Category: Crypto

$600m USD Stolen by Crypto Hackers, and then ‘returned’?

Hackers have in the past week stolen almost $600m in one of the largest cryptocurrency heists in history. 

It is believed that the hackers managed to find a weakness in the Blockchain site Poly Network and have stolen digital tokens known as Ether. It had been reported that these hackers have stolen thousands of Ether as well as various other coins.

The scale of this hack is on par with the Coincheck and Mt Gox breaches that have occurred in the past years. What is different about this event is the response of those responsible since it has become public knowledge.

Poly Network is a decentralised finance (defi) provider. Users use this service to transfer tokens tied to one blockchain to a different network.

An open letter had initially been published via twitter to try and “establish communication” with the thieves. Poly Network have said “The amount of money you have hacked is one of the biggest in defi (decentralised finance) history. Law enforcement in any country will regard this as a major economic crime and you will be pursued. The money you stole are (sic) from tens of thousands of crypto community members, hence the people”

In numbers, $267m of Ether has been stolen, and $252m of Binance coins, and $85m of USDC tokens.

Binance has issued a statement saying that they were aware of the security breach, but stated that they are “coordinating with all security partners to proactively help” but have warned that there is only so much that they can do and that “There are no guarantees”.

Crypto Returned – Is it all there?

What followed was an announcement that most of the ‘stolen’ crypto has been returned to Poly Network and that the hack itself was ‘white hat’ in nature. White Hat hacks are quite commonplace in the digital space to collect ‘bug bounties’, or rewards for pointing out the areas of weakness in certain systems What is not usual, is for white hat hackers to actually proceed with causing harm to systems, or stealing from those they are trying to help.

What is happening to the remainder of the unreturned coins at this stage is still unclear but it does seem that there are some discrepancies between the amounts returned and the amounts taken.

There is a lot of ongoing back and forth regarding the promises supposedly offered by private companies not to pursue any legal action against the hackers, in return for the safe receipt of the stolen cryptocurrency. It is also said that no private company should have the right to interfere with law enforcement when it is clear a crime has been committed.

Whilst it is definitely advantageous to uncover flaws in security from outside support, the manner in this event have caused more issues than resolutions. Now in this scenario, there are a lot of grey areas and uncertainties, but one thing that is clear, is that we are no closer to knowing the real motive behind the original hack. One can only hope that in future, such events are much less common, and that the wider adoption of cryptocurrencies can move forward without disruption.

CipherTrace released a report on Tuesday that stated that the cryptocurrency crime losses have hit an all time high with losses of $474m in the first seven months of 2021. In saying this, losses in the overall crypto market has dropped significantly from $1.9bn in 2020 and then $4.5bn in 2010.

The US Securities Exchange Commission (SEC) are looking into the first case involving securities fraud in the decentralised finance market.  The SEC have charged Blockchain Credit Partners, a decentralised finance lender, and two of its top executives for raising fraudulent funds of circa $30m.

Digital Yuan Could Shake Up US Dollar Dominance

As the discussions get more and more fractious between the Worlds two largest economies, China are wisely making some real moves to steal a march on their US counterparts with the launch of their digital Yuan or as it is formally known DC/EP.

It is no secret that China have been trying to make inroads into USD supremacy for years but the currency juggernaut of global trade is so deeply embedded within all financial systems that it has been near impossible to usurp the Dollar with fiat. It now absolutely makes sense that China would want to make their move into the digital currency sphere with their National currency digital equivalent.

Digital Yuan to shake up USD dominance?
Digital Currency Shake Up coming?

Digital Yuan is not a ‘Bitcoin-type’ cryptocurrency

We need to note that DC/EP is not to be used in the same way as Cryptocurrencies such as Bitcoin for speculative or investment purposes but as a transaction currency that will be bad news also for all those Libra fans out there who were expecting Facebook to be the master of digital currency.

China will not be alone in launching a national Cryptocurrency. There are many other nations with plans to float their own online currencies but by being the first of the big guns to the table should definitely give China an advantage in taking some market share with their Digital Yuan. Add to the fact that China is the largest global exporter and it would make sense that they will be looking for trading partners to utilise their digital currency in transactions and moving away from some dollar denominated agreements.

The infrastructure for digital payments in China is not new. AliPay, WePay and others have already paved the way with local China transactions growing from a total $956million in 2017 to $1.6trillion in 2019 and an estimated 20% growth again in 2020. This effectively doubles the digital payment transactions in 3 years with $2trillion in estimated transactions set for this year.

The Chinese state also has a vast number of employees in the public sector and we would imagine that making these transactions with digital Yuan will be one of the first steps made to integrate the currency into the hands and devices of the local populous and simultaneously reduce their own costs to handle these transactions.

This puts China in the rather unique position of being able to test their digital Yuan with sufficient volume locally to ensure it is perfected before the other superpowers even get started.

Bitcoin to boom through 2020

Oliver Isaacs has come out with some very strong words on the potential for Bitcoin to go wild for the rest of 2019 and start 2020 above all time highs. Isaacs is of the belief that the global economic uncertainty surrounding US-China, alongside wider unease in more mainstream markets is pushing sentiment towards Bitcoin becoming a ‘safehaven’.

“I believe bitcoin has the potential to hit $25,000 by the end of 2019 or early 2020. There are multiple drivers behind the recent resurgence. There are geopolitical, technological, and regulatory drivers. The net effect of the trade war between the U.S. and China has led to a sudden interest in bitcoin as a hedge on investments.”

BTC $25000 in 2020

Crypto Analyst Oliver Isaacs thinks yes

The wider adoption of cryptocurrencies and Bitcoin as payment methods in general in more mainstream retail outlets has also been mooted as a reason for the upward spike.

Our view is that sentiment is definitely on the upside since the 2018 losses but that it will likely take a little longer than 6 months for BTC to crash through it’s all time highs and a little more regulatory support before this happens. Time will tell.