A decentralized finance (DeFi) protocol based on the Bitcoin network called Sovryn crypto lost more than $1.1 million in cryptocurrencies. This was reported by the developers of the project on their blog.
Attackers conducted an attack on the credit issuance protocol, affecting credit pools of the RBTC token (a bitcoin-linked token based on the Roostock sidechain, which has smart contracts functionality) and USDT. The attack allowed unknown persons to withdraw $211,045 in USDT and 44.93 RBTC (~$915,000) using the asset conversion feature. The Sovryn price was hit hard because of this.
The developers claim that they are still making efforts to recover the funds. It is reported that so far, developers have managed to regain access to half of the stolen funds. Exactly how they could accomplish this is unclear.
The attackers, Sovryn found out, took advantage of credit manipulation. Through the third-party exchanger RskSwap, they could withdraw much more cryptocurrency from Sovryn than the intended short-term loan.
Recall that earlier Immunefi analysts estimated that the cryptocurrency market lost almost $430 million during Q3 due to hacks, with about 99% of the attacks coming from decentralized financials and about 1% from centralized services.
Analysts explain such a big gap by the fact that DeFi is all about automation. In the case of centralized projects, fraudsters face multiple layers of protection.
The biggest incidents this past quarter were the attacks on cross-chain bridge Nomad Bridge (about $190 million lost) and DeFi market maker Wintermute (about $160 million lost). These two projects alone accounted for about 79.85% of Q3 losses. Other top incidents included Raccoon Network and Freedom Protocol ($20 million), Impermax Finance ($7.4 million), Audius ($6 million) and others.
Earlier we reported that the EU banned cryptocurrency wallets of users from Russia.
ETF filings changed the Bitcoin narrative overnight — Ledger CEO
Over the past 12 months, some investors learned the hard way why they needed to move their crypto offline. Those who kept Bitcoin (BTC) and altcoins on crypto exchanges like FTX lost control of their assets, sometimes forever. Events drew a red line under the storied crypto adage: “Not your keys, not your coins.”
FTX’s loss was hardware wallet manufacturer Ledger’s gain, however. The Bahamas-based exchange’s November 2022 bankruptcy filing delivered to Ledger “our biggest sales day ever,” the firm’s chief experience officer, Ian Rogers, told Cointelegraph, and “November turned out to be our biggest sales month on record.”
Paris-based Ledger has been on a strong growth curve recently, though the past year has not been without controversy. In May, for instance, the firm drew industry ire when it launched a new secret recovery phrase storage service called Ledger Recover. Still, it remains one of the best-known and most-used crypto wallet makers in the world.
Cointelegraph recently caught up with Rogers and Ledger CEO Pascal Gauthier in New York City to discuss the new crypto climate in the United States, the latest trends in crypto storage and differences in doing business in the U.S. and Europe, among other topics.
Cointelegraph: Many think that the crypto/blockchain sector is still in the doldrums or moving sideways at best, but you see reasons to be cheerful even here in the U.S.?
Pascal Gauthier: What happened in 2023 — and went virtually unnoticed — is a change of tone regarding Bitcoin. When the SEC [Securities and Exchange Commission] implied that Bitcoin was a utility and/or commodity — and not a security [like other altcoins] — this triggered two things: large companies like BlackRock began their ETF [exchange-traded fund] application process, and then the media narrative around Bitcoin changed almost overnight.
As 2023 began, Bitcoin was for drug dealers, terrorists, bad for the planet, etc. — and suddenly it became completely kosher. The biggest financial institutions in the U.S. are suddenly doing Bitcoin.
CT: The BlackRock application for a spot-market Bitcoin ETF was a turning point?
PG: Big money is coming into crypto; it’s been announced. It may take a few years to really finally arrive, but if you look at Fidelity, BlackRock, Vanguard…
CT: What about U.S. regulations? Aren’t they still a barrier?
PG: The next administration will decide the fate of crypto in the United States. If Biden stays in power, this administration could continue to be aggressive toward crypto. If it’s someone else, we’ll see what happens.
CT: Let’s talk about offline storage devices. Mark Cuban said in 2022 that crypto wallets were “awful.” Did he have a point?
PG: A lot of our early customers used our [cold wallet] product to “buy and hold.” You would purchase a Ledger [device], you put your Bitcoin in it, and then you put it someplace and forget about it. But that’s not what we recommend now.
Today, you can connect your wallet to Web3 and use your private keys to do many things, including buying, selling, swapping and staking crypto, as well as engaging with DApps [decentralized applications] and even declaring your taxes.
PG: For the industry, it’s a three. For Ledger, maybe a four — and we’re striving to be a 10. The industry has a lot to do in terms of UX and UI [user interface].
Ian Rogers: Your hardware-software combo today is not just about hardware and software. It’s an end-to-end experience.
When you’re buying an Apple iPhone, for instance, you’re not buying a piece of hardware; you’re buying into the Apple experience. We would ultimately like that to be the same thing with Ledger. Our approach is to do the absolute best user experience possible without compromising on security or self-custody.
CT: Still, there’s these UX issues like the 24 seed words you need to recover your private key if you lose your Ledger device. Some users go to great lengths to safeguard those words, even engraving them in steel just in case their house burns down. Doesn’t that sound sort of extreme?
PG: It is a little backwards to have something like a metal plate in your home. It’s not very 21st century. But we came up with a solution for this.
When you use a Ledger product, you end up with your Ledger device and a PIN code. And you will also have those 24 words that become your master password, basically. You need to keep those 24 words safe, and this is a major barrier to entry for a lot of people. They don’t trust themselves with those 24 words. They don’t trust themselves not to lose them.
So, we came up with a service called Ledger Recover [i.e., an optional paid subscription service provided by Coincover that is expected to launch in October] to deal with that. It allows you to shard your private key into three encrypted shards and then send them to three different custodians. They cannot do anything with the [single] encrypted shard. Only you can bring your 24 words together again if necessary.
CT: Don’t we already have something like that with “social recovery,” where you entrust your cold wallet recovery to several friends or “guardians?”
PG: Social recovery doesn’t really work. We’ve done something that resembles social recovery — but with businesses [i.e., Ledger, Coincover and EscrowTech]. You will have to present your ID if you want to initiate the shard recovery.
CT: You were criticized when you first announced the Ledger Recover service in May. Then, the launch was postponed amid the “backlash.” There were security concerns. People said these three shard-holding companies could reconstruct your private key.
PG: There is still a lot of education to be done for people to understand really how security works. People said [at that time] that it might be a good product if it were more transparent and easier to adopt. So we didn’t go live in May, as planned, in order to make the product ‘open source,’ which adds something in terms of transparency though not security,
CT: But couldn’t three sub-custodial companies, at least in theory, collaborate and reconstruct your privacy key?
PG: It’s not possible. They don’t have the necessary tools necessary to decrypt and reconstruct.
CT: Moving on to Ledger’s business model, do you sometimes worry that as big institutions like Fidelity Investments or banks like BNY Mellon enter the crypto space that users may simply park their crypto with them? If they get hacked, those giant custodial institutions will then make them whole again. Or at least that is sometimes the thinking.
PG: We’re a pure technology company. So when Fidelity decides to become a [retail] crypto custodian, they’ll probably come to us and buy a part of our technology to build their own technology stack.
CT: Your business strides several continents. You’re based in France, but you sell many of your devices in the United States. You have first-hand experience of those two business climates — the U.S. and Europe. Are there key differences when it comes to crypto?
PG: Europe has a tendency to over-regulate or regulate too fast, generally speaking. Sometimes people say, well, you know, Europe has clarity because it has MiCA [Markets in Crypto-Assets, the EU’s new crypto legislation], while in the U.S., there is a lack of clarity and lots of lawsuits.
But in the U.S., the way that the law is designed is slow and bumpy. It takes time to change laws in the U.S., but when change finally does come, it’s often for the better.
If you look at the biggest tech champions in the world, they’re mostly American or Chinese. Zero are European.
CT: Are you linking heavy regulation with a lack of innovation?
PG: It’s hard to say if they are directly linked, but Europe has always had a heavy hand in terms of taxation and regulation.
Ian Rogers: To me, there’s no question they are linked. At LVMH [the French luxury goods conglomerate where Rogers served as chief digital officer for five years], we worked with a lot of startups. Every European startup wanted to get to the U.S. or China to “get scale” before they came back to Europe. Europe is not a good market if you’re a startup.
CT: But Ledger remains positive about the future of cryptocurrencies and blockchain technology overall?
PG: Things are not necessarily what they seem to be. It was our [late] French president François Mitterrand, who said: “Give time for time.” There’s something going on now, and only the future will be able to make clear what is happening.
Dirham stablecoin DRAM hits Uniswap, developed by relaunched Distributed Technologies Research
A former MIT alumnus and SoftBank executive has launched a Dirham-backed stablecoin that aims to give countries plagued by high inflation environments exposure to assets linked to the United Arab Emirates’ native currency.
Cointelegraph reached out to Akshay Naheta, founder and CEO of Distributed Technologies Research (DTR) following the announcement of DRAM stablecoin that was listed on Decentralized Finance protocols Uniswap and PancakeSwap on Oct. 3.
The Abu Dhabi based- company has been developing the technology for a Dirham-backed stablecoin since Oct. 2022. Naheta has essentially rebooted DTR in the jurisdiction, which he had helped co-found in Switzerland in 2019.
DRAM is an Ethereum ERC-20 token that is issued by DRAM Trust. The organization is a Hong Kong law governed trust while an independent trustee responsible for approving token mints and burns is reportedly licensed and regulated under the Hong Kong Monetary Authority.
As it stands, DTR cannot offer DRAM in Hong Kong or within the United Arab Emirates but Naheta indicates that conversations are ongoing to provide token liquidity for listing on centralized exchanges outside of those two jurisdictions.
Regulatory parameters require that Dirham fiat reserves must be deposited before any DRAM tokens can be minted, with reserves reportedly held by regulated financial institutions.
The DRAM website also provides links to the stablecoin’s smart contract addresses for Ethereum, BNB and Arbitrum. The ETH token contract reflects a max total supply of 2 million DRAM at the time of publication, while the ARB contract reflects 499,999 DRAM and the BNB contract holds 2.5 million DRAM.
A background search carried out by Cointelegraph uncovered the previous launch of Distributed Technologies Research in Switzerland four years ago.
The foundation went on to develop a decentralized payments system called Unit-e, which was designed and built by a host of academics and developers through partnerships and grants with high-profile academic institutions including Stanford, MIT and University of Illinois.
Cointelegraph has established that Naheta was involved in founding DTR during his tenure at SoftBank. DTR’s Unit-e project was a scalable decentralized payments network built by a Berlin-based development team.
“The original ambition back in 2019 was also to disrupt payments and to create a protocol that would have very high throughput with significant cost efficiency.”
Naheta shared details of the company’s efforts in “its previous incarnation” in a complete summary of the Unit-e protocol reviewed by University of Illinois researchers. The team now building the DRAM stablecoin features a team of around 30 permanent staff and contractors.
Naheta said that while DTR would not be able to market DRAM in the UAE, the firm expects demand from companies in the region that are grappling with high inflation and currency issues:
“The link to AED (Dirham) was driven by the strong performance and attractiveness of the UAE economy and the desire for stable, digital asset investment options around this region.”
The UAE is emerging as hub for the nascent cryptocurrency and wider Web3 space due to a favorable regulatory frameworks that aim to foster financial innovation and adoption of digital assets.
Binance collaborates with Royal Thai Police to seize $277M from scammers
In an announcement sent to Cointelegraph, Binance said it worked alongside law enforcement agencies, providing intelligence to disrupt the criminal group. The operation, which had the code “Trust No One,” led to the arrest of five alleged key syndicate members and the seizure of various assets worth $277 million. Over 3,200 victims have already contacted the authorities to file for compensation.
The Cyber Crime Investigation Bureau (CCIB) of the Royal Thai Police collaborated with crypto exchange Binance and United States Homeland Security Investigations (HSI) to take down a crime ring responsible for conducting a pig butchering crypto scam in Thailand.
— CZ Binance (@cz_binance) October 3, 2023
Police Lieutenant Colonel Thanatus Kangruambutr, an inspector at the CCIB, expressed appreciation for the crypto exchange’s contributions to the investigation. According to the inspector, the rise of crypto scams led to financial damage for residents in Thailand. The inspector explained:
“Through prompt information exchange with key partners, including the Binance investigations team, this successful operation resulted in arrests of the criminals. Binance remains an essential ally in our combat against scams and cybercrimes.”
Binance’s head of financial crime compliance, Tigran Gambaryan, said the company will continue its partnership with various authorities worldwide as they do their part in “restoring the trust in the digital-asset ecosystem.“
Crypto exchange Binance has collaborated with various industry actors to combat crypto-related crime. In 2022, the crypto exchange recovered and froze $450,000 of stolen assets related to the Curve Finance hack.
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