CoinShares investment firm reports $21.5 million loss from Terra collapse
In their Q2 earnings report, European cryptocurrency investment firm CoinShares reported that they'd only made $120,000 in net income in the most recent quarter, down from more than $32 million in Q1. They explained this was largely because of an enormous loss that resulted from the May collapse of the Terra ecosystem, costing the firm £17.7 million ($21.5 million).
- "CoinShares reports $21.7M loss tied to Terra implosion", Cointelegraph
Michael Saylor steps down as MicroStrategy CEO as the company reports a $918 million impairment charge on Bitcoin holdings
Bitcoin maximalist Michael Saylor announced he would be stepping down as CEO of MicroStrategy, which is ostensibly a software company but in recent years appears to be mostly a Bitcoin-purchasing company. Saylor is extremely pro-Bitcoin, with an emphasis on "extreme". In March 2021, when Bitcoin was at around $57,000, he urged people to "go mortgage your house and buy Bitcoin with it... if you've got a business that you love because your family works for the business and it's been in your family for 37 years, and you can't bear to sell it, mortgage it, finance it, and convert the proceeds into ... Bitcoin. If you're working for a company that's got $100m in the treasury, you ought to convince the CEO and the board of directors to convert the treasury into Bitcoin... that'd be worth billions to them."
Unfortunately, that treasury strategy — which in his case also includes taking on more debt to buy more Bitcoin — is not currently working out so well for MicroStrategy, which reported a $918 million impairment charge on their Bitcoin holdings in their most recent earnings report. Saylor stepped down as CEO the same day.
Robinhood fined $30 million over lackluster cybersecurity and anti-money laundering protections in their crypto offering
The New York Department of Financial Services levied a $30 million fine against Robinhood, an app used for stock trading that has also branched into crypto. According to the DFS, Robinhood Crypto demonstrated "significant failures" in its anti-money laundering and cybersecurity obligations.
Robinhood Crypto had certified to the DFS in 2019 that they were in compliance with those regulations, despite the fact that they were not. The DFS imposed a $30 million fine to the company, and also ordered them to hire an outside party to evaluate their regulatory compliance and efforts to remediate the problems with their platform.
Reaper Farm exploited for around $1.7 million
Yield farming project Reaper Farm suffered an exploit that resulted in a $1.7 million loss. The attackers discovered a vulnerability that allowed them to withdraw anyone else's funds. They then bridged funds to Ethereum, then laundered them through Tornado Cash. After discovering the exploit, Reaper Farms used the same vulnerability to remove funds from the remaining vulnerable vaults to prevent the attacker from stealing more.
Shortly after the exploit, Reaper Farms announced they plained to raise capital via "the sale of vested $OATH tokens from our treasury with desirable terms", which would then be used alongside other assets in their treasury to compensate users.
- "Multi-Strategy Vault Post-Mortem", Reaper Farm
- "8/1/2022 Reaper.Farm Exploit Recovery Plan", Reaper Farm
Operators of Dropil crypto scam sentenced to federal prison
Two men who ran an "investment management service" called Dropil were sentenced to 2½ and 3 years in prison after stealing around $1.9 million from more than 2,000 people. They convinced people to buy DROP tokens, which they said would provide access to an automated trading bot that would return up to 63% in annual returns. In reality, there was no functional trading bot. When the SEC inquired, the two men forged profitability reports and lied under oath about the project.
- "Two Orange County Men Sentenced to Federal Prison for Conning Investors Out of $1.9 Million Through Cryptocurrency Offering", U.S. Attorney's Office, Central District of California
SEC charges perpetrators of $300 million Forsage crypto pyramid scheme
The SEC charged eleven people who helped to create and promote the crypto pyramid and Ponzi scheme Forsage. The scam operated from January 2020 into 2021, despite multiple cease and desist actions from regulators in the US and the Philippines.
Users deposited their money into projects running on the Ethereum, Tron, and Binance blockchains, and earned rewards for recruiting others to the scheme. The project also used payments from newer investors to pay out earlier investors — a Ponzi scheme.
- "SEC Charges Eleven Individuals in $300 Million Crypto Pyramid Scheme", U.S. Securities and Exchange Commission
- "SEC charges 11 people in alleged $300 million crypto Ponzi scheme", CNBC
Players in the National Women's Soccer League may be "out money" after Voyager bankruptcy
Half of the money in a large deal between the crypto platform Voyager Digital and the National Women's Soccer League was supposed to be distributed to players in cryptocurrency accounts. According to a press release from Voyager, this was intended to "provide NWSL players with financial education on crypto, including key lessons and tools, to help develop long-term financial growth opportunities for players potentially well after their competitive playing careers have ended."
Those players have certainly learned something about crypto, as the league informed them that they're not likely to get the funds they were promised after Voyager Digital filed for bankruptcy in early July.
People rush to steal some of the $190 million in the Nomad bridge after an exploit is discovered
After an attacker began exploiting a vulnerability in the Nomad bridge, many people rushed to replicate the attack and steal some of the roughly $190 million of various cryptocurrencies in the bridge. Some didn't seem to think through the consequences of using wallets tied to their real-life identities to exploit the vulnerability, which should be interesting to watch.
Nomad posted on Discord and tweeted that they were "aware of the incident" and "investigating", but the attack was ongoing over an hour after the acknowledgement.
Four days before the attack, Nomad announced that they'd raised a $22.4 million seed round from investors including Coinbase, OpenSea, and Crypto.com.
CoinFLEX cuts "significant number" of staff
CoinFLEX, a yield farming platform that stopped withdrawals in late June, announced they had made major staff cuts to reduce their cost base by 50–60%. "The intention is to remain right-sized for any entity considering a potential acquisition of or partnership opportunity with CoinFLEX," they wrote in a blog post.
- "CoinFLEX Update: July 29, 2022", CoinFLEX blog
Restructuring plans reveal Babel Finance's $225 million losses during crypto market dip
Babel Finance, a crypto lender that suspended withdrawals in mid June, sustained "massive losses" thanks to its proprietary trading desk, which was trading with customer funds. According to a restructuring plan viewed by Bloomberg, Babel's prop desk lost around 8,000 BTC and 56,000 ETH, valued at around $225 million at the time of the loss. The trading team was not using risk controls, and their unhedged position led to forced liquidations that made Babel's lending and trading departments unable to meet its margin calls from counterparties like Zipmex.