Launch of cryptographic initiatives; Bitcoin upgrade enabled; Reports Address DeFi, Tether; SEC Rejects Bitcoin ETF; DOJ To Sell $ 56 Million In Crypto Fraud Products | Baker

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Raising Municipal Funds and Rewarding Loyalty: New Cryptocurrency Use Cases

By Lauren Bass

Earlier this week, a cryptocurrency nonprofit reportedly launched a Bitcoin-based digital asset designed to raise funds for the New York City government while simultaneously allowing individual stakeholders to earn rewards. According to reports, although NYC has yet to formally partner with the nonprofit, the funds generated by the token will be stored in a secure wallet and can be claimed and used by the city at any time.

The NYC-related coin is the second in a series and follows Miami’s earlier adoption of its city-specific token in August. Miami’s cryptocurrency staking is reported to have generated more than $ 21 million in revenue for the city. To celebrate and promote the success of his digital asset, the mayor of Miami is reportedly working on a plan to distribute a “bitcoin yield” dividend to every resident of the city.

In related news, a multinational hamburger fast food chain is reportedly rewarding loyal customers with cryptocurrency. According to reports, any customer who spends at least $ 5 at the restaurant will be eligible to receive digital tokens, including Dogecoin, Ethereum, and Bitcoin.

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Bitcoin taproot upgrade enabled to improve network security

By Veronica Reynolds

This week, a lockdown consensus of 90% of Bitcoin network miners and mining pools (reached in June 2021) resulted in the successful activation of the long-awaited and discussed Taproot upgrade, the first upgrade in the protocol to the Bitcoin network in over four years. implemented via soft fork. Taproot’s goal is to change how Bitcoin scripting works to improve scalability, privacy, and security. To do this, “the soft fork introduces the concept of Merkelized Abstract Syntax Tree (MAST)”, which can increase the confidentiality and efficiency of smart contracts by revealing only their relevant parts during the transaction.

A cryptocurrency network fork refers to a change in the underlying protocol of a cryptocurrency network (software or code), resulting in a split into two different chains. A soft fork differs from a hard fork in that soft forks are backward compatible upgrades of network software, with validators (nodes) running older versions of the software capable of recognizing network blocks added by validators running the network. latest software. In contrast, hard forks are not backward compatible and generally represent an ideological difference between validators, resulting in two separate parallel blockchains and separate digital assets.

Since SegWit, a community implemented upgrade that took place in August 2017, a Bitcoin upgrade has not been so heavily discussed and anticipated. Reports indicate that upgrading Taproot will result in lower transaction fees and improved functionality of smart contracts.

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Reports cover DeFi security, tie distribution and liquidity

By Veronica Reynolds

A report released earlier this month titled “Top 10 DeFi Security Best Practices” outlines many steps developers can take to improve the security of decentralized applications (dApps). This list includes measures to prevent “reentrancy attacks”, that is, “when a contract invokes an external contract before updating its own state”. The infamous 2016 DAO hack was said to have fallen victim to this particular flaw, resulting in the theft of $ 60 million of ether. The report also cautions against using decentralized exchange reserves (DEX) or automated market maker (AMM) as price oracles, as this can allow users to “manipulate the spot price of a book. of orders or a DEX AMM, often using a flash loan. ”And recommends using a decentralized oracle instead. The report further recommends using Chainlink VRF as a random verifiable oracle instead of Keccak256 or Blockhash and encourages developers to incorporate DeFi security principles in general to ensure enhanced security.

According to a study released last week claiming to have analyzed blockchain data from various sources, Tether, a company that distributes Tether stablecoin (USDT), distributed USD 108.5 billion and received USDT 32.7 billion over the course of the period 2014-2021. Of the total USDT distributed, 89.2% would have gone to market makers, with two market makers receiving 55% of all outgoing transfers ever distributed and 60% of outgoing transfers distributed in the past year. According to the study, the majority of USDT transferred to these two market makers was through just two exchanges – FTX and Binance.

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SEC rejects Bitcoin spot exchange-traded fund proposal

By Joanna F. Wasick

Last Friday, the SEC issued a ruling rejecting a Bitcoin spot exchange-traded fund (ETF) proposal, stating that the proposal did not demonstrate that the ETF would follow federal securities laws, in particular the requirement under which the ETF is “designed to prevent fraud and manipulative acts and practices” and “protect investors and the public interest.” While the proposal emphasized the facets inherent in bitcoin and the bitcoin market which are supposed to deter fraud and manipulation, the SEC has found them inadequate.

Instead, the SEC explained that any bitcoin ETF would need a “full supervisory sharing agreement,” with a significant regulated market tied to the underlying or benchmark bitcoin assets, “in order to obtain authorization to trade. Such agreements would provide for the collection and sharing of information about market trading activity, clearing activity and client identity between the parties. This, the SEC said, would constitute a “necessary deterrent” to the manipulation, as it would provide the information necessary to investigate a manipulation if it should occur.

The move may appear inconsistent with the October SEC ruling allowing ETFs linked to Bitcoin futures. However, SEC Chairman Gary Gensler pointed out that bitcoin futures trade on highly regulated exchanges, which is not the case with real bitcoin.

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US and Canadian authorities pursue fraudulent schemes and recover stolen crypto

By Keith R. Murphy

The United States Department of Justice and the Southern California District Attorney’s Office have been authorized to liquidate nearly $ 56 million in fraud proceeds recovered from a promoter of the BitConnect cryptocurrency, according to a press release issued this week. The government intends to sell the seized cryptocurrency and will keep the proceeds in US dollars as part of its efforts to compensate the victims. The BitConnect program is said to be the largest cryptocurrency program to face criminal prosecution, and the promoter is expected to be sentenced in January 2022.

According to a report released this week, a young Canadian has been accused of stealing $ 46 million in cryptocurrency from a resident of the United States through a SIM swap attack. The youth’s age was not disclosed; However, the report notes that Canadian police, working with the US Federal Bureau of Investigation and the US Secret Service, were successful in resolving the case after the thief used some of the stolen funds to buy a name. gaming user. Seven million dollars worth of cryptocurrency was reportedly seized this week in connection with the deal.

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