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.
Latest Market Insights
Outrageous Predictions 2023: The War Economy
- The constantly growing global need for energy drives the world's richest to huddle up and launch a R&D project in a size the world hasn't seen since the Manhattan Project gave the US the first atomic bomb.
French President Macron resignsThe political stalemate in France and the rise of Marie Le Pen following the 2022 elections corners President Macron, forcing him to give up on politics and resign from his position. At least for now.
Gold rockets to USD 3,000 as central banks fail on inflation mandateAs markets and central banks realise that the idea that inflation is transitory is wrong, and that prices will remain higher for longer, gold is sent through the roof, hitting a price tag of USD 3,000
EU Army forces EU down path to full unionWith continued challenges in the region and a US military that isn't aggressively enacting its former role as global policeman, the European Union agrees to create its own armed forces, bringing the whole region closer.
A country agrees to ban all meat production by 2030In an effort to become one of the global leaders on the path to net-zero emissions, one country decides to not only put a heavy tax on meat, but to ban domestic production entirely.
UK holds UnBrexit referendumFollowing a recession and domestic pressure, the United Kingdom is thrown into political turmoil that will end with a vote to wind back Brexit.
Widespread price controls are introduced to cap official inflationHistory tells us that with the war economy comes rationing and price controls. And this time is no different, as policymakers introduce strict price controls that lead to a range of unintended consequences.
OPEC+ & Chindia walk out of the IMF, agree to trade with new reserve assetSanctions against Russia have caused widespread turmoil due to US Dollar moves in countries across the globe that don't consider the US an ally. To relieve themselves from this, they leave the IMF and create a new reserve asset.
USDJPY fixed to the USD at 200 as Japan overhauls financial systemFollowing the challenges that faced the Japanese Yen in 2022, the Bank of Japan attempts to keep the currency from sliding. Unsuccessful on the long-term, Japan will launch a reset of its entire financial system.
Tax haven ban kills private equityWith the war economy comes an increased focus on national interests and sovereign nations' ability to assert themselves. In that regard, the OECD countries turn their attention on tax havens and pull the big guns out, banning them altogether.