FTX exchange news: FTX stored cryptocurrency keys without encryption
FTX exchange news: Crypto exchange FTX was storing cryptocurrency keys unencrypted until its collapse, leaving “hundreds of millions of dollars” vulnerable to theft or other malicious activity. The Block writes about it.
The revelation was part of prepared testimony before the U.S. House Financial Services Committee from the company’s new CEO, John Ray III, who said he took steps to protect more than $1 billion in digital assets.
“Storing FTX’s private keys in unencrypted form would allow any employee with access to internal systems, or any outside entity that might gain access to the systems, to move or steal customer funds in a relatively trivial way,” experts told the publication.
Because the keys were previously stored unencrypted on FTX, there are many ways someone could obtain the private keys, such as by hacking or phishing attempts. This could also trigger an FTX exchange collapse.
In November, FTX wallets were seriously hacked: Peckshield and Halborn estimated the exchange was compromised, resulting in a loss of about $400 million. While the identity of the hacker is still unknown, platform founder Sam Bankman-Fried spoke of “disgruntled employees and other attackers who may have stolen the private keys.
The testimony began with the release of an eight-count indictment, for which the former FTX CEO faces up to 165 years in prison. Southern District of New York Attorney Damian Williams called the FTX fiasco one of the biggest financial frauds in American history.
Bankman-Fried is accused of using customer funds to cover losses at a subsidiary of Alameda Research. Also, prosecutors also accused him of violating campaign finance laws by using client funds to make millions of dollars in illegal political donations.
Amid the proceedings, a court in the Bahamas ordered Bankman-Friede to remain in custody. He is likely to be extradited to the United States next year. The judge chose to ignore requests that the FTX founder be released.
Previously, we reported that the U.S. Justice Department is preparing to charge Binance and the exchange’s founder with money laundering.
Cryptotraders lost more than $250,000,000 in liquidations after Fed rate hike
Cryptotraders had a tough day: almost 68,000 positions were liquidated on exchanges in the last 24 hours, and the total volume of liquidations exceeded $257,000,000. All this happened against the news of the US Federal Reserve’s rate hike and another Securities and Exchange Commission regulatory action against cryptocurrencies.
Cryptotraders lost $132,000,000 in BTC
Bitcoin, Ethereum, and Ripple were the leaders in the number of forcibly closed positions. BTC liquidations totaled almost $132,000,000; Ethereum traders lost $51,000,000. XRP positions accounted for about $8,000,000 of liquidations. Bitmex exchange executed the largest order of $7.39,000,000.
Cryptocurrency market capitalization has declined 2% in the last 24 hours, but is still above the $1 trillion mark.
The weekly CoinShares report also recorded a massive outflow of funds for six consecutive weeks. During that period, nearly $500,000,000 was withdrawn from cryptocurrency platforms, with $113,000,000 coming from bitcoin. Analysts at the company believe the outflow is due to liquidity needs during the banking crisis rather than a negative outlook. The company mentions that a similar scenario was seen in March 2020 amid a COVID-19-induced panic.
Regulators continue to hunt the cryptobusiness
Another reason for the increased volatility in the market has been harsh action from U.S. regulators. Last night it became known that the U.S. Securities and Exchange Commission sued cryptomagnate Justin Sun, accusing him of fraud and market manipulation.
The SEC also issued a notice of wrongdoing against Coinbase, the largest U.S. cryptocurrency exchange. The securities regulator sued Coinbase Global Inc, for some of the products it offers.
We previously reported that Bitcoin (BTC) tests $28,000, but onchain metrics urge caution.
Binance was caught circumventing KYC to register Chinese clients
Employees of the cryptocurrency exchange Binance help clients from China to bypass compliance and verification. CNBC writes about it, citing hundreds of corporate emails from exchange employees on Discord and Telegram. It is reported that Binance has helped over 200,000 users register, bypassing its own security system. One case describes correspondence between a user from China and a Binance employee.
The employee under the pseudonym yaya.z suggested the user from China turn on a VPN, register as a Taiwanese resident and then return the location to China. Binance employees also advise customers not to use VPN services from the U.S., Hong Kong and Singapore, because the exchange does not provide services in those regions, writes CNBC. At the same time, Binance freely processes applications from U.S. email providers like Gmail or Outlook for registration.
The exchange even offers specialized mobile applications for customers from China. A CNBC reporter could download a special mobile application from Binance via email. At the same time, no VPN was needed to download the app, as the download was conducted through the domain of binance[.]com. It is also alleged that the exchange still verifies users with Chinese phone numbers.
An exchange spokesperson denied the existence of a special Chinese version of the mobile application. The exchange also added that it has improved the system to identify users from banned regions. CNBC notes that after providing evidence, Binance removed employee messages from corporate chats to circumvent KYC.
We previously reported that the Ethereum (ETH) price crossed the $1,800 mark, opening the way to $2,000.
Why cryptoanalysts expect bitcoin to fall
The market remains in a bearish trend and bitcoin (BTC) will resume its fall and test $16,000. There are two reasons:
The first statement can be confirmed or disproved by a technical analysis of the cryptocurrency market, but there is not enough additional information for the second.
The market capitalization of altcoins (ALTCAP) does hold nearly $605 billion of resistance. Although ALTCAP has risen above it several times, it didn’t develop above this area.
However, the daily RSI has broken through the bearish divergence trendline (green line). Such a breakout often precedes significant reversals into a bullish trendline. As a result, ALTCAP will move higher towards the $680B resistance area. If not, ALTCAP could fall back to the $518B support area.
There are also those who argue that bitcoin will test the $10000-$11000 area because there is a CME price gap that needs to be filled. The gap refers to the difference between the closing price of bitcoin futures on the Chicago Mercantile Exchange (CME) on Friday and the opening price on the following Monday.
We previously reported that Hong Kong has allocated another $50,000,000 to the crypto industry.
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