Are you curious about the latest in the crypto world? Here’s a rundown of today’s key trends and events affecting Bitcoin prices, blockchain technology, DeFi, NFTs, Web3, and crypto regulations.
Terraform wallet moves $62M BTC as Do Kwon remains in legal limbo
A wallet reportedly linked to Terraform Labs and its co-founder, Do Kwon, has transferred $62 million worth of Bitcoin to a different address.
Blockchain analytics firm Arkham Intelligence reported that on September 2, Terraform Labs moved more than 1,075 Bitcoin, valued at approximately $62 million at the time, from one of its wallets. It remains uncertain whether Kwon, who is currently awaiting extradition from Montenegro, was directly involved in this transaction.
The Terra ecosystem suffered a significant collapse in 2022, prompting authorities in the United States and South Korea to file charges against Kwon and several of his associates for their alleged involvement in the platform's downfall. In 2023, Kwon was arrested in Montenegro on unrelated charges and subsequently sentenced to four months in prison.
Following his release, Kwon has had limited freedom of movement within Montenegro, while the governments of the United States and South Korea continue to vie for his extradition. The legal proceedings have oscillated between local and higher courts for several months, and at the time of this report, Kwon's future remains uncertain.
SEC charges and settles with crypto-focused Galois Capital over custody issues
The U.S. Securities and Exchange Commission (SEC) has charged and subsequently reached a settlement with the crypto-focused investment advisory firm Galois Capital regarding issues related to the management of client assets.
The charges pertained to a private fund primarily invested in cryptocurrency, as stated by the SEC in a release on Tuesday.
"By failing to adhere to the Custody Rule provisions, Galois Capital subjected investors to risks, including the potential loss, misuse, or misappropriation of fund assets, including crypto assets," said Corey Schuster, Co-Chief of the SEC Enforcement Division’s Asset Management Unit. "We will continue to hold accountable advisers who fail to meet their fundamental investor protection obligations."
Beginning in July 2022, the Miami-based Galois Capital failed to ensure that certain cryptocurrencies held by the private fund it advised were "maintained with a qualified custodian," according to the SEC. The firm held some of these cryptocurrencies on platforms like FTX Trading LTD., which the SEC noted was not a qualified custodian.
Galois Capital was significantly impacted by the rapid collapse of FTX a few years ago. FTX filed for bankruptcy protection in November 2022, and its top executives, including former CEO Sam Bankman-Fried, faced criminal charges.
According to the SEC, approximately half of the fund's assets under management were lost in just a few weeks following the FTX collapse in November 2022. Galois Capital subsequently ceased operations in February 2023.
FBI says North Korean hackers are ‘aggressively targeting’ crypto employees
The United States Federal Bureau of Investigation (FBI) has issued a warning that North Korean cybercriminals are "aggressively targeting" employees within the web3 industry to steal cryptocurrency funds.
The FBI highlighted that North Korean actors are employing advanced social engineering techniques to deceive individuals at cryptocurrency and decentralized finance (DeFi) firms in order to "compromise networks connected to cryptocurrency assets," according to a statement released on Tuesday. These schemes present a "persistent threat" to entities managing significant amounts of cryptocurrency or related products.
"Over the past several months, North Korean malicious cyber actors have conducted research on various targets associated with cryptocurrency exchange-traded funds (ETFs)," the FBI stated. "This research involved pre-operational preparations, indicating that North Korean actors may attempt malicious cyber activities against companies involved with cryptocurrency ETFs or other cryptocurrency-related financial products."
In addition to researching potential targets, North Korean cyber criminals have impersonated prominent members of a victim’s company or created fake scenarios—tailored to the victim's background, skills, or business interests—to gain and exploit their trust.
Other tactics employed by these cyber criminals include persuading victims to download applications on devices connected to the web3 company's network, requesting non-standard software for simple tasks like video conferencing, or involving them in debugging exercises that include malicious code packages.
To mitigate these threats, the FBI advises firms to avoid storing crypto wallet information on internet-connected devices, refrain from conducting debugging exercises on company computers, and implement systems to verify individuals through a separate communications platform.
Aave, Sky float partnership to bridge DeFi, TradFi
Decentralized finance (DeFi) protocols Aave and Sky (formerly known as Maker) are exploring a partnership aimed at "bridging the gap between DeFi and traditional finance (TradFi)," according to an announcement on September 2.
This potential collaboration dubbed the Sky Aave Force, stems from a governance proposal submitted on September 2 by Phoenix Labs, a DeFi research and development organization. The proposal recommends issuing SPK tokens—native to Sky’s subDAO, Spark—to support the creation of a market for USDS, a stablecoin launched following Maker’s rebranding to Sky in August.
"The Sky Aave Force has an ambitious goal: to drive mass adoption and bridge the gap between DeFi and TradFi. Now is the time to work together," stated Aave Labs, the developer behind the Aave DeFi lending platform.
Phoenix Labs proposes distributing up to 3.33 million SPK tokens per month to incentivize the creation of an Aave v3 market for Sky’s sUSDS, a yield-bearing token that represents deposits in the Sky Savings Rate (SSR) program. Similar to the previous DAI Savings Rate (DSR) program, SSR offers yield to depositors from the revenues generated by Sky’s protocol.
Under the proposal, idle sUSDS on Aave would "consistently earn the Sky Savings Rate (SSR), enabling the market to outperform its USDC and USDT counterparts," according to Phoenix Labs.
The proposal further suggests introducing a USDS Direct Deposit Module (D3M) to Aave’s Lido Market, with an initial debt ceiling of $100 million. In July, Aave partnered with Lido, the leading Ethereum staking protocol, to create a lending market for wstETH, a liquid staking derivative (LSD) representing a claim on Lido’s ETH staking pool.
Bitfarms mines 233 BTC in August as Riot pens open letter in takeover saga
Bitcoin miner Bitfarms reported generating 233 BTC ($13.9 million) in August, marking a 2% increase in its operational hashrate to 11.3 EH/s compared to the previous month.
Despite the increase in hashrate, the bitcoins earned by Bitfarms in August represent an 8% decline from the 253 BTC mined in July. The company attributed this decrease to higher average network difficulty levels during August. Additionally, Bitfarms' August production reflects a 39% year-over-year drop, largely due to the impact of the April halving event on miners’ revenues and the network hashrate approaching all-time highs.
Of the 233 BTC earned in August, Bitfarms sold 147 BTC ($8.8 million) as part of its treasury management strategy. The remaining 86 BTC ($5.1 million) were added to its bitcoin treasury, bringing the company's total holdings to 1,103 BTC ($65.1 million).
In August, Bitfarms also agreed to acquire its competitor, Stronghold Digital, in a $175 million deal financed by stock and debt. Bitfarms CEO Ben Gagnon stated on Tuesday, "This acquisition will enable us to enhance and rebalance our energy portfolio, with a target to expand to 950 MW by the end of 2025, with nearly 50% of our capacity based in the U.S."
Meanwhile, rival miner Riot Platforms continues to pursue Bitfarms. After an initial offer in April to acquire Bitfarms for approximately $950 million, Riot withdrew its $2.30 per share offer in June, citing the Bitfarms board’s "lack of meaningful engagement." Despite this, Riot has steadily acquired Bitfarms stock, becoming its largest shareholder, with ownership now at approximately 19.9%, as confirmed by Bitfarms on Tuesday.
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