08CZ, Binance billionaire, Say's Crypto Needs to Get Real

Crypto WeeklyCrypto Weekly

7

CZ, Binance billionaire, Say's Crypto Needs to Get Real

Shiba Inu and Dogecoin (the latter developed as a joke) rose in popularity during the two-year bull run in cryptocurrencies, largely thanks to coordinated buying via social media communities like the "SHIBArmy."

The Crypto Market Crashes

Investors lost faith in Terra's ability to maintain its dollar peg, causing its value to fall. Some speculated the sustained pressure might have come from external attackers in the rival world of centralized finance.

Terra has no collateral backing its value like there is with Tether, but a formulaic process of mining and then destroying its very own coin supply does so in a one-to-one ratio to the dollar. Despite the stable exchange rate, it had advertised a 20% return every year using its Anchor protocol, which some have compared to a Ponzi scheme, while others have said it was merely a marketing tool to boost acceptance.

Crypto fans often ridicule traditional market investors for being "normies" since digital currencies are backed by nothing but fan support, and none act as legal tender - apart from Bitcoin in El Salvador and an everincreasing number of nations because it has a use case. None of these so-called "Meme" coins do. Immediately following this week's meltdown in Terra and Luna, Binance's CZ urged his followers to take a more modest stance. "We must respect the market more than anything else and not be arrogant. Build step by step, day by day," he wrote.

Crypto Weekly

Regulating Crypto as Securities is SEC Chair Gensler's Top Priority

The Securities and Exchange Commission chairman, Gary Gensler, has reiterated that most cryptocurrencies are securities, as the administration aims to regulate the market.

Despite the debate over which financial regulator should supervise crypto, the chairman continues to stake his claim on the agency's authority and oversight. As he discussed reducing risk and increasing transparency of derivatives at the International Swaps and Derivatives Association's Annual Meeting, Gensler said most crypto tokens involve a group of entrepreneurs raising funds from the public. According to the Supreme Court's Howey test, most crypto tokens qualify as investment contracts.

In response to Gensler, several cryptocurrencies are more like digital gold and commodities. The Securities and Exchange Commission (SEC) should have more jurisdiction over crypto than the Commodities Futures Trading Commission (CFTC). Sen. Cynthia Lummis (R, WY), who is currently drafting comprehensive legislation to regulate cryptocurrencies with Sen. Kirsten Gillibrand (D, NY), believes most cryptocurrencies are commodities, so they are regulated by the CFTC for spot markets and futures. However, Lummis said that for crypto products bundled into securities, they would have a case law test called the Howey Test to verify a security, which falls under the SEC. A derivative contract called a swap based on a crypto asset is a security-based swap and must be registered with the Securities and Exchange Commission. In addition, Gensler said that derivative trading platforms - whether centralized or decentralized - that offer security-based swaps need to be registered with the Commission.

"Derivatives must comply with securities regulations if the underlying asset is a security," Gensler explained. Two years ago, the SEC charged app developer Abra with failing to register with the SEC and for failing to transact security-based swaps on a nationally registered exchange. Gensler warned more cases could be brought. Gensler said, "Unfortunately, there may be more." He added, "We will use all of the tools in our enforcement toolkit to ensure investors are protected."

Gensler's comments come as crypto markets plummet, with Bitcoin (BTC) down more than 50% from its peak and stablecoin TerraUSD (UST) trading as low as 10 cents.

Crypto Weekly

9

CultDAO Provides Support to Anonymous Against Unjust Government Actions

White-hat hacking group Anonymous announced that it was intensifying its fight against the Russian government and other unfair governments. CultDAO will source funds from other crypto projects with "similar conceptions" in this regard.

13 ETH will be Donated

Following the Russian invasion of Ukraine on March 15th, Anonymous and Russia began a cyberwar. According to the group, hacktivists frequently support governments and organizations that act unjustly towards innocent people.

"Funding the revolution" following Anonymous' announcement on Wednesday was CultDAO's response. A tweet from CultDAO stated: "$CULT is completely decentralized & can fund those causes & revolutionaries who are ordered offline by governments and centralized entities.'' The goal of CultDAO is to empower individuals to gain more financial freedom through a community-driven, decentralized organization. They believe the best way to achieve that is to accelerate the mass adoption of decentralized finance (DeFi), which transfers financial authority from centralized institutions to the people. The statement makes a reference to the action from Canada’s Prime Minister, Justin Trudeau, in February. Then, the Canadian government froze the bank accounts of those donating to Ottawa’s Freedom Convoy protest and forced Just Giving to refund $9 million in donations for the protest. In return, people turned to Bitcoin to continue supporting the protests as the popular cryptocurrency cannot be subject to governmental or banking restrictions.

CultDAO functions according to its manifesto, which aims to support initiatives favoring decentralized financial systems. Showing support for Anonymous against unjust governmental actions aligns with the organization’s ultimate goal. So far, CultDAO has agreed to donate 13 ETH to the cause.

The CultDAO, launched in 2014, is a blockchain-based DAO that aims to usher in the "decentralized finance revolution." Members can vote on funding for projects that concentrate on decentralized applications. For its multiple operations supporting DeFi, the protocol uses CULT, a hyper-inflationary token.

Crypto Weekly

Phishing Attack on Crypto Websites Targets MetaMask, DexTools and CoinGecko Users, and More

Phishing attacks targeting MetaMask users have compromised a handful of high-profile crypto websites. According to various sources, Etherscan and CoinGecko were among those compromised by suspicious popups, including the decentralized finance channel DeFiPrime. MetaMask users would receive a popup prompting them to take action or approve a transaction on certain websites. When these popups were discovered, websites began warning users.

Coinzilla Culprit

CoinGecko reported that a malicious ad script caused an attack from crypto ad network Coinzilla on May 14. Users were advised not to connect their MetaMask wallets to the data analytics portal since it had been disabled. In this case, crypto wallet users were the victim of a phishing attack. Malicious links were displayed in some popups promoting NFT projects, such as the Bored Ape Yacht Club. At the time of writing, the dodgy domain had been taken down.

This week, one popular Ethereum blockchain tracker, Ethereumscan, warned that "we have received reports of phishing popups through a third-party integration and are investigating." DexTools, another crypto-based app website, was also compromised. "All ads have been disabled until @adsbycoinzilla clarifies the situation," it wrote before warning, "please be aware and do not approve suspicious requests."

Increasing Crypto Phishing Attacks

Users of cryptocurrency have been targeted with shady advertising scripts in the past. Phishing attacks utilizing Google Ads were detected earlier this year. These attacks attempted to steal credentials or trick users into logging into the attacker's wallet so they could receive transactions from the attacker.

Malicious actors have manipulated both Google and Facebook (now Meta) to display crypto scam advertising that entices users to divulge personal information or enable wallet access.

Another phishing attack in February targeted NFT marketplace OpenSea and led to the theft of NFTs worth $1.7 million from platform users. As well as scammy emails disguised as MetaMask verification requests, MetaMask users have been targeted previously.

As a result of a massive data breach on company servers in 2020, the French hardware wallet company, Ledger, customers have been bombarded with phishing emails and scams.

Crypto Weekly

11

Billionaire Chief of FTX Says Bitcoin Has No Future as a Payment Network

According to the Financial Times, the founder of FTX cryptocurrency exchange criticized bitcoin's inefficiencies and high environmental costs, saying it has no future as a payment network. Bitcoin, the world's most popular cryptocurrency, is created using a process called "proof of work" where computers solve complex puzzles to create the currency. This process consumes a lot of power. Sam BankmanFried, FTX's Founder and CEO, told FT that "proof of stake" networks will be needed to develop crypto as a payments network since they are cheaper and more energy-efficient. The proof of stake network is an alternative to this system, where participants can buy tokens that allow them to join the network. As they accumulate tokens, they can mine more coins.

The blockchain Ethereum, which hosts ether, the second-largest cryptocurrency, is experimenting with moving to this energyintensive network. Bankman-Fried also said he didn't believe bitcoin had to disappear as a cryptocurrency and could still be a commodity, an asset, and a store of value like gold in the future, the report said. As a result of the collapse of TerraUSD, a socalled stablecoin, bitcoin hit its lowest point since December 2020 last week. According to Forbes, Bankman-Fried is worth $21 billion, while the company he co-founded, FTX, was valued at $32 billion in a funding round in February.

Crypto Weekly

Crypto Exchange KuCoin Raises $10 Billion in Funding

“We raised this round because of this concept, as web3 is all about openness, and we want KuCoin to be an open ecosystem, and an open ecosystem needs many friends. In this world of crypto, we need all sources of information to guide our decisions, and these prominent investors can provide us with up-to-date information.”

KuCoin announced that its valuation reached $10 billion in its first financing round in four years, as the global cryptocurrency exchange aims to expand its web3 ecosystem. The Seychelles-based firm raised $150 million in a pre-Series B financing round led by Jump Crypto. KuCoin said Circle Ventures, IDG Capital, and Matrix Partners participated in the new round. After its $20 million Series A round in November 2018, the four-year-old platform was valued at $100 million. In the new round, the platform is valued at $10 billion.

With 18 million users in 200 countries and regions, KuCoin is one of the largest exchanges based on daily trading volume, Lyu said. The company plans to bolster its repertoire of crypto wallets, GameFi, DeFi, NFT platforms, and DAOs, he said. "This is how everyone becomes part of the ecosystem, and the value of the ecosystem is dependent on the loyalty and size of this group," he said.

The company began exploring opportunities in the web3 ecosystem several years ago, competing with companies such as Binance, Coinbase, FTX, and Crypto.com, among others. KuCoin Ventures, a division offering

Crypto Weekly

13

financial and strategic investment services, was launched late in 2017.

KuCoin has gained some popularity and some notoriety for listing tokens with small to medium market capitalizations. According to Lyu, the asset under management for the venture arm is already in the hundreds of millions. A popular way that some savvy traders made good profits in the past was by heavily betting on KuCoin's upcoming listing and selling them after it went live on the central exchange. Retail investors could also make good money on these tokens, especially during a bull cycle. In contrast to those listed on Coinbase and Binance, their market caps are too small, so the upside is greater on paper. Lyu stated, "One of our major strategies at KuCoin is to provide users with high-quality potential projects, and this is one of the reasons we are known as "people's exchange." "KuCoin, a home to hidden gems in the industry, tracks real-time hot sectors and carefully examines potential projects, even if they are small or midcap tokens at an early stage," he explained. “KuCoin BurningDrop, for example, is a world premiere listing method where many new projects are listed as highquality projects with vast potential after a period of development, whether it's through the normal listing or KuCoin Spotlight. We guarantee its huge potential and quality by maintaining rigorous, all-around, and allencompassing processes."

According to the company, demand for centralized services has grown over the years, but it is also committed to catering to those users who prefer decentralized services. Because of its direct integration with the wider crypto native ecosystem, DEX is preferred by some users. “Currently, we are exploring and developing decentralized products, such as the NFT marketplace Windvane. The KuCoin Community Council (KCC), built by members of the KuCoin community and KuCoin fans, will also be an important part of developing a decentralized ecosystem for KuCoin, with DEX and other protocols such as lending and stablecoins built upon it.” He added, "We also offer a P2P service for users who wish to convert fiat currencies into digital assets with the lowest fees and a high level of security."

Aside from that, the exchange has stepped up its activities to support global regulatory requirements and invest in enhancing its security and risk management systems.

According to Tak Fujishima, head of Asia at Jump Crypto, KuCoin is a comprehensive crypto services platform for a global audience. "We are pleased to be a part of the company's growth and expansion in futures and margin trading, lending, staking, and passive yield generation to support web 3.0 and the crypto market."

Crypto Weekly

Despite Bitcoin Ban, China is Mining Bitcoin Clandestinely According to Cambridge

In May, the Chinese government cracked down on the crypto mining industry, but many miners have found ways to continue operations while evading detection. Despite its complete ban on Bitcoin mining a year ago, China has re-emerged as a major Bitcoin mining hub, according to a report released by the Cambridge Centre for Alternative Finance (CCAF) last Tuesday.

From September to January, traffic from China accounted for about 20% of Bitcoin's total hash rate, a measure of the network's processing power for verifying transactions and mining new crypto coins. After a mining ban last May, data showed that activity had fallen to zero in July.

The CCAF regularly publishes the Cambridge Bitcoin Electricity Consumption Index (CBECI) based on aggregated geolocational data reported by partnering mining pools. Its data shows that mining activities in China recovered quickly last year. After showing virtually no activity from China in August, it was back up to 22.3% of the Bitcoin hash rate the following month, coming in only under the US, which was at 27.7% in September.

According to the CCAF, the data "strongly suggests that significant underground mining activity has developed in the country. Underground miners avoid authorities by using off-grid electricity and geographically dispersed small-scale operations to conceal their operations".

According to CCAF, the abrupt recovery in Chinese traffic could have been caused by miners digging underground. The group stated that it takes time to find or build nontraceable hosting facilities of that scope. "It's likely that a significant share of Chinese operators adjusted to the new conditions and continued to operate covertly using foreign proxy services to deflect attention."

The center added that the ban appears to have led underground miners to grow more confident and satisfied with the protection provided by local proxy services. According to an industry insider named Bob, Chinese miners also attempt to "diversify" their locations and offer services for hosting mining operations in Europe and the US. Bob asked only to be identified by his first name since he is currently stuck in China due to the Covid-19 pandemic. The ban last year created headaches for business owners trying to move expensive, specialized equipment. By the end of 2021, at least 2 million cryptocurrency mining machines were stuck in southwest Sichuan province due to complicated relocation procedures. “Cryptominers in China are using VPNs and try not to consume too much electricity at any one time,” Bob said.

By one estimate, miners were losing around 170 yuan (US$26.70) in profit each day the machines were offline. The largest operators lost millions of dollars, which can never be recovered. In November, the Chinese cybersecurity firm Qihoo 360 reported that underground crypto mining in the country was alive and well. Qihoo said that at the time, there were 109,000 active crypto mining Chinese IP addresses each day, located mostly in provinces such as Guangdong, Jiangsu, Zhejiang, and Shandong.

As of January 1, the US had overtaken China as the world's largest Bitcoin mining location, up from 35.1% last June. China was the world's top Bitcoin mining location before the ban. By February, the aggregated computing power of the Bitcoin network had risen to 248.11 exahashes per second (EH/s) from 57.47 EH/s last June.

Picture a whole new world on the rise. A decentralized society fuelled by blockchain technology. It could affect our economy, banks, businesses, even our social media. Cartesi connects what we know today with the new, bridging the gap between Linux and the blockchain world.

Let’s get ready for the future. Join us for what’s next:

cartesi.io

Crypto Weekly

Stolen Assets Recovered by Binance Shows Crypto Isn't a Haven for Criminals

Binance recovered a portion of the $6 million of crypto stolen from the recent Ronin hack. This represents just a fraction of the total amount stolen, but there is hope that more will be recovered in the coming days. US authorities have connected the exploit to Lazarus, a North Korean hacker group. The cryptocurrency exchange's network handled a series of transactions, resulting in the recovery of 5.8 million US dollars. Binance CEO Changpeng Zhao announced the recovery last April 22 on his personal Twitter account. Lazarus group, run by the North Korean state, is believed to be responsible for the digital heist. Last March, a security breach on the Ronin network, an Ethereum sidechain developed by the creators of Axie Infinity, Sky Mavis, resulted in the theft of approximately 173,600 $ETH and 25,500,000 Million $USDC. The Axie Infinity team expressed gratitude for the recovered funds in a tweet on the same day. “Every cent recovered is a win for the @AxieInfinity community. Thanks, @cz_ binance. Funds will be put into the bridge once we are able.”

The interesting thing about this case is that Binance successfully traced the stolen assets, despite the use of Tornado Cash. Tornado Cash, a service that allows anonymous transfers on the Ethereum blockchain, was tracked as the source of the funds from the hackers' wallets. Binance identified the hackers' Ethereum wallet address based on the funds' trail. Afterward, the funds reached the exchange.

Fears of a decentralized financial system becoming more popular and mainstream are being promoted by politicians and bureaucrats who often talk about cryptocurrencies as if they simply anonymize users. These soundbites are based more on purposely supporting a climate of fear than caring about the truth. It's no wonder that some would like to portray Bitcoin and other cryptocurrencies as an uncontrollable beast

Crypto Weekly

that facilitates misconduct when it does nothing of the sort.

Over the past few years, Bitcoin transactions have suffered from a lack of KYC (know your customer) and AML (anti-money laundering) procedures, often mandated by law. The industry needs governments to come together and develop common sense rules for exchanges to adhere to - rules that protect the public while freeing crypto entrepreneurs to do what they do best and innovate.

Once regulatory regimes are streamlined, governments will be better positioned to respond to threats facing the industry. They will be forced to enforce these regulations uniformly, ensuring the industry is safe for all participants. The technology itself is not the issue. Each exchange needs to install a better technology apparatus, including ongoing security audits. With government oversight and better implementation, this will limit the risks found across the industry. Currently, there are many exchanges around the world that have not implemented acceptable KYC standards. I believe in freedom but when we have it, we need to remember the respect everyone deserves including our home, the planet earth, and the systems that nourish us and give us life. In doing that we show recognition to a certain duty to the community and establish rules of order for its proper functioning.

KYC {Know Your Customer} is an important part of that foundation for decentralized communities to function, recognizing that criminal anti-social elements will persist unless systems are implemented to push them out. We mistrust governments when they are corrupt and it seems few are not, yet with Blockchain corruption, criminality may be eliminated most efficiently.

If you have been following me at all, most of you will know I believe blockchain is an intrinsic system of incontestable truth encoded in a way that it simply does what it was designed to do flawlessly. Publicly transparent if that is the intention of its design. Blockchain, programmed by codes, produced by the people, for their best use of the world community, will one day be the foundation for our future systems of government and justice. It will be a natural evolutionary process and will take some time to work out all the kinks. Freedom is coming.

Robert Stone Editor