This is only the latest in a string of events involving regulatory pressure on Binance. In April, Binance canceled the acquisition of the bankrupt Voyager platform by its Binance.US arm, citing a "hostile and uncertain regulatory climate in the US". This move came shortly after a March lawsuit from the US CFTC against Binance and its CEO. Elsewhere, Binance closed its derivatives arm in Australia in April, citing issues with the Australian securities regulator.
Binance exits Canada
Binance announced they would be exiting Canada, "proactively withdrawing" ahead of stablecoin regulation and crypto investment limits. As is becoming a trend in the industry, crypto exchanges and other platforms appear to be finding investor protection to be fundamentally incompatible with their business model.
Aragon DAO faces governance crisis
As the Aragon Association took steps to "progressively decentralize" their centralized project by assigning more control to the Aragon DAO, they encountered some challenges. Aragon, somewhat ironically, is a platform for creating and running DAOs that has been "stewarded" by the Aragon Association, a non-profit run by a small committee.
In June and October 2022, the Aragon DAO — that is, all holders of the $ANT token or (later) their delegates — voted on several proposals supporting a move to place the Aragon treasury under DAO control. The treasury is a pool of crypto assets currently priced at around $174 million. However, the tokens continued to remain under control of the Aragon Association.
On May 9, 2023, the Aragon Association announced that they would not be following through with the treasury change, and instead would be "repurposing the Aragon DAO into a grants program". They attributed the decision to "coordinated social engineering and 51% attack" on the DAO that began shortly after a small portion of the treasury assets were transferred.
A week before the announcement, Aragon also banned a group of token holders from the group's Discord channel. Aragon characterized the group as appearing "coordinated" and alleged the group was "engaging in harassment". They claimed the group were members of the "Risk Free Value Raiders", which they described as "a sophisticated, well-resourced, and coordinated group of actors that target crypto projects with an imbalance between the value of their token and treasury". They also accused the group and its members of coordinating governance attacks on other DAOs, including Invictus DAO and Mango Markets. Aragon wrote that they believed the RFV Raiders were aiming to "[extract] value from Aragon for financial profit" rather than pursue the DAO's goals of supporting developers building DAO infrastructure.
One of the banned members told a different story, publishing and later taking down a statement in which he claimed that they were trying to get answers to questions about why the Aragon team was so slow to enact the DAO vote. "We find these bans, failure to empower the community with treasury transfers, and overall lack of transparency to be frustrating and against the ethos of both what DAOs are meant to be and what Aragon team members have repeatedly said they stood for. However, these actions have become a common pattern for Aragon," he wrote.
On May 11, Aragon apologized for how they handled the crisis, unbanned the banned Discord members, and announced that they would "keep following a gradual [treasury] transfer approach, making sure it aligns with the mission of the project", but continued to characterize the members as attackers and reiterated that "we won’t stand for hostile and coordinated attacks".
Blockchain-based diamond tracking firm Everledger collapses
Everledger was an Australian company that hoped to use blockchains to track provenance of diamonds, other precious gems, fine wines, and other luxury goods. Things apparently didn't pan out, though, when an investor's planned funding fell through and the company was placed into voluntary administration.
Everledger had in the past raised US$37 million in funding. AUD$3 million (~US$2 million) of that funding came from the Australian government's blockchain grants program in 2021.
- "Government and Tencent-backed Aussie blockchain firm collapses", Australian Financial Review
Bittrex files for bankruptcy
A bit over a month after Bittrex announced it was closing US operations, and less than a month after the US SEC charged the company with operating an unregistered exchange, Bittrex has filed for Chapter 11 bankruptcy protection. According to court filings, the company has assets and liabilities both within the $500 million and $1 billion range, and has more than 100,000 creditors.
Bittrex used to be a much larger presence in the US, enjoying more than 20% of US market share in 2018. It has since dropped to below 1%.
The entity that filed for bankruptcy in the US is Bittrex, Inc., which is separate from Bittrex Global. "This announcement does not impact Bittrex Global, which will continue operations as normal for its customers outside the U.S.," said a Bittrex spokesperson.
Ethereum user pays 64 ETH ($118,000) transaction fee on 84 ETH ($155,000) swap
A recent surge in memecoin popularity has caused Ethereum transaction fees to skyrocket. One trader paid the price, eating a 64 ETH ($118,000) transaction fee just to perform a simple swap of 84 ETH to another token. Welcome to the future of finance.
- Tweet by Whale Alert
- Ethereum transaction on Etherscan
Deus Finance suffers third hack
Deus Finance suffered yet another hack as around $7 million was taken from the protocol. This was not the first time the platform had been targeted, suffering a $3 million exploit in March 2022 and a $13.4 million exploit in April 2022. Then, in May 2022, Deus Finance's algorithmic stablecoin lost its intended dollar peg in the wake of the Terra collapse and never recovered.
In the most recent hack, around $7 million was stolen as attackers discovered a vulnerability in the contracts of the DEI token. Some of the attackers were apparent whitehats, who executed the exploit to safeguard the funds until they could be returned to a secure address. As of May 8, $5.5 million of the $7 million stolen had been returned.
Xirtam rug pulls
A project called Xirtam, built on the Arbitrum blockchain, raised 1,909 ETH (~$3.2 million) in several fundraising rounds in April 2023. Then, on May 4, the project rug pulled. Founders drained the funds from the project, then deposited them into Binance. This turned out to have been a huge mistake for them, as Binance was able to freeze the stolen assets.
On September 6, Binance announced that they were working to return the frozen 1,909 ETH to the people who had purchased it in the funding rounds.
WallStreetBets coin tanks 90% after insider dumps holding
WallStreetBets is a subreddit that became popular during the pandemic-fueled everyone-should-become-a-daytrader era, and is known for its memestocks and its users who often make enormously risky gambles on the stock market. The only surprise to me in this particular incident is that it took this long for them to rally around a crypto token, because it's a match made in heaven.
The WSB coin launched as an "official memecoin of r/wallstreetbets". The whitepaper explains the token allocation, saying that "It's the fairest launch memecoin you will find with no team allocation and no presale. Just a free airdrop and some coins for the community. 10% of the $WSB supply is reserved as a treasury for the r/wallstreetbets sub to do with as they please. I’m sure they will spend it wisely and definitely not waste it gambling or convincing each other to drink their own urine." Compelling!
The token launched, and quickly achieved a $50 million "market cap". However, on May 3 the token suddenly lost 90% of its value as one of the token creators, "zjz", dumped a massive quantity of the tokens allocated to the team, trading them for 334 ETH (~$635,000).
zjz has claimed that he only sold the tokens because another creator — "WSBMod" — was secretly draining the token by creating huge airdrops and then claiming them for himself. WSBMod, on the other hand, claims that zjz's actions were theft, and has threatened to involve the police and FBI.
Crypto sleuth zachxbt has since gotten involved in the fray, and along with another prominent crypto figure has joined a multi-sig wallet to try to help secure the funds' return without giving any of the creators involved in the dispute unilateral control.
Former OpenSea executive convicted of fraud and money laundering in NFT insider trading case
Nate Chastain, the former Head of Product for the popular OpenSea NFT marketplace, was convicted by a jury of fraud and money laundering for illegally profiting from his insider knowledge of which NFTs would be featured on the site. The two charges each carry a maximum sentence of twenty years in prison.
Chastain was asked to resign by OpenSea in September 2021 after a Twitter user discovered apparent evidence that he had been engaging in insider trades. He was arrested and charged with money laundering in June 2022.
Chastain unsuccessfully argued in his defense that information about which NFTs would be prominently featured on OpenSea wasn't insider knowledge, and "nobody told Nate that he couldn't use or share that information". However, prosecutors argued that attempt to use anonymous accounts to make the trades suggested that he knew what he was doing was wrong.
This case has been described as the first NFT-related insider trading case, and could set a precedent for other similar charges.
OKX suddenly drastically limits withdrawals for users who haven't completed KYC
As regulatory groups have started to pay more attention to crypto platforms, it hasn't been terribly unusual to see them tighten their identification requirements — particularly for customers engaging in high-value transactions. However, the Seychelles-based OKX exchange suddenly and without warning implemented a $5,000 total withdrawal limit for users of its crypto exchange that hadn't provided detailed identification (KYC), leaving some users who were unwilling to provide such identification with large sums of crypto assets trapped on the exchange. Previously, users who had submitted only the base level of identification were able to deposit or withdraw $50,000 per day. These users weren't notified of the change, even when they deposited funds, and only discovered the new limit when they went to withdraw or heard about it on social media.
It's not clear when precisely the change went into effect, but reports of the limitation began appearing in April 2023.