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Web3 is Going Just Great

...and is definitely not an enormous grift that's pouring lighter fluid on our already smoldering planet.

Created by Molly White. Subscribe to her newsletter for weekly recaps.

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Bribe Protocol team disappears after raising $5.5 million

The Bribe Protocol promised a DAO infrastructure tool where "token holders get paid to govern", and raised $5.5 million in funding in January to work on their extensive roadmap. However, the project leaders have effectively disappeared. There are no posts on the project's Twitter account since May, their Medium page has been untouched since March, and the Discord is a ghost town aside from the occasional message asking about the status of the project and the inevitable reply that the developers had rug pulled.

Bribe Protocol was incubated by Advanced Blockchain AG and Composable. Composable might ring a bell, because in February its pseudonymous head of product, 0xbrainjar, was revealed to be Omar Zaki, who had settled with the SEC over charges that he had misled investors while operating an unregistered investment advisement company and hedge fund. At the time, he wrote that "I do not want a mistake in my youth to cloud all of the team's efforts", though the SEC charge was filed less than three years prior, when Zaki was 21.

An employee of Figment Capital, one of the investors in Bribe Protocol, claimed that the project had formally shut down and returned 86% of the funds raised from institutional investors, though "retail took a huge L". However, this doesn't appear to have been publicly announced by the project.

Bribe Protocol is, of course, not to be confused with the other Bribe Protocol, a defi project that was abandoned in May 2021.

Theme tags: Rug pull
Tech tags: DAO, DeFi

Experienced crypto trader suffers $470,000 theft after signing malicious message

An experienced crypto trader lost $470,000 to a hack when they signed a malicious message that permitted an attacker to drain all of their USDC stablecoins from their crypto hot wallet. Unlike most crypto hacks that involve approving malicious contracts, this hack was perpetrated when the trader was tricked into simply signing a malicious message. Signing a message tends to be a safer and more common action with crypto wallets, and so traders are not always as careful, though as this trader discovered, it can still have catastrophic impacts.
Theme tags: Hack or scam

Crypto.com reportedly lays off hundreds more employees than they announced, tries to hide it

In mid-June, Crypto.com announced they would be laying off 260 people, or around 5% of their employees. However, The Verge has reported that "hundreds more" employees were quietly laid off since then. They report: "Crypto.com has been trying to limit knowledge of the extent of these departures even within the company, with CEO Kris Marszalek refusing to answer a question about the total figure in a recent employees-only town hall meeting."

Marszalek also tried to discourage employees from leaking about the layoffs, saying at a company town hall: "A number [of employees laid off] makes for a great headline, it's a great thing to gossip about. [But] as co-owners of this company, you should ask yourself, 'is it in my interest for this number to be out there?'" One employee told The Verge that this did nothing to assuage their fears about the layoffs, and that "[it felt like] I got told to shut up and get back to work. It felt insulting."

One recent review on Glassdoor claims that Crypto.com had laid off "more than 1,000 employees", and alleged that "They've removed the company directory so we can't see the numbers go down."

Theme tags: Layoffs, Shady business

South Korea moves to block sixteen unregistered crypto exchanges

The South Korean Financial Services Commission (FSC) reported to investigators sixteen unregistered crypto exchanges that were serving Korean users and hosting events marketing to Koreans. The exchanges include MEXC, KuCoin, CoinW, CoinEX, ZB.com, Bitglobal, Bitrue, Poloniex, BTCEX, Phemex, XT.com, Pionex, BTCC, DigiFinex, AAX, and ZoomEX.

Although the FSC informed the exchanges they needed to register and report their activities, the exchanges did not comply. The FSC has moved to block access to these exchanges in the country, including by asking communications authorities to block access to the exchanges' websites. The FSC pointed to the risk of user data leaks and money laundering as motivations for their action.

Those operating unregistered exchanges in the country could face up to five years imprisonment or a ₩50 million ($37,900) fine, and be barred from registering in the country for five years.

Theme tags: Law, Shady business

Binance exec claims that scammers are using deepfakes to impersonate him

Screenshot of messages between a blurred individual and Patrick Hillman. Individual: "Hi Patrick this is [blurred], I had a conversation with Mark J Marshall, can you confirm the Zoom call we had on Thursday with you?" Patrick Hillman: "That wasn't me." Individual: "they impersonated your hologram [LinkedIn link] This person sent me a zoom link then your hologram was in the zoom , please report the scam""They impersonated your hologram" (attribution)
Binance's chief communications officer, Patrick Hillman, has come out with a blog post claiming that "Scammers created an AI hologram of me to scam unsuspecting projects". (Hologram?) He claimed that scammers were using these meetings to ask token creators to pay a listing fee for their tokens, something that Binance also does, but has been more squirrely about.

The only evidence Hillman provided was a redacted conversation via LinkedIn, where he denies meeting with someone, and they reply: "they impersonated your hologram. This person sent me a zoom link then your hologram was in the zoom". (Again, hologram?) Amusingly, Hillman waxes poetic about the importance of security at Binance throughout the whole post, while also including a LinkedIn screenshot with a name that's blurred so poorly it remains completely legible.

Hillman goes on to claim, with no further evidence, that "a sophisticated hacking team used previous news interviews and TV appearances over the years to create a 'deep fake' of me". If so, this would be remarkable, as to date video deepfakes have mostly been limited to robotic-sounding and grainy pre-recorded Elon Musk impersonations, rather than anything that can respond naturally and quickly to alive conversation.

Another possible explanation is that Hillman is trying to cover Binance's collective ass after being caught taking listing fees for tokens they never list. But who's to say, really — maybe deepfakers have made a considerable breakthrough with startling implications, and Hillman just didn't feel it was important to elaborate on.

Theme tags: Shady business

Adam Neumann continues to fail upwards as VCs throw even more money at the ex-WeWork CEO

Adam Neumann, standing on stage wearing a microphone and a white shirt that says "Made by We" repeatedly in rainbow colors, pointing at the audienceAdam Neumann (attribution)
In a just world, people would probably not be able to fail upwards quite to the extent of Adam Neumann, who engaged in all sorts of self-dealing and lost billions of dollars, among many other allegations, when he was CEO of WeWork until September 2019.

But Neumann has so far enjoyed a comeback thanks to the likes of Andreessen Horowitz, who led a $70 million funding round in May for Neumann's "Flowcarbon" startup, which aims to sell tokenized carbon credits — sorry, "Goddess Nature Tokens" — to companies trying to green up their image.

Andreessen Horowitz is now enabling another one of Neumann's new crypto schemes to the tune of $350 million — its largest investment to date. This one is just called "Flow", in which Neumann is returning to the real estate industry in a company that aims to help with the residential housing crisis... with blockchain, somehow.

God forbid the venture capitalists give money to deserving founders who haven't already been given, and squandered, a chance. Responding to the news that a16z had put $350 million into Neumann's new gambit — an amount larger than the money raised by all Black-founded startups in the US combined in Q2 — author and investor Kathryn Finney said it was a "slap in the face". "It sends a signal that you can really mess up as a white guy and still get second chances to win," she said.

Theme tags: Bad idea, Bummer

HUSD stablecoin depegs

Month chart showing HUSD maintaining a $1 peg until dropping below $1 on August 17. The coin dipped to around $0.93, briefly returned to around $0.96, and then on August 18 dropped to $0.84HUSD to USD month chart (attribution)
HUSD, a stablecoin linked to the Huobi crypto exchange, lost its peg and dropped to around $0.85. HUSD is a cash-backed stablecoin intended to be pegged to the US dollar, but the coin lost its peg due to "liquidity issues". HUSD later tweeted that, "We had made the decision to close several accounts in specific regions to comply with legal requirements, which included some market maker accounts. Due to the time difference in banking hours, this resulted in a short-term liquidity problem". The stablecoin restored its peg on August 18.

Several weeks earlier, major crypto exchange FTX announced that they had removed HUSD from their USD basket, meaning they would not be able to be used as collateral.

Huobi worked to distance itself from HUSD as the coin de-pegged, emphasizing that the token is maintained by a different entity and claiming to have exited their stake in that entity in April. However, the token was originally launched by Huobi in 2018, and Huobi has continued to run promotions involving the token as recently as July.

Theme tags: Hmm
Blockchain tags: Blockchain: Ethereum
Tech tags: stablecoins

Celer Network's cBridge suffers BGP hijacking attack, users lose combined $240,000

The Celer Network's cBridge project was targeted with a BGP hijacking attack. Users who tried to access the bridge's frontend were instead shown a site that prompted them to authorize transactions that drained their wallets. The attacker was able to steal around 128 ETH (~$240,000) before the exploit was discovered and Celer took the frontend offline. The stolen funds were quickly transfered to the Tornado Cash cryptocurrency tumbler.
Theme tags: Hack or scam

Genesis lays off 20% of employees, jettisons CEO after Three Arrows Capital disaster

Crypto broker Genesis is laying off 20% of their employees and reshuffling their leadership in the wake of a several-hundred-million dollar loss related to the Three Arrows Capital implosion. With 260 employees, the 20% workforce cut will affect around 50 employees. Genesis also announced that their CEO Michael Moro would be "stepping down".
Theme tags: Contagion, Layoffs

Canadian pension manager says they invested "too soon" in the crypto sector after $150 million loss

Canadian caisse de dépôt et placement du Québec (CDPQ), Canada's second-largest pension fund manager, sunk $150 million into Celsius during a WestCap-led funding round announced in October 2021.

Needless to say, this hasn't worked out so hot for CDPQ — Celsius locked up its customers' funds in June and filed for bankruptcy in July, and the courts are in the middle of trying to figure out how to untangle it all. "For us it's clear when we look at all of this, even if the last chapter has not been written, that we went in too soon into a sector that was in transition", said CDPQ's CEO.

CDPQ reported a $33.6 billion loss in the first half of 2022, which they attribute mostly to declines in equity and bond markets.

Theme tags: Bad idea, Collapse

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