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United States
bankruptcy Crypto Firm digital currency Technology United States

Crypto Firm Terraform Labs Files for Chapter 11 Bankruptcy in US

 

Following the 2022 collapse of its cryptocurrencies, Singapore-based Terraform Labs (TFL), the firm behind digital assets TerraUSD (UST) and Luna, filed for Chapter 11 bankruptcy in Delaware. 

The Chapter 11 bankruptcy protection petition was confirmed by Terraform Labs, which noted it as a strategic move that will allow it to sustain its operations and support litigation ongoing in Singapore and U.S. litigation involving the Securities and Exchange Commission. The group stated it wouldn't need more funding in order to "meet all financial obligations to employees and vendors during the Chapter 11 case.”

In a court filing earlier this week, Terraform Labs' estimated assets and liabilities are between $100 million and $500 million, with between 100 and 199 creditors. 

Terraform Labs stated that it intends to keep growing its web3 business. The startup launched Station v3, a cryptocurrency wallet, earlier this month and just acquired Pulsar Finance, a cross-chain portfolio manager and data vendor. 

“The Terra community and ecosystem have shown unprecedented resilience in the face of adversity, and this action is necessary to allow us to continue working toward our collective goals while resolving the legal challenges that remain outstanding,” stated Chris Amani, CEO of Terraform Labs.

Founded in 2018, Terraform Labs collapsed the cryptocurrency market in May 2022, wiping out at least $40 billion in market value. The announcement of bankruptcy was made four days after the U.S. SEC decided to move the civil trial against Do Kwon, a co-founder of Terraform Labs, and the company for an alleged $40 billion cryptocurrency scam from January 29 to March 25. 

Kwon is being held in detention in Montenegro for leaving the nation in March using forged travel documents. The co-founder of Terraform Labs could be extradited to the United States or South Korea in March following the extradition decision, which is entirely up to the justice minister of Montenegro. 

Last year in February, the U.S. SEC charged Kwon and Terraform Labs with scamming the U.S. investors who purchased the digital assets Terra USD and Luna. As per the court petition, Kwon holds a 92% ownership in Terraform Labs, while Daniel Shin, another co-founder of the company, holds an 8% investment in TFL.
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Tokens
Blockchain Crypto cryptocurrency Decentralized Digital Assets digital currency Fintech NFTs Smart Contracts Technology Tokens

The United States is Monitoring Vulnerabilities in Bitcoin

 

The United States has shown a keen interest in the cybersecurity aspects of Bitcoin, particularly honing in on a vulnerability associated with the Ordinals Protocol in 2022. The National Vulnerability Database (NVD), overseen by the National Institute of Standards and Technology (NIST), a branch of the U.S. Department of Commerce, has brought attention to this issue for public awareness. This underscores the growing focus of government agencies on the security dimensions of cryptocurrencies.

The vulnerability at the core of this development is specific to certain versions of Bitcoin Core and Bitcoin Knots. It enables the bypassing of the datacarrier limit by disguising data as code. In practical terms, this vulnerability could result in the Bitcoin network being inundated with non-transactional data, potentially causing congestion in the blockchain and affecting performance and transaction fees. This concern is not merely theoretical, as evidenced by the exploitation of the Ordinals inscriptions in 2022 and 2023.

The Ordinals gained prominence in late 2022, involving the embedding of additional data onto a satoshi, the smallest Bitcoin unit, similar to the concept of nonfungible tokens (NFTs) on the Ethereum network. However, the increased usage of Ordinals transactions has led to heightened network congestion, resulting in elevated transaction fees and slower processing times. For blockchain enthusiasts, these issues are not just technical glitches but critical challenges that could influence the future trajectory of Bitcoin.

Luke Dashjr, a Bitcoin Core developer, has been outspoken about this vulnerability, likening it to receiving a flood of junk mail that obstructs essential communications. This metaphor aptly encapsulates the essence of the vulnerability, disrupting the otherwise streamlined process of Bitcoin transactions.

In response to these concerns, a patch has been developed in Bitcoin Knots v25.1. However, Dashjr notes that Bitcoin Core remains vulnerable in its upcoming v26 release. He expresses hope that the issue will be addressed in the v27 release next year. The implications of this vulnerability and its subsequent patching are substantial. Rectifying the bug could limit Ordinals inscriptions, although existing inscriptions would persist due to the immutable nature of the network.

This situation underscores a broader theme in the cryptocurrency world: the constant evolution and the need for vigilance in maintaining network security. The involvement of U.S. federal agencies in tracking and cataloging these vulnerabilities may signify a step toward more robust and secure blockchain technologies. While the identification of Bitcoin's vulnerability by the NVD serves as a cautionary tale, it also presents an opportunity for growth and improvement in the cryptocurrency ecosystem.
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Monkey Drainer
Cyber Security Cyber Threats digital currency money extortion Monkey Drainer

Crypto Scammer Monkey Drainer Shuts Down Criminal Operations

Cyber threats are not new in the crypto space. The industry has been witnessing advanced cyber security attacks since its inception and even recorded more during the 2022 crypto winter, especially in the DeFi Sector. 

According to Yahoo Finance, the cryptocurrency sector suffered a massive loss of nearly $50 billion last year due to various hacking incidents. Numerous groups have been involved in these nefarious activities, including the notorious North Korean Lazarus group and the infamous Monkey Drainer.

However, in a recent turn of events, the Monkey Drainer group has announced that they will be retiring from scamming in the cryptocurrency industry and switching their focus to another sector. Additionally, the group said that they will destroy all the devices and files they use to carry out their operations and will not return to the sector. 

In their message, Monkey Drainer advised other cybercriminals not to go after easy money and suggested that if they want to be successful, they should operate in a large group. They also recommended a new competitor called Venom Drainer to young cybercriminals who want to continue in this line of work.  

Interestingly, Venom Drainer emerged just a day before Monkey Drainer's announcement, indicating that they plan to replace them with a newer group. 

PeckShieldAlert, a company that monitors security incidents on blockchain networks, reported on Twitter that the scammers tried to hide their money by putting 200 ETH, worth $330,000, into Tornado Cash. 

However, Monkey Drainer still had 840 ETH coins worth $1.4 million left in their main wallet after the deposit. 

DeFi, short for Decentralized Finance, is a type of financial system that is built using a new technology called blockchain. This system does not rely on banks or other traditional financial institutions to work. Instead, it's decentralized and allows people to access financial services like lending, borrowing, trading, and investing without needing a middleman.  

This sector has become popular in recent years and has attracted billions of dollars in investment. It also offers people new opportunities to access financial services in a more transparent and decentralized way.  

Here are some things to be careful about when investing in cryptocurrency: 

1. Watch out for phishing attacks, where hackers pretend to be a trustworthy crypto company to trick you into giving them access to your digital assets. 

2. Be cautious of new and untested trading platforms, as some of them may be fraudulent. 

3. Be careful when using third-party software to manage your digital assets, as they can expose you to additional cybersecurity risks. 

4. Look out for crypto-malware, a type of malicious software that allows hackers to access your computer and mine cryptocurrencies without your knowledge. 

5. Keep your private key safe, as this is what you use to access your digital assets. If hackers get access to your private key, they can take your cryptocurrency without your permission. 

6. Cryptocurrencies are not regulated, which means that there is no agency in charge of their production or management. Be wary of unregulated exchanges, as they may attract hackers and scammers. 

Cryptocurrency is still a new concept, and it can be confusing even for experienced investors. Keep in mind that cryptocurrency is not as safe as traditional assets, and it comes with additional risks.  
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Technology
cryptocurrency data security digital currency Fraud Scams Technology

Report: Crypto Crime Hits Record $20 Billion in 2022

 

The unlawful use of cryptocurrencies reached a new high of $20.1 billion last year, as transactions involving companies sanctioned by the United States skyrocketed, as per data from blockchain analytics firm Chainalysis released on Thursday.

In 2022, the cryptocurrency market lost momentum as risk appetite started to wane and various crypto firms went bankrupt. Investors suffered significant losses, and regulators increased calls for greater consumer protection. 

Despite a drop in overall crypto transaction volumes, the value of unlawful crypto transactions increased for the second year in a row, according to Chainalysis. As per Chainalysis, transactions linked with sanctioned entities increased more than 100,000-fold in 2022 and accounted for 44% of illicit activity last year. 

Funds received by Garantex, a Russian exchange sanctioned by the US Treasury Department in April, accounted for "much of 2022's illicit volume," according to Chainalysis, adding that the majority of that activity is "likely Russian users using a Russian exchange." 

According to a Chainalysis spokesperson, wallets are labelled as "illicit" if they are not part of a sanctioned entity.

Garantex did not respond immediately to an emailed request for comment.

Last year, the US also sanctioned cryptocurrency mixing services Blender and Tornado Cash, alleging that they were being used by hackers, including those from North Korea, to launder billions of dollars in cybercrime proceeds.
 
The volume of stolen crypto funds increased by 7% last year, but volumes of other illicit crypto transactions, such as those related to scams, ransomware, terrorism financing, and human trafficking, decreased.

"The market downturn may be one reason for this. We've found in the past that crypto scams, for instance, take in less revenue during bear markets," Chainalysis said.

Chainalysis stated that its $20.1 billion estimate only encompasses blockchain activity and excludes "off-chain" crime such as fraudulent accounting by crypto firms.

According to Chainalysis, the figure also excludes instances where cryptocurrencies are the proceeds of non-crypto-related crimes, such as when cryptocurrency is used as a means of payment in drug trafficking.

"We have to stress that this is a lower bound estimate - our measure of illicit transaction volume is sure to grow over time," the report said, noting that the figure for 2021 was revised to $18 billion from $14 billion as more scams were discovered.





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Technology
Crypto cryptocurrency digital currency FTX Technology

What does Downfall of FTX Uncovers about Crypto Media

 

What happens when a crypto mogul holds the crypto equivalent of a press conference and is confronted with his role in a crypto media scandal? 

Sam Bankman-Fried was grilled this morning about Friday's revelation of his secret payments to the Block, a cryptocurrency publication founded in 2018. The question came at the end of a Twitter Spaces hosted by Unusual Whales, a pseudonymous Twitter account that gained a following by tweeting about congressional stock trades during the pandemic and now offers a financial information service with a heavy emphasis on crypto data. For the record, it resembled many old-fashioned press conferences, albeit in a new setting: Bankman-Fried dodged the question and exited the conversation.

But the moment emphasizes how much crypto-native media exists and how quickly it has developed its own online information realm that is largely distinct from the mainstream media. Crypto media, on the other hand, is a full-fledged entity in its own right. Much of it appears to be traditional outlets with newsrooms, articles, and podcasts that happen to cover a niche topic.

However, it is also inextricably linked to Twitter, the chat platform Discord, the encrypted messaging app Telegram, and tools for direct analysis of blockchain data. And it has a lot of overlap with the rest of the anti-establishment digital media sphere, as the FTX collapse demonstrates better than anything else.

Indeed, as part of the mogul’s ongoing apology tour, crypto entrepreneur Mario Nawfal, who hosted Musk for a Twitter Spaces to discuss the "Twitter Files," also hosted a Spaces with Bankman-Fried. To truly understand the crypto media sphere, go back to the early stages of the FTX collapse — one of the biggest stories in the world right now — and examine how much of it occurred in this largely self-contained ecosystem.

Bankman Fried's problems began with a Nov. 2 report by CoinDesk, a decade-old crypto news service owned by Digital Currency Group, a crypto-focused venture capital firm. According to financial records obtained by CoinDesk, FTX was more financially intertwined with its sister firm, the hedge fund Alameda Research, than previously known.

The report sparked online speculation that Bankman Fried's empire was not financially sound and that the price of FTX's native token, FTT, had been inflated. Changpeng Zhao, the CEO of rival exchange Binance, announced on Twitter four days later that his company was selling its FTT holdings.

Bankman-Fried and Alamada's CEO, Caroline Ellison, fought back on Twitter, assuring the cryptocurrency community that their finances were solid. On-chain analysis — the interpretation of publicly available blockchain data — suggested that the two were not as confident in FTX's financial position as they showed up. According to The Data Nerd, a pseudonymous Twitter account dedicated to on-chain analysis, Alameda sent more than $250 million in stablecoins to FTX in a single day.

As the collapse began, much of the most foresighted real-time analysis of FTX's precarious financial position came in Tweet threads and Twitter Spaces from Dylan LeClair, a contributor to Bitcoin Magazine.

As the fallout from the collapse unfolds, Autism Capital — a Twitter account created in 2020 and linked to a Discord chat — is one source of extensive leads and tips about it. It sometimes reports details of the fallout before mainstream media outlets. The account tweeted on December 4 that Ellison was represented by the law firm WilmerHale. Bloomberg has since confirmed this.

Of course, mainstream media outlets have covered the FTX story as well. POLITICO has covered the intricacies of Washington's response; the FT and Wall Street Journal have scooped stories about internal corruption; a Vox reporter published a damning interview with Bankman-Fried; and the New York Times landed a much-watched live interview with Bankman-Fried.

The tone of coverage, on the other hand, frequently varies. The FTX story is mostly about the dangers of cryptocurrency, with its lack of regulation and ever-present scams, in mainstream media. More emphasis is being placed in the crypto media world on the extent to which Bankman-Fried funded establishment media outlets and politicians while becoming the crypto mogul most embraced by those establishments. 

What's the big picture here?

Media ecosystems tend to form around important human interaction sites, such as governments and markets.

Governments' core activities generate fundamental units of information (e.g. bills and executive orders). Markets are the same way (prices and trading volumes). More elaborate media ecosystems can sprout up around these core pieces of information to cover everything else that's going on.
 
These digital networks also generate basic information, such as social media posts. Furthermore, blockchain networks — a new subset of digital networks — are abandoning on-chain data.

Could they one day support similarly robust media ecosystems?

It is astounding how large and developed the crypto media ecosystem has become. However, it is possible that it is too large.

After all, as Byron Guilliam, senior markets strategist at Blockworks, a crypto media firm aimed at financial institutions, told DFD, "the entire crypto market cap is smaller than Apple, and Apple does not have 15 media outlets covering it."

The demise of the FTX could point to the future of digital information. Or, as the crypto markets remain stagnant and the Block is now rocked by scandal, it could be the last gasp of a crypto media bubble about to burst.
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Security
Crypto Crypto Mining Data digital currency Google Translate malware Research Security

That 'Clean' Google Translate App is Actually Windows Crypto-mining Malware

 

 
The Turkish-speaking group responsible for Nitrokod, which has been active since 2019 is said to have infected thousands of systems in 11 countries. Nitrokod, a crypto mining Trojan, is usually disguised as a clean Windows app and functions normally for days or weeks before its hidden Monero-crafting code is executed. What's interesting is that the apps offer a desktop version of services that are normally only available online.

"The malware is dropped from applications that are popular, but don't have an actual desktop version, such as Google Translate, keeping the malware versions in demand and exclusive," Check Point malware analyst Moshe Marelus wrote in a report Monday.

"The malware drops almost a month after the infection, and following other stages to drop files, making it very hard to analyze back to the initial stage."

Nitrokod also uses other translation applications, such as Microsoft Translator Desktop, and MP3 downloader programmes in addition to Google Translate. On some websites, malicious applications will highlight about being "100% clean," despite the fact that they are infected with mining malware. Nitrokod has been productive in spreading its malicious code through download sites such as Softpedia. Since December 2019, the Nitrokod Google Translator app has been downloaded over 112,000 times, according to Softpedia.

Nitrokod programmers, according to Check Point, are patient, taking a long time and multiple steps to conceal the malware's presence inside an infected PC before installing aggressive crypto mining code. Due to the lengthy, multi-stage infection efforts, the campaign went unnoticed for years before being discovered by cybersecurity experts.

"Most of their developed programs are easily built from the official web pages using a Chromium-based framework. For example, the Google translate desktop application is converted from the Google Translate web page using the CEF [Chromium Embedded Framework] project. This gives the attackers the ability to spread functional programs without having to develop them."

After the program is downloaded and the user launches the software, an actual Google Translate app, built using Chromium as described above, is installed and runs normally. Simultaneously, the software quietly fetches and saves a series of executables, eventually scheduling one specific.exe to run every day once unpacked. This extracts another executable that connects to a remote command-and-control server, retrieves Monero miner code configuration settings, and begins the mining process, with generated coins sent to the miscreants' wallets. To conceal its tracks, some of the early-stage code will self-destruct.

One stage also looks for known virtual-machine processes and security products, which may indicate that the software is being researched. If one is discovered, the programme will terminate. If the programme is allowed to run, it will create a firewall rule that will allow incoming network connections.

Throughout the various stages, the attackers deliver the next stage using password-protected RAR-encrypted files to make them more difficult to detect. According to Marelus, Check Point researchers were able to investigate the crypto mining campaign using the vendor's Infinity extended detection and response (XDR) platform.
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Technology
Crypto cryptocurrency Digital Assets digital currency Digital Money NFTs Technology

Hackers Steal NFTs Worth $3M in Bored Ape Yacht Club Heist

 

Hackers stole non-fungible tokens (NFTs) estimated to be worth $3 million after getting into the Bored Ape Yacht Club's Instagram account and uploading a link to a replica website that tried to capture marks' assets.

The fake post offered a free airdrop – essentially a promotional token giveaway, to customers who clicked the link and connected their MetaMask crypto-asset wallets to the scammer's wallet. Rather than receiving free items, victims had their digital wallets drained. 

Bored Ape Yacht Club tweeted Monday morning in a warning that came too late for some of its members, "It looks like BAYC Instagram was hacked. Do not mint anything, click links, or link your wallet to anything,"  

The Bored Ape Yacht Club, or BAYC, is a collection of photographs depicting bored primates in various attitudes and costumes, which can be used as internet profile avatars and sell for hundreds of dollars in crypto coins. 

Miscreants stole four Bored Apes, six Mutant Apes, and three Bored Ape Kennel Club NFTs, as well as "assorted additional NFTs estimated at a total value of $3 million," according to Yuga Labs, the company that launched Bored Ape Yacht Club. 

"We are actively working to establish contact with affected users," a Yuga Labs spokesperson said, adding that its hijacked Instagram account did have two-factor authentication enabled, "and the security practices surrounding the IG account were tight." 

"Yuga Labs and Instagram are currently investigating how the hacker was able to gain access to the account," the spokesperson stated. 

This is the second time in less than a month that the NFT collection has been hacked. Bored Ape Yacht Club said on March 31 that their Discord server had been compromised. According to security firm PeckShield, a cybercriminal stole one NFT: Mutant Ape Yacht Club #8662 in a previous incident. 

In March, following the launch of the ApeCoin cryptocurrency by the Bored Ape Yacht Club, fraudsters stole around $1.5 million by claiming a huge amount of tokens using NFTs they did not own and obtaining bogus flash loans. Flash loans are given and repaid in a single blockchain transaction, which might take as little as seconds to get and return the funds. These and other recent hacks have raised security concerns about NFT and cryptocurrency technologies.
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US
Bitcoins Crytocurrency Digital Asset digital currency Technology US

US Attributes North Korean Lazarus Hackers to Axie Infinity Crypto Theft

 

The US Treasury Department announced on Thursday that it had linked North Korean hackers to the heist of hundreds of millions of dollars in cryptocurrencies linked to the popular online game Axie Infinity. 

On March 23, digital cash worth about $615 million was stolen, according to Ronin, a blockchain network that enables users to transfer crypto in and out of the game. No one has claimed responsibility for the hack, but the US Treasury announced on Thursday that a digital currency address used by the hackers was under the control of a North Korean hacking group known as "Lazarus." 

The Treasury Department spokesperson stated, using the initials of North Korea’s official name, “The United States is aware that the DPRK has increasingly relied on illicit activities — including cybercrime — to generate revenue for its weapons of mass destruction and ballistic missile programs as it tries to evade robust U.S. and U.N. sanctions.” 

The wallet's users risk being sanctioned by the US, according to the representative. Chainalysis and Elliptic, two blockchain analytics companies, said the designation validated North Korea was behind the break-in. Sky Mavis co-founder Aleksander Larsen, who develops Axie Infinity, declined to comment. Sky Mavis engaged CrowdStrike to investigate the incident, but the firm declined to comment. 

The FBI has ascribed the attack to the Lazarus Group, according to a post on the official Ronin blog, and the US Treasury Department has sanctioned the address that received the stolen money. The Reconnaissance General Bureau, North Korea's primary intelligence bureau, is said to be in charge of the Lazarus hacking squad, according to the US. It has been accused of being involved in the "WannaCry" ransomware attacks, as well as hacking multinational banks and customer accounts and the Sony Pictures Entertainment hacks in 2014. 

Cryptocurrency systems have long been afflicted by hacks. The Ronin hack was one of the most massive cryptocurrency thefts ever. Sky Mavis stated it will refund the money lost using a combination of its own balance sheet capital and $150 million raised from investors including Binance. 

The Ronin blog stated, “We are still in the process of adding additional security measures before redeploying the Ronin Bridge to mitigate future risk. Expect the bridge to be deployed by end of month.” 

According to a Treasury spokesperson, the US will consider publishing crypto cybersecurity guidelines to help in the fight against the stolen virtual currency.
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