The Associated Press continues to mishandle its NFT fiasco with mass Discord bans and scrubbing of messages
After the fiasco the previous day in which some group of people at the Associated Press apparently decided turning an image of human suffering into an NFT was a brilliant idea, some at the Associated Press seem to be intent on tarnishing the organization's reputation even further. Horrified individuals took to the project's Discord, as the AP had previously invited people to use that as a way to give feedback and ask questions. The AP's "Director of Blockchain" Dwayne Desaulniers spent a while trying (but not really succeeding) to explain why the AP has decided to turn some of its photojournalism into NFTs. However, around 24 hours after the initial NFT tweet had been made, he apparently decided enough was enough and nearly everyone who'd asked a question was banned from the Discord, with their messages were removed. Some of Desaulniers' replies were also removed, such as where he had replied "Fucking right" to a user who said, "Dwayne wants a world without adblock, without archive.is, without a possibility that someone somewhere might wring a tiny bit of the AP's journalistic output out of them without paying for the privilege."
Nelson Mandela's paintings from prison to be sold as NFTs
The Guardian reported that five watercolor paintings created by former South African president Nelson Mandela depicting scenes from his years of incarceration will be sold as NFTs next month, as well as a handwritten description of why he created the artwork. His daughter is the one behind the project, and she says that "My dad was all about creating an accessible society. This is a way of democratising his art." She does not explain why there is a need to sell them as NFTs in order to accomplish this, or why this makes them more accessible than them already being available to view online. She also doesn't explain how pricing them at $3,500 for a set including one of each, or $700 apiece, can be considered "accessible".
The Associated Press wants to sell you an NFT of migrants adrift at sea
The Associated Press announced they would be dropping a new NFT on the platform they launched in January, which notably doesn't allow users to sell their NFTs off-platform or really do much at all with the image or video associated with their NFT. Most NFTs they've offered to date have been fairly benign, like a photo of a shooting star over a house in a field, or of a person spray-painting "illegal" on a brick wall (edgy!)
However, on February 24 they announced that their newest NFT would show a short, top-down video of around fifty migrants crammed into a small inflatable boat, adrift at sea in the Mediterranean. Any goodwill the AP might have had for their NFT project was likely shattered by their choice to monetize a video of human suffering. The already horrific NFT announcement was particularly ill-timed, given its juxtaposition on many Twitter feeds amongst news of Russian military action against Ukraine. The Associated Press deleted the announcement tweet four hours later.
Founders of BitMEX crypto exchange take guilty plea, pay $10M fine for failing to implement an anti-money laundering program
Arther Hayes and Benjamin Delo, the founders of the BitMEX cryptocurrency exchange, pled guilty to violations of the Bank Secrecy Act, which they violated by ignoring requirements to implement any anti-money laundering (AML) programs, including programs that would verify customer identities (KYC). They also separately agreed to pay a $10 million fine, which represents the monetary gain from their crime. "BitMEX was in effect a money laundering platform", said the U.S. Department of Justice statement, which also described how the platform was reportedly used to launder funds from a hack of another exchange, and how the executives both had direct knowledge that some of their customers were from countries under OFAC sanctions.
In March, the third co-founder, Sam Reed, also pled guilty and agreed to pay a $10 million fine. In August, top BitMex employee Gregory Dwyer entered a guilty plea and agreed to pay a $150,000 fine.
BitMEX had attempted to evade sanctions by claiming they didn't serve customers in the United States, though in reality they served thousands of U.S. customers and marketed in the U.S. At one point, when an early investor inquired as to why an investment in the company hadn't triggered a report to regulatory authorities, Delo responded with a meme of a man smiling, superimposed with the text "Incorporated in Seychelles, come at me bro". Hayes and Delo face a maximum sentence of five years in prison as a result of this plea. The exchange had in August paid $100 million to settle a separate lawsuit from the Commodity Futures Trading Commission, in an agreement which had also required them to implement proper blocks to prevent U.S. customers from using the service.
- "Founders Of Cryptocurrency Exchange Plead Guilty To Bank Secrecy Act Violations", The U.S. Attorney’s Office, Southern District of New York
- "BitMEX to Pay $100 Million to Resolve Regulator’s Lawsuit Over Crypto Derivatives Trading", The Wall Street Journal
- "Third BitMEX Founder Pleads Guilty to Anti-Money-Laundering Violation", The Wall Street Journal
- "Top BitMEX Employee Pleads Guilty to U.S. Charge", The Wall Street Journal
Space Crypto game surprises its player base with new, disadvantageous tokenomics
Space Crypto, a play-to-earn game that launched on February 15, announced on February 23 that users wouldn't be able to withdraw all their reward tokens, as expected. Without previously informing investors, they decided that players won't be able to withdraw the necessary amount of reward tokens ($SPE) to repair all their ships, essentially locking everyone in to artificially extend the game's life. They also decided that the token exchange rate would be 5 in-game tokens = 1 $SPE (also not specified in the whitepaper), essentially hiding the true amount of in-game currency needed for positive return on investment. The community was fairly universally enraged, and the $SPE token price dropped in value by 93% after the announcement.
- Space Crypto (SPE) to USD Chart, CoinMarketCap
- Tweet by mikacrypto__
Utility promising to restore mining performance on Nvidia GPUs actually malware
The popular Tom's Hardware and PC Gamer websites both ran articles about a utility called "Nvidia RTX LHR v2 Unlocker", which claimed to increase the artificially-limited cryptocurrency mining performance of its RTX graphics cards. These graphics cards are shipped with performance-limiting software to reduce the GPUs' attractiveness to cryptocurrency miners, whose thirst for GPUs has made it difficult and expensive for gamers and various others to acquire the hardware. Unfortunately, both publications had to run a second article just a day later to warn their readers away from the software they had just advertised. "Instead of fixing the capped mining performance, the utility infects the host system with malware", wrote Tom's. Though it is now clear that the tool is malware, it's not immediately clear what exactly the malware does — speculation has ranged from keylogging to, well, cryptocurrency mining.
NBA player De'Aaron Fox ditches his NFT project after raking in $1.5 million
Sacramento Kings player De'Aaron Fox announced his "SwipaTheFox" NFT project in mid-December, and the "high utility NFT collection" went live on January 15. The project roadmap promised a metaverse basketball court, a scholarship to a University of Kentucky student, and chances to win all-star game tickets, as well as "much more to come". The project had over 100,000 people in its Discord, and pulled in about 475 ETH (about $1.5 million at the time).
Suddenly, on February 23, the project deleted its social media accounts and most of its Discord. Fox wrote in the remaining Discord announcements channel that "The time and attention that y'all deserve and that I wanted to give you all/what this project requires, was not known to me and I overstepped and stretched myself too thin, trying to do this project in the middle of an NBA season." He promised to send anyone who bought more than five NFTs (which would have cost ~0.4 ETH, around $1,300, if bought at mint price) a signed jersey (available for purchase online for around $100).
The following day, after some attention was drawn to the rug pull, Fox released a Twitter statement that said basically nothing at all, and made no mention of reimbursing holders. Meanwhile, the floor price of the NFTs dropped to around 0.003 ETH ($8).
Seller withdraws Sotheby's CryptoPunks auction minutes before it's due to go live, likely due to "tepid" reception
Two weeks prior, collector 0x650d announced that they would be partnering with the Sotheby's auction house to auction a single lot of 104 CryptoPunks. CryptoPunks are some of the earliest NFTs, and trade for hundreds and even thousands of ETH (equivalent to hundreds of thousands to millions of dollars). The collector wrote in a Twitter thread that they "simply could not pass up the opportunity to elevate CryptoPunks in the international art community. And with this sale, the CryptoPunk collection will be solidified in the broader art world." Media reports speculated that the auction would fetch as much as $30 million.
However, 0x650d withdrew the sale only minutes before the auction was due to start, tweeting only "nvm, decided to hodl". CoinDesk reported that, "Perhaps contributing to 0x650d's reversal were rumors of a tepid reception for the CryptoPunks mega-lot. Three sources, including one bidder on-site at Sotheby's, told CoinDesk that the highest pre-bid offer was $14 million, which was also the reserve price."
Journalist says she's been able to use chain analysis tools to discover the person behind the 2016 hack of The DAO
"The DAO", one of the first DAOs, was famously hacked in 2016, requiring a hard fork of the Ethereum blockchain to "undo" the breach. (So immutable!) Had Ethereum not forked, members of The DAO would have lost 3.6 million ETH — then worth around $50 million.
Journalist and researcher Laura Shin reported on February 22 that she had successfully used a forensics tool from Chainalysis to discover the identity of the hacker: Toby Hoenisch, a co-founder of the TenX "crypto debit card" project. Hoenisch refused to speak with Shin, and has denied the allegation.
For a technology that makes lofty promises of anonymity and privacy, increasingly-powerful technology is being released that at least claims to be able to unwind crypto mixing and make other connections between wallets and transactions that were previously extremely difficult, if not next to impossible. I imagine there may be a few people behind various crypto crimes sweating a bit as these technologies progress and threaten to unmask those behind other hacks and scams.
Security researchers desperately try to contact Ocean Protocol about a critical security problem
Ocean Protocol is a web3 project promising to help people "publish, discover, and consume data in a secure, privacy-preserving fashion". Recently, they've been promoting the ALGA defi wallet, a project created by an external development team called Data Whale. Security researcher Christopher Bleckmann-Dreher, also known as "schniggie", resorted to publicly replying to one of Ocean Protocol's promo tweets to try to get the group's attention on a security vulnerability he and his collaborator Daniel Matesic ("mtd_0x00") had discovered. The duo found Kubernetes infrastructure that appeared to be completely compromised, and were able to get a shell, call their underlying AWS metaservice, and more. When Bleckmann-Dreher tried to report the bug through Ocean Protocol's Github bug bounty program, he found it was retired. He also tried to contact the team via their security email address, Telegram, and Discord, but received no reply.
After Bleckmann-Dreher's attempts to contact the project were published on Web3 Is Going Great on February 26, Ocean Protocol's founder Bruce Pon commented to say they were "on it", and that he had alerted Data Whale about what appeared to be an issue in the ALGA project. Several hours later, Data Whale announced they would be taking the app offline due to concerns that there was a vulnerability, and that they had contacted the researchers. ALGA was later brought back online after they confirmed the vulnerability was not an issue with their project, but rather with Ocean Protocol itself. Pon acknowledged on February 27 that "there was a configuration issue on Ocean compute-to-data which is being fixed now", and later that day Ocean Protocol cut a new release of their operator engine which appeared to be a patch.