This week’s edition of ‘The Cortex Connection’ summarizes some of the events, trends, and developments from the month of June.
Security
The audit was challenging, but we did our best and can proudly share the results!
The security audit of crvUSD was completed in June 2023 by notable audit firm MixBytes, who has also done code reviews for 1inch, AAVE, ConvexFinance, and SushiSwap. In response to an inquiry about the audit being published after code was released in production, Curve’s official Twitter account noted that the “latest deployed and the actually used implementation contains fixes of issues from the audit”.
Money Lost to Crypto Ponzi Schemes in 2022 Surpasses Hacks and Exploits
As reported by Bitcoinist, data analytics and risk management firm TRM Labs released their Illicit Crypto Ecosystem Report which covers “over 20 blockchains and all major known forms of crypto-mediated illicit finance, as well as the use of cryptocurrency to launder the proceeds of crime. There are many categories covered that range from illicit drug trafficking to even murder for hire but most notable in the report is that at least $7.8 billion dollars was lost to Ponzi Schemes in 2022 v $3.7 billion lost through hacks and exploits. They also point out that illicit actors showed a shift away from Bitcoin into other chains.
Atomic Wallet Faces Backlash After ‘Updating Security Infrastructure’ Without Revealing Cause of $100 Million Hack
The Daily Hodl reports that on June 3rd, some Atomic Wallet users lost a total of $100 million dollars due to an undetermined exploit. The security community seeks more information from the Atomic Wallet developers who seem to have been vague in their assessment of the situation. Atomic Wallet has been in contact with law enforcement and data analytics firms in attempt to track down and recover the funds.
Arbitrum-Based DeFi Project Chibi Finance Rug Pulled Over $1 Million
News agency CryptoPotato reported that Chibi Finance went live on Tuesday, June 27th, 2023 and took off with the funds shortly after. Security research firm CertiK identified that the Chibi devs deployed a malicious contract that enabled them to steal user funds from the protocol smart contracts. Chibi Finance’s Twitter, Telgram, and their website have all since been removed.
Regulatory News
Coinbase: ‘The SEC Has No Jurisdiction Over Cryptos on Coinbase’s Platform’
In response to the SEC’s lawsuit against Coinbase filed in June alleging that the exchange offered unregistered securities, Coinbase filed an official answer arguing the regulator violated due process and is reaching beyond its jurisdiction. They go on to say that “cryptos on the exchange’s secondary market platform are not part of any arrangements where a promoter is selling an asset tied to a contract'‘. The SEC similarly filed suit against Binance within the same 24 hour period covering the sale of unregistered securities as well as other alleged illegal behavior.
Full List of Cryptos Named as Securities by the SEC Per the Binance & Coinbase Lawsuits
BeInCrypto has published a full list of cryptocurrencies that the SEC has identified in their lawsuits against Binance and Coinbase. They include top marketcap tokens like XRP, ADA, ATOM, MATIC, and many others. It comes as no surprise that many of the listed tokens lost value at a greater pace than the overall crypto market once the news broke.
Canadian Lawmakers Publish Recommendations in Support of Blockchain Adoption
The Standing Committee on Industry and Technology (SCIT) has published a comprehensive report titled Blockchain Technology: Cryptocurrencies and Beyond that includes recommendations that attempt to balance regulations with innovation. The committee believes the existing Canadian regulations are already showing their effectiveness noting that it resulted in a limited impact of the FTX debacle on Canadian firms.
“Protecting investors is important, but the government needs to have a good reason to prevent people from investing their own money as they choose”
Known as ‘Crypto Mom’ in the Twitter space, SEC Commissioner Hester Peirce noted during an appearance at Australian Blockchain Week in response to how she thinks crypto would be regulated that ‘ I think we have to make sure that whatever regulatory framework you have doesn’t just assume that everything is a financial asset.’
BlackRock spurs others to update their Bitcoin Spot ETF applications
ARK Invest, run by founder and CEO Cathy Wood, has ammended their SEC filing to include a surveillance-sharing agreement which matches mega investment firm BlackRock’s application for their Bitcoin Spot ETF. The inclusion of this agreement is believed to help address SEC worries of potential market manipulation. Decrypt.co reports that this may move ARK Invest to the front of the line with regard to getting their approval first, as they filed nearly 2 months ahead of BlackRock.
HB721 approves the examination of the possible impact of holding crypto and how the state would custody a digital currency and what impact it would have if the state held part of it’s funds in crypto and gold as a hedge against inflation.
For Your Information
Was the Latest Bitcoin Surge Just Michael Saylor All Along?
According to June 28th, 2023 SEC filings (and Saylor’s Twitter account), MicroStrategy has acquired an additional 12,333 BTC for $347 million at an average price of $28,136 per Bitcoin and now holds 152,333 at a total average price of $29,668. At current market valuation, that puts them at just above break even profit after a pretty devastating bear market.
FTX 2.0?
CoinTelegraph reports that FTX CEO John Ray is opening up the floor to bidders looking to finance the new venture to reboot the exchange. The exchange would likely rebrand, and any offer would include some repreive for creditors hoping to get value back from funds that were misappropriated by the former CEO Sam Bankman-Fried. As per a June 26 report on the recovery process, FTX still has a near $2 billion hole in its books. Of course the market is not devoid of traders capitalizing on the news as the exchanges associated FTT token witnessed a 45% price increase on the news.
A Sad Day for US Users — KuCoin to Introduce Mandatory KYC
Starting on July 15, 2023, KuCoin will require new customers to complete KYC checks to access their trading platform. Existing users who do not complete the KYC process will have restricted access and will only be able to withdraw funds, access spot trading sell orders, and will only be able to deleverage and close their margin positions. No deposits will be possible without completing the KYC process. KuCoin claims the change is in response to the firms’ efforts to meet global compliance requirements. It is generally understood that US customers will be unable to use the platform once these new rules go in effect.
Project Mariana, a collaboration between the BIS Innovation Hub, the Bank of France, the Monetary Authority of Singapore, and the Swiss National Bank, is exploring the use of CurveFinance for on-chain wholesale CBDC pools.
In a Tweet thread by @evmknows, they explain what this means as a major milestone for TradFi and DeFi innovation. You can read the full report about Project Mariana on the BIS website.
That’s it for our news roundup for June. We hope you found these updates useful. If we missed anything or you have any feedback or suggestions for future editions, feel free to visit our Discord to let us know.