Wednesday, November 2, 2022

Deribit Halted Withdrawals Amid $28M Hot Wallet Hack

November 2, 2022

The biggest crypto news and ideas of the day

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Hello and welcome to The Node. This is Daniel Kuhn and Xinyi Luo, here to take you through the latest in crypto news and why it matters. In today's newsletter:

In this newsletter: Crypto exchange Deribit hit with hot wallet attack, a16z comes to Ooki DAO's defense against CFTC and France, Switzerland and Singapore look to crypto for foreign exchange markets.
The Takeaway: The "Missing Crypto Queen" was one of crypto's most high-profile fraudsters. New information suggests she received help from government officials, David Z. Morris writes.

– D.K.

Today's must-reads

Top Shelf

Crypto Exchange Deribit Loses $28M in Hot Wallet Hack: Cryptocurrency options and futures exchange Deribit paused withdrawals while dealing with the aftermath of the $28 million exploit. The company tweeted that client assets have not been affected and iot will reopen withdrawals after security checks.

Meanwhile, a rogue actor has been disrupting Bitcoin's Lightning Network, the network's scaling and payments layer, apparently by creating a non-standard bitcoin transaction that prevented users from opening new Lightning channels between nodes.

Crypto Investor a16z Wants to Join Ooki DAO Defense Against CFTC: Venture capital firm Andreessen Horowitz, known as a16z, filed a "friend of the court" brief to argue that the Commodity Futures Trading Commission (CFTC) must serve its lawsuit against individual members of the DAO, instead of targeting the organization as a whole.

A16z is just the latest entity requesting to join the case against Ooki DAO in which the CFTC alleges the DAO violated federal commodities laws by offering leveraged and margin crypto trading products to U.S. residents.

France, Switzerland, Singapore to Test DeFi in Forex Markets: Central banks from France, Switzerland and Singapore are attempting to automate foreign exchange markets using decentralized finance (DeFi) protocols to cut the cost of cross-border payments. The project is being coordinated by the central bank of central banks, the Bank for International Settlements (BIS).

"DeFi and its applications have the potential to become systemically important parts of the financial ecosystem," the BIS said in a statement.
Meanwhile, the Monetary Authority of Singapore (MAS) started two new pilot projects to explore the use of tokens in trade finance and wealth management, involving major TradFi players Standard Chartered and HSBC.

– Xinyi Luo

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Putting the news into perspective

The Takeaway

Ruja Ignatova (OneCoin Corporation)

OneCoin and the Rise of Global Financial Frauds

After two years running dark, the BBC's investigation into the OneCoin pyramid scheme returns with evidence of corruption at the very highest levels of government. The so-called "Missing Crypto Queen," aka Ruja Ignatova, who disappeared on Oct. 25 of 2017 now appears to have been assited by United Arab Emirates and Bulgaria government officials. David Z. Morris examines the rise of global financial frauds in the digital age, and asks whether this new ability to bring in huge amounts of money is often supported by "heavier players." Read the full story here.

Overheard on CoinDesk TV...

Sound Bites

"You had all the ingredients you would need for a scammers dream."

– Chainalysis cybercrime research lead Eric Jardin, on how exploiters stole $1.2 million during Ethereum's Merge, on CoinDesk TV's "First Mover"

The news in a sentence

Headlines

Crypto Exchange BitMEX Cuts Staff as It Pivots Back to Derivatives Strategy | Crypto Finance Firm Galaxy Digital to Cut One-Fifth of Workforce: Sources | DeFi Protocol Solend Struck by $1.26M Oracle Exploit | Crypto Miner Bitdeer to Extend IPO Deadline by One Year | Bitcoin Miner Iris Energy Says Some Machines Aren't Covering Financing Costs | Switzerland Sticks to Tougher ID Checks for Crypto to Cash Transactions | Early MakerDAO Developer and Stablecoin Pioneer Found Dead in Puerto Rico |

Keeping Your Crypto on an Exchange? That's Where It's Most Exposed to Hackers. There's a Better Way.

Why waste time hacking lots of small wallets when you can go after everyone's deposits at once by attacking an exchange?

This is why hacks of crypto exchanges are becoming more and more common.

*This is sponsored content from iCoin.

What others are writing

Off-Chain Signals

Bankruptcy Judge Advances Probe Into Whether Celsius Operated as Ponzi Scheme (WSJ - paywalled)
Report Claims 97% of Uniswap Tokens Are 'Rug Pulls'—Crypto Twitter Has Doubts (Decrypt)
Aave Rolls Up its Sleeves With Only 5% of Goals Met (The Defiant)
How Nic Carter fueled demand for tungsten on crypto Twitter (Protos)
The Serotonin Web3 Gaming Review (serotonin.co)

The Chaser...