Coinbase fined $3.6 million by Dutch central bank
The Dutch central bank levied a €3.3 million ($3.6 million) fine against Coinbase, who began operating in the Netherlands without properly registering. The fine is reportedly unusually large, because of Coinbase's prominence and because it had accumulated a significant number of Dutch customers without the proper registration. Coinbase had been noncompliant from November 2020 to August 2022.
Bithumb executives charged with embezzlement
South Korean prosecutors filed charges against several executives of the Korean cryptocurrency exchange Bithumb. Those charged included its owner, Kang Jong-Hyun, and his sister Kang Ji-Yeon, who rurns Bithumb affiliates Inbiogen and Bucket Studio. The charges included embezzlement, breach of trust, and fraudulent illegal transactions. The charges follow reports that Bithumb and affiliated companies were being investigated for possible tax evasion, though those investigations are a separate matter unrelated to these charges.
In December, the largest Bithumb shareholder, Park Mo, was found dead outside his home in an apparent suicide after he was named as a suspect by prosecutors in an investigation into embezzlement and stock manipulation.
Korean prosecutors had previously charged the former chairman of Bithumb over an alleged $100 million in fraud, though he was acquitted for lack of proof.
Kevin Rose loses pricey NFTs to wallet hack
Kevin Rose, perhaps best known as the founder of Digg, but also a prominent crypto investor and entrepreneur, lost a substantial number of pricey NFTs when he apparently signed a malicious transaction. The hacker stole 25 Squiggles NFTs, which are trading at a floor price of 13.3 ETH, putting the estimated price based on the floor price at around 332.5 ETH (~$519,000). Rose acquired the Squiggles for between 6.3 and 16 ETH each (~$10,000 to $25,000).
The thief also stole an Autoglyph NFT, which rarely change hands, but which have most recently sold for around 200 ETH ($312,000). Rose had been offering his Autoglyph for sale for 345 ETH ($539,000), but had yet to find a buyer.
Fortunately for Rose, the hacker was apparently unable to steal a CryptoPunk NFT he owned that resembles a zombie. The rare zombie variant of the already pricey NFT have fetched millions — albeit in periods of stronger interest in NFTs.
FBI pins the Harmony Bridge hack on North Korea
A June 2022 hack saw cryptocurrency notionally worth $100 million stolen from Harmony's Horizon Bridge. At the time, blockchain research firm Ellipsis concluded that there were "strong indications" that the hack had been perpetrated by the North Korea state-sponsored Lazarus hacking group. Lazarus has been responsible for several major crypto hacks before this one, including the massive Axie Infinity hack in March 2022.
Now, the FBI has accused two groups of North Korean hackers — Lazarus and APT38 — of perpetrating the Harmony hack. The groups then used Tornado Cash and RAILGUN to launder the funds.
Porsche bungles NFT roll-out
For some reason, Porsche decided they needed to release a set of Porsche 911 NFTs so that customers could buy "the opportunity to co-create Porsche's future in the Web3 universe" (whatever that means). The set of 7,500 NFTs were available to mint for 0.911 ETH apiece, or around $1,490. If the project sold out, Porsche would have been looking at a windfall of more than $11 million.
Unfortunately for them, things didn't quite go as planned, with collectors balking at the high pricetag. Mints slowed to a crawl far before the 7,500 limit was reached, and the NFTs quickly began trading at a discount on secondary markets (meaning it was cheaper to buy a resold NFT than mint a new one).
Porsche decided to pump the brakes on the mint when fewer than 2,000 had sold. However, they botched that too — they announced they had stopped the mint before they actually did so, which caused the collection's secondary floor price to rise back above the mint price in anticipation of higher scarcity. Observant traders who noticed this were able to arbitrage the price difference, minting new NFTs and immediately flipping them for a profit on secondary markets.
NFT collectors criticized Porsche for appearing to try to jump into web3 without knowing the space, and asking for an exorbitant mint price without a clear plan.
Wormhole hacker becomes the third largest holder of stETH
After the $320 million hack of the Wormhole blockchain bridge in February 2022, much of the funds remained dormant. Now, however, the hacker seems to have returned. On January 23, they took 95,360 ETH (~$157 million) of the 120,000 ETH they stole (now worth substantially less) and used it to lever up a position in stETH. stETH is Lido-staked Ether, an asset representing ETH that has been staked on Ethereum since it moved to the proof-of-stake model.
Ultimately, the Wormhole hacker became the third-largest holder of stETH as a result. The size of the swaps was so large that it moved the stETH market, increasing trading volume by 3000% and temporarily causing the asset to move above its usual 1:1 peg with Ethereum.
The move, which many crypto enthusiasts took as an indication that the Wormhole hacker was a "crypto degen", is unlike the activities of many crypto hackers, who typically try to launder the money and exit into fiat rather than keep it within the crypto ecosystem.
Gemini lays off 10% of staff amid troubles
Gemini performed a 10% layoff, cutting roughly 100 positions. This move followed a 7% layoff in July 2022, and a 10% reduction just a month prior to that.
Gemini has been having a rough time lately, trying to recoup $900 million of their customers' funds from Genesis, and facing charges from the SEC that their Earn product was an unregistered securities offering.
Binance announces that users won't be able to use SWIFT for transfers below $100,000
Binance informed its users that they would no longer be able to perform transactions below $100,000 via the SWIFT financial network. According to Binance, this was because their banking partner, Signature Bank, had announced they were implementing that floor for all cryptocurrency exchange clients.
Signature Bank has suggested it intends to step back somewhat from the crypto industry. It is one of the relatively few US banks that services crypto clients, and provided services to FTX among others.
Patrick McKenzie speculated that the change might have been related to AML/KYC, and Binance's "Bond villain compliance strategy".
Nexo fined $45 million by US SEC
More bad news for Nexo, whose Bulgarian offices were raided a week prior amidst allegations of organized financial crime. Now, the United States SEC and state securities regulators have fined the company a total of $45 million for violations of securities law — only the latest in a string of regulatory enforcement actions against companies offering interest-earning cryptocurrency accounts or lending services.
In a spin attempt rivaling those of Olympic gymnasts, Nexo wrote that the large fine was good, actually: "Nexo believes that the company has been recognized for what it truly is - a pioneer, like Uber and Airbnb, providing disruptive solutions in a fast-paced environment," they wrote.
In February, following similar action against BlockFi, Nexo stopped offering their interest program to new customers in the US. Now, Nexo will also stop offering its lending product to US customers as part of the settlement agreement.
- "Nexo Agrees to Pay $45 Million in Penalties and Cease Unregistered Offering of Crypto Asset Lending Product", United States Securities and Exchange Commission
- "Crypto Lender Nexo Is Fined $45 Million as Crackdown Widens", The New York Times
Genesis files for bankruptcy
The Genesis cryptocurrency lending platform filed for bankruptcy, following weeks of turmoil after the FTX collapse. Genesis halted withdrawals shortly after FTX's failure, and shortly afterwards warned of possible bankruptcy if they couldn't raise at least $1 billion in new capital. The past few months have also featured a public conflict between Genesis, along with its parent company DCG and DCG's CEO and founder Barry Silbert, and the Winklevoss twins behind the Gemini crypto exchange.
It remains to be seen what the impact of a Genesis bankruptcy may have on its parent company, Digital Currency Group (DCG). DCG owes Genesis more than $1.65 billion, according to bankruptcy filings, including a $1.1 billion promissory note created to absorb Genesis losses in the Three Arrows Capital collapse.
- "Genesis, a Crypto Lending Firm, Files for Bankruptcy", The New York Times