Weekly Crypto Roundup: titans clash, hacks continue, and sanctions hit home

Weekly Crypto Roundup: Titans Clash, Hacking Continues and Sanctions Hit

The week ended with Bitcoin (BTC) just below $24,000, as it was last week. And Ether (ETH) jumped 24% this week to remain below $1,900. However, the main crypto events of the past few days have had more to do with crypto exchanges and their owners

The Binance-WazirX Clash

India’s Enforcement Directorate (ED) has frozen bank deposits of crypto exchange WazirX worth ₹64.67 crore. The ED also investigated allegations of money laundering and “mysterious” crypto transactions between WazirX and Binance that were not available on the blockchain.

WazirX clarified that such transfers were users sending crypto funds between their personal WazirX and Binance accounts.

However, there was a public clash during this time as WazirX CEO Nischal Shetty claimed that WazirX owned Binance, the world’s largest crypto exchange. Binance CEO, billionaire Changpeng Zhao, strongly denied these ownership claims and urged WazirX users to move their funds to Binance. Following a heated exchange of tweets between the two CEOs, WazirX and Binance announced the end of “off-chain” transfers between the two exchanges. WazirX further warned Indian users that moving their funds to Binance could put them at risk of violating India’s crypto tax regulation, where 1% or 5% must be deducted at source for certain amounts.

While the ED continues its investigation, an Indian government source warned that the WazirX episode exposed the “dark side” of cryptocurrency and urged users to exercise caution in such transactions.

Future ED revelations about WazirX and his financial activities could harden the Indian government’s stance on crypto innovation in the coming years.

Hacking doesn’t stop work

Three days into August, thousands of wallets connected to the Solana blockchain were drained of crypto assets as members of the ecosystem scrambled to stop the leak and identify what vulnerability the hacker had exploited. A few days later, evidence appeared to point to a Slope wallet providing services to Solana users.

Slope released a statement on Thursday confirming that a total of 9,232 addresses had been compromised. An independent audit found that there was a vulnerability in the mobile version of the wallets between July 28 and August 3.

“Although there is no conclusive evidence from auditors linking the Slope vulnerability to the exploit, its very existence compromised many assets,” the report said.

A detailed audit will shed more light on the actual cause(s) of the hack, even as the company continues to search for the hacker and come up with ways to compensate affected users.

Another hack was not far away, however, as Curve Finance, an exchange liquidity fund, was exploited on Tuesday. The attack hit the Curve Finance website, and according to Binance’s CEO, over $500,000 was reported stolen from the homepage via a malicious contract. However, this time the saga seemed to end on a lighter note when the hackers tried to send the stolen money to Binance.

“Binance has frozen/recovered $450,000 of Curve’s stolen funds, representing over 83% of the hack. We are working with LE to refund users. The hacker kept sending money to Binance in various ways and thought we couldn’t catch it,” Mr. Zhao tweeted on Friday.

Mr. Zhao also advised that Web3 projects should not use GoDaddy as their domain name system (DNS) for security reasons.

This incident shows how not only crypto protocols, but also their accompanying channels – websites, social media accounts, messaging systems, vendor services, etc. – are at risk of being targeted by hackers. On the other hand, it also highlights the role that centralized crypto exchanges can play in thwarting such incidents well ahead of legal authorities.

A tornado of chaos

Hackers who make off with millions of dollars in crypto funds often trip the authorities by funneling their ill-gotten gains through a virtual currency mixer. Such “mixers” disguise the source of funds by mixing them with funds from other sources – including legal ones – so that illegal transactions are more or less impossible to trace.

One common virtual currency mixer is Tornado Cash, a decentralized protocol based on the Ethereum blockchain. Tornado Cash has been linked to the Harmony and Nomad crypto bridge hacks that occurred this summer. On Monday, the Treasury Department’s Office of Foreign Assets Control (OFAC) announced it was imposing sanctions on Tornado Cash for not doing more to prevent money laundering.

However, the following days showed that the sanctions will not only affect hackers, but also legitimate cryptocurrency traders. In particular, a number of accounts on dYdX – a decentralized crypto exchange based on the Ethereum blockchain – were also blocked as a result of the sanctions.

dYdX issued a statement clarifying that the blocking was the result of some users’ funds being linked to an approved cryptocurrency mixer, even though the users themselves had no interaction with Tornado Cash.

“Many accounts were blocked because a certain portion of wallet funds (even insignificant amounts in many cases) were at some time associated with Tornado Cash, which was recently added to the US Treasury Department’s OFAC sanctions list,” dYdX said.

dYdX continues to lift account bans, but the incident shows how one country’s sanctions can have far-reaching effects that reach deep into decentralized ecosystems.

Sanjit
Sanjit

I am Sanjit Gupta. I have completed my BMS then MMS both in marketing. I even did a diploma in computer software and Digital Marketing.

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