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.
Is stablecoin a security? Crypto Investors get rid of stablecoins: USDT suffered the most
The market capitalization of the leading stablecoins has dropped significantly after the FTX crash. Let’s find out what this means for the market and whether it’s worth following the example of other investors and going into fiat. Is stablecoin a security?
The drama surrounding FTX seriously undermined investors’ confidence in centralized exchanges and forced them to get rid of stablecoins en masse. USDT suffered the most: according to CoinMarketCap, its supply has fallen from $67 billion to $65 billion in the last two weeks.
Because of concerns about Tether and stablecoin security reserves, users are redeeming USDT or converting it to USDC. A similar situation was observed after the collapse of Terra Luna – then within two weeks the market capitalization of the asset fell by $10 billion.
However, CTO Paolo Ardoino says that Tether was not affected by the FTX crash and users have nothing to worry about.
BUSD and DAI were also hit
USDT is not the only stable coin affected by the FTX story. For example, the circulating supply of BUSD fell from $23 billion to $22.5 billion, and DAI fell from $5.7 billion to $5.2 billion.
On the contrary, the capitalization of USDC and Pax Dollar steel blockers increased. Over the past two weeks, USDC’s supply reached $44.7 billion.
The cryptocommunity is actively discussing this on Twitter and speculating about the reasons for this growth. Some believe it may be due to USDC’s profitability and the influx of former USDT holders into the asset.
FTX collapse undermined investor confidence
The fall of the Sam Bankman-Fried empire has undermined user confidence in the cryptocurrency and led to a massive collapse in prices.
But market participants also fear that other platforms will follow FTX’s lead. So it’s no surprise that many retail investors are choosing to hold their own assets rather than hold them on centralized exchanges.
Previously, we reported that Poloniex curtailed support for stablecoins on the BNB Chain.
U.S. authorities launch investigation into Genesis investing system
The Securities Commission of Alabama launched an investigation into the Genesis investing system. This edition of Barron’s, citing the head of the regulator, Joseph Borg.
Borg refused to elaborate on what exactly Genesis is suspected of. The newspaper said the Alabama regulator as well as agencies in several other states were investigating whether Genesis had encouraged U.S. citizens to invest in securities.
Which other regulators are in question is unclear. Borg himself has not directly stated the investigation against Genesis. Instead, he said that “if a firm serving institutional investors fails, retail depositors will be affected [as well].”
Is Genesis investing legitimate?
Genesis Global Trading has hired consultants from investment bank Moelis & Company to consider options for restructuring the business, including bankruptcy. As The New York Times has learned, the broker has not yet made any final decision and still hopes to avoid bankruptcy.
It is worth noting that Moelis & Company consultants also tried to save the bankrupt broker Voyager Digital. A Genesis spokesperson said in a media comment that the firm is still trying to find a way to resolve the issue without declaring bankruptcy.
Genesis’ problems have already affected the firm’s partners. The credit division of cryptocurrency exchange Gemeni is known to have frozen the withdrawal of client assets, citing Genesis’ difficulties. The exchange later said it was working on a solution, but did not provide details.
We previously reported that Binance is launching a reserve-proof system.
How the SEC is trying to create conditions for money control bitcoin. What could it lead to?
When CME Group launched the first bitcoin futures contract in 2017, Chairman Emeritus Leo Melamed said he would “tame” the major cryptocurrency. The SEC has since approved several ETFs. But as exchanges increased their supply of BTC, the community began to have questions about market manipulation. Today, it’s about money control bitcoin.
Banks want to control bitcoin. Can banks control bitcoin?
Manipulating bitcoin with ETFs will lower its price in the short term, but will help accelerate the mass adoption of the cryptocurrency by traditional market participants.
The SEC approved the first bitcoin ETF in October 2021. The ProShares Bitcoin Strategy exchange-traded fund appeared on the New York Stock Exchange on Oct. 19, a day when the fund’s shares traded nearly $1 billion.
The Bitcoin ETF is not suitable for retail investors because it gives institutional investors an advantage. A bitcoin futures ETF has “the potential for price suppression and greater volatility due to the dominance of futures.” BTC futures will appreciate relative to the spot price because of positions opened by hedge funds.
The gold standard. Who controls cryptocurrency?
It’s a common belief in the gold market that ETFs are currently outpacing prices. The same practice seems to have been adapted for the bitcoin market as well. CME Group claims that bitcoin ETFs will help investors “benefit from efficient price discovery in transparent futures markets.”
“Paper” bitcoin may change the minds of crypto skeptics
Bitcoin’s core value comes from two factors. First, BTC is truly decentralized. Second, its maximum supply is 21 million coins. However, bitcoin ETFs increase the supply of BTC by selling “paper” assets and thus affect the value of the cryptocurrency.
The threat of decentralization
Bitcoin futures ETFs can accelerate mass adoption. However, their existence runs counter to the decentralization ethic advocated by the BTC. There is concern that the BTC could be “hijacked” by hedge funds and big banks, which could end up manipulating the price.
We previously reported that Polkadot is offering money to fight cryptocurrencies.
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