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Roundup of crypto hacks, exploits and heists in 2020

2020 has had its share of hacks, attacks, and exploits, here is a roundup of the most notable ones.



Unlike in previous years, crypto news in 2020 has not been dominated by major exchange hacks and million dollar Bitcoin thefts. However, there have still been quite a few and most of them have originated from the nascent decentralized finance sector.

DeFi has been one of the main drivers of crypto market momentum in 2020 and it stands to reason that the emerging financial landscape has been a magnet for scammers and hackers. Largely unaudited smart contracts coupled with cloned code have been a recipe for vulnerabilities and exploits, often resulting in millions of dollars in digital assets being pilfered.

A CipherTrace report from November 2020 stated that during the first half of the year, DeFi took up 45% of all thefts and hacks resulting in over $50 million lost. That figure rose to 50% of all thefts and hacks in the second half, according to the report. Speaking to Cointelegraph, CipherTrace CEO Dave Jevans warned of a potential regulatory crackdown: “DeFi hacks now make up more than half of all cryptocurrency hacks in 2020, a trend that is attracting attention from regulators.”

He added that of greater concern to regulators is the lack of Anti-Money Laundering compliance: “Funds stolen in the largest hack of 2020 – the $280 million KuCoin hack – were laundered using DeFi protocols.” Jevans also believes that 2021 is likely to bring clarity from regulators in terms of what actions DeFi protocols are expected to take to avoid the consequences of a failure to comply with AML, Capture the Flag, and possible sanctions.

Exchange hacks in 2020

The KuCoin hack occurred in late September when exchange CEO, Johnny Lyu, confirmed that the incursion affected the firm’s Bitcoin, Ethereum, and ERC-20 hot wallets, after private keys were leaked.

By early October KuCoin said it had identified suspects and had officially involved law enforcement in the investigation. By mid-November the Singapore based exchange declared that it had recovered 84% of the stolen crypto and resumed full services for the majority of its tradable assets.

There were other exchange hacks this year, but KuCoin was the largest. In February Italian exchange Altsbit lost almost all of its funds in a $70,000 hack, and there have been a couple of other minor crypto exchange breaches. In October 2020, as many as 75 centralized crypto exchanges had closed due to various reasons, hacking being onem.

DeFi’s 2020 hacks and exploits

With billions of dollars pouring into DeFi protocols and yield farms, the emerging landscape became a hotbed for hackers. The first major incursion of 2020 happened on DeFi lending platform bZx in February when two flash loan exploits resulted in the loss of nearly $1 million in user funds. A flash loan is when crypto collateral is borrowed and repaid within the same transaction.

bZx froze operations to prevent further loss, but this generated a wave of criticism from industry observers claiming that it was ultimately a centralized platform after all and could be the “death of DeFi.”

Markets crashed in March resulting in a lot of collateral liquidations, especially for Maker’s MKR token, but these were not hacks. The next one of those came the following month when a wrapped version of Bitcoin called imBTC was attacked using something called an ERC-777 token standard reentrancy method. The attacker was able to siphon a Uniswap liquidity pool for all of its value, estimated to be $300,000 at the time.

April also saw Chinese lending platform dForce drained of all its liquidity using the same exploit. The hacker repeatedly increased their ability to borrow other assets and made off with around $25 million in funds.

In June, an exploit was discovered in Bancor’s smart contracts that resulted in the draining of as much as $460,000 in tokens. The DeFi automated market maker stated that they had deployed a new version of the smart contract that had fixed the vulnerability.

Balancer was the next DeFi protocol to get exploited to the tune of $500,000 in wrapped Ether pilfered from its liquidity pools using a well-planned arbitrage attack. A series of flash loans and arbitraged token swaps were carried out in an attack on a vulnerability that the Balancer team apparently already knew about.

Not so much a hack as another exploit, but bZx was in the news again in July with a dubious token sale that was manipulated by bots placing buy orders in the same block that marked the start of the token generation event. Almost half a million dollars in price pump profits was captured by the attackers.

DeFi options protocol Opyn was the next victim in August when hackers exploited its ETH Put contracts making off with more than $370,000. The exploit allowed attackers to “double exercise” Ethereum Put oTokens and steal the collateral. Opyn recovered around 440,000 in USDC from outstanding vaults using a white hat hack, effectively returning them to Put sellers.

Again, not a direct hack but a code flaw in an unaudited Yam Finance smart contract affected the rebasing of the governance token resulting in a price collapse in mid-August. The protocol was forced to appeal to DeFi whales to save it by voting for a restart as version 2.

When the Sushi unrolls

The SushiSwap saga began at the end of August and the terms “vampire mining”’ and “rug pull” were coined. The anonymous protocol cloner and administrator known as “Chef Nomi” sold $8 million worth of SUSHI tokens causing the token price to collapse. A few days later, the protocol was rescued by FTX exchange CEO Sam Bankman-Fried, who was handed control by a consortium of DeFi whales through a multi-signature smart contract. Eventually all the funds were returned to the developer fund.

The rug pulls, or “pump and dumps” as they were termed during the previous altcoin boom in 2017, continued with a number of DeFi clones such as Pizza and Hotdog. Token prices for these food farms surged and collapsed within hours and sometimes even minutes.

In mid-October, hordes of “degenerate farmers,” or degens as they were termed, piled money into an unaudited and unreleased smart contract from DeFi protocol Yearn Finance founder Andre Cronje. The Eminence Finance contract lost $15 million when it was hacked within hours of Cronje posting teasers about the new “gaming multiverse” on twitter. The hacker returned around $8 million but kept the rest, which prompted the disgruntled traders to initiate legal action against the Yearn team over lost funds.

In late October, a sophisticated flash loan arbitrage attack on the Harvest Finance protocol resulted in the loss of $24 million in stablecoins in around seven minutes. The attack sparked debate as to whether these exploitations of the design of the system can be considered as hacks.

November was a particularly painful month for Akropolis which had to “pause the protocol” as hackers made off with $2 million in DAI stablecoin. The Value DeFi protocol lost $6 million in an all too common flash loan exploit, yield generating stablecoin project Origin Dollar was exploited for $7 million, and Pickle Finance suffered a $20 million collateral loss in a sophisticated “‘evil jar” exploit.

One that broke the mold of exploiting the system was a personal attack on an individual in mid-December. Nexus Mutual DeFi protocol founder Hugh Karp lost $8 million from his MetaMask wallet when a hacker managed to infiltrate his computer, spoofing a transaction. These types of attacks are generally less common as they involve some degree of social engineering.

The last reported flash loan attack of the year, so far, was an $8 million incursion on Warp Finance on December 18.

Many retail traders and investors have also fallen foul to phishing attempts and Ledger hardware wallet owners have also been targeted in 2020 after the personal information of some 272,000 Ledger buyers was hacked.

Battle hardening DeFi

The majority of smart contract and flash loan exploits in 2020 will serve to battle-harden the emerging financial ecosystem as it develops. New and smarter DeFi protocols are likely to emerge next year, but, as always, scammers, hackers and cybercriminals will also up their game in an attempt to stay ahead.

A huge dose of vigilance and attention is needed to delve into the current world of DeFi, but it has come a very long way in such a short period of time, and the decentralized financial landscape of the future is constantly evolving.




Crypto miners eye cheap power in Texas, but fears aired over impact on the grid

Can Texas meet the electricity demands of migrating Chinese Bitcoin miners?



The recent crackdown on crypto mining in China has seen concerns expressed over the potential impact a hashrate migration could have on Texas’ unreliable electricity market, as an increasing number of dislocated miners eye the Lone Star State.

Texas’ abundant sources of renewable energy and highly deregulated power grid make the state an obvious choice for migrating miners from China and elsewhere, with 20% of Texan electricity being generated by wind as of 2019.

Speaking to CNBC, Brandon Arvanaghi, a former security engineer at crypto exchange Gemini, predicted Texas will see “a dramatic shift over the next few months” as miners look to set up shop.

“We have governors like Greg Abbott in Texas who are promoting mining. It is going to become a real industry in the United States, which is going to be incredible,” he said, adding:

“Texas not only has the cheapest electricity in the U.S. but some of the cheapest in the globe.”

Castle Island Ventures’ founding partner, Nic Carter told CNBC that half of the world’s hashing power could ultimately exit China’s borders and will need new homes, stating:

“Every Western mining host I know has had their phones ringing off the hook. Chinese miners or miners that were domiciled in China are looking to Central Asia, Eastern Europe, the U.S., and Northern Europe.”

Global hash rate has fallen by one-third since early May following reports that China’s mining industry would be subjected to stricter supervision.

But is the Texan power grid up to the challenge of providing power for an influx of more crypto miners? The Electric Reliability Council of Texas (ERCOT) has just requested that Texans curb their electricity usage amid the recent heatwave that saw many residents turning up their air conditioners earlier this week.

Roughly 12,000 megawatts of generation capacity was offline as of Monday — enough to power 2.5 million homes. ERCOT described the scale of forced outages as “very concerning.”

The regulator warned that a failure to heed the request could result in a repeat of the widespread winter power failures that left 69% of Texans without electricity, and roughly half without water in February. According to Buzzfeed, February’s outages could have resulted in up to 700 deaths in the state.

Angela Walch, a Texas research associate at University College London’s Centre for Blockchain Technologies, tweeted her concerns regarding the share of Texas’ electricity being devoted to Bitcoin mining, emphasizing that her family has been “asked to reduce our air conditioning use, not run washing machines & dryers, etc.”

Obviously, Bitcoin is not the sole cause of this cluster*^% that our poor political leadership in Texas has caused.

But, I am curious to know the portion of the grid it uses. Maybe Bitcoin miners are the first to be shut down in times of grid stress.

— Angela Walch (@angela_walch) June 15, 2021

However Tierion CEO Wayne Vaughan responded by asserting that much of the electricity used to power Texan mining operations comprised stranded resources that “would never be able to reach your home to power your appliances.”

Others argued that wholesale Bitcoin mining operations could actually alleviate Texas’ power issues, with Texas’ seasonal surges in electricity demand incentivizing miners to sell power back to the state’s grid that otherwise go uncaptured.

In September 2020, the Peter Thiel-backed crypto miner Layer1 in West Texas reported it had reaped profits exceeding 700% by selling renewable electricity back to the grid amid surging summer demand.

While up-to-date data for global hashrate distribution is not available, the Cambridge University’s Bitcoin Electricity Consumption Index (BECI) estimates that China represented 65% of the world’s hashing power as of April 2020.

Earlier this month, district regulators in Western Xinjiang and Yunnan issued notices mandating the suspension of virtual currency mining enterprises. BECI estimates the two regions account for 40% of the country’s hash rate.

Castle Island Ventures’ founding partner, Nic Carter told CNBC that half of the world’s hashing power could ultimately exit China’s borders and will need new homes, stating:



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Bitcoin price hits $40K as Paul Tudor Jones slams Fed inflation claims

Bitcoin price action is back at $40,000 as Paul Tudor Jones recommends a 5% BTC portfolio.



Bitcoin (BTC) passed $40,000 on June 14 as a consolidation period snapped to unleash a solid breakout.

BTC/USD 1-hour candle chart (Bitstamp). Source: TradingViewBTC price breaks out past $40,000

Data from Cointelegraph Markets Pro and TradingView showed BTC/USD gaining 3% in under an hour, reaching $40,500 on Bitstamp.

The largest cryptocurrency capitalized on upside which resulted from a new positive tweet from Elon Musk over possible acceptance by Tesla in the future.

Earlier, Cointelegraph reported on traders betting on a leg up to around $47,000 before a correction.

A look at buy and sell positions on major exchange Binance showed support at $38,000, wit resistance at $40,500 the next hurdle for bulls.

Buy and sell levels on Binance as of June 14. Source: Material Indicators/TwitterTudor Jones advocates 5% BTC allocation

Bitcoin reached a $2 trillion market cap because of a “dichotomy” in Federal Reserve policy which “questions” its credibility, says famous trader Paul Tudor Jones.

In an interview with CNBC on June 14, the founder of Tudor Investment Corporation sounded the alarm over advancing inflation.

After last week’s consumer price index (CPI) report showed that U.S. inflation had hit a 13-year high, Bitcoin’s deflationary nature has rarely looked so appealing.

For Tudor Jones, the idea that higher inflation is just temporary due to recent events, as suggested by the Fed and central banks in general, is a myth.

“It’s somewhat disingenuous to say, for them to say, that inflation is transitory,” he told CNBC’s Squawk Box segment.

Today’s environment is entirely different to that which saw episodes of inflation in the past, such as 2013, and as such, there is little sense in the Fed applying the same forecasts.

CPI was much lower then, Tudor Jones noted, while now, unemployment and jobs also roughly equal each other.

Related: Paul Tudor Jones says Bitcoin is ‘like investing early in Apple or Google’

Meanwhile, gold and Bitcoin have provided a refuge for many. Despite the precious metal vastly underperforming Bitcoin in terms of gains, it remains near record highs.

“When you look at the Fed today and the Fed back then, you wonder how can you have such wildly different policy views on what constitutes the right levels for employment, the right levels for inflation,” he continued.

“How can you have that with an eight-year timeframe? It’s almost like a split personality and you wonder why Bitcoin has a $2 trillion market cap and gold’s at $1,865 an ounce. And the reason why is you have this dichotomy in policy that again questions — questions — the institutional credibility of something.”

Ultimately, a 5% Bitcoin allocation is one of the only things he advocates to those seeking portfolio advice.

“I say, ‘OK, listen, the only thing I know for certain is I want to have 5% in gold, 5% in Bitcoin, 5% in cash, 5% in commodities at this point in time,'” he added.

A look at buy and sell positions on major exchange Binance showed support at $38,000, wit resistance at $40,500 the next hurdle for bulls.



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Investment product issuer 21Shares will list Bitcoin ETP on Aquis Exchange

Exchange-traded product issuer 21Shares said it will make its Bitcoin ETP available to U.K. professional investors through the Aquis Exchange.



The announcement comes the same day as ETC Group’s Bitcoin ETP began trading on the same exchange.

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Investment product issuer 21Shares will list Bitcoin ETP on Aquis Exchange

Switzerland-based 21Shares, formerly known as Amun, has said it will make its Bitcoin (BTC) exchange-traded product available to traders in the United Kingdom through the Aquis Exchange.

According to an announcement from 21Shares, its Bitcoin exchange-traded product (ETP) will be available to professional investors on the Aquis Exchange this summer. U.K.-based firm GHCO will be acting as the crypto ETP’s liquidity provider, with 21Shares saying the product would be “engineered like an [exchange-traded fund].”

“ETPs trade on exchanges in a similar manner to a listed stock and institutional investors in the U.K. will get exposure to Bitcoin via a regulated framework and structure which they are already accustomed to,” said 21Shares. “The ETP has been designed to provide institutional U.K. investors with secure and cost-effective exposure to Bitcoin without the associated Bitcoin custody and security challenges.”

21Shares reported more than $1.5 billion in assets under management across 14 ETPs available on European stock exchanges. One unit of the firm’s Bitcoin ETP on Aquis will reportedly represent exposure to 0.00035 BTC, or roughly $12.54 at the time of publication.

A few companies have begun expanding their crypto products to the U.K. market. Also on Monday, crypto investment manager ETC Group’s Bitcoin ETP began trading on the Aquis Exchange in London and Paris. However, the country’s financial watchdog, the Financial Conduct Authority, banned the sale of crypto derivatives to retail traders in January.

21Shares reported more than $1.5 billion in assets under management across 14 ETPs available on European stock exchanges. One unit of the firm’s Bitcoin ETP on Aquis will reportedly represent exposure to 0.00035 BTC, or roughly $12.54 at the time of publication.



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