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 crypto

The 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.
Source: Saxo Group
Source: Saxo Group
Disclaimer

The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
- Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)
- Full disclaimer (https://www.home.saxo/en-hk/legal/disclaimer/saxo-disclaimer)

Saxo Capital Markets HK Limited
19th Floor
Shanghai Commercial Bank Tower
12 Queen’s Road Central
Hong Kong

Contact Saxo

Select region

Hong Kong S.A.R
Hong Kong S.A.R

Saxo Capital Markets HK is a company authorised and regulated by the Securities and Futures Commission of Hong Kong. Saxo Capital Markets HK Limited holds a Type 1 Regulated Activity (Dealing in securities); Type 2 Regulated Activity (Dealing in Futures Contract) and Type 3 Regulated Activity (Leveraged foreign exchange trading) licenses (CE No. AVD061). Registered address: 19th Floor, Shanghai Commercial Bank Tower, 12 Queen’s Road Central, Hong Kong

By clicking on certain links on this site, you are aware and agree to leave the website of Saxo Capital Markets, proceed on to the linked site managed by Saxo Group and where you will be subject to the terms of that linked site.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the US and other countries. AppStore is a service mark of Apple Inc.

Please note that the information on this site and any product and services we offer are not targeted at investors residing in the United States and Japan, and are not intended for distribution to, or use by any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation. Please click here to view our full disclaimer.