The Hong Kong Securities and Futures Commission added Hounax to its warning list on November 1, a move that victims have criticized as much too late to stop the damage.
Hounax crypto scam steals $19 million
A scam Hong Kong cryptocurrency platform called Hounax swindled its customers out of HK$148 million (US$19 million). The group drew in customers by offering financial expertise on social media and awarding prize money to those who signed up to the platform. While some customers successfully tested whether they could withdraw their funds earlier on, the platform later stopped allowing customers to withdraw, or told them they would need to pay additional fees to do so.
Bitcoiner spends $3 million on transaction fee
A Bitcoiner making a large transaction ended up spending 83.64 BTC (~$3 million) of the 139.42 BTC (~$5.1 million) transaction on transaction fees, effectively spending $3 million to send what ended up being a $2 million transfer. This apparent error has become the largest transaction fee in Bitcoin history.
A person then claimed on Twitter to be the owner of the wallet, verifying the claim by signing a message from the wallet that paid the fee. They claimed that they had been hacked, and that an error on the attacker's part led to the huge fee payment. AntPool, the mining pool that mined that block and earned the huge fee, later agreed to return the fee, though it's not clear if or how they verified that the person to whom they're returning the fee wasn't in fact the attacker who had obtained control of the wallet.
A similar fee overpayment incident occurred in September, when the Paxos crypto firm erroneously paid a $500,000 fee to send $1,865. They attributed the huge fee to a bug in their software, and the F2Pool mining pool (who had mined the block and received the fee) opted to return the overpayment.
KyberSwap hacked for $50 million
The KyberSwap decentralized exchange was hacked by an attacker who stole large sums of ETH, wETH, and the USDC stablecoin. Altogether, the assets are valued at around $54.7 million. The attacker was able to exploit a complex bug in a feature for liquidity pool providers. Prior to the hack, KyberSwap had approximately $80 million in TVL.
Shortly after the attack, the thief sent a message: "Negotiations will start in a few hours when I am fully rested." The KyberSwap team later responded to offer a 10% bounty, also seeming to praise the attacker: "You have done one of the most sophisticated hacks ser. That was high EV and everyone missed it."
The thief had other plans, though, ultimately issuing a list of "demands" which included "complete executive control" over the company and "surrender of all ... assets" to the hacker. They wrote that they had big plans for the network, and although they planned to dismiss all executives, they wrote that employees would be offered double salaries to continue their work. The hacker signed the message "Kyber Director".
Meanwhile, KyberSwap regained around $4.7 million after negotiations with the operators of front-running bots, who agreed to return 90% of the funds they obtained through frontrunning the hacker's transactions.
- "KyberSwap offers 10% bounty to hacker following $47 million exploit", The Block
- "KyberSwap DEX Hacked for $48 Million, Attacker Teases Negotiations", CoinDesk
- On-chain messages between the attacker and KyberSwap
- On-chain message from the attacker
HTX (fka Huobi) and Heco Chain hacked for $115 million
Justin Sun confirmed that HTX (formerly Huobi) and its related Heco Chain protocol were hacked for a combined $115 million. It's been a rough few weeks for Sun, whose Poloniex exchange was hacked for around $120 million on November 10, and a rough few months for HTX, which was hacked for $8 million in late September.
HTX suspended withdrawals as they investigated the hack, and wrote that the company would "fully compensate for HTX's hot wallet losses". Security firm Cyvers said they believed the theft was enabled by a private key leak.
Binance fined over $4 billion, founder pleads guilty and resigns
Binance founder Changpeng "CZ" Zhao pleaded guilty to money laundering charges and agreed to step down as CEO of Binance, the largest global cryptocurrency exchange. He will pay a $50 million fine and faces the possibility of 18 months in prison.
Binance agreed to pay $4.3 billion in restitution for widespread wrongdoing including failure to implement proper anti-money laundering programs, unlicensed money transmitting, and sanctions violations. Binance will be allowed to continue operating, but will be subjected to a three-year-long monitorship program to ensure AML and sanctions compliance.
Simultaneously with the DOJ action, Binance reached agreements with the CFTC, FinCen, and OFAC on ongoing legal issues. Notably, the SEC lawsuit was not among those settled.
CZ posted a long thread on Twitter, admitting "I made mistakes, and I must take responsibility," carefully sidestepping mentioning what any of those mistakes were.
- "Binance and CEO Plead Guilty to Federal Charges in $4B Resolution", U.S. Department of Justice [archive]
Aragon DAO votes to sue its founding team
Aragon is a prominent project that creates DAO infrastructure. Ironically, its own DAO-based governance has been fraught, with the group facing a governance crisis in May over conflicts between the DAO and the Aragon Association (a small group of "stewards" for the project).
Now, after the Aragon Association decided without consulting the DAO to dissolve itself and wind down the project's governance tokens (while keeping some of the funds), the DAO has voted to sue the group. The DAO has accused the group of improperly taking investors' money to put it "into their new secretive company". They've allocated $300,000 to legal efforts.
- "A DAO is funding a lawsuit against its own founding team", The Block [archive]
- "Aragon DAO votes to fund legal action against its founders", CoinTelegraph [archive]
- Proposal to sue the Aragon Association
Bittrex finally closes up for good
After paying a then-record $29 million fine for sanctions violations in October 2022, shutting down US operations in March 2023, filing for bankruptcy in May, and paying $24 million to settle a lawsuit from the US SEC in August, Bittrex is finally throwing in the towel. The company announced that it was closing its global operations, and urged customers to withdraw funds stored with the exchange within only two weeks. The also informed customers who held US dollars on the exchange that they would not be allowed to withdraw, and would have to convert their dollars to Euros or cryptocurrency.
Bittrex used to be a major player in the US cryptocurrency market, with over 20% of US market share in 2018. However, the exchange's dominance had dwindled to below 1% as of 2021.
DOJ reportedly seeking $4 billion resolution to Binance investigation, with possible criminal charges against CEO
According to Bloomberg, ongoing negotiations between the U.S. Department of Justice and Binance have involved penalties greater than $4 billion as part of ending an ongoing, multi-year probe into the exchange. Such a settlement would not insulate founder Changpeng "CZ" Zhao from criminal charges.
The negotiation may involve a deferred prosecution agreement, in which the US would file a criminal complaint but agree not to prosecute so long as Binance met agreed conditions under a monitoring process.
It remains to be seen if this is the avenue the DOJ and Binance will go with. A Bloomberg source speculated that a decision could come within the next few weeks.
Kraken sued by U.S. SEC
Kraken is the latest cryptocurrency exchange to face a lawsuit from the U.S. Securities and Exchange Commission. According to the SEC, Kraken violated securities laws by listing tokens like Polygon (MATIC) and Solana (SOL), which the SEC has argued in this and in other lawsuits are unregistered securities.
Furthermore, the SEC claims that Kraken commingled corporate and customer funds, "at times pa[ying] operational expenses directly from bank accounts that hold customer cash."
Kraken's new CEO, Dave Ripley, posted on Twitter that the company "plan[s] to vigorously defend [their] position" that they do not list securities.
DOJ cracks down on $225 million crypto romance scam
At least according to the rather shady Tether stablecoin provider, the U.S. Department of Justice has been working on an investigation into a massive "pig butchering" romance scam and human trafficking operation based out of Southeast Asia.
According to Tether, they "voluntarily fr[oze] approximately 225 million in USDT tokens" in connection to the investigation.
Some romance scammers hoping to lure victims into sending them cryptocurrencies are themselves victims of human trafficking operations, where they are held victim and forced to send such messages.