Crypto Weekly: A hackers paradise
Summary: Another hacker was active this week hacking a Japanese exchange for more than $90mn worth of cryptocurrencies. Meanwhile, the US State Department started to offer rewards paid in cryptocurrencies for information about hackers targeting US infrastructure. Lastly, Robinhood got increasingly dependent on cryptocurrency trading in Q2 to generate revenue.
Hack costs Liquid Global more than $90mn
The Japanese exchange Liquid Global suffered a major hack last week, where hackers stole more than $90mn worth of crypto-assets. The incident comes the week after the blockchain interoperability protocol called Poly Network was hacked, letting the hacker run away with $610mn before choosing to return the assets to the protocol. In contrast to the Poly hack, the funds stolen from the Liquid exchange have not been returned yet. According to on-chain analysis company Elliptic, the hacker used decentralized exchanges shortly after the hack to convert Ethereum tokens into Ether to avoid having the tokens frozen, which happened for the Poly hackers. Following that move, the hacker used an Ethereum mixer called Tornado Cash to obscure the blockchain pathway of the funds. This makes it fundamentally more challenging for prosecutors, brokers, and exchanges to follow the Ether on the blockchain. These moves by the hacker essentially indicate that the person in question has no intention of returning the assets to the exchange. These hacking events are boosting the sentiment for those who have distrust of cryptocurrencies, making notably institutions and regulators cautious.
US State Department offers rewards in cryptocurrencies
Staying within hacking but jumping to the other side of the table, the US State Department is now offering rewards paid in cryptocurrencies for information about hackers targeting US infrastructure and other criminal activities. For many decades, the US government has been paying out rewards in return for information on the grounds of their Rewards for Justice program. After quietly introducing the option to be paid in cryptocurrencies last month, the option was widely announced some weeks ago at the cyber conference Black Hat in Las Vegas, which gathers a substantial number of white hat hackers (hackers with good intentions). The option to be paid in cryptocurrencies comes after several notable hacks explicitly targeted US infrastructure like the colonial gas pipeline earlier this year. The new option indicates that the US State Department assumes they can gather new information from informants who earlier were not willing to hand out information to the US government. This is potentially one of the more concealed ways the US government can benefit from crypto-assets.
41% of Robinhood’s Q2 revenue came from cryptoThe US-based stock, options, and cryptocurrency broker Robinhood announced its Q2 2021 result last week. Publicly trading under the ticker HOOD, the broker generated a revenue of $565mn, of which $233mn came from cryptocurrency trading. Most surprisingly, more than 60% of funded Robinhood accounts traded cryptocurrencies during the quarter. In particular, Dogecoin trading was popular among Robinhood traders as 62% of the company’s revenue from cryptocurrency trading came from Dogecoin. These key figures indicate that the company is at present highly dependent on cryptocurrency trading to generate revenue, in particular a meme cryptocurrency like Dogecoin. The company acknowledged this by stating: “If demand for transactions in Dogecoin declines and is not replaced by new demand for other cryptocurrencies available for trading on our platform, our business, financial condition and results of operations could be adversely affected”. For the quarter, Robinhood reported a net loss of $502 million.
Quarterly Outlook Q2 2022
Quarterly Outlook Q2 2022: The End Game has arrived
- Shocks from covid and the war in Ukraine have forced the global financial and political world to change, but what will the end game be?
Productivity and innovation have never been more importantAs the world economy hits physical limits and central banks tighten their belts, could equities be facing a 10-15% downside?
The great EUR recovery and the difficulty of trading itIf the terrible fog of war hopefully lifts soon, the conditions are promising for the euro to reprice significantly higher.
Tight commodity markets – turbocharged by war and sanctionsWith supply already tight, commodities keep powering on. But will it last for yet another quarter?
Between a rock and a hard placeGeopolitical concerns will add upward price pressures and fears of slower growth, while volatility will remain elevated.
The Great ErosionInflation is everywhere and central banks try to combat it. But will they get it under control in time?
Australian investing: Six considerations amid triple Rs: rising rates, record inflation and likely recessionWhile global financial markets are struggling in an uncertain world, the commodity-heavy Australian ASX index is poised to keep a positive momentum.
Cybersecurity – the rush to catch up with realityWith the invasion of Ukraine, governments and private companies are rushing to reinforce their cyber defenses.