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A hacker has stolen $950,000 in ether from a crypto wallet via the same vanity address exploit linked to an attack on trading firm Wintermute last week.

The hacker stole 732 ETH on Sept. 25 and sent it directly to the sanctioned cryptocurrency mixing service Tornado Cash, according to PeckShield citing on-chain data. Here it will have been mixed with other cryptocurrency and withdrawn to the hacker’s own wallet.

The exploit was made possible due to the recent vanity address weakness that was picked up on GitHub in January but only made widely known by DEX aggregator 1inch on Sept. 15. A vanity address is a cryptocurrency address designed in a certain way, often to feature a pattern or word in the address, similar to a custom license plate on a car. 

Many vanity addresses were created through a tool called Profanity. Yet 1inch highlighted that its method of creating such addresses made them easier to breach through a brute force attack. While this would require a lot of computing power, it might be offset by the amount of cryptocurrency in the wallet.

A number of smaller hacks have taken place so far. Earlier this month, $3.3 million was drained from multiple Ethereum addresses that had used Profanity. On Sept. 20, crypto market making firm Wintermute said it had been hacked for $160 million — later acknowledging it was likely due to this exact issue.

© 2022 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Japanese banking giant Nomura has invested in London-based blockchain payments firm Fnality, according to an announcement from Fnality on Monday. 

The financial services firm will also join Fnality’s international consortium of global banks, which are focused on building a regulated, peer-to-peer payments system based on digital assets.  

Fnality already counted 16 major financial institutions as backers: Banco Santander, BNY Mellon, Barclays, CIBC, Commerzbank, Credit Suisse, Euroclear, ING, KBC Group, Lloyds Banking Group, Mizuho Financial Group, MUFG Bank, Nasdaq, Sumitomo Mitsui Banking Corporation, State Street Corporation and UBS.  

Formed in 2019 and initially known as Utility Settlement Coin (USC), Fnality aimed to create a network of wholesale blockchain-based payments systems denominated in five currencies: U.S. dollars, Canadian dollars, euros, British pounds and yen. The tokenized currencies would be fully backed by fiat currency held by the relevant central bank. 

In September 2020, Reuters reported that the project had faced delays in its bid for regulatory approval. 

Fnality’s fundraising attempts

The details of the investment from Nomura were not disclosed. However, Fnality plans to use the investment to expand its presence in capital markets across Europe, the U.S. and Japan, it said. 

The Block recently reported that Fnality is seeking to raise £50 million ($53 million) in a Series B round, the same amount that it raised in a Series A round in June 2019 when Fnality formed as a commercial entity. 

“Following on from its successful Series A investment round, Fnality is currently raising funding as part of an ongoing Series B investment round. Full details will be provided by Fnality upon the completion of the round,” a spokesperson for Fnality International told The Block at the time. 

Nomura’s crypto push

The news of Nomura’s backing comes as the investment bank launches a new crypto VC unit as part of its digital assets business. The unit is named Laser Venture Capital and will invest in startup categories like DeFi and blockchain infrastructure. 

Laser Venture Capital is the first product to launch from Nomura’s new digital assets business, which is known as Laser Digital. The bank is plotting two further launches, one focused on secondary trading and the other on investor products.

Steven Ashley and Jez Mohideen will run Nomura’s Laser Digital crypto business as chairman and CEO, respectively. As part of the new role, Ashley has stepped down from his previous role as the bank’s head of wholesale division.

“The transformation of financial services powered by blockchain technology is clearly accelerating, and we believe Fnality is uniquely positioned to capitalize on the significant opportunities brought by this evolution,” said Angel Issa, Nomura’s global head of corporate development and strategic investments, in today’s announcement. 

“We look forward to leveraging Fnality’s technology and expertise to continue delivering differentiated value to our clients and partners globally,” he added,

© 2022 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Episode 91 of Season 4 of The Scoop was recorded remotely with The Block’s Frank Chaparro and Viktor Bunin, protocol specialist at Coinbase and Stephane Gosselin, MEV boost architect & co-founder of Flashbots.

Listen below, and subscribe to The Scoop on Apple, Spotify, Google Podcasts, Stitcher or wherever you listen to podcasts. Email feedback and revision requests to podcast@theblockcrypto.com.

In the crypto world, MEV (‘Maximal Extractable Value’) refers to block producers’ ability to reorganize the sequence of transactions in any given block to extract a premium.

While MEV can be used nefariously in instances such as front-running large transactions, it can also be used for arbitrage opportunities that do not directly impact other market participants.

In this episode of The Scoop, we take a closer look at the world of MEV with Viktor Bunin, a protocol specialist at Coinbase, and Stephane Gosselin, the founder of Flashbots — a research project that provides MEV solutions to Ethereum validators.

According to Gosselin, the purpose of Flashbots is to make markets more efficient:

“We look at market structures, we research them and we develop products to try to improve them, and make sure that they’re aligned with the intent of the chains that they’re operating on top of.”

How Flashbots works in practice is essentially by creating a separate layer where users can bid against each other to have their transactions included on the blockchain. 

As Bunin explains,

“It essentially creates a private mempool or a ‘fastlane’ where it says, ‘Hey, you’re welcome to compete all you’d like, but you should do it at this layer,’ and then there will be a standardized way by which whoever is a winning bid — essentially the winning transaction — that will be the one that gets included on the blockchain and no others.”

During this episode, Chaparro, Bunin, and Gosselin also discuss:

• How Coinbase Cloud plans to integrate Flashbots’ tech
• What Flashbots is doing to mitigate centralization concerns
• Why Flashbot’s MEV Boost redistributes value more efficiently than traditional finance

This episode is brought to you by our sponsors Tron, Chainalysis & IWC Schaffhausen

About Tron
TRON is dedicated to accelerating the decentralization of the internet via blockchain technology and decentralized applications (dApps). Founded in September 2017 by H.E. Justin Sun, the TRON network has continued to deliver impressive achievements since MainNet launch in May 2018. July 2018 also marked the ecosystem integration of BitTorrent, a pioneer in decentralized Web3 services boasting over 100 million monthly active users. The TRON network completed full decentralization in December 2021 and is now a community-governed DAO. | TRONDAO | Twitter | Discord |

About Chainalysis
Chainalysis is the leading blockchain data platform. We provide data, software, services, and research to government agencies, exchanges, financial institutions, and insurance and cybersecurity companies in over 60 countries. Backed by Accel, Addition, Benchmark, Coatue, Paradigm, Ribbit, and other leading firms in venture capital, Chainalysis builds trust in blockchains to promote more financial freedom with less risk. For more information, visit www.chainalysis.com.

About IWC Schaffhausen
IWC Schaffhausen is a Swiss luxury watch manufacturer based in Schaffhausen, Switzerland. Known for its unique engineering approach to watchmaking, IWC combines the best of human craftsmanship and creativity with cutting-edge technology and processes. With collections like the Portugieser and the Pilot’s Watches, the brand covers the whole spectrum from elegant timepieces to sports watches. For more information, visit IWC.com.

© 2022 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Prosecutors in South Korea claim Interpol has issued a red notice for the arrest of Terraform Labs CEO Do Kwon, according to a Bloomberg report.

The news comes after a South Korean court issued a warrant for Kwon’s arrest on Sept. 14. Days later, after Kwon claimed he was not on the run, South Korean prosecutors asked Interpol to issue a red notice against him.

Those same prosecutors said on Monday that Interpol, which coordinates policing efforts between countries, had issued the notice, Bloomberg said.

Kwon’s location is currently unknown after police in Singapore, where Terraform Labs was based, said a few weeks ago that he was not in the city-state.

He and other Terraform Labs executives face allegations that they breached capital markets laws in South Korea. Terra, the blockchain, and its associated tokens terraUSD and luna collapsed in spectacular fashion in mid-May — wiping out some $40 billion in a matter of days.

© 2022 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Bitcoin and ether were both down over the past week after another volatile week of trading in which macroeconomic sentiment continues to guide prices.

Bitcoin was down 5.75% at $18,949 over the past week, while ether shed more than 11.54% and was trading at $1,299, at the time of writing Coinbase data show. 

Ether has continued to decline since The Merge, JP Morgan said in a research note on Wednesday. 

“Reasons for the recent decline likely include a combination of buy-the-rumor, sell-the-news flows specific to Ethereum’s Merge event along with broader weakness in risk assets due to more hawkish central banks.”

The U.S. Federal Reserve raised the U.S. federal funds rate by 75 basis points on Wednesday, marking a 15-year high. The decision to take the rate to 3% to 3.25% had been expected, with the market pricing in a rise of 75 basis points ahead of time; however, markets sold off sharply on the news.  

PFOF a win for Wall Street?  

Robinhood shares soared at the open on Thursday following reports that the U.S. Securities and Exchange Commission (SEC) won’t limit it in making payment-for-order-flow (PFOF) deals.

PFOF deals are a major part of the business models for firms like Robinhood and Charles Schwab. This system allows Robinhood to offer commission-free trading, but the system is not without its critics. This routes orders through a handful of large electronic trading firms that are paying the broker, and some argue that retail traders don’t get the best price in this system.

There been an ongoing argument over whether the U.S. business model for low-cost trading apps like Robinhood is ethical, Laura Hoy, equity analyst at Hargreaves Lansdown, told The Block on Thursday.

“The SEC’s latest decision to allow the payment for order flow model these platforms use is a major milestone in the argument, but it’s certainly not the end,” she said. 

Hoy went on to say this practice has been banned in many countries, and while the SEC has stopped short of doing that, the regulator still has space to make the practice a bit less lucrative.  

“Over the next few months, we’re likely to hear just how the SEC will tackle the issue, which could add to the volatility that stocks like Robinhood have experienced of late,” she said. “After a pandemic-fueled boom, the industry’s been in the hot seat as rising interest rates make trading stocks look less appealing, so any attack on the underlying business model could see the recent gains erased.” 

Robinhood shares spiked 9% after the open on Thursday, having surged throughout pre-market trading. However, the stock has since surrendered those gains, closing the week at $9.44, having peaked just below $12 on Thursday. 

© 2022 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

The cost of transacting on the Ethereum network has significantly declined since the eye-popping days of 2021’s DeFi Summer and the subsequent boom in non-fungible token issuances.

Ethereum’s transaction costs have reached the lowest point they have ever been in the past two years, as of Sept. 22, according to data from The Block.

Although transaction costs are hitting new lows, Ethereum transaction count and daily active users have not dropped concurrently. A likely culprit: transacting users don’t feel the need to pay high costs to get their transactions through in a speedy fashion.

“People are not in a hurry and are not willing to pay more for their transactions to go through sooner,” The Block Research data analyst Simon Cousaert explained.

When looking at the total transaction count and active addresses on the Ethereum network, neither of these statistics is nearing all-time lows. In fact, both have increased roughly 20% and 60% in the same two-year time frame, respectively.

Uniswap, OpenSea, and ETH transfers were the highest gas-consuming (cost to perform a transaction) smart contracts in the past month, according to The Block’s data.

During the entire 14-month period, OpenSea contributed to a huge portion of the total gas consumption but has fallen significantly since January. OpenSea consumed 230,000 ETH or roughly 16,400 ETH month-over-month (MoM). But within the last 30 days, this MoM number is well below the MoM average sitting at roughly 1,100 ETH.

This caused other transactions on the network, such as transfers and token swaps, to cost an astronomical amount more. The drop-off in transaction costs can be attributed to the significant reduction in OpenSea activity, and the slow migration of users switching to alternative blockchains in search of cheaper transactions.

There has been significant growth in the Layer 2 space, primarily in optimistic rollup solutions such as Arbitrum and Optimism. Though transaction costs are reaching new lows, transaction counts on the leading optimistic rollup solutions are on an upward trajectory.

© 2022 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

CoinFlex’s creditors have overwhelmingly backed the Seychelles-based crypto exchange’s restructuring plans in the early hours of voting on the proposals. 

After almost five hours of voting today, tokens representing more than 99% of creditor assets had agreed to the proposed restructuring deal, according to a poll on Snapshot. Voting is due to end on Tuesday. 

CoinFlex was founded in 2019 as a platform for physically delivered futures, before pivoting its focus to build a repo market for crypto.

The exchange halted client withdrawals in June after a counterparty failed to pay a margin call. CoinFlex identified this counterparty as noted crypto investor Roger Ver — although Ver denied this and said he is the one owed money. CoinFlex went on to lay off staff in an effort to reduce costs, before eventually filing  for restructuring in a Seychelles court in August. 

Under the restructuring plans, CoinFlex’s creditors will own 65% of the company’s equity and employees will be allocated 15% to vest over time in a share option program. Investors in CoinFlex’s Series A funding round will be wiped out, while those who took part in its Series B will remain shareholders. 

CoinFlex’s proposal also includes an agreement with the BCH alliance that would see the alliance assume responsibility of the SmartBCH Bridge. If approved, CoinFlex said the takeover would mean that “BCH on the SmartBCH network will be 1:1 redeemable for BCH via the SmartBCH Alliance.”

The exchange is just one of many crypto firms to suffer following May’s collapse of the Terra ecosystem, which wiped out $40 billion in investor value in a matter of days. Hedge fund Three Arrows Capital filed for bankruptcy at the start of July and crypto lender Celsius followed a couple of weeks later.  

© 2022 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

In what’s looking like a relatively quiet week for scheduled crypto news, ongoing restructuring hearings are likely to hit the headlines.

Voyager’s journey ends

The auction of Voyager Digital’s assets is due to conclude on Thursday.

The law firm Kirkland & Ellis has been hosting rounds of bids from interested parties since the crypto lending platform filed for Chapter 11 bankruptcy in July.

Bidders may submit a variety of types of proposals, from a simple purchase of Voyager’s assets to an attempted restructuring and resuscitation of the firm. The Wall Street Journal reported last week that exchange giants FTX and Binance are leading the bidding.

Voyager filed for bankruptcy amid a broad crypto market downturn that began in May with the collapse of the Terra blockchain — a market shock that wiped out $40 billion in investor value in a matter of days.

Compute North goes south

Before that, on Monday, a firm from a totally different part of the crypto industry will hold bankruptcy proceedings of its own.

Compute North, which builds facilities and physical infrastructure for mining firms, filed for Chapter 11 bankruptcy last week. A hearing to discuss the filing of a list of creditors and the operation of the firm’s cash management system is due to take place on Sept. 26.

Compute North has between $100 million and $500 million in both estimated liabilities and estimated assets, according to last week’s filing. It provides services for some of the biggest bitcoin mining companies, including Marathon, which recently started energization at a colocated 280-megawatt bitcoin mining facility in West Texas.

CoinFlex’s final flex

Tuesday will see yet more developments at an insolvent crypto firm, this time the Seychelles-based exchange CoinFlex.

Creditors have until Sept. 27 to vote on a restructuring proposal that will give them ownership of 65% of the company. Voting began at 8 a.m. UTC today and is due to end at 4 a.m. UTC on Tuesday. After about three hours of voting today, tokens representing more than 99% of creditor assets had agreed to the proposed restructuring.

CoinFlex is another victim of this year’s crypto market slump. The exchange suspended withdrawals in June, citing “extreme market conditions and continued uncertainty involving a counterparty.” Several days later, CoinFlex’s CEO accused prominent crypto investor Roger Ver of defaulting on a loan agreement worth $47 million in USDC. Ver, however, denied the accusation, saying he was the one owed money.

© 2022 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Pre-seed venture capital investment firm Robot Ventures hired a former Goldman Sachs trader Hart Lambur as a partner, the firm announced on Twitter. 

Lambur is best known for co-founding crypto project UMA, which allows developers to build financial products on top of the Ethereum blockchain. 

“Welcome @hal2001 our new Venture Partner to the Robot family,” Robot Ventures, which was founded by protocol Compound Labs founder Robert Leshner, said in a tweet. 

“Hart brings a wealth of experience as the founder of UMA & Across protocols and will be working closely to assist the projects we invest in,” the firm said. 

Robot Ventures did not immediately respond to a request for comment.

Robot Ventures made headlines in 2020 when it brought on giga-brain quant Tarun Chitra as a venture partner when it raised $4 million in fresh funding. 

The firm has backed a wide range of companies in the decentralized finance space, including Nansen, Argent, Goldfinch and LayerZero. 

Chitra spent the early days of his career doing quantitative research and development at D.E. Shaw Research and Vatic Labs. Since 2018 he’s run his own company, Gauntlet, which creates tools for crypto developers that allows them to forecast risk related to their projects.

As for Lambur, the Columbia University graduate spent more than seven years at Goldman Sachs as an interest rate trader, providing liquidity in US Treasuries, according to his LinkedIn profile. 

© 2022 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

The U.S. Department of Defense hired a crypto intelligence firm to review the potential security threat of cryptocurrencies.

DARPA, the Defense Advanced Research Projects Agency, has tasked Inca Digital with developing tools to understand how crypto markets work and help crack down on the illicit uses of digital assets that could pose a risk to national security. DARPA is an independent agency of the U.S. Department of Defense, which is headquartered at the Pentagon.

“The program underway here involves mapping out the cryptocurrency universe in some detail,” Mark Flood, a program manager with the agency, told The Washington Post.

Inca Digital, owned by veterans, and its government contracting entity, Inca Digital Federal, analyze data across crypto markets, blockchains, and news and social media to deliver intelligence to financial institutions, technology firms and government entities.

The firm announced a Series A fundraise led by Galaxy Digital and GTS Venture Capital in April. Other investors include Wedbush Capital and Menai Financial Group. 

Inca Digital counts a wide range of government and private sector companies among its clientele including the Commodity Futures Trading Commission, crypto exchange FTX and brokerage firm Fidelity.

The news comes at a time when a number of government agencies take a closer look at the crypto market. The U.S. Treasury’s Office of Foreign Assets Control (OFAC) recently sanctioned Tornado Cash for helping a North Korean organization launder more than $455 million worth of stolen cryptocurrency.

© 2022 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.