BNB Chain team prepares to step in to prevent massive Venus Protocol liquidation

After the massive BNB Chain bridge hack in October 2022, the hacker was able to take out a massive position with the Venus Protocol defi lending project. They borrowed $150 million in stablecoins by putting up 900,000 BNB (~$244 million at the time).

The recent SEC lawsuit against Binance has caused the BNB token to plummet almost 25%, from $305 to ~$230. This puts the hacker's position dangerously close to the liquidation threshold of $220, which could cause substantial impact on the market via cascading liquidations.

In November, BNB Chain passed a governance proposal giving the BNB Chain core team the ability to liquidate the position if it approached the liquidation threshold, meaning they could repay the debt in a more controlled manner that wouldn't dump hundreds of thousands of BNB onto the market all at once.

On June 12 the Venus team tweeted a reminder: "BNBChain core team is ready to take over the $BNB position on Venus as planned if the BNB price hits the liquidation threshold. The liquidator address has prepared $30M already to refund the account loans with more to come if needed. No BNB will be dumped into the market and no shortfall is expected on Venus."

This is not the only bad debt on the Venus platform, which has been described as "opaque" by Protos and has been accused of trying to hide some of its liabilities.

Abandoned Atlantis Loans project exploited for $1.1 million

Although developers abandoned the Atlantis Loans defi lending project in early April due to "financial difficulties", as a self-executing defi protocol it has continued to chug along rather like a zombie. As the developers wrote when they abandoned the project, "Atlantis Loans as a protocol is fully decentralized and the only way to make changes or turn things off will have to be done through the governance."

Evidently, few people continued to pay much attention to the project, because an exploiter was able to come along and perform a governance attack targeting the users who still had active smart contract approvals with the defunct project. They published and voted on a proposal to allow them to upgrade the smart contract in such a way that they could then take advantage of the approvals to transfer the tokens to their own wallet address. Ultimately they made off with around assets notionally worth around $1.1 million.

Sturdy Finance exploited for $775,000

The Sturdy Finance defi lending protocol was exploited, with hackers taking advantage of an oracle manipulation vulnerability to make off with 442 ETH (~$775,000). They subsequently transferred the funds into Tornado Cash. The total loss to the project was somewhat higher: 504 ETH (~$884,000).

Roughly an hour after the attack, the project tweeted that they were aware of the attack, and had paused all markets. On June 19 the project sent a message to the attacker, pleading with them to return the funds and threatening: "There are criminal organizations following the same evidence trails we are. This isn't going away until you return funds. We are your best option out of this."

Minting of TrueUSD stablecoin through Prime Trust halted; TUSD deviates from peg

On June 10, TrueUSD announced on Twitter: "TUSD mints via Prime Trust are paused for further notification." They offered no further explanation. TUSD is the fifth largest stablecoin by market capitalization.

The decision may have been related to insolvency rumors surrounding Prime Trust, a US-based fintech company. On June 8, BitGo announced a non-binding letter of intent to acquire Prime Trust.

After the announcement, the TUSD stablecoin dipped as low as $0.9951. This is a seemingly small deviation from the $1 peg, but in the stablecoin world, such small variances can be serious.

Crypto.com to shut down institutional trading in the US

Singapore's Crypto.com has announced it will be imminently shutting down its institutional exchange service in the US, citing "limited demand from institutions in the U.S. in the current market landscape". The firm will continue to serve retail customers in the country, however.

CFTC awarded default judgment in case against Ooki DAO

Ooki DAO was sued in September of last year for allowing illegal trading of digital assets, engaging in activities only allowed by registered futures commission merchants, and not performing proper KYC. It was a potentially landmark case, as one of the first actions to be taken against a DAO and an opportunity to test various DAOs' claims that by decentralizing governance, they can skirt regulatory enforcement.

Now, a judge has awarded default judgment in the case, requiring the DAO to pay a more than $640,000 penalty, close down its website, and stop trading.

The court held that the Ooki DAO was a "person" under the Commodity Exchange Act and thus could be held liable for violations of the law.

Robinhood to delist Solana, Cardano, Polygon tokens after SEC describes them as securities

Robinhood announced that its crypto exchange will delist the tokens for Solana (SOL), Cardano (ADA), and Polygon (MATIC) after they were described as unregistered securities in lawsuits against Binance and Coinbase. They seem to be the first exchange serving US customers to delist tokens mentioned by the SEC in the lawsuits. On June 12, they were followed by eToro US, who delisted ALGO, MANA, DASH, and MATIC. On June 16, Bakkt delisted SOL, ADA, and MATIC.

While simply claiming in a lawsuit that a crypto token is a security does not necessarily constitute a firm decision that it is so, this has been enough in the past to lead exchanges to remove token listings. The 2020 lawsuit against Ripple and its XRP token led to the token widely being delisted from exchanges serving US customers.

Scammers capitalize on Binance lawsuit fears to pull off Discord phishing scam

Adding insult to injury in Binance's tough couple of days, someone has managed to hijack the Discord vanity URL used by BNB Chain, the blockchain project associated with Binance. The scammers created a fake Discord channel where they have posted a message: "In order to curb the reactionary market's response to patently false SEC accusations, we are hosting a $BNB airdrop on BSC to show our faith in our technology and community!" The scammers urged members to connect their crypto wallets, ostensibly to receive their share of the roughly 100,000 BNB (nearly $30 million) the scammers claimed they'd allocated to the giveaway.

After this was brought to BNB Chain's attention by crypto sleuth zachxbt, they tweeted that they "acted quickly (within 10 minutes) to ban the offending accounts and remove the posts. We've taken steps to secure the server and protect against any further abuse." However, less than an hour later they put out a new tweet announcing that the URL had been hijacked to redirect to a new server.

"This is a scam, and if you connect your wallet, you will lose your funds. Please exercise caution until we are able to confirm a resolution", they wrote.

SEC files complaint against Coinbase

The SEC has clearly been busy. The agency followed up its complaint against Binance by smacking Coinbase with charges the very next day. This isn't terribly unexpected: in late March the SEC hit Coinbase with a Wells notice, which is a formal notice saying "we're about to file a complaint against you, convince us not to." Coinbase decided that instead of any real attempt at convincing them not to, they would use the incident as a PR opportunity to try to win hearts and minds (of the public but also critically in Congress), convincing people that the SEC was being unfair to them and stifling innovation in the United States and all sorts of other things.

The SEC, apparently unconvinced by Coinbase's usual spiel, filed a complaint with five claims for relief involving operating without registering with the SEC and offering unregistered securities by way of providing a cryptocurrency staking program.

Coinbase has responded with its usual bluster, and vowed to fight the lawsuit. They don't really have much choice, given their business is almost entirely predicated on being able to continue operating in the US. A tweet by Coinbase CEO Brian Armstrong refers to "the US congress... introducing new legislation to fix the situation", suggesting he is hoping that Congress might bail him out of the mess he's in. Given the amount of lobbying Coinbase has been doing, and the apparent bought and paid for crypto advocates who sit in Congress, his hopes are not entirely misplaced, but we shall see. As with the lawsuit against Binance, this is not likely to resolve anytime soon, particularly if the companies both decide to fight in court.

SEC files complaint against Binance

The SEC has filed a complaint against Binance, various related companies, and Binance CEO Changpeng "CZ" Zhao. They allege that the company has been acting with "blatant disregard" of US securities laws through their operation of unregistered trading platforms, have performed multiple offers of unregistered securities and investment schemes, and have defrauded investors through material misstatements around supposed controls for manipulative trading activity, such as wash trading, on the Binance platforms.

The complaint echoes some of the allegations made by the CFTC in a March lawsuit, including that Binance.US was primarily a front for Binance's international platform that was used to try to distract US regulators. However, it also goes farther by adding allegations around Binance's lack of controls around market manipulation, which the SEC alleges contradict public statements by Binance that they had sophisticated programs to prevent wash trading and other manipulative actions. The SEC even claims that the CZ-owned and -operated market maker Sigma Chain was engaged in substantial wash trading on the platform.

The SEC lawsuit was also a bit of a bombshell in its naming of some major cryptocurrencies as securities: SOL, ADA, MATIC, FIL, ATOM, SAND, MANA, ALGO, AXS, and COTI. These are the crypto assets associated, respectively, with the Solana, Cardano, Polygon, Filecoin,[d] Cosmos, The Sandbox, Decentraland, Algorand, Axie Infinity, and Coti projects.

No JavaScript? That's cool too! Check out the Web 1.0 version of the site to see more entries.