The Binance ecosystem theft of $568 million worth of BNB tokens on its BNBChain, Do Kwon’s assets frozen and passport recalled, and EU approves final MiCA rules text as the space looks at what’s next. Click to read this edition of ProBit Global’s Weekly Blockchain Bits.
Binance had a week like never before!
The hack of a cross-chain bridge linking with BNBChain, a Binance infrastructure, saw 2 million BNB tokens stolen (worth about $568 million at the time of theft) last week. According to CoinMarketCap data, the value of BNB dropped by more than 3% to $285.36 a coin as a result.
The exploit caused BNBChain to announce that it will adopt on-chain governance votes to determine future actions like whether to freeze hacked funds, use BNB Auto-Burn to make up for the remaining hacked funds, start a Whitehat program for future bugs found ($1m on offer) or a bounty for catching the hackers (10% of the recovered funds on offer).
During the same week, the largest crypto exchange by market cap announced it had signed a Memorandum of Understanding with the Financial Monitoring Agency of the Republic of Kazakhstan to tackle topics such as information exchange. It also entails establishing and blocking virtual assets obtained by criminal means as well as those intended for laundering from crime and the financing of terrorism.
It also obtained a permanent license to provide crypto transaction services within the International Financial Center in Astana, Kazakhstan.
Kim Kardashian shilled, slammed with a $1.26 million fine
The US Securities and Exchange Commission (SEC) last week filed charges against Kim Kardashian for ‘shilling’ a crypto asset security offered and sold by EthereumMax on social media.
The SEC finds that Kardashian was paid $250,000 to publish a post on her Instagram account (with over 300 million followers) but she did not disclose the payment. This contravenes federal securities laws which require any celebrity or other individual who promotes a crypto asset security to disclose the nature, source, and amount of compensation they received in exchange for the promotion, the SEC notes. The case is a reminder that celebrities or influencers endorsing investment opportunities, including crypto asset securities, do not necessarily mean that the products are right for all investors, SEC Chair, Gary Gensler, said. Without admitting or denying the findings, Kardashian agreed to pay $1.26 million — — approximately $260,000 in disgorgement and a $1,000,000 penalty — — as well as agreeing to not promote any crypto asset securities for three years.
Lightning Network reached capacity milestone
The team had in the previous week presented developers with a way to mint, send, and receive assets on the Bitcoin blockchain which could see the issuing of assets like stablecoins on the Bitcoin network.
In large part due to River Financial and Loop by Lightning Labs expanding their channels, the growing public capacity indicates that Bitcoin’s layer-2 scaling solution, which allows fast micropayments with minimal fees, is gaining traction.
LN’s capacity grew in the second half of 2021 but later slowed down considerably toward 2022 and at a slow rate of 11% during the first four months. It accelerated in May, growing by 6%, which is equal to a yearly growth rate of 100% to record its fastest since October 2021.
Do Kwon’s troubles deepen
From the claim to be “obviously on the run”, and not cooperating with their investigations, South Korean prosecutors have reportedly frozen the crypto assets of Do Kwon, the founder of TerraLabs. The freeze includes massive Bitcoin assets via two exchanges. . Korean media had reported that a one-year arrest warrant was issued for Kwon and five others including a co-founder, Nicholas Platias, for violating the Capital Markets Act.
Last week, Kwon and his Luna Foundation Guard were claimed to have created a virtual asset wallet on Binance with approximately 3313 BTC the next day after a warrant for Kwon’s arrest was issued.
The same week also saw the South Korean foreign ministry serve Kwon with a “Notice of Order to Return Passport” within 14 days. The notice states that he risks the travel document being administratively invalidated if he fails to comply within the stipulated period.
EU approves final MiCA text
The EU Council approved the final Markets in Crypto Assets (MiCA) text last week and adoption by the European Parliament’s Economic and Monetary Affairs Committee scheduled the following week. MiCA is a new set of rules that seek a uniform legal framework for crypto assets in the EU and to safeguard consumers against market manipulation and financial crime. It will also require significant crypto assets service providers (CASPs) to disclose their energy consumption. An agreement was reached among EU institutions on MiCA in June after more than two years of consultation, discussion, and amendments. The next steps after the adoption in parliament include lawyer/linguist checks, a plenary vote in parliament, and publication in the official journal of the EU
Relatedly, Members of the European Parliament (MEPs) last week adopted a resolution for better use of blockchain to fight tax evasion and for EU member states to coordinate more on the taxing of crypto assets. The resolution seeks to ensure fair, transparent, and effective taxation for crypto assets and for authorities to consider a simplified tax treatment for occasional or small traders and small transactions.
Crypto services from EU to Russia banned following tightening
As part of its eighth package of hard-hitting sanctions against Russia for its aggression against Ukraine, the EU Council last week tightened its existing prohibitions on crypto assets for users in Russia.
All crypto-asset wallets, accounts, or custody services to Russia were banned irrespective of the amount of the wallet — previously up to €10,000 was allowed. The ban forms part of a widening of the scope of services that can no longer be provided to the government of Russia or legal persons established in Russia. Others include IT consultancy, legal advisory, architecture, and engineering services.
Mastercard offers banks a new tool to combat crypto fraud
Multinational financial services corporation, Mastercard, last week launched a new product to help banks assess the risk of crime associated with crypto merchants on its network.
According to blockchain analytics firm Chainalysis, the amount of crypto entering wallets known to have criminal connections surged to a record $14 billion last year. This prompted the development of Crypto Secure™, designed to bridge the gap between traditional finance and crypto. The Crypto Secure platform, powered by the blockchain security startup that Mastercard acquired last year, CipherTrace, enables banks and other card issuers to see color-coded ratings representing the risk of suspicious activity based on the severity of risk ranging from low to high. It does not choose to turn away a specific crypto merchant or not.
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