Autor Cointelegraph By Zhiyuan Sun

Chinese VC loses $42M in crypto due to compromised mnemonic seed phrase

Chinese VC loses $42M in crypto due to compromised mnemonic seed phrase

Uverejnil používateľ | nov 23, 2022 |

According to a new twitter post on Nov. 23, Bo Shen, general partner of the Vitalik Buterin-advised venture capital fund Fenbushi Capital, claime that $42 million worth of funds were drained from his Trust Wallet on Nov. 10. Shen, who grew up in China but now lives in Atlanta, says that the funds were his personal assets and the exploit does not affect Fenbushi-related entities.”The incident has been reported to the local law enforcement. FBI and lawyers both have been involved. Civilization and justice will eventually prevail over barbarism and evil. This is the iron law of human society. It’s just a matter of time.”Later today, blockchain analytics firm SlowMist confirmed the exploit and stated the reason for theft being “mnemonic words compromise.” The firm also disclosed that a combination of addresses belonging to Shen was drained of 38,233,180 USD Coin (USDC), 1,607 Ether (ETH), 719,760 Tether (USDT), and 4.13 Bitcoin (BTC). The stolen funds were later deposited to exchanges ChangeNow and SideShift.”In addition, we have verified during our investigation that @boshen1011’s Trust Wallet is the official version and not a fake wallet. Trust Wallet itself has no security issues related to this theft.”Following the theft of @boshen1011’s personal wallet, we were immediately tasked with the investigation.We began by conducting an on-chain analysis of the stolen assets and the hackers’ address.Here’s what we found https://t.co/ddxSmYvt0I— SlowMist (@SlowMist_Team) November 23, 2022On Twitter, Shen thanked users for their supportive comments and reiterated his “commitment to blockchain technology and decentralized services.” The last recorded hack of Bo Shen’s wallets took place on Dec. 8, 2016, after hackers gained unauthorized access to a database backup from forum.ethereum.org. Shen, an early investor in Ethereum and Augur, had both tokens drained from his wallets, which were sent to an instant exchange service on Poloniex. A portion of the funds has since been recovered.

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Mango Markets hacker allegedly feigns Curve short attack to exploit Aave

Mango Markets hacker allegedly feigns Curve short attack to exploit Aave

Uverejnil používateľ | nov 22, 2022 |

As described by analysts at Lookonchain on Nov. 22, tokens of decentralized exchange Curve Finance (CRV) appear to have suffered a major short-seller attack. According to Lookonchain, ponzishorter.eth, an address associated with Mango Markets exploiter Avraham Eisenberg, first swapped 40 million USD Coin (USDC) on Nov. 13 into decentralized finance protocol Aave to borrow CRV for selling. The act allegedly sent the price of CRV falling from $0.625 to $0.464 during the week. Fast forward to today, blockchain data shows that ponzishorter.eth borrowed a further 30 million CRV ($14.85 million) through two transactions and transferred them to OKEx for selling. The team at Lookonchain hypothesized that the trade was conducted to drive down the token price “so many people who used CRV as collateral will face liquidation.”In response to the heavy selling activity, a wallet associated with Curve’s founder added 20 million more CRV in collateral. On Aave, the wallet addresses’ health factor was 1.65 at the time of publication, indicating an excess of collateral against borrowed assets.But as told by blockchain analytics firm Arkham, the trades “may simply be bait,” with Aave being the primary target instead. Arkham claims that Eisenberg built up an over $100 million position on Aave for a sophisticated trading scheme. It first involves a distraction short of CRV tokens on Aave, which is illiquid on the platform but also has very low margin requirements, both of which are important factors for the exploit. The ensuing attention would prompt users to buy the dip en mass to defend the price of CRV and, for others, to try to squeeze the short-seller to cover their position for a loss.However, the real conspiracy appears to be exploiting the possibility that Aave cannot cover Eisenberg’s CRV short positions, as the platform allegedly does not have enough liquidity to buy back more than 20% of the short. This would then favor bets against Aave and the price decline of its native token:”The real target here was AAVE’s vulnerable looping system, which Avi mentioned last month. Using $40 million to borrow almost $50 million of CRV could leave AAVE with severe bad debt.””To liquidate Avi’s position, Aave liquidators will have no way to buy back all the CRV he borrowed. AAVE will have to sell significant amounts of tokens from the safety module to cover this loss,” wrote Arkham. A screenshot of a swap quote provided by the firm shows an 89.8% potential swap impact between USDT and CRV for the estimated $100M position.he put in a fuck ton of usdc. can borrow at 90% ltvborrowed heaps of $CRV. psyop short.pump curve ridiculously.aave has to liquidate the “usdc” and buy back enormous amounts of $CRV, literally 50-100% slippage on orders of that size— Fraxgener 200x (@napgener) November 22, 2022At the time of publication, CRV is up 15.47% to $0.5742 in the past 24 hours, while the price of Aave has declined by 6.33% to $53.54 during the same period. On Oct. 11, Eisenberg drained $117 million from the Mango Markets protocol and kept $47 million as bug bounty before returning the rest, calling it a “highly profitable trading strategy.”

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FTX and Alameda likely colluded from the very beginning: Report

FTX and Alameda likely colluded from the very beginning: Report

Uverejnil používateľ | nov 17, 2022 |

According to a new report published by blockchain analytics firm Nansen on Nov. 17, bankrupt cryptocurrency exchange FTX was allegedly intertwined with that of crypto trading firm Alameda Research from the very beginning. Both entities were created by crypto businessman Sam Bankman-Fried, who is now being considered for extradition by U.S. authorities for his role in the collapse of the exchange. Based on available on-chain evidence, Nansen identified a series of wallets placing Alameda as one of the earlier liquidity providers for FTX in May 2019. Of the initial 350 million in its native token FTT’s supply, 27 million allegedly ended up on Alameda’s FTX deposit wallet, while the two firms controlled 86% of the supply combined. The setup meant very little FTT was circulating in the open market, making the tokens extremely susceptible to price manipulation.Fast forward to the bull market of 2021 when the FTT token rose from its seed price of $0.10 to $84; Nansen believed that the two firms could not cash out their large positions without seriously spooking the markets, and likely used their FTT positions as collateral to take out loans.The blockchain analytics firm then pointed out almost $1.6 billion worth of FTT being exchanged between Alameda Research and troubled brokerage Genesis Trading in September 2021. The problem, according to Nansen, began when FTX and Alameda started reinvesting the loans back into their own FTT tokens in order to bid up the price, resulting in mounting leverage.The report continued that things appeared to work fine until the crypto crash of June 2022. With the blowup of centralized finance, or CeFi, firms such as Three Arrows Capital and Celsius, which all had exposure to Genesis Trading, Alameda likely faced a liquidity crunch that could not be resolved unless it sold its FTT tokens for cash. However, this was not possible without crashing its price and causing contagion in the FTX exchange.On-chain then showed over $4 billion of FTT tokens were sent from Alameda to FTX, illustrating the possibility of a loan issuance in the equivalent amount. Some have raised the likelihood of FTX moving customer deposits as the basis for an emergency liquidity injection into Alameda.In any scenario, the issue finally came to light when Changpeng Zhao, CEO of cryptocurrency exchange Binance, decided to liquidate its leftover investments in FTX consisting of FTT. The move spooked investors and simultaneously caused both a bank run on the FTX exchange and intense selling pressure on FTT. Soon, users realized the that the funds FTX promised simply weren’t there, leading to the beginning of the end of what used to be the world’s third-largest cryptocurrency exchange. 

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Blockstream CEO Adam Back talks Bitcoin over a game of Jenga

Blockstream CEO Adam Back talks Bitcoin over a game of Jenga

Uverejnil používateľ | nov 16, 2022 |

Ever since his childhood years, Adam Back, now CEO of Blockstream, would spend his time fidgeting with programming code to look for encryption keys embedded in the software. Born in 1970, the London native completed his A-levels in mathematics, physics, and economics before focusing on computing science and earning a Ph.D. from the University of Exeter. Having devoted his career to applied cryptography, Back invented HashCash in 1997, a proof-of-work system used to limit email spam and denial-of-service attacks that later became more renowned for its use in Bitcoin. In fact, Back was one of the few people to be cited in the original Bitcoin whitepaper.Nowadays, Back manages his digital asset custody firm Blockstream based in Victoria, Canada, which raised $210 million in a Series B round last August. During an interview with Cointelegraph reporter Joe Hall, Back explained what fascinated him so much about Bitcoin at first was its fertile ground for a lot of applied research and development. “It covers lots of interlayer topics or people, like mathematics, computer science, and programming,” he said.When asked what advice he could give to the new generation of Gen Zs and Boomers approaching Bitcoin alike, Back suggested first getting to know the people in the industry. “I think the good way to get involved is to sort of try to contribute to something as a volunteer, as you learn things when you get to interact with people. You know there could be many different things to come across, like user interface, documentation, or educational materials.”The 52-year-old cryptographer is also exploring new physical boundaries for the use of Bitcoin, literally. For a few years now, Back has been operating the Blockstream Satellite Network, which broadcasts the entire Bitcoin blockchain around the world 24/7 through its leased satellites. “You could sync a node from scratch by the satellite; it will take a week or two,” he said, continuing: “but it actually fetches all the history as well and reassembles it. And it’s some pretty cool kind of tech in terms of error correction and redundancy.” According to Blockstream, the setup can “protect against network interruptions” and “provide areas without reliable internet connections access to Bitcoin.” Though, for the privilege of not needing internet to use Bitcoin, one would need a satellite kit in order to receive transmissions.

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Breaking: Crypto lender Genesis Global halts withdrawals

Breaking: Crypto lender Genesis Global halts withdrawals

Uverejnil používateľ | nov 16, 2022 |

According to a new tweet by Genesis Global on Nov. 16, the institutional crypto lender said it would “temporarily suspend redemptions and new loan originations in the lending business.” In explaining the decision, the firm cited “unprecedented market turmoil” related to the collapse of troubled cryptocurrency exchange FTX, resulting in “abnormal” levels of withdrawals that Genesis Global claims to have exceeded its current liquidity.The firm also added that its current liquidity was negatively impacted by the collapse of hedge fund Three Arrows Capital in June. As part of bankruptcy proceedings, the brokerage has filed a $1.2-billion claim against Three Arrows Capital.Though it’s unclear what the firm’s liquidity levels are, Cointelegraph previously reported that Genesis Global had $175 million worth of funds stuck on FTX. In response, Digital Currency Group, the parent company of Genesis Global, sent its subsidiary an emergency $140-million equity infusion to cover losses. It’s now apparent that the transfer was insufficient to meet consumer withdrawal demands. As for the next steps, Genesis Global stated:“We have hired the best advisors in the industry to explore all possible options. Next week, we will deliver a plan for the lending business. We’re working tirelessly to identify the best solutions for the lending business, including among other things, sourcing new liquidity.”Genesis Global also claimed that its spot, derivatives trading and custody businesses remain “fully operational.” In its latest quarterly report, the firm stated that it has $2.8 billion worth of active loans. Since the announcement, its parent company, Digital Currency Group, has clarified that it has no impact on its own operations. However, Genesis Global currently serves as the liquidity provider of the popular $6.7-billion Grayscale Bitcoin Investment Trust (GBTC). The fund is currently trading at a discount of nearly 40% to its net asset value at the time of publication in part due to investor speculation on its exposure to Genesis Global.Update 2:35 PM UTC: Cryptocurrency exchange Gemini confirms Genesis Global is the lending partner for its Earn program and will not be able to meet customer redemptions within five business days. Gemini also states that the event does not affect the firm’s other products and services and that “all customer funds held on the Gemini exchange are held 1:1 and available for withdrawal at any time.”Update 2:40 PM UTC: GBTC released a statement saying that “all Grayscale products remain safe and secure, held in segregated wallets in deep cold storage by our custodian @Coinbase.” The company also claimed its digital asset products are unaffected, and that the firm does not borrow nor lend with custodied assets. 

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