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CASH-STRAPPED CELSIUS: Bankrupt cryptocurrency lender Celsius Network, which disclosed Monday that it was running low on money, said it has received several proposals from firms looking to inject cash into the company, though didn’t name names. It also won approval from a U.S. judge to sell bitcoin (BTC) that it mines. - Needs money: Celsius, which paused customer withdrawals amid the spring’s crypto market rout, needs liquidity. A number of firms are reportedly looking to acquire Celsius, or parts of the bankrupt firm.
- Money on hand: A recent court document showed that Celsius mined $8.7 million worth of bitcoin in July. It also holds several millions of dollars worth of the platform’s CEL token, which has substantially fallen in value and is undergoing a short squeeze. However, the company's operational and capital costs exceed its holdings.
PUSHING BACK: U.S. Sen. Pat Toomey (R-Pa.) made public a letter claiming the Federal Deposit Insurance Corporation (FDIC) improperly pressured banks against providing services to cryptocurrency companies, even though those services are legal. - Background: Toomey’s letter was prompted by whistleblower accounts in an American Banker report, which claimed the federal banking regulator has “downgraded” bank’s loans and tried to dissuade financial firms from expanding into crypto without legal basis.
- Similar action: Commentators have noted a similar anti-crypto bent in guidance issued by the U.S. Federal Reserve this week, which would expand central bank oversight over the industry.
OFFICER, WHAT IS THE LAW? The U.S. Securities and Exchange Commission has filed a complaint against blockchain startup Dragonchain for failing to register more than $16 million in crypto asset securities offerings over the course of five years. This is the latest in a string of small-time actions taken against irrelevant crypto projects by regulators. - Looking back: A slew of crypto startups launched ICOs (initial coin offerings) to raise money for their operations amid the bitcoin market boom at the end of 2017, running afoul of the SEC, which considers token sales securities that should be subject to federal securities laws and information disclosure.
- Tax evaders hunting: Meanwhile, the Internal Revenue Service can serve a "John Doe" summons on crypto prime dealer SFOX, a court ruled Monday, allowing the tax agency to hunt for potential tax evaders who are using company's services. The IRS has previously served such summons on companies including Kraken and Circle.
MORE IN: The World Bank affiliate International Finance Corporation is teaming up with upstart blockchain platform Chia Network to revamp the carbon credit market in a project called the Carbon Opportunities Fund. Some climate activists believe tokenizing carbon credits will make the industry more efficient and effective while others write off these voluntary carbon capture efforts entirely. - New fund: CoinFund, a crypto-specific investment firm, inaugurated a $300 million venture capital fund to back early-stage blockchain projects, a sign of investor confidence in an industry plagued by a bear market.
- Elsewhere, Brazil's largest investment bank, BTG Pactual, has launched a crypto trading platform, allowing customers to trade BTC, ETH, SOL, DOT and ADA.
DOGE, JUMP! Dogecoin's (DOGE) price has surged this week following increased retail interest in Polygon Edge-based token exchange called Dogechain. Dogechain allows traders to convert dogecoin to wDOGE and allows them to use tokens, non-fungible tokens (NFT) and products built on the network. - Zooming out: Meme coins in general are rallying, outperforming bitcoin (BTC) and ether (ETH). While historically such market exuberance over mostly useless tokens has portended a market-wide price crash, analysts say the latest jump appears to be driven by news and doesn't represent a speculative frenzy.
– Xinyi Luo |
Overheard on CoinDesk TV... |
"The consumer business is dead ... The brand itself is dead." – 507 Capital founder Thomas Braziel, discussing bankrupt cryptocurrency lender Celsius, on CoinDesk TV's "First Mover" |
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- Inside the Crash of Three Arrows Capital (New York Magazine)
OpenSea Volume Sinks to 13-Month Low (The Defiant) Bitcoin miners forced to dump holdings to stay afloat amid market crash (Protos) Crypto Ads Starring Matt Damon, Tom Brady Vanish From Television (Bloomberg) Investment in infrastructure is critical for crypto startups, not a ‘nice to have’ (Techcrunch)
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Putting the news into perspective |
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In Crypto, Base Layer Security Isn’t Enough Earlier this week a new type of stablecoin (aUSD), built on a platform (Acala), which itself was built on a blockchain (Polkadot), fell from its $1 peg to $0.009 (which rounds to zero as far as I’m concerned), following an attack on one of the platform’s liquidity pools. If the words following “attack on” seem to be oddly specific, that’s because they are. Acala wasn't attacked, hacked and thwarted directly. Rather, the iBTC/aUSD liquidity pool, something built on top of Acala, was attacked, hacked and thwarted directly. The exploit was successful and allowed bad actors to create billions of aUSD for themselves. This influx of new aUSD crushed the price of the stablecoin strictly through immense supply dilution. aUSD has since recovered, but only after the Acala community voted to destroy the billions of the improperly minted aUSD. Never mind that the minted aUSD wasn’t really improperly minted and never mind the need for a centralizing force to come in to fix this mistake, let’s instead look at how cryptocurrency protocols are only as secure as what’s built on top of them. Move fast and break everything aUSD isn’t the first crypto thing that has been broken or hacked (e.g. Ronin for $625 million and Wormhole for $326 million) – it’s just the flavor of the week. But we should be clear here: aUSD didn’t necessarily stop working, and the attackers didn’t rappel into a building to physically break into the mainframe or something. Instead, aUSD worked as designed. Buggy code governed the liquidity pool, and that buggy code allowed attackers to print billions of aUSD. This is the same as the two other examples provided – with each CoinDesk article accurately using the term “exploit” to describe the attacks. We should do the same here, because exploit, rather than hack, more accurately defines taking advantage of poorly constructed code. Exploits, of course, aren’t isolated to protocols you’ve never heard of. Acala is built on Polkadot, for instance. Sure, Polkadot’s native currency DOT is the 11th-most valuable cryptocurrency, but it’s not like Polkadot is Ethereum. Except Ethereum did have an exploit in 2016 – colloquially called The DAO Attack – which led to a messy chain split (look up Ethereum Classic) and a loss of credibility. This is good ammo for the boomer Bitcoin developers who are hellbent on changing absolutely nothing about Bitcoin because they’re afraid that would break the protocol. I’m not coming here in defense of halting new development of Bitcoin or other cryptocurrency protocols, but rather, I simply want to provide some color as a warning given how easy it is to draw a parallel to Silicon Valley tech companies and crypto. The ethos of Silicon Valley tech is (was?) to “move fast and break things,” but the stakes are simply higher for crypto. If a developer at Salesforce introduces a bug that hurts a customer’s experience, patching that bug really comes only at the expense of time to fix the mistake (maybe there’s a reputational hit, but a company can get through a few mistakes a year with no issue). Not so in crypto. If a bug is introduced to a crypto protocol through a new shiny product or layer or smart contract or whatever and is eventually exploited, the damage could spread far and wide and could be irreversible. Things should be built on crypto protocols and the protocols themselves should be upgraded, but that should be done with care. All said, the main point is: It’s fine to move fast and break everything, unless you don’t want to break everything. – George Kaloudis |
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Starfish Finance II - Attack of the (Dapp) Clones Far beyond Earth and millions of miles past the moon, there’s a planet where Decentralized Finance (DeFi) and NFT-Fi meet on an interoperable network. First observed in 2022, the world known as “Starfish Planet” is home to degens, hodlers, frens and a starfish named Sean. Starfish Planet is one of the many planets orbiting within the Astar Network ecosystem. While many have traveled to Astar at different times, they all chose this ecosystem for the same reason: the EVMs are being attacked by clones. Continue reading here *This is sponsored content from Starfish. |
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