This week’s edition of ‘The Cortex Connection’ summarizes some of the events, trends, and developments from the month of August.
Security
Crypto Lender Exactly Hit by $12M Bridge Exploit
Optimism based crypto lender Exactly was hit by a $12 million exploit in August, as hackers drained funds from its bridge protocol. Exactly said it has paused all operations and is working with security experts to investigate the incident and recover the funds. The team has released a post-mortem with more in-depth analysis of the exploit.
Base Project Magnate Finance Rug-Pulls $6.5M
Magnate Finance, a lending and borrowing platform on Base, a layer-2 protocol of Coinbase, has rug-pulled its users of $6.5M. The project's deployer address was linked to previous scams, and the team manipulated the price oracle to drain all the assets. The team also deleted its website and social media accounts.
Balancer Exploited for Nearly $900k After Vulnerability Warning
A hacker exploited a vulnerability in the Balancer protocol and drained $900,000 worth of tokens from their boosted pools. The attack happened shortly after a security audit warned about the risk of such an exploit. Balancer has since released a post-mortem via thread on X (formerly Twitter) detailing the mitigation procedures in place and next steps.
Crypto Hackers Returning Funds Rises in 2023
According to a research report by Coinpedia, crypto hackers have shown a higher tendency to return the stolen funds in the first half of 2023. The report analyzes the possible reasons behind this trend, such as increased security measures, public pressure, ethical dilemmas, or strategic moves. The report also provides some recommendations for crypto users and platforms to prevent future attacks and recover their assets.
Regulatory News
Spot Bitcoin ETFs Have 75% Chance of Approval This Year Following Grayscale Court Victory
Bloomberg analyst Eric Balchunas has increased the probability of a spot Bitcoin ETF approval in the U.S. by the end of 2023 from 65% to 75%, following a recent court ruling in favor of Grayscale against the SEC. The analyst argues that the SEC will face legal and public pressure to approve the Bitcoin ETFs, which could boost the adoption and price of Bitcoin, and that the unanimity of the decision was an unexpected but largely positive development.
Class-action Suit Against Uniswap Over Scam Token Losses Dismissed
A class-action suit against Uniswap Labs and its related entities was dismissed by a U.S. district court judge, who ruled that the plaintiffs failed to show that the defendants violated the federal securities laws.
The plaintiffs were six individuals who bought scam tokens on Uniswap, a decentralized cryptocurrency exchange, and sued Uniswap Labs for allegedly controlling the liquidity pools and the UNI governance tokens.
The judge found that the plaintiffs' claims were based on social media statements and not on actual knowledge of the defendants' involvement in the scam tokens. The judge also stated that the plaintiffs' concerns were better addressed to Congress than to the court. Read the entire case document for the full details.
SEC Brings First NFT Enforcement Action
The SEC filed a complaint against podcast studio Impact Theory and its founder for allegedly selling unregistered NFTs that were securities. The SEC claimed that the NFTs were investment contracts under the Howey test, and that the studio failed to disclose material information to the buyers. The SEC also alleged that the studio used proceeds from the NFT sales to pay off personal debts and fund other projects. The SEC seeks injunctive relief, disgorgement, and civil penalties.
The SEC's action is the first enforcement action against an NFT issuer and many are wary that it will set a precedent for how the SEC will regulate NFTs in the future. The SEC's action could have a chilling effect on the NFT market, as it could make issuers hesitant to offer NFTs for fear of running afoul of securities laws.
It remains to be seen how the NFT market will evolve in the wake of the SEC's action. However, it is clear that the SEC is taking a close look at NFTs and that issuers should be aware of the risks associated with offering NFTs.
“Biden’s Crypto Tax Proposal Is An Attempt to Kill Adoption in US
Patrick McHenry, Chairman of the House Financial Services Committee, has criticized the Biden Administration's new proposal for crypto tax regulations. McHenry said in a statement Friday that the proposal was lacking clarity and urged for clearer rules.
The proposed rules would require cryptocurrency exchanges to report customer information to the Internal Revenue Service (IRS). They would also create a new reporting requirement for crypto miners, who would have to report their electricity costs to the IRS.
McHenry argued that the proposed rules would be burdensome for businesses and untenable for individuals in the crypto industry. He also said that the rules would also stifle innovation in the industry, a sentiment shared by a majority of crypto holders.
The Biden Administration has said that the proposed rules are necessary to crack down on tax evasion in the crypto industry. The administration has also said that the rules will help to ensure that everyone pays their fair share of taxes.
The proposed rules are still in the early stages of development and could change before they are finalized. It is unclear how the rules will be implemented or how they will impact the crypto industry.
For Your Information
Ben Armstrong Fired From BitBoy Crypto and Affiliates
BitBoy Crypto, a popular cryptocurrency news and opinion YouTube channel, has cut ties with its founder and host, Ben Armstrong. The company cited Armstrong's "relapse into substance abuse" and "emotional, physical, and financial damage" to employees and others in the space as reasons for the decision.
Armstrong has responded to the accusations as defamatory and “100% false”, posted a negative drug screening test, and counterclaims of a coup in order to strip him from his business.
The split between Armstrong and BitBoy Crypto is a major development in the cryptocurrency space. Armstrong was one of the most popular and influential figures in the industry, and his channel had over 3.3 million subscribers. His departure is a blow to BitBoy Crypto, but it remains to be seen how the company will move forward without its longtime host and how this highly letigious process will play out.
Shopify to Accept USDC Payments Via Solana Pay
Shopify, a leading e-commerce platform, has integrated Solana Pay, a decentralized payment protocol. This integration will allow Shopify merchants to accept USDC payments from customers around the world.
The integration with Shopify is a major step forward for Solana Pay. It will give Solana Pay access to Shopify's millions of merchants, which will help to drive adoption of Solana Pay and cryptocurrency payments in general.
The integration is also a sign of the growing acceptance of cryptocurrency payments by mainstream businesses. Shopify is one of the leading e-commerce platforms in the world, and its decision to integrate Solana Pay is a major endorsement of cryptocurrency payments.
That’s it for our news roundup for August. We hope you found these updates helpful!