Web3 is Going Just Great

The FTC lawsuit focuses on Voyager's claims suggesting to customers that accounts with the lender were FDIC insured. That complaint also names Voyager as a defendant. Voyager settled with the FTC, agreeing to pay a $1.65 billion judgment that will be suspended until customers are repaid.

Black Hole Token is a Chinese project built on BNB Chain, which promises an original mechanism that only goes up. "The more you sell, the more the price goes up", promises their website.

Sounds legit.

The team behind the FinSoul project was reportedly the same as the group who pulled off the much larger $31 million Fintoch exit scam in May. They used similar strategies, including using paid actors to pose as their executive team, to push the FinSoul scam.

They may now be discovering this was a bad idea, as an impending default on a $20 million loan from February 2022 threatens the platform with a possible $7 million loss.

The loan went to a fintech credit fund called Stratos, who in turn used the money for a risky real estate technology investment (now written down to zero), crypto investments of their own (not disclosed to Goldfinch, and sold at a "near full loss"), and other investments. Stratos is, awkwardly, an investor in Goldfinch, and Stratos' founder was an advisor.

This is not the first loan gone bad for Goldfinch, who suffered a loss when an African motorcycle taxi financing company used a $5 million loan to try to plug the hole in the finances of a sister company.

A commenter on the disclosure about the distressed loan wrote, "This is the second occurrence of a lack of transparency from a borrower or a lack of auditing capability from Goldfinch. We can all appreciate that Warbler Labs will backstop the loss, but it is increasingly worrying to discover a complete lack of control from the loan underwriter, especially in the context of Stratos being an equity investor in Goldfinch."

This is actually the second such lawsuit by the supermarket against the exchange, after the first was thrown out when defendants claimed that they had simply named the project after the co-founder's brother, Joe. However, shortly after the victory, a co-founder admitted on their blog that they "just named it Trader Joe, after the supermarket".

Trader Joe's is seeking all profits made by the exchange, plus damages and compensation for the failed lawsuit last year.

This isn't the first security breach to tarnish 3Commas' reputation. In October 2022, customers reported losing a significant amount of assets in what 3Commas first tried to blame on phishing websites resembling FTX. 3Commas months later owned up to the fact that their database had been compromised, and that API keys were leaked.

The warning list was created to notify potential users of these firms, and to inform them that losses related to the use of those platforms won't be covered by the UK's compensation scheme.

Huobi has claimed they don't operate or promote in the UK, while KuCoin gestured towards adjusting its practices in the UK. Firms on the warning list may be subjected to more serious enforcement actions in the future, including fines or even prison time.

Avalanche co-founder and CEO Emin Gün Sirer drew widespread mockery when announcing that "the amount lost is only $3m", apparently not perceiving that $3 million is a massive sum to most people. He also didn't mention that it constituted almost the entire total TVL of the Stars Arena project, which was left with less than $1 in tokens following the attack.

Stars Arena was fortunate, in that the hacker ultimately contacted them offering to make a deal. The attacker returned 90% of the funds, keeping $300,000 as a "bounty".

The attacker tried to launder around $131 million of the stolen assets by routing them through services including Railgun and THORSwap. After "consultation with advisors, legal counsel, and law enforcement", THORSwap decided to pause its web interface in hopes of making money laundering more challenging for the attacker — although the thief could still interact with the THORSwap smart contracts directly, if they so chose.

Some criticized THORSwap for apparently caving on its censorship-resistant, decentralized ethos. Others, however, saw the move as understandable given the THORSwap developers reside in the United States, which has recently cracked down on mixing services that facilitate the laundering of illicit funds.

"It's a challenging time, not only for our industry but also for the global economy," wrote Yuga Labs CEO, apparently hoping that people ignorant to the past year of disaster across the NFT industry might be willing to attribute Yuga Labs' struggles to macroeconomic forces and not the implosion of the crypto — and particularly NFT — world.

In a long post on Twitter, the project promised "we will refund all investor funds down to the last cent". They also wrote that "Not only are we going to use the fullest extent of the law to go after the person or persons behind this hack / attack, we will also use ALL OTHER MEANS NECESSARY - and we do have such resources at our disposal, to go after the ones who are behind this. (We work with assets within the Russian government directly...)"

In a later post on their website, however, they wrote that they do "not bear legal liability to refund investors for the losses incurred unless the hacked funds are successfully recovered", attributing the incident to force majeure. They repeatedly claimed that they had not been involved in the theft. The project completely took down its website, redirecting it to this post.

The fine was announced in March 2024, and Crypto.com said it had appealed the penalty.

Crypto.com was hardly the first exchange to fall afoul of the regulator: Binance was fined $3.35 million in July 2022 for the same, and Coinbase was hit with a $3.6 million for the same in January 2023. Binance later shut down their Dutch operations after failing to obtain a license.

Prager Metis is among the auditors who audited FTX, and was noted by FTX's CEO-in-bankruptcy John J. Ray III for advertising itself as "the first CPA firm to officially open its headquarters inside the metaverse".

None of the clients involved with the faulty audits were disclosed in the lawsuit, and the SEC has not issued any statements connecting the charges to the FTX collapse.

Three Arrows Capital fell apart in June 2022, and was among one of the first major collapses that set off a domino effect of crypto company failures throughout that summer and the rest of the year.

The change is scheduled to go into effect on October 16.

Police have received more than 2,200 complaints pertaining to the exchange, involving $191 million (and counting) in possible losses. Eleven people, including various crypto influencers who had promoted the exchange, were taken in for questioning. However, police have said those eleven people were not likely central to the fraud, and that the leaders of the JPEX project are on the run.

According to the South China Morning Post, "The alleged case of financial fraud involving HK$1.37 billion is the largest of its kind in Hong Kong's history."

However, a bug on the part of the counterfeiter prevented massive losses. The spoofer used only six decimal places instead of eight, meaning that those who tried to redeem the fake tokens only received $250 instead of $25,000.

Upbit later re-enabled Aptos transactions after patching the bug.

Sun offered a bounty to the hacker to return 95% of the funds, also promising to hire them as a "security white hat advisor" for the exchange. Otherwise, he threatened to go to law enforcement.

Two weeks later, the thief returned the funds, with a note that their hot wallet key had leaked. Huobi paid the $410,000 bounty.

In their announcement, Mixin wrote that "the database of Mixin Network's cloud service provider was attacked by hackers", leading to some confusion as Mixin is supposed to be a decentralized network that ostensibly shouldn't have a centralized cloud database.

Mixin announced they would be suspending deposits and withdrawals pending analysis of the incident. They also told users that they would be compensated "up to a maximum of 50%" on assets that had been stolen from them, and receive "tokenized liability claims" (that is, IOUs) for the rest.

These types of scams draw in tens of millions of dollars each month, and one researcher has estimated around $350 million in Tether have been stolen in these types of scams since September 2021.

This is the second theft from Balancer in a month, after it warned of a critical vulnerability on August 22, and that vulnerability was exploited for around $2 million several days later.

The JPEX cryptocurrency exchange was the subject of a September 13 consumer warning by the Securities and Futures Commission (SFC), who said they were promoting services to Hong Kong residents without proper licensure. The following day, attendees of the Token 2049 crypto event observed that JPEX had abandoned the booth they'd rented. Then, JPEX hiked their withdrawal fees to as high as $999, and limited withdrawals to $1,000.

According to the South China Morning Post, customers have filed at least 83 complaints about the exchange, pertaining to crypto assets priced at $4.3 million. Hong Kong police have disclosed they are investigating the firm.

JPEX released a statement that the SFC was "exerting undue pressure on our platform", and asserted that the watchdog should "bear full responsibility for undermining the prospects" of the crypto industry in the region. Later, they accused their "partnered third-party market makers" of "maliciously fr[eezing] funds". They announced that, as a result, they would be pausing their Earn product. They also suspended their platform's gaming feature.

"Personally, we believe decentralization only works for the 'informed', it's not for everyone, no offense meant," wrote PolkaWorld on Twitter.

The trailer for the show features a duo pitching "Ape Water": Bored Ape-branded canned water that sells for $2.80/can. "We want to reimagine water... When you scan the can, that's when crypto and web3 is unlocked," says the booster. Revolutionary.

Even crypto Twitter seemed less than enthused, with one person writing that the show was "like Shark Tank, but cringe". Another wrote, "Just take a peep at the panel of judges it's full of crypto grifters and scammers".

However, the Holesky launch was a failure when developers misconfigured the network, causing it to fail to initiate. Developers announced they would try to relaunch the project a week after its intended go-live date. At least it was just a testnet.

Nouns NFTs have been popular since the project's launch in 2021, and in mid-2022 enjoyed a floor price of over 100 ETH (then over $150,000). Now they tend to sell for around 35 ETH (~$57,000). The DAO has used its substantial treasury to fund a wide range of projects, from creating Nouns short films, to distributing eyeglasses to kids, to partnering with Bud Light for a Super Bowl commercial in 2022.

Now, however, more than half of the project has opted to leave, with some leavers citing flawed decisionmaking and lack of leadership. As for the new fork, some Nouns owners may choose to "ragequit" — that is, forfeit their NFT and cash out their portion of the treasury (around 35.5 ETH, or $57,850, apiece). Some arbitrageurs have been buying Noun NFTs for months, hoping to use this ragequit functionality to profit.

Lawrence, Paffrath, and Nash are far from the only people facing class actions over their endorsements of FTX. Tom Brady, Gisele Bundchen, Steph Curry, Shaquille O'Neal, Larry David, are also facing lawsuits over their activities in promoting the firm.

Remitano acknowledged the hack, writing that they had suffered a "data breach from a third-party source". They have claimed that users' assets will not be affected by the theft.

Remitano is a peer-to-peer crypto exchange focused on emerging markets, including Nigeria, Pakistan, Venezuela, and Malaysia.

This isn't the first time Cuban has been burned by the crypto industry. In June 2021, he lost "enough that I wasn't happy about it" in the collapse of the Titan stablecoin. Cuban is also a defendant in a class action lawsuit related to his endorsement of Voyager, a crypto broker that collapsed in July 2022.

Although Genesis Global Capital filed for bankruptcy in January 2023, portions of its business were excluded from the bankruptcy and continued to operate.

The series was developed by Mila Kunis and her production company, and she, Ashton Kutcher, and Chris Rock all performed in the show, which ultimately aired six episodes accessible only to those who hold the NFTs. The premise, according to the SEC, is "house cats that become sentient after being exposed to their owner's medical marijuana".

The SEC determined that the project had marketed the NFTs as an investment in a web series enterprise, and had therefore violated securities laws by not registering with the SEC. Stoner Cats 2 LLC agreed to a cease-and-desist order, and will pay a $1 millon penalty.

OneCoin operated out of Bulgaria, and was founded by Greenwood and "Cryptoqueen" Ruja Ignatova, the latter of whom has been on Europol's most wanted list since May 2022. The fraud amounted to around $4 billion and affected at least 3.5 million victims.

Simultaneously, Binance.US announced it would be cutting 1/3 of its employees, or more than 100 people. This is the second staffing cut since the SEC lawsuit was filed in June — Binance.US cut around 50 positions, then around 10% of employees, shortly after the lawsuit was announced. The primary Binance entity also fired more than 1,000 people in July.

CoinEx is based out of Hong Kong, and was recently forced to stop serving US customers as part of a settlement with the New York Attorney General which also required them to pay a $1.7 million fine.

Remilia is a very controversial group, particularly after it was exposed that leader Charlotte Fang was a major figure in a white supremacist cult known as Kali Yuga Accelerationism (abbreviated "kaliacc"), and involved in a 4chan suicide cult.

Fang announced the theft on September 11 in a tweet accompanied by a glitch art image derived from a photo of the Twin Towers engulfed in flames and smoke shortly after the 9/11 terrorist attacks.

The team wrote in an announcement that they had no choice but to sell the treasury wallet to drain the liquidity pool, which is locked to... well, stop the project team from draining the project and rug-pulling. At the time of announcement, the project team had around 950 ETH (~$1.5 million) in the treasury wallet.

Some pointed out that they could simply set the tax to 0% and carry on without the hefty sales tax, but that didn't seem to appeal to the project's creators. Some also speculated that the team might just take the money and run after draining the LP.

On September 7, Fortress Trust disclosed that several customers had been "impacted by a third-party vendor" compromise. On September 8, Fortress Trust announced they had been acquired by Ripple. On September 11, The Block reported that Ripple had covered undisclosed losses to customers as a part of the acquisition deal. The losses were later disclosed to be around $15 million, and the third-party vendor was said to be a company called Retool, who blamed the compromise on a social engineering attack against one of their employees.

Bitcoiner Jameson Lopp speculated that the transaction "looks like an exchange or payment processor with buggy software" based on its transaction history. "The address in question that made the fee calculation error has the characteristics of a withdraw-only hot wallet from an enterprise," he wrote.

His observations were well-founded, as it later came out that the wallet belonged to the Paxos blockchain company, who attributed the overpayment to a bug. Luckily for Paxos, the miner who snapped up the outsized fee agreed to refund it.

However, the link was a scam, and anyone who connected their wallet risked having their wallet drained of its cryptocurrency and NFTs. Some blue-chip NFTs were stolen, including two CryptoPunks (a collection with a floor price of around 47 ETH, or $76,800). Altogether, stolen assets surpassed $650,000 in value within a few hours of the theft according to zachxbt, though this counts notoriously difficult-to-value NFTs.

The tweet was taken down within twenty minutes of being posted. All in all, posting a link to a wallet drainer was probably among the least effective things the attacker could do with the Twitter account of a person whose word can dramatically move markets.

It did seem to be something of a stark warning to some in the crypto world, however, who expressed sentiments along the lines of "if Vitalik can get hacked, anyone can."

In September 2022, the startup managed to raise $5 million from investors including TCG Crypto and 1kx. Either that money's run out, or they're cutting their losses early.

He was arrested in August 2022 after a year on the run. Now, he and his brother and sister have all been sentenced to 11,196 years in prison – sentences so over the top that one has to wonder if perhaps Turkish prosecutors are worried the Özers are some kind of crypto-focused vampire crime family. They will also pay a 135 million lira fine (~$5 million).

The CTFC stated: "Somewhere along the way, DeFi operators got the idea that unlawful transactions become lawful when facilitated by smart contracts. They do not."

As part of the deal, Salame has agreed to forfeit $1.5 billion. He will also pay $5.6 million restitution to FTX debtors and $6 million to the U.S. government, and will forfeit two homes in the Berkshires and a 2021 Porsche 911. According to the New York Times, he is not cooperating with the investigation.

Salame's sentencing is scheduled for March 2024.

The wallet address used by the phisher has been associated with multiple crypto phishing websites which attempt to convince users to authorize transactions, often by impersonating known crypto projects or promising token airdrops.

YouTuber CDawgVA publicly withdrew from the project on September 3, writing, "I was not told or made aware at any point that there was Blockchain technology and was only made aware of that information when the event went live. I was given assurances that it had nothing to do with NFT's. Given my vocal hatred of such tech, I would never agree to join had I known that."

The creator of the OTK Network, which had agreed to participate in the League, wrote: "We were told there was no NFT/crypto component but looks like that may not be the case."

Creator League issued a statement attempting to downplay its blockchain usage, emphasizing that people who purchased "Creator Passes" were not buying cryptocurrency or NFTs. "The Creator League is not an NFT project and we have never sold tokens," they insisted. "Those buyers who remain uncomfortable with the blockchain technology can request a refund," they continued.

Now, Creator League has been postponed. eFuse, the company behind it, has also just announced a 30% layoff amid company restructuring.

A report by cybersecurity expert Brian Krebs outlines how various experts have come to this conclusion after analyzing a long string of crypto thefts perpetrated against people with otherwise strong security practices. Altogether, the thefts suspected to have been enabled by the LastPass breach amount to more than $35 million.