The Wormhole Hacker Becomes the Hacked - Raises Concerns

Gensler Says Almost All Crypto Counts as Securities & Goereli ETH - Speculators Ruin Everything?

Theo Delarosa
February 27, 2023

🗓 Daily Bullets - Monday, February 27th

Today’s newsletter is 1451 words. A cool 9 minute read.

The crypto market stayed subdued over the weekend with Bitcoin ranging in the $22-23k range and ETH chilling in the $1600s. Despite that it was an action packed weekend filled with exploits, counter exploits, Solana outage, controversies and plenty of project updates.

Issue Contains:

👨‍💻 The Wormhole Hacker Becomes the Hacked - Raises Concerns
🚨 Gensler Says Almost All Crypto Counts as Securities
❌ Goereli ETH - Speculators Ruin Everything?
✅ Daily Bullets
📊 Market Dashboard
📚 Research/Reads
📝 Good Tweets

👥 Follow: Twitter | LinkedIn

👨‍💻 The Wormhole Hacker Becomes the Hacked - Raises Concerns

The quick take: Jump Crypto and Oasis orchestrated a counter exploit against the February 2022 $321M Wormhole exploiter, but this raises worrying centralization concerns - can anyone’s funds be seized?

Key Details:

Jump Crypto and Oasis.app retrieved $225M from the Wormhole protocol hacker through a "counter exploit"
The retrieval was ordered by the High Court of England and Wales
The assets were moved to a safe wallet controlled by the court-authorized third party, Jump Crypto
Oasis.app retrieved the assets through a previously unknown vulnerability in the design of the admin multisig access, which was highlighted by white hat hackers earlier this month
The team emphasized that user assets were not at risk of being accessed by any unauthorized party

How it could set a dangerous precedent:

1/ MakerDAO is facing heavy criticism following a 'counter-exploit' worth $225M.
They couldn't refuse the order of the High Court of England and Wales just yet.
But there's a strategy in place to say NO in the future: 🧵
— Ignas | DeFi Research (@DefiIgnas)
Feb 26, 2023

In this case, all's well that ends well, right? They got the bad guy and returned the stolen money in accordance with law enforcement but the underlying concern is that IF a government so wanted to, they could censor and restrict anyone with these types of actions. Once a power and ability exists, it can forevermore be utilized. So much for decentralization and self sovereignty.

Go Deeper: here

🚨 Gensler Says Almost All Crypto Counts as Securities

The Quick Take: SEC Chair Gary Gensler believes that pretty much every sort of crypto transaction falls under the SEC's jurisdiction except spot transactions in Bitcoin and the actual purchase or sale of goods or services with crypto. Crypto investors are hoping to profit based on the efforts of intermediaries, making these tokens securities that fall within the SEC's jurisdiction.

Hot off the @NYMag press, from @GaryGensler
“Everything other than bitcoin,” Gensler told me, “you can find a website, you can find a group of entrepreneurs, they might set up their legal entities in a tax haven offshore, they might have a foundation, they might lawyer it up to… twitter.com/i/web/status/1…
— Cory Swan.com #Bitcoin WORKS (@coryklippsten)
Feb 26, 2023

Significance: He’s probably right! There’s a wonderful book most people who invest and trade in financial markets should read. It’s called Reminiscences of a Stock Operator. It details the slimy, dark and criminal behavior that used to exist before the SEC. It highlights the lengths that people would go to mislead investors.

Time is a flat circle and we see those exact verbatim behaviors playing out today in the world of crypto.

Bottom line: A lot of people in crypto prefer wild west style rules because it provides us with outsized possibilities to profit but we can’t deny that the space we inhabit is fundamentally broken. Normal people get rinsed every single day.

Go Deeper: here

❌ Goereli ETH - Speculators Ruin Everything?

Backstory: LayerZero enabled a marketplace for testnet Goerli ETH which resulted in traders and speculators doing what they do best and artificially boosting the price of what is meant to be a free and valueless token issued only for testnet developers to simulate transactions, smart contracts, and other activities prior to deploying on the Ethereum mainnet.

Key Details:

The gETH market was created by LayerZero to make it easier for Ethereum developers to access ether on the Goerli testnet.
gETH prices spiked to over $1.60, from 7 cents, with a market cap of up to $15M.
Speculators are betting on gETH as a way to invest in the base roots of applications supposed to later be built on Ethereum.
An NFT collection and a Shiba Inu-themed Goerli Inu memecoin have already been built on the Goerli network.

How it started - The marketplace:

Public Goods by LayerZero
We're excited to introduce the Testnet Bridge as the first of several tools we launch for the Ethereum developer community.
Cliffs: Get Goerli-ETH quickly, easily, and begin testing ASAP without camping faucets or feeling stranded
— LayerZero Labs (@LayerZero_Labs)
Feb 21, 2023

Significance: The gETH price spike has attracted criticism from the crypto community, with some calling it the start of the end of Goerli testnet and plans to build a new testnet called Holli that would make it easier for developers to acquire its testnet ETH.

Besides that, this one again highlights the role (or lack thereof) that speculators play in financial markets. From longing to shorting, traders and speculators move the price of financial assets but very seldom do they provide any actual value while many times hurting those with genuine needs in the market.

Just another day in paradise!

Go Deeper: 1st, 2nd, 3rd

✅ Daily Bullets

🔥 Highlights

Polygon zkEVM mainnet launch on 27 March
Jump Crypto and Oasis.app ‘counter exploits’ Wormhole hacker for $225M
Machi Big Brother, dumped 1,010 NFTs for 11,680 ETH or $18.6M, in the space of 48 hours
Lido Finance largest ever daily stake inflow - more than 150,000 ETH from Justin Sun
At least $577M of Blur-linked NFT sales are wash trades
Coinbase suspending BUSD trading
Solana network outage after ‘forking’ incident
Liquid staking TVL now second-largest among DeFi protocols
Testnet Goerli ETH spikes as traders jump on opportunity meant for developers
On March 15, the STG token will migrate to a new address
Tel Aviv Stock Exchange to let customers of its non-bank members trade crypto

📰 Crypto News

Republic cancels $75M Metaverse Fund following crypto collapse and SEC guidance
Electronic Arts founder Trip Hawkins is now making NFT games
Adidas hinted at unique ways to integrate crypto beyond simply adding a payments option
Playboy expected to launch MetaMansion Virtual World this year
Peloton launching Swagger Society, a Web3 lifestyle membership club
Fujitsu and Mitsubishi look to create Japanese 'metaverse economic zone'
Alchemy Pay obtains license from Central Bank of Indonesia
Crypto exchange CoinEx will stop serving users in the United States
The Rock Trading, one of the oldest crypto exchanges in the world, pausing its operations
South Korea’s Lotte Group partners with Polygon for global NFT drive

💲Coin/Project Updates

Proposal for Uniswap v3 to launch on Avalanche
Police arrested and summoned 2 suspects who reportedly exploited Platypus Finance
⁠$700,000 drained from BNB Chain-based DeFi protocol LaunchZone
Near released update on decentralized funding, DAOs, and accelerator
Super Puma drop and reveal plans
Alchemy launches dApp builder that can spin up apps in 4 minutes
Bounce will provide auction infrastructure to Base network incubated by Coinbase
A large amount of SHIB tokens moving to exchanges
Mars Protocol to launch Farm Vaults on Osmosis Outpost
Trezor assumes control of silicon chip production for flagship Model T hardware wallet product
Binance Futures will launch USDⓈ-M CKB perpetual contracts
Hashed Network wins Polkadot Parachain Auction #40
Parallel Closed Alpha launches - PRIME becomes transferrable
Rollbit exploited - losses were minimal and all funds are safe
The co-founder of SpankChain and Reflex Labs, teased a revival for Tornado Cash
Mantle and Mirana proposed to deploy a $200M fund pool in the next 3 years
ZigZag identified 12k industrial sybil farming with 10+ accounts
Thala Lab’s testnet now live - two core products: the Move Dollar CDP vaults and ThalaSwap
Blueshift cross-chain incentivised testnet is live
Introducing NitroSwap, an AMM DEX built on the Nitro Testnet
HALO’s token airdrop proportions

📊 Market Dashboard

📈 Gainers:

$XEM: Blockchain platform
$GTC: Infrastructure
$STX: Bitcoin Layer 1

📉 Losers:

$BNX: GameFi
$BNX (old contract): GameFi
$XCN: Infrastructure

Chart of the Day - GETH

Look at what those unscrupulous traders and speculators are doing to gETH, making the lives of developers harder. Talk about a pump and dump.

📚 Research/Reads

Solana and Cosmos | MEV Series Part I: Blockspace Markets Across Ecosystems - source

Blur airdrop on OpenSea's market dominance | NFT Trading Professionalizes - source

EigenPhi Research | MEV Outlook 2023 - source

Chainlink | What Is a zkEVM? - source

Innovations | Stablecoins part 2: Can on-chain stablecoins break through a fiat-dominated market - source

Opinion | Is the SEC’s action against BUSD more about Binance than stablecoins? - source

📝 Good Tweets

Who doesn’t want to find those next hot gems? Here’s how you use DeFiLlama to find them:

Want to find the next 10x gems?
You can easily do it on your own using DeFiLlama - for free.
Here's a step-by-step guide to finding your own gems in 2023:
(includes little-known features)
— Edgy - The DeFi Edge 🗡️ (@thedefiedge)
Feb 25, 2023

Market Makers and Manipulation - How it Works

Have you ever wondered how and why Market Makers manipulate the crypto market?
Discover the mystery behind Pumps and Dumps and learn all about Market Makers 👇🧵
— Rekt Fencer (@rektfencer)
Feb 26, 2023

Exploring Machi Big Brother’s Whale Status

Machi Big Brother can crash the NFT market in one click.
Here's how and why he should (1/17)
— Liam Herbst (@liamherbst_)
Feb 23, 2023

Everyone mentions narratives in crypto all the time so here are the basics

“Narratives” have been getting huge amounts of attention lately and as a self proclaimed early narrative submitooor, I’ve decided it’s finally time to make a thread on the absolute basics of narratives as they are often misunderstood.
🧵👇🏻
— Reetika (@ReetikaTrades)
Feb 26, 2023

5 projects that have big upcoming catalysts

Five Projects With Upcoming Catalysts (a 🧵)
Here are 5 projects that have big upcoming catalysts. This thread includes a brief thesis for each, with links to additional reading material.
I think these will outperform the market in the short/medium term.
— GarrettZ (@GarrettZ)
Feb 26, 2023

8 protocols and the whales who dominate them

Whale token investors 🐋
Who secretly owns the majority of the tokens you hold? And at what price did they invest 🧐
I spent 3 weeks tracking down the top whales of 8 strong performing protocols👇
— Thor⚡️Hartvigsen (@ThorHartvigsen)
Feb 27, 2023