Bitcoin briefly spiked by about $1,000 before dipping around $1,000 below its previous price, as traders excitedly reacted to the news, and then the news that the news was fake.
SEC Twitter account compromised, used to falsely announce approval of bitcoin spot ETFs
As the crypto industry collectively turns blue holding its breath for a decision on a raft of bitcoin spot ETFs currently in front of the SEC, the SEC Twitter account was hacked. The hacker posted an announcement stating that the Commission had approved bitcoin ETFs, even including a graphic with a fake quote from Chairman Gary Gensler.
Barry Silbert resigns from Grayscale board
New SEC filings have revealed that Digital Currency Group CEO Barry Silbert and president Mark Murphy have resigned from the board of Grayscale Investments, the organization behind the Grayscale Bitcoin Trust and a subsidiary of DCG.
Grayscale is in the midst of an application process with the SEC for approval to convert the trust into a spot bitcoin ETF. This has been an ongoing effort by Grayscale, and has been denied before.
DCG, meanwhile, is in the middle of financial difficulties and ongoing legal battles, including a lawsuit from the New York Attorney General alleging a $1 billion fraud by DCG and its Genesis subsidiary. The lawsuit from the NYAG also names Silbert personally.
Nostr Assets gets clogged up
The Nostr Assets bitcoin platform has had to ask people to stop depositing into their platform because it's all clogged up. The project uses the bitcoin Lightning Network, which itself is an attempt to overcome the slowness and high cost of the bitcoin network. However, it too has limited capacity, and Nostr Assets has announced that the "inbound capacity of lightning channels" was depleted.
Meanwhile, the founder of the Nostr social media platform has accused Nostr Assets of being an "affinity scam" by falsely suggesting in their platform name and $NOSTR token naming they are affiliated with the Nostr project. Nostr Assets has described the allegations as "unfounded", saying that their use of the Nostr network means the name is "pertinent", and suggesting that Nostr's founder has no basis to dictate who can use the Nostr name as it is a decentralized and open source project.
Bitcoiner spends $3 million on transaction fee
A Bitcoiner making a large transaction ended up spending 83.64 BTC (~$3 million) of the 139.42 BTC (~$5.1 million) transaction on transaction fees, effectively spending $3 million to send what ended up being a $2 million transfer. This apparent error has become the largest transaction fee in Bitcoin history.
A person then claimed on Twitter to be the owner of the wallet, verifying the claim by signing a message from the wallet that paid the fee. They claimed that they had been hacked, and that an error on the attacker's part led to the huge fee payment. AntPool, the mining pool that mined that block and earned the huge fee, later agreed to return the fee, though it's not clear if or how they verified that the person to whom they're returning the fee wasn't in fact the attacker who had obtained control of the wallet.
A similar fee overpayment incident occurred in September, when the Paxos crypto firm erroneously paid a $500,000 fee to send $1,865. They attributed the huge fee to a bug in their software, and the F2Pool mining pool (who had mined the block and received the fee) opted to return the overpayment.
Up to $1 billion stored in early Bitcoin wallets may be at risk due to "Randstorm" vulnerability
While trying to help a Bitcoin holder who lost their password, researchers at Unciphered discovered a major flaw in the way early Bitcoin wallets had been created. Thanks to a flaw in an open source software library called BitcoinJS, which was later incorporated into many wallet software projects to generate Bitcoin wallets with random keys, wallets created prior to 2016 may be vulnerable to cracking. Wallets created before March 2012 are at particular risk, as the roughly 6% of those that are vulnerable (and which hold a combined ~55,000 BTC, or ~$100 million) could be cracked without requiring major computing resources.
Unciphered worked with various wallet providers to contact people whose wallets may be vulnerable, though ultimately it is up to those wallet holders to secure their funds by creating new wallets and transferring their tokens. Unciphered also noted that some Dogecoin, Litecoin, and Zcash wallets may be vulnerable due to shared code.
Poloniex hacked for more than $120 million
Assets including Bitcoin, Ethereum, and Tron's TRX token, priced at more than $126 million, were stolen from Justin Sun's Poloniex cryptocurrency exchange. Researchers are still homing in on the exact amount of funds that were stolen from the company's hot wallets across multiple blockchains, but suffice to say it's a lot.
Poloniex was initially tight-lipped, posting on Twitter that they had "disabled for maintenance" an exchange wallet. Justin Sun later updated that they were investigating the "hack incident", and promised to "fully reimburse" the massive theft... somehow. He later tweeted that they would offer a 5% "bounty" to the hacker if they returned the funds within a week, threatening to "engage law enforcement" otherwise.
MEV bot exploited for almost $2 million
An MEV bot was exploited after an attacker discovered a vulnerability in its code that allowed anyone to call one of its functions that sold wBTC for wETH. Using a flash loan to imbalance a wETH/wBTC pool on Curve, the attacker then caused the bot to purchase wBTC at its inflated price. They then sold the wBTC for a profit. Altogether, the exploiter made off with 1,047 ETH ($1.975 million).
- Tweet thread by CertiK Alert [archive]
- Transaction on Etherscan [archive]
Almost $100 million liquidated over false news of Bitcoin ETF approval
A post falsely announcing that the SEC had approved a spot Bitcoin ETF caused $100 million in liquidations as the market briefly surged on the news. $81 million in short positions were liquidated as Bitcoin shot up to $30,000 from just under $28,000, and another $31 million in long positions were liquidated as the news turned out to be false.
The post by crypto media outlet CoinTelegraph was based on a faked screenshot of what appeared to be the Bloomberg Terminal. The post quickly propagated through the crypto world before people began to question its veracity. CoinTelegraph later issued an apology, blaming the incident on a failure by employees to follow the normal editorial approval process.
This adds to the list of incidents that illustrate the extent to which false reporting by traditional or crypto media, or by influential personalities, can move crypto markets. Past incidents have included a crypto Twitter personality tweeting the false rumor that Interpol had issued a red notice for Binance CEO Changpeng Zhao, and two instances of token price spikes based on false press releases claiming major corporations would accept the tokens as payment.
- "Clarification on sharing false spot Bitcoin ETF news", CoinTelegraph [archive]
Bitcoin mining hardware manufacturer Bitmain stops paying employees
Bitmain, the manufacturer of popular Bitcoin mining equipment (known as ASICs), is apparently in such dire financial straits that it can no longer pay employee salaries. Local media reported that all "bonuses and incentives" were nixed by the Beijing-based company, and the firm is considering cutting all wages by 50%. They also wrote a letter to employees, informing them that they would not be paying out September salaries until a review later in the month.
Paxos pays $500,000 fee to send $1,865
A wallet on the Bitcoin blockchain paid a 19.82 BTC ($499,171) fee to transfer 0.074 BTC ($1,865). Put another way, they spent 270x the transaction value to pay the fee. Bitcoin transaction fees are required to make any action on the Bitcoin blockchain, and people can opt to pay higher fees to incentivize their transactions being processed sooner. 19.82 BTC is far outside the realm of someone just hoping to get a speedy transaction, however — the next-highest transaction fee in that block was 0.006 BTC ($159.20).
Bitcoiner Jameson Lopp speculated that the transaction "looks like an exchange or payment processor with buggy software" based on its transaction history. "The address in question that made the fee calculation error has the characteristics of a withdraw-only hot wallet from an enterprise," he wrote.
His observations were well-founded, as it later came out that the wallet belonged to the Paxos blockchain company, who attributed the overpayment to a bug. Luckily for Paxos, the miner who snapped up the outsized fee agreed to refund it.
- Bitcoin transaction on Blockchain.com explorer [archive]
- Tweet thread by Jameson Lopp [archive]