Launch of new Crypto and DeFi products; SEC Charges Crypto Exchange; States provide enforcement measures; Bitcoin public key added to SDN list; Hacks continue | BakerHotelier

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European Bank Launches Stablecoin; Financial firms expand crypto products

By Robert A. Musiala Jr.

A subsidiary of a major European financial services company recently launched EUR CoinVertible (EURCV), an Ethereum ERC20 stablecoin backed 1:1 by euros. According to a press release, among other features, the EURCV will feature “(i) the complete segregation of collateral assets held to back the value of the issuer’s stablecoins, (ii) with direct access given to token holders on the collateral assets, and (iii) the establishment of business continuity plan mechanisms in the event of a market or technological event.The press release also notes that the smart contract code for EURCV will be published under a open source license and that access to EURCV will be limited to those who complete the integration through the financial services firm’s existing anti-money laundering procedures.

Another recent press release announced that “the world’s leading derivatives market…plans to expand its suite of cryptocurrency options to its standard and micro-sized Bitcoin and Ether contracts from May 22” . The press release notes that through the first quarter of 2023, its “Bitcoin and Ether futures and options complex reached a record average daily notional amount of over $3 billion, signifying an increase in demand customers for liquid hedging tools”.

According to a recent report, a major Japanese bank has announced that it has integrated MoneyTap, a blockchain-based money transfer app backed by RippleNet, into three local banks in Japan. RippleNet is a product of the American blockchain payment company Ripple. And in a latest recent development, the Bank for International Settlements released a white paper with findings on Project Meridian, which explores the use of distributed ledger technology to drive innovations in real-time gross settlement systems.

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Release of Ethereum ‘Unstaking’ data; Launch of new DeFi products

By Robert A. Musiala Jr.

According to recent reports, following the ‘Shanghai’ upgrade of the Ethereum network, which marks the completion of Ethereum’s transition to a proof-of-stake network and allows network validators to shed ether (ETH), about 5% of validators are looking to withdraw their ETH. The report notes that ETH withdrawal and withdrawal requests take up to 17 days.

According to a recent press release, decentralized finance (DeFi) infrastructure firm Maple Finance has launched its cash management pool, which the press release says is designed to provide “non-US DAOs [decentralized autonomous organizations]offshore companies, Web3 Treasuries, and HNWI participants” with “the most direct access to Treasury yields.” The release notes that the DeFi liquidity pool is designed to allow participants to invest in stablecoins and ” will pass the 1-month US Treasury bill rate, less fees, to lenders.” The press release further notes that “Room40 Capital, an institutional crypto hedge fund, has created a standalone SPV to be the sole borrower in the pool The new product would only be available to non-US accredited investors.

A major US credit scoring agency recently announced that it has partnered with tech firms Spring Labs and Quadrata “to provide off-chain credit scoring for DeFi and Web3 applications”. According to a press release, the new service will provide off-chain credit data to DeFi applications using a patented process that keeps consumer identity data confidential. According to the press release, the new service “will allow DeFi lenders to have access to this critical information when making their lending decisions…ultimately minimizing their risk and providing borrowers with more opportunities for better terms.”

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SEC Charges US Crypto Exchange With Multiple Securities Law Violations

By Lauren Bass

According to a recent press release, the U.S. Securities and Exchange Commission (SEC) has filed a lawsuit against U.S. cryptocurrency trading platform Bittrex Inc. and its former CEO, alleging the operation of an unregulated exchange. registered, a broker and a clearing agency. in violation of United States securities laws. The SEC also accused Bittrex’s foreign subsidiary, Bittrex Global GmbH, “of failing to register as a national securities exchange in connection with its operation of a single order book shared with Bittrex.” Among other things, the complaint alleges that Bittrex and its CEO advised client token issuers to remove from public channels certain “problematic statements” that could “raise questions for the SEC” as to whether the proposed crypto tokens and assets on Bittrex were titles. The complaint seeks an injunction as well as restitution of profits and civil penalties.

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States Bring Crypto Enforcement Actions, Assess Oversight Costs

By Robert A. Musiala Jr.

A recent press release from the California Department of Financial Protection and Innovation (DFPI) announced that the DFPI had issued “discontinue and desist orders against five entities to stop fraudulent investment schemes related to artificial intelligence (AI)”. According to the press release, “[t]It orders to find that the named entities and individuals violated California securities laws by offering and selling unqualified securities and making material misrepresentations and omissions to investors. The entities allegedly “solicited funds from investors claiming to offer high-yield investment programs (HYIPs) that generate incredible returns by using AI to trade crypto assets” and “used marketing programs to multiple tiers that reward investors for recruiting new investors.

According to a recent press release, “The New York State Department of Financial Services (DFS) has passed a final rule setting out how companies holding a DFS-issued Bitlicense will be assessed for the costs of overseeing and monitoring them. review”. The new regulations give DFS the power “to collect oversight costs from licensed virtual currency businesses, like other DFS-regulated licensees.”

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OFAC Adds New Bitcoin Public Key to SDN List

By Christopher Lamb

According to a press release issued by the Office of Foreign Assets Control (OFAC) of the United States Department of the Treasury, pursuant to Executive Order (EO) 14059, OFAC has designated two entities in the People’s Republic of China (PRC) and five individuals , based in the PRC and Guatemala, for participating in acts that contribute to “the international proliferation of illicit drugs or their means of production”. On April 4, 2023, a federal grand jury in the U.S. District Court for the Southern District of New York indicted some of these named individuals on various conspiracy charges, including importing fentanyl and money laundering. As part of the action, OFAC added an individual’s Bitcoin public key that was “used to receive bitcoin payments for illicit drug transactions” to the Specially Designated Nationals List (SDN List) .

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DeFi protocol hacked for $7.4 million; Wallet attack drains $10.5 million

By Joanna F. Wasick

On April 15, Hundred Finance, a multi-chain lending protocol, announced that it had suffered a major security breach on Ethereum’s layer 2 Optimism blockchain, resulting in losses of approximately $7.4 million. Although the protocol did not reveal how the attack was executed, blockchain security firm CertiK said it was a flash lending attack, which involves a hacker borrowing a large amount of funds through a type of unsecured loan from a loan protocol. The hacker then uses these funds to manipulate the price of an asset on a decentralized finance (DeFi) platform. Hundred Finance said it contacted the hacker and worked with various security teams on the incident.

Recent reports indicate that over $10.5 million in cryptocurrencies and NFTs were taken in an unidentified wallet drain exploit that had been happening since December 2022. MetaMask developer Taylor Monahan recently put the problem highlighted on Twitter. While claiming that no one knows exactly how the exploit works yet, some of its features include that it targets keys created from 2014 to 2022 and users who are more “crypto-native”, i.e. those with multiple addresses and working in the crypto/blockchain space. For this reason, the developer advised those whose assets are connected to a single private key to either migrate their funds, split their assets, or get a hardware wallet.

For more information, please see the following links:

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