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Ukraine’s government abruptly canceled its planned crypto airdrop and said it would instead sell NFTs to raise funds following last week’s Russian invasion.

“After careful consideration we decided to cancel airdrop,” Mykhailo Fedorov, Ukraine’s minister for digital transformation, posted from his verified Twitter account today. “Instead, we will announce NFTs to support Ukrainian Armed Forces soon. We DO NOT HAVE any plans to issue any fungible tokens.”

Scammers had earlier appeared to target Ukraine’s fundraising attempts.

© 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.

Despite reports that Ukraine’s crypto airdrop had come early, it appears highly likely that the token has nothing to do with the Ukrainian government.

CoinDesk earlier reported that the Ukrainian government had started sending “Peaceful World” tokens to people who had to donated cryptocurrency to support its defence against Russia, before issuing a clarification. However, there are a number of reasons why these tokens do not appear genuine.

For a start, the tokens are being handed out six hours ahead of the snapshot time publicized by Ukraine’s official Twitter account. A snapshot is when a record of the blockchain is taken, with this list used to calculate how many tokens should be given out to each address in the following airdrop. It wouldn’t make sense for an airdrop to go out ahead of the snapshot.

Igor Igamberdiev, a researcher at The Block, points to several other red flags. 

While the tokens appeared to be sent out from the official Ukraine Ethereum wallet, this was actually a trick, according to Igamberdiev. In this type of scam, tokens set to be movable by anyone – not just the wallet’s owner – are distributed but then moved to another address. It makes it look like the address owner moved them, when they had no involvement. “This is how scammers usually work,” Igamberdiev said.

In addition, the tokens were funded from Binance to create the contract, do the airdrop and add liquidity on decentralized exchanges. According to Igamberdiev, the contract could freeze funds at a specific address – a worrying sign. Plus, he noted that the code used for the airdrop is very inefficient unless Ukraine was planning to give all donors roughly the same amount of tokens. Most airdrops allocate tokens proportionately to a user’s involvement rather than rewarding everyone equally. 

The tokens are already being traded on Uniswap and have seen $500,000 in trading volume so far.

We have reached out to the Ukrainian government and will update this story should we hear back.

© 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.

Treasure, the biggest marketplace for non-fungible tokens (NFTs) on the Arbitrum blockchain, has been hit by an exploit.

Treasure DAO co-founder John Patten confirmed the exploit in a tweet posted on the evening of March 2.

“Treasure marketplace is being exploited. Please delist your items. We will cover the costs of the exploit — I will personally give up all of my Smols to repair this,” he said.

Earlier today, Treasure advised users to “delist everything” through messages posted on its Discord server, and said the marketplace had been paused. Its representatives later added that they believed they had identified the issue.

The news triggered panic among Treasure users, who took to social media to sound the alarm. 

DELIST ALL YOUR SHIT OFF TREASURE MARKETPLACE, THIS ISNT A JOKE. THIS WAS JUST STOLEN IN A MARKETPLACE EXPLOIT FOR 0 MAGIC, I JUST HAD A PINK SMOL STOLEN. THESE ARE NOT REAL SALES, DELIST NOW. @Treasure_DAO KILL THE SITE https://t.co/8TySOce5kW

— Keyboard Monkey (@KeyboardMonkey3) March 3, 2022

The full extent of the exploit and which items have been stolen is not yet clear, but a blockchain address associated with the hacker — shared by Twitter sleuths — gives some indication. 

That address appears to show that 17 Smol Brains — perhaps the most popular NFTs traded on Arbitrum — were stolen. Based on their listed prices on the Treasure platform, the total value of these pieces comes to 426,511.38 in MAGIC, Treasure’s native token, or around $1.4 million at current prices.

The hacker appears to have been able to acquire the pieces without paying for them.

🚨🚨 Seems to be a bug in the @Treasure_DAO marketplace.

Listed smols getting sold for 0 magic

Delist your smols 🚨🚨 pic.twitter.com/VB1BYhcsrW

— edgar.eth 🦉 (@edgar_eth) March 3, 2022

News of the hack triggered a sharp fall in the price of MAGIC, from around $3.8 to as low as $2.6, according to CoinGecko. The price of the token has recovered somewhat in the hours since the exploit and is now trading at roughly $3.3.

John Patten and Treasure were contacted for comment but did not respond by press time. 

© 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.

New York is prioritizing the procurement of blockchain analytics tools to better enforce sanctions against Russia.

New York Governor Kathy Hochul announced actions today to bolster the ability of the New York Department of Financial Services (NYDFS) to identify transactions between virtual currency businesses and sanctioned entities. 

Superintendent of Financial Services Adrienne Harris said in a statement that the NYDFS is coordinating with other state and federal regulators and regulated crypto businesses to “ensure the full weight of our regulatory regime is brought to bear in the fight to protect Ukraine.”

“We know that bad actors will try to evade sanctions through the transmission of virtual currency, which is why it is imperative that we have the ability to monitor transactions and exposure in real-time,” said Harris. 

The office has already been assessing a number of blockchain analytics tools and service providers, but it now plans to fast track its contracting efforts, according to today’s announcement.

This is a continuation of Hochul’s efforts to support sanctions against Russia. The governor issued an executive order last weekend compelling state entities to divest funds from any institution determined to be a Russian or supporting entity. 

© 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.

Ukraine’s official Twitter account teased an “airdrop” Thursday morning, and though details remain sparse about the initiative, the announcement appears to have triggered a fresh influx of donations.

As shown in a pair of Dune Analytics dashboards tracking the accumulation of ETH to the government’s coffers, the amount jumped in the early hours of March 2 — coinciding with Ukraine’s post on the matter.

“Airdrop confirmed,” Ukraine’s official Twitter account posted today. “Snapshot will be taken tomorrow, on March 3rd, at 6pm Kyiv time. Reward to follow!”

Source: Michael Silberling/Dune Analytics Dashboard

More than $11 million worth of ETH has been donated to the government’s address thus far, as well as nearly $10 million worth of BTC. Donations have also been collected in the form of TRX, DOT and other digital assets. 

© 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.

Quick Take

• In this series, we dive into the mechanics and developments behind emerging decentralized governance tools that are reducing coordination costs for DAOs
• Here, we look at Gnosis Safe, a tool for decentralized treasury management and execution, and Snapshot, a tool for decentralized voting 
• We also discuss SafeSnap, a new module that enables trustless, on-chain execution of Safe transactions based on the outcome of SnapShot’s off-chain votes

This research piece is available exclusively to
members of The Block Research.
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this Research content on The Block Research.

Investment brokerage Charles Schwab filed to create a “Crypto Economy ETF” on Thursday, according to regulatory filings.

As stated in the filing:

“The fund’s goal is to track as closely as possible, before fees and expenses, the total return of an index that is designed to deliver global exposure to companies that may benefit from the development or utilization of cryptocurrencies (including bitcoin) and other digital assets, and the business activities connected to blockchain and other distributed ledger technology.”

The fund, as structured, is intended to track the performance of a Schwab Crypto Economy Index. Which specific firms the index will track is unknown as of press time. If approved, the ETF would trade on the NYSE Arca exchange. 

Schwab’s filing also made clear that the ETF would not invest in cryptocurrencies themselves. 

“The fund will not invest in cryptocurrency or digital assets directly,” the firm wrote. “The fund will not invest in initial coin offerings. The fund may, however, have indirect exposure to cryptocurrencies by virtue of its investments in companies that use one or more digital assets as part of their business activities or that hold digital assets as proprietary investments.”

As The Block reported last year, Schwab has been eyeing the crypto space, though the firm’s leadership has pointed to regulatory uncertainty as a hindrance. 

Walt Bettinger, the firm’s CEO, pointed to those concerns in a January interview with Bloomberg. Still, he told the news outlet that crypto is “hard to ignore.” 

© 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.

Global music brands Billboard and Universal Music Group are partnering to launch ChartStars, an NFT based project of digital collectibles built on the Flow blockchain. 

This is Billboard’s first scalable NFT project geared toward music fans. The collection will be comprised of artist-focused digital artwork that celebrates the achievements and milestones of the Billboard Charts. The items will feature officially licensed art including short visual clips from music videos and album photos. 

“For the first time, music fans will now have an opportunity to be forever linked to their favorite artists, by sharing ownership of a moment in time,” said Julian Holguin, President of Billboard, in a statement.

Crypto startup Unblocked is also involved in the initiative. The startup raised a $90 million funding round earlier this year, drawing participation from Jay-Z, Tiger Global as well as Dapper Labs, which developed Flow.  

The development comes amid a depending connection point between the mainstream music entertainment industry and the use of NFTs for consumer branding and promotion. In January, artist Nas sold royalty rights to two of his songs as NFTS. Last month, The Block reported that Coachella partnered with FTX US to launch NFTs tied festival passes and other perks. 

© 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 is converging with one of the largest industries in the world: oil and gas.

In this episode of The Scoop, Justin Ballard, co-founder of Jai Energy, joined The Block’s Frank Chaparro to discuss how his Wyoming-based firm is working with producers of oil and gas to help them put excess energy to work by mining bitcoin.

“Every single of one them that calls us, typically are calling us about a flare gas situation,” Ballard, who worked for more than a decade as an attorney and operator in the oil industry prior to founding Jai, said of new entrants to bitcoin mining from the oil and gas world.

“The oil and gas industry and bitcoin mining can work together,” he said.

Jai uses the excess energy or ‘run-off’ owned by oil companies to power bitcoin mining, which offers a new revenue stream for gas companies and energy for Jai’s bitcoin mining operation. Ballard explained how the synergies between these groups will expand:

“There’s a variety of areas where oil and gas companies have megawatts of excess capacity that they’ve so capital into building out, but they’re not utilizing on a daily basis. And we’ve had some success showing them those areas and where it’s like, look, you can go build a very nice bitcoin mine on this facility.”

Ballard also explained how the business models of oil and gas firms and bitcoin mining companies are nearly identical, with the main difference being the change in difficulty built into the bitcoin network.

During this episode, Chaparro and Ballard also discuss:

• How the firm is working with the El Salvador government on its Volcano-powered bitcoin mining operation
• What he thinks about the climate questions that have long hungover the bitcoin space
• How supply chain issues are making the job of being a bitcoin miner more complicated
• The job creation stemming from bitcoin miners

© 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.

Four members of the Senate Banking Committee are asking what the Treasury Department is doing about crypto in the context of sanctions policy. 

In a March 2 letter to Treasury Secretary Janet Yellen, Elizabeth Warren (D-MA), Mark Warner (D-VA), Jack Reed (D-RI) and Committee Chair Sherrod Brown (D-OH) call for responses as to the Office of Foreign Asset Control’s (OFAC) work on cryptocurrencies. 

“There are growing concerns that Russia may use cryptocurrencies to circumvent the broad new sanctions it faces from the Biden administration and foreign governments in response to its invasion of Ukraine,” the letter reads, citing a New York Times report that Warren tweeted out two days earlier. 

The letter particularly highlighted decentralized finance as an area of concern, asking “How has the growth of DeFi arrangements and services affected malign actors’ ability to circumvent sanctions, as well as OFAC’s ability to enforce sanctions?”

Ultimately, the senators ask if OFAC needs new legal authorities or resources. 

Following Russia’s invasion of Ukraine, the US and allies have imposed crippling sanctions on Russia, largely cutting the country out of the financial system. A number of reports have speculated on crypto’s potential utility to get around those sanctions, but data remains limited.

The same questions came up in Federal Reserve Chair Jerome Powell’s testimony before the House Financial Services Committee earlier today, suggesting a political push for new authorities over cryptocurrencies and sanctions. 

© 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.