Friend.tech team abandons project

The development team behind friend.tech has officially ditched the crypto-based social media project, which was (very) briefly hailed as a potential platform for influencers to earn money from their followers. It attracted crypto influencers, OnlyFans models, and a handful of more mainstream notables. Friend.tech received undisclosed seed funding from the crypto venture capital firm Paradigm.

The project spiked in popularity when it launched in August 2023, but interest rapidly dwindled. A token launched in May 2024 also suffered a mostly downward trajectory. On September 7, the team reassigned ownership and admin rights to the smart contracts to the burn address, making them permanently inaccessible.

Some denounced the project as a Ponzi scheme (repeating accusations it has received since its inception, based on its incentive structure). Others accused the development team of rug pulling and not delivering on their promises — accusations that intensified as one co-founder deleted his Twitter account and the other set his to private. The team is estimated to have made around $44 to $60 million in fees.

Revelo CEO resigns after claiming he was robbed of personal and company funds at gunpoint

Nick Drakon, formerly the CEO of the crypto research and venture capital firm Revelo, announced on Twitter that he was resigning from the company. In the post, he claimed that he "was recently targeted, surveilled and robbed by a highly sophisticated group. This was an in person attack where my wife and 8 month old son were threatened. The group was specifically interested in crypto assets and knew the deposit addresses belonging to the crypto businesses I operate. I was forced, at gunpoint, to log into a number of crypto accounts and transfer funds out. The funds stolen comprised personal funds, Revelo Intel working capital & retained earnings, as well as Revelo Ventures (an investment syndicate) funds for deals awaiting settlement."

He went on to state that the "vast majority" of the stolen assets were his personal funds. He also alleged that "There is some evidence to suggest that someone in the Ventures syndicate is either part of the group, or passing information onto them."

The amount of funds stolen was not disclosed. Drakon resigned as CEO, and said that he had forfeited his interest in Revolo Intel "to facilitate the return of some money back to members as quickly as possible". He wrote: "To be clear, I have zero financial interest in Revelo moving forward."

He also stated that he would be "stepping away from 'public life' in this space", and warned others: "If you are someone who is known to control large sums of money, you are a target and it is not difficult at all to get to you."

Robinhood pays $3.9 million to settle commodities law violations in California

Robinhood has paid $3.9 million to settle charges from the California Department of Justice that the platform was violating commodities laws. From 2018 to 2022, the popular trading platform prohibited its customers from actually taking custody of the cryptocurrency assets they purchased on the platform. According to the California DOJ, this violated the state's commodities laws.

In addition to the fine, terms of the settlement require the platform to allow its customers to withdraw their crypto assets, and to update disclosures regarding asset custody.

The California DOJ also accused the platform of misleading its customers by claiming that the app "advertis[ed] it would connect to multiple trading venues, to ensure customers receive the most competitive prices between the venues, which was not always true". They also say that Robinhood lied about always holding all customer crypto assets purchased through the platform, when in reality, "there were instances in which it arranged for trading venues to hold customer assets for extended periods".

Trump family Twitter accounts compromised ahead of World Liberty Financial launch

The Twitter accounts belonging to Lara and Tiffany Trump were compromised and used to announce a fake launch of the (unfortunately real) World Liberty Financial project that their family has been promoting. Donald Trump's son Eric tried to warn people of the scam, but in doing so retweeted the scam tweet containing the malicious token address.

The posts were deleted and accounts were locked down very quickly by Twitter, but not before approximately 2,000 people bought around $1.8 million of the fake token.

Penpie hacked for $27.3 million

The defi protocol Penpie was exploited for 11,113.6 ETH (~$27.3 million) by an attacker who exploited a flaw allowing them to withdraw unearned "rewards". Although the protocol claimed to have been audited by two blockchain security firms, they later disclosed that the smart contracts containing the bugs had not been fully audited.

The team behind Pendle (the platform on which Pendie is built) detected the attack and paused Pendle an hour after the attack began, which they claim prevented another $105 million from being stolen.

Members of the Penpie team filed complaints with Singaporean police and the US FBI. They also attempted to negotiate a "bug bounty" via on-chain and social media messages to the attacker, but the hacker seems uninterested and has continued to transfer funds between various crypto wallets and launder funds through Tornado Cash.

SEC charges Galois Capital, Galois settles

Eighteen months after the crypto-focused algorithmic trading fund Galois Capital shut down, explaining that they had lost around $40 million in the FTX collapse, the SEC has filed a lawsuit against the firm for failing to properly custody their clients' funds. According to the SEC, instead of complying with SEC requirements that investment advisers hold assets with qualified custodians like banks, Galois was keeping assets on crypto exchanges including FTX.

The SEC also charged that Galois Capital had misled some investors into believing they needed five business days of notice to redeem assets, while other investors were allowed to redeem assets more quickly.

Galois agreed to a settlement with the SEC in which they will pay a $225,000 penalty, which will go to investors who lost money.

"Peripheral" Aave smart contract hacked for $56,000

The popular defi lending platform, Aave, suffered a smart contract exploit that allowed an attacker to steal around $56,000. A smart contract outside of the core Aave protocol, which is used to allow people to use existing collateral to repay their loans, had gradually accrued a balance of tokens leftover from slippage. These small leftover token amounts are sometimes called "dust". Altogether, these tokens amounted to around $70,000 across several blockchain networks.

An exploiter was able to take advantage of an arbitrary call error that allowed them to steal funds from these various contracts, amounting to around $56,000. Various people associated with Aave emphasized that there was no risk to user funds or flaw in the core Aave protocol, and one described the hack as "raiding the tip jar".

OpenSea receives SEC Wells notice

OpenSea has announced that they received a Wells notice from the U.S. Securities and Exchange Commission, warning them of a likely lawsuit from the agency. According to CEO Devin Finzer, "they believe NFTs on our platform are securities". Finzer did not provide any more details about the scope of the SEC's notice.

Finzer promised that the company would vigorously fight any impending lawsuit.

The lawsuit echoes previous enforcement actions by the SEC, such as a September 2023 settlement with the celebrity-backed Stoner Cats project, in which the SEC suggested that it may broadly view NFTs as securities if investors "reasonably expect to profit" from the continued efforts of those who release the NFTs.

Bitcoin mining company Rhodium Enterprises files for bankruptcy

The Texas-based Rhodium Enterprises bitcoin mining company has filed for bankruptcy, disclosing debts between $50 and $100 million and total assets between $100 and $500 million. The company had tried to begin restructuring, but was not able to reach agreement among shareholders, and so decided to enter bankruptcy.

Bitcoin mining has been an extremely challenging business in recent times, partly due to volatile crypto prices over the last few years, and due to diminishing miner rewards following the April halving event.

Rhodium Enterprises had been showing signs of trouble, including failing to make scheduled loan payments earlier this month. In December 2023, a dispute between them and a subsidiary of the Riot Platforms bitcoin mining group culminated in armed security removing Rhodium employees from a bitcoin mining facility in Rockdale, Texas, where Rhodium was leasing bitcoin miners. The case was later sent to arbitration.

Brothers charged by SEC for $60 million "crypto bot" Ponzi scheme

Brothers Jonathan and Tanner Adam were charged with violating the antifraud provisions of the federal securities laws with their GCZ Global and Triten Financial Group entities, which the SEC alleges amounted to a $61.5 million Ponzi scheme that impacted more than 80 victims. The brothers claimed to have a crypto arbitrage bot that would pull from investor funds to perform profitable trades that would earn them 8–13.5% returns. They claimed to investors that, short of a complete meltdown in global financial markets, their funds would be safe.

However, $53.9 million of investor funds were used to pay other investors, in classic Ponzi fashion. The brothers also used investor funds to build houses for themselves and their family, purchase vehicles and designer goods, and make payments on a $30 million condo in Miami for Tanner.

One of the brothers, Jonathan, had in 2004 been convicted on felony securities law violations that resulted in a four-year jail sentence and more than $300,000 in restitution.

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