Monthly Archives: March 2023

Terra’s Do Kwon Accused of $40B Crypto Fraud by US Prosecutors

• US prosecutors have accused Terraform Labs’ Co-Founder Do Kwon of running a cryptocurrency scam that cost investors up to $40 billion.
• A grand jury in Manhattan has charged him with securities fraud, commodities fraud, and conspiracy.
• The US SEC also claimed that Terraform Labs and Kwon organized an unregistered securities sale through digital currencies, resulting in the collapse of LUNA/UST.

US Prosecutors Accuse Do Kwon of Crypto Fraud

American prosecutors have accused Do Kwon, the Co-Founder of Terraform Labs, of running a massive cryptocurrency scam that allegedly drained at least $40 billion from investors. A grand jury in Manhattan has charged him with securities fraud, commodities fraud, and conspiracy.

US SEC’s Plea Against Terraform Labs

In addition to the accusations by US prosecutors, the US Securities and Exchange Commission (SEC) also claimed that Terraform Labs and Kwon offered and sold unregistered securities via digital currencies which ultimately led to the collapse of LUNA/UST last May. This plea was followed by a Department of Justice investigation against Terraform Labs’ former employees to determine what caused this catastrophe.

Kwon Arrested by Montenegrin Authorities

The 31-year-old developer had been on the run for several months prior to his arrest earlier this week in Montenegro after falsifying his identity multiple times while attempting to evade authorities across numerous countries.

Implications for Investors

As a result of these events, many investors have reportedly suffered substantial losses due to Kwon’s actions. It remains unclear how they will be compensated or if any form of legal recourse is available for them at this time.

Potential Penalties for Kwon

Given the magnitude of these allegations against him, it is likely that Do Kwon will face severe penalties if found guilty by US courts or other legal systems around the world where he may be subject to extradition requests from American authorities.

Interaction Between Wallet Tied to Euler Hack and North Korean Group Detected

• The interaction between a wallet tied to Euler Finance’s exploiter and North Korea’s Lazarus Group was detected.
• Lazarus Group is a sanctioned North Korean state-sponsored cyber threat group linked to the Reconnaissance General Bureau (RGB).
• Euler Finance was exploited in a flash loan attack and the vulnerability remained on-chain for eight months prior to the exploit.

Exploiter Wallet Interaction with Lazarus Group

Days after Euler Finance was hacked, an interesting interaction was picked up from one of the exploiter wallets. On-chain analyst Lookonchain detected an address tied to the exploiter of the Ethereum-based lending protocol sent 100 Ether (approximately $171,700) to a wallet associated with Lazarus Group’s mammoth Ronin network hack. While it is still unclear if the Euler exploiter is affiliated with the North Korean state-sponsored cyber threat group linked to the North Korean Reconnaissance General Bureau (RGB), the interaction is peculiar as many community members had previously speculated that the notorious collective could be behind it.

Lazarus Group

Lazarus Group was initially sanctioned by OFAC in 2019 and has been involved in several exploits. In addition to the $625 million exploit of Axie Infinity’s Ronin network, it was also behind last year’s $100 million Harmony bridge hack.

Euler Finance Exploit

Euler Finance was exploited in a flash loan attack on March 13th. Further investigation revealed that the vulnerability remained on-chain for eight months prior to the exploit despite a $1 million bug bounty in place. Over a period of two years, six security firms namely – Halborn, Solidified, ZK Labs, Certora, Sherlock, and Omnisica – conducted ten separate audits on the lending protocol according to Euler Labs CEO Michael Bentley.

Bug Bounty

Despite having placed a $1 million bug bounty since August 2020 , Euler Finance’s vulnerability remained undetected until hackers took advantage of it earlier this week . The vulnerability allowed attackers access to funds stored as liquidity reserves within its smart contracts . It has not yet been determined how much money they were able to steal from users’ funds .

Conclusion

The case of Euler finance serves as an example for other DeFi protocols who must pay close attention when conducting their own audits and implement robust security measures if they are going remain competitive in this space .

Crypto Markets Shed $70B: BTC Hits 2-Month Low

• Bitcoin (BTC) has dropped to a two-month low of less than $20,000, with altcoins also in the red.
• This is due to the crypto market cap dropping beneath $1T and a major dump of up to 15% in some coins within 24 hours.
• This follows Fed Chair Jerome Powell speaking to Congress last week and Silvergate issues coming to light.

Bitcoin Hits 2-Month Low

Bitcoin (BTC) has dropped to a two-month low of less than $20,000, with almost all altcoins also losing value. This is due to the crypto market cap dropping significantly beneath $1T and a major dump of up to 15% in some coins within 24 hours.

Reasons for Drop

The recent drop follows Fed Chair Jerome Powell’s speech to Congress last week and Silvergate issues coming to light. The bear pressure was strong enough that BTC plummeted from almost $22,000 to under $19,900 on March 10th – its lowest price tag since January 14th.

Altcoins Not Faring Better

The altcoins are not faring any better than Bitcoin either; ETH, DOGE, SOL, LTC, TRX and many others have slumped by up between 5%-15%.

Conclusion

Overall it has been an unstable week for the cryptocurrency markets as BTC drops below the psychologically important price point at $20k.. Altcoins such as ETH, DOGE and SOL have been hit hard too as they slump by up between 5%-15%. Although there have been attempts by bulls at reversing this trend these have so far been unsuccessful.

Market Watch Summary

Crypto markets have shed over $70 billion in the past 24 hours as Bitcoin hits a two month low beneath $20k. Altcoins such as ETH, DOGE and SOL are down between 5%-15%. The primary cause appears to be related both Fed Chair Jerome Powell speaking at Congress last week and Silvergate issues coming into light.

Why Bitcoin Price Crashed to $22.2K: Analyst Explains

• Bitcoin’s price crashed to $22.2K in minutes, causing a considerable tick in liquidations of around $243 million across the board.
• Silvergate Bank revealed operational challenges leading many crypto companies to abandon ship, but the nature of the crash was too quick for it to be directly related.
• Intra-day trader 52Skew clarified that the crash was due to a large Binance spot sale directly into an area of stacked up longs, which caused a margin call.

Recent Crash Causes Liquidations

The recent crash of Bitcoin’s price caused a considerable tick in liquidations, standing at around $243 million across the board for the past 24 hours.

Silvergate Bank Recent Challenges

Silvergate Bank recently revealed operational challenges which led many crypto companies to abandon ship, however, the nature of the crash seemed too quick for it to be directly related.

Reason For Crash Clarified

Intra-day trader and creator of delta-based trading systems 52Skew took it to Twitter to clarify that the reason for this particular crash was due to a large Binance spot sale directly into an area of stacked up longs, which caused a margin call.

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Conclusion

The reason behind Bitcoin’s price crashing down is still unclear; however, intra-day trader 52Skew clarified that it may have been due to Binance spot sale and stacked up longs causing a margin call.