Web3 is Going Just Great

It seems perhaps even Sotheby's prestige is not sufficient to overcome the NFT downturn.

However, some confusing instructions resulted in the owner sending the punk to the burn address, effectively destroying the NFT. "I was trying to wrap it and don't know what I was doing... Thought I was following the directions exactly..." they later wrote. They also later shared that they had borrowed money in order to purchase the CryptoPunk.

The criminal charges out of the US add to civil charges he's facing from the SEC, as well as an investigation out of South Korea.

After the collapse, Kwon became a fugitive. South Korea issued a warrant for his arrest in September, and Interpol issued a red notice. However, he's remained on the lam for some time, reportedly hiding in Serbia for a time — a country with no extradition agreement with South Korea.

Now, officials in Montenegro have announced they arrested Do Kwon, who was attempting to travel through the country using falsified documents. Montenegro is a Balkan country bordering Serbia.

According to Coinbase, the Wells notice related to "aspects of the company's exchange, our staking service Coinbase Earn, and Coinbase Wallet". It's not terribly surprising that the SEC might have Coinbase Earn in its crosshairs, as it has recently taken action against similar products, such as Kraken's staking service. In the wake of the action against Kraken, Coinbase seemed to try to pre-empt SEC arguments by sending an email to customers emphasizing things like "You earn rewards from the protocol, not Coinbase". It doesn't look like this has shifted the SEC's thoughts much, though.

This should be an interesting saga to watch, partly because Coinbase has expressed willingness in the past to go head to head with the SEC.

With the exception of Soulja Boy and Mahone, the celebrities paid a total of more than $400,000 in disgorgement, interest, and penalties to settle the charges without admitting or denying them.

Eight celebrities were also charged with violations of anti-touting law.

In a tweet announcing the shutdown, SpankPay reassured customers, "Rest assured your money is safe and we'll get it to you as soon as possible" — always a scary thing to hear from a crypto company.

It seems that only the payments processing side of the business is shutting down, with projects including SpankChain and SpankMatch continuing to operate.

In addition to standalone servers, General Bytes' cloud service was impacted, and the company announced that it would be permanently shuttering it. "It is theoretically (and practically) impossible to secure a system granting access to multiple operators at the same time where some of them are bad actors," wrote the company in their statement explaining the decision, apparently unaware that this is something software companies find themselves doing all the time.

This exploit was the second breach suffered by General Bytes this year, after hackers exploited a vulnerability in August 2022 that allowed them to steal customer funds. It's unknown how much was stolen in that attack. The company also patched multiple hardware and software issues in their ATMs in September 2021, after Kraken Security Labs discovered issues including poor security practices that would allow attackers to "walk up to an ATM and compromise it".

According to the BBC, dozens of high-profile individuals in Romania, including members of the government and academics, lost money to the scam after it was promoted by technology expert Gabriel Garais — who also says he lost money in the scheme.

iEarn Bot claims to be a US-based company, although its website is full of false information. The person named as the company's founder told the BBC he has nothing to do with the scheme, and companies and institutions listed as "strategic partners" say there is no such partnership.

The BBC identified one cryptocurrency wallet that received payments from around 13,000 others totaling nearly $1.3 million.

On March 17, blockchain security company BlockSec observed an attacker trying to exploit a vulnerability in the NFT lending project Paraspace. Although they had successfully identified a vulnerability that could have allowed them to steal 2,900 ETH (a bit over $5 million), their attempt to execute the hack failed because they didn't correctly estimate what it would cost them in gas fees.

After observing the attempt, BlockSec executed a whitehat rescue, where they successfully executed the same attack to remove the funds from Paraspace and secure them until they could return them to the project team.

Incredibly, the exploiter sent an on-chain message to BlockSec: "hey man, I am the one who made the contract you just copied, I couldn't make it work for a stupid gas estimation error. since I lost a lot of money trying to make it work, it would be cool to get at least some of them back... best of luck". Altogether, the would-be attacker spent around 0.7 ETH (~$1,200) on gas fees while trying to pull off the hack.

According to the US DOJ, ChipMixer had been used to process, among other things, proceeds of the massive March 2022 Axie Infinity hack by a North Korean cybercrime group.

US law enforcement seized two domains and a Github account tied to the organization, and German law enforcement seized ChipMixer's back-end servers and $46 million in cryptocurrency.

Holders trying to use the exchange approved transactions which they didn't realize allowed the phishers to drain their ETH. So far, the scammers have stolen around 74 ETH ($130,500).

Around $11.9 million of tokens were sent from the Balancer defi liqiuidity project to Euler during the attack, prompting Balancer to pause the project.

The Angle Protocol decentralized stablecoin project also disclosed that almost half of the total value locked in the project — around $17.6 million in the USDC stablecoin — were sent to Euler during the hack.

Mark Zuckerberg had once talked about eventually using NFTs for Meta's metaverse projects, suggesting that eventually "the clothing that your avatar is wearing in the metaverse, you know, [could] be basically minted as an NFT and you can take it between your different places". It sounds like that plan may no longer be on the table now.

Euler announced that they were aware of the exploit, and were "working with security professionals and law enforcement".

A joint statement from federal regulators announced that "All depositors of this institution will be made whole... no losses will be borne by the taxpayer. Shareholders and certain unsecured debtholders will not be protected. Senior management has also been removed."

The shutdown of Signature and the collapse of Silvergate leave many companies in the crypto industry without much access to the US banking system.

When team leads reviewed the spreadsheet to sign off on the payments, they didn't see the row, and there was no rollup showing total payments or anything else that would've helped them catch the malicious activity. The transactions were uploaded to a tool allowing asset transfers via CSV, and the required six out of nine multisig members approved the transaction.

PeopleDAO have reported that they're working with various security researchers to track the funds, and have reported the theft to the FBI and FTC.

That evening, Coinbase announced they would be pausing USDC redemptions for dollars until the following Monday, claiming it was only because in times of high volume, they needed to process transfers via the traditional banking system. Despite their stated reason, this deepened fears about the stability of USDC, which is supported in part by Coinbase.

The price of USDC began to wobble on smaller, less liquid exchanges like Gemini and Kraken before the issue was reflected more widely. However, most exchanges were showing USDC trading at prices between $0.90 and $0.98 later that night — a noticeable departure from USDC's normally fairly steady peg.

A sustained de-peg would wreak havoc on the crypto industry, where USDC is the second largest stablecoin and boasted a $43 billion market cap (at least before substantial outflows surrounding the SVB concern). Other stablecoins even have exposure to USDC, with both FRAX and DAI using USDC for significant portions of their collateral.