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The documents are likely to intensify the move among major cryptocurrencies to become more decentralized and look more like ether, the report said.

Musk had previously engaged with the Bob token bot several times, aiding a value rise.

Backers include the likes of prominent crypto businesses and personalities such as Binance, CertiK and Justin Sun, among others.

The largest crypto by market cap benefited from last week’s pause in interest rate hikes, but a market analyst suggests that cuts may be necessary for prices to rise significantly in the future. ALSO: Indonesia updates its list of digital assets approved for trading in the country.

Binance.US’s market share among exchanges that support USD pairs continues to dwindle in the wake of the US Securities Exchange Commission lawsuit against the firm and global exchange giant Binance. 

As of June 18, Binance.US’s market share relative to a group of similar exchanges declined to 4.35% — a steep decline from more than 16% in April 2023 — according to The Block’s Data Dashboard. On the other hand, Binance’s market share has increased slightly from the previous month. 

Earlier this month, the SEC alleged in a suit that Binance violated securities laws, maintained an improper relationship with Binance.US and misdirected capital to other entities owned by Binance founder Changpeng Zhao. Binance described the SEC’s suit as “part of a rushed effort to claim jurisdictional ground from other regulators — and investors do not appear to be the SEC’s priority.”

In any case, the SEC’s actions have had a significant impact on Binance.US, which suspended USD deposits and delisted a number of trading pairs. Market makers including Wintermute and Keyrock have ceased trading on the venue, while the exchange has witnessed a decline in volumes, market depth, and an increase in slippage. 

Sudden increase in slippage

As The Block’s data dashboard indicates, slippage — the delta between the price at which a trader places a trade and the price at which it is executed — for a $100,000 sell order surged from 5.02 on June 6 to 18.66 on Sunday. 

Meanwhile, Binance.US’s monthly trading volumes currently sit at $1.69 billion — down from over $17 billion in March. 

© 2023 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.

Sometimes it’s good to be suspicious of journalists.

Take the case of Orbiter Finance. Last month, a supposed journalist claiming to be from a crypto news site contacted one of its Discord moderators and asked them to fill in a form. The moderator didn’t realize this simple act would hand over control of their Discord server.

Once inside, the perpetrator froze other admins’ control over the server and restricted the ability for community members to send messages. They posted an announcement for a fake airdrop, sending everyone to a phishing website designed to steal their NFTs. It worked. In total, they stole a million dollars’ worth of NFTs and tokens in a flash, while the team could only watch.

“We were so concerned,” said Gwen, a business development manager at Orbiter Finance, who recounted what had happened in an interview. “If we cause any damage to [our community members], we will just lose the trust from them.”

The Orbiter attack is just one recent example in a long string of exploits involving NFT drainers and compromised Discord servers or Twitter accounts. Data collected by NFT analyst and security expert known as OKHotshot shows that at least 900 Discord servers have been compromised since December 2021 for carrying out phishing attacks — with a notable uptrend in the last three months.

Such attacks have impacted at least 32,000 victim wallets over the last nine months, according to data gathered by PeckShield and multiple dashboards on Dune Analytics. In total, attackers have stolen NFTs and tokens worth a combined $73 million. 

The faces behind the attacks

These schemes often involve wheeling and dealing in an emerging black market for drainer code. 

The orchestrators of the phishing attacks first head to Telegram and Discord, where they can find channels run by the developers of numerous different kinds of drainer. They contact the developer and purchase the drainer, which takes the form of a set of code that can be integrated into websites, while typically agreeing to give 20-30% of the proceeds to the developer. Then they will use their own methods — one being the fake news site example described above — to compromise a Discord server or Twitter account and advertise a fake website containing the NFT drainer code to steal NFTs and anything they can get their hands on. 

That is, when they’re not busy with homework.

“95% of them are kids below the age of 18 and they’re still in high school,” said a pseudonymous security researcher known as Plum, who works on the trust and safety team at NFT marketplace OpenSea, adding that this is why the number of attacks tends to increase during the Summer holidays.

“I personally have talked to quite a few of them and know they’re still in school,” said Plum. “I’ve seen pictures and videos of various of them from their schools. They talk about their teachers, how they’re failing their classes or how they need to do homework.”

These kids seem to make little effort to hide their newfound riches.

“They’ll buy a laptop, some phones, shoes and spend vast amounts of money on Roblox. They all play Roblox for the most part. So they’ll buy the coolest gear for their Roblox avatar, video games, skins and things like that,” said Plum.

Plum added that they often also buy gift cards with crypto on gift card marketplace Bitrefill, spend thousands of dollars on Uber Eats, buy designer clothes, pay people to do their homework for them and even buy cars that they can’t drive yet. And they also gamble. 

“They’ll bet $40,000 a pop on an online poker game and stream it to all the other hitters in a Discord call. Everyone will watch this person play this poker game,” they said.

The exploiters try to cover their tracks by paying people in lower income countries to use their personal details to register on exchanges, obfuscating the trail when they cash out, said Plum. But they said at least some of them should have been caught by now because they leave behind ample evidence of their actions — if it wasn’t for a lack of interest from law enforcement in catching them. 

As for why perpetrators think they can get away with such attacks, Plum speculated that, “they feel invincible, they have God mode — that no-one can touch them.”

While countries like North Korea are also involved in phishing attacks targeting NFTs, they typically use their own drainers and are less involved with drainers for sale, said Plum. As for those who create the NFT drainers — who in some cases carry out attacks using their own technology — they’re a little more elusive, but their pseudonymous profiles nevertheless leave a distinct trail.

The rise of NFT drainers

One of the earliest NFT drainers, Monkey, set up their Telegram channel in August. But it wasn’t until October when it started really getting active. Over the next few months, their technology was used to steal 2,200 NFTs according to PeckShield, worth $9.3 million, and an extra $7 million in tokens.

On February 28, Monkey decided to hang up their hat. In a farewell message, its developer said, “all young cyber criminals should not lose themselves in the pursuit of easy money.” They told their clientele to use a rival drainer known as Venom.

Venom was a worthy competitor. It was another of the earliest drainers, and over time it was used to steal more than 2,000 NFTs from over 15,000 victims. The drainer’s customers used 530 phishing sites to carry out attacks targeting crypto projects like Arbitrum, Circle and Blur — reaping a total of $29 million across NFTs, ether and various tokens.

While Venom was one of the first NFT drainers to go multichain, they didn’t pull it off very well, security experts noted. But theirs was the first drainer to be used to steal NFTs on NFT marketplace Blur.

Other competitors included Inferno, which was used to steal $9.5 million from 11,000 victims and Pussy, which was used to steal $14 million from 3,000 victims. Customers of Angel, which originated from a Russian hacking forum, used it to steal $1 million from over 500 victims in the form of NFTs and various tokens — most recently compromising crypto wallet Zerion’s Twitter account.

And then came Pink.

The curious case of Pink

On October 25, Fantasy, a security expert and co-founder of crypto security firm BlockMage, was digging in the Discord Server for Wallet Guard, a crypto product designed to protect against phishing attacks. It was here that they came across another account called BlockDev, who claimed to be a security researcher and ran a Twitter account called Chainthreats where they would post security information about exploits.

While Fantasy and BlockDev had some disagreements when they first met, over time, they started speaking on a regular basis. Then BlockDev came up with an idea: to exploit the crypto hot wallet owned by the developer of the Venom drainer — using its own API against it. BlockDev explained how they were planning to do it and then carried out the attack, stealing $14,000 of cryptocurrency from Venom’s developer. Fantasy watched the whole thing happen and noted down the wallet that BlockDev used to carry out the attack.

At the start of the year, a new NFT drainer broke onto the scene called Pink. This one seemed more advanced than its predecessors. It quickly became popular and was used to steal NFTs in a flurry of attacks. Only when Fantasy looked into it, they traced the source of the funds used to set up the drainer back to BlockDev’s wallet — suggesting they were the same person.

“I looked back at the original funding source as well as the general activity between the two wallets — they share similar activity. I confronted him and he wasn’t too happy about it,” said Fantasy. “He was disappointed in me as a person. He thought he could trust me, which I thought was very amusing.”

At this point the supposed researcher, now known as Pink, deleted their Discord and Twitter accounts and cut ties with security researchers like Fantasy and Plum.

Pink drainer went on to be used for larger exploits throughout May and June, including on the Discords of Orbiter Finance, LiFi, Flare and Evmos, as well as Steve Aoki’s Twitter account and others.

The attackers again employed the tactic of posing as journalists reaching out to conduct interviews and often told Discord moderators, or whoever their target was, to bookmark a certain webpage. According to ScamSniffer, this key step is how they end up infiltrating servers. 

Plum and Fantasy noted that the Pink drainer manages to evade protections, such as wallet extensions that are designed to prevent such thefts. They said Pink has been finding success in bypassing wallet extensions Pocket Universe and Wallet Guard. They also implemented a way to steal tokens and NFTs at the same time on Blur, which they described as a significant development.

As for what can be done to protect against such attacks, Plum said that security-focused wallet extensions are still good for protecting wallets in general. They noted that it’s good practice to use multiple wallets and to store large amounts of funds in cold wallets, and added that it’s also good to revoke approvals — when a wallet gives the blockchain permission to interact with a certain token — if the token in question isn’t being actively used.

“Don’t set yourself up so that one mistake — if you’re distracted by your kids screaming — it causes you to lose everything you have,” Plum said. 

© 2023 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.

Coinbase’s stock price picked up nearly 6% over the last week as the average price target among analysts slightly increased, according to data compiled by The Block Research. 

Coinbase traded up 5.93% last week, ending the week’s session at $55.59 despite the overhang of the US Securities and Exchange Commission’s lawsuit against the exchange-operator. The stock is up more than 7% since the SEC announced its suit on June 6. 

Meanwhile, the average price target analysts for COIN inched up slightly from $69.17 per share to $69.70 as of June 18. The tick up was underpinned by one broker removing its sell rating coverage for the stock, which in turn elevated the consensus coverage rating.

Aside from regulatory related headlines, the exchange announced last week that it bought back $64.5 million worth of their Convertible Senior Notes, a type of debt that can be exchanged into a set amount of the issuer’s shares, at a 29% discount, according to a company release. 

“We are always looking for the best opportunities to deploy capital to create shareholder value,” said Alesia Haas, Coinbase’s chief financial officer, in a company statement. “This opportunistic repurchase is a continuation of those efforts and reflects our confidence in our business, strong first quarter financial performance, and improved competitive positioning.”

$1.373 billion of notes will remain outstanding following the close of the repurchase, the firm said. 

© 2023 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 57 of Season 5 of The Scoop was recorded with The Block’s Frank Chaparro and Clearpool CEO Robert Alcorn.

Listen below, and subscribe to The Scoop on Apple, Spotify, Google Podcasts, Stitcher, or wherever you listen to podcasts. Please send feedback and revision requests to podcast@theblock.co.

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Robert Alcorn is the CEO of decentralized credit marketplace, Clearpool.

In this episode, Alcorn examines the state of the crypto credit market in the wake of a tumultuous 2022 for crypto lenders, and explains what is needed for the sector to mature.

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This episode is brought to you by our sponsors PayPal and CleanSpark.

About CleanSpark

CleanSpark (NASDAQ: CLSK) is America’s Bitcoin Miner™. Visit cleanspark.com/theblock to learn more about the CleanSpark way.

© 2023 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.

Crypto exchanges in the U.S. have been put on notice since the spectacular collapse of FTX and the Securities and Exchange Commission (SEC) recent enforcement actions against two of the biggest industry players, Binance and Coinbase.

While the remaining major centralized exchanges take stock, a pick’n’mix bag of crypto exchanges are emerging ready to seize on their misfortunes with new ideas once dismissed as non-competitive against the incumbents.

“We’ve only seen exchanges 1.0,” said Franklin Bi, a partner at Pantera Capital. “We’re really seeing a wave of the next generation of exchanges that have seen what it takes, know what kind of regulatory landscape they’re walking into, but also know what’s possible in terms of bridging together a centralized user experience and a pretty rich, vibrant DeFi ecosystem that exists now.”

Hybrid exchanges, user-friendly decentralized exchanges and institutional-only marketplaces are all in the mix, with retail-focused centralized exchanges the least desirable at present. Pitches for centralized exchanges are rarely passing the desks of VCs these days, according to multiple investors. And even if they were, it’s not a proposal that many want to touch.

“Until there is a simpler pathway towards U.S. registration and deeper volumes to go around, CEX startups are going to be limited in their growth potential, which may dampen VC interest,” said Michael Safai, co-founder of trading firm Dexterity Capital.

For investors and founders with the right risk appetite, though, the landscape for exchanges is the most ripe for disruption than it’s been in years, said Thomas Klocanas, general partner and head of venture at BlockTower Capital.

Investing in decentralized exchanges

Since the collapse of FTX, investors and customers have gravitated toward decentralized exchanges (DEXs). Around $144 million across 43 deals has been invested into DEX startups from November 2022, according to data from The Block Research. 

Investors are also looking for new primitives that push the boundaries of what DEXs can do, particularly in terms of attracting institutional players. Gleb Dudka, a principal at venture firm Greenfield, highlighted portfolio company Mangrove, a DEX that is looking to attract market markets who want to operate without locked capital.

The hybrid exchange model that merges CeFi and DeFi is becoming increasingly popular as the long term vision of a decentralized financial system is embraced, Pantera’s Bi said. An example of this is OnDefy, which builds a centralized-like user interface on top of a DEX, Klocanas said.

“It’s no longer enough to just fork Uniswap’s code or push out a basic [automated market maker] model with the twist being that it’s supposedly regulatory-friendly,” said Michael Anderson, co-founder of Framework Ventures. “With the alt-L1 narrative waning and the emergence of viable cross-chain solutions, I think established players now have the means to assert their dominance and solidify their leads across any relevant chains.”

Targeting the institutions

Many of the emerging exchanges, such as EDX, Zodia Markets, CrossX, Archax and the controversial Prometheum, are focusing heavily on the institutional market.

“The retail market is reasonably well served,” said Simon Barnby, chief marketing officer at Archax. “I think institutions have always been seen as the ultimate prize, there is that institutional wall of money and when that gets involved that’s a real game changer for the space.”

BloxCross, an exchange that started out targeting retail customers in LATAM last year, pivoted to also serving institutional clients for payments, remittances, and digital value transfer following FTX’s impact on retail appetite, said Keith Bliss, global head of markets and strategy at BloxCross.

Some of the exchanges saw the writing on the wall prior to FTX and have been slowly getting their ducks in a row trying to bring TradFi’s market structure to crypto.

Formed two years ago, Zodia Markets, a noncustodial exchange and brokerage catering to institutional clients, has been aiming to launch a solution that would help the market mature through its backing from bank Standard Chartered.

“We saw the gap in the market but it was unintentional from a timing perspective that all these things happened that reaffirmed the business model,” said Usman Ahmad, CEO and co-founder of Zodia Markets.

However, he acknowledged the difficult road ahead. “We saw the opportunity of our heritage being focused on the institutional side, and I think that’s where others are seeing the same opportunity. But it’s gonna be a tough market for them to crack.”

This can be seen in the way the current wave of crypto exchanges have struggled to capture the institutional market. Bullish was launched in July 2021 with an allocated $10 billion of capital, yet its plans to become a public company have been delayed and the company recently laid off some staff. Earlier this month, Crypto.com shut down its institutional arm due to limited demand in the current crypto market.

Challenges of launching a new exchange

For the startups early in their journey, it’s a tough market, said Zodia Markets’ Ahmad.

“Candidly, unless you have found a specific niche, where you are confident that you can generate [total value locked in the protocol] or volume, you should pivot,” said Julia Zhou, partner at trading group AlphaLab Capital.

 With many leading global exchanges facing issues at home, it opens up the opportunity for regional focused exchanges to take leadership positions, said Pantera’s Bi. However, some pointed to the stiff competition that still exists in the market.

“Traditional banks might be willing to enter the market when you have rules in place, but crypto is already hyper competitive so any new challengers will need a serious point of differentiation,” said Alex Harper, CEO and co-founder of Australian exchange Swyftx, adding that it’s the only local exchange to successfully scale in the country in the last four years.

Plus there’s always the current state of the market to consider. Even if bigger exchanges have faced difficulties, that doesn’t mean conditions are any easier.

“There is always room to launch new exchanges, founders just need to be aware that during a bear market product-market fit validation is very hard to find,” said Greenfield’s Dudka. “As on-chain activity continuously decreases and people are more risk-averse just to make it to the next bull run they might refrain from interacting with new protocols.” 

© 2023 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.

While most layer-one projects are targeting developers in the market for non-fungible tokens and decentralized finance, Solana is carving out a niche in an industry known to eat up and spit out challengers: mobile. 

Solana first unveiled its plan to gatecrash the telecoms space with a new Android phone called Saga about a year ago. It also released the so-called Solana Mobile Stack, a set of libraries for developers to build mobile-first decentralized applications on the blockchain. 

Today, Saga is now in the hands of just a few thousand, but it is already having an impact on the workflow of a wide-range of crypto native players from developers to venture capitals to even this reporter. We spoke with a few of them to find out how they’ve been using the platform.

Solana Saga unboxed 

At first glance, the device looks like a typical Android phone, but a closer inspection reveals green accent buttons as well as a Solana logo discreetly placed on the back. 

It’s not just the logo that makes it a “crypto” phone, but rather the functionality built in throughout. Approving transactions on decentralized applications with your finger print and seed vault, for example, is relatively seamless compared to using Metamask or Phantom on an iPhone. 

Emmett Hollyer, head of business operations at Solana Labs, said the ultimate goal is to make web3 simple enough that the device can appeal to “any consumer, whether they are crypto-centric, crypto-curious, or otherwise.” 

For The Block’s Cameron Tynes’ the device is living up to Hollyer’s talking points, noting in a message to this reporter that Saga represents “by far the smoothest web3 experience I have had, especially considering it is all on mobile.”

Barriers to adoption

The so-called Seed Vault and the security it provides are among the benefits of the phone for venture investor Carl Vogel, a partner at 6th Man Ventures.

“It combines the secure elements of hardware wallets with the usability of a mobile device,” he said in a message to The Block. 

Most of the negatives for Tynes, an Apple iPhone owner, chalks up to bugaboos with Android devices generally. 

“Not being able to use Apple Pay/savings has been my biggest barrier in making this my everyday phone,” he added. 

Solana Mobile Stack

The Saga device is part of Solana’s broader ambitions in mobile, which also include the Solana Mobile Stack. Chris Osborn, co-founder of secure message application Dialect, is a user of both. 

The openness of Saga removes some of the barriers of building out apps that exist in Apple and Google environments. 

“We are already facing challenges getting these experiences approved in the major app stores, and we’ve only barely started,” he said, referring to new features for Dialect. “Saga will continue to be the platform on which we can design and ship experiences that are unconstrained by app store restrictions, and that are best for the user.”

Solana app store challenge

In a sense, Saga’s fate is tied to these developers and the robustness of its app store. 

“The challenge is on Saga, and on web3 developers generally, to build the first wave of these killer web3 apps,” Osborn said. 

In Vogel’s view, Saga carves out a third path for developers “to iterate and capture more value.” 

“For iOS and Android, the in-app purchases are 15% – 30% while for Saga it’s 0%,” Vogel said.

Still, Solana is focused on Saga — not on the competition coming from behemoths like Samsung and Apple. 

“Our goal is not to compete directly with Apple and Samsung, but to prove what is possible for a great web3 experience on mobile,” Solana Labs’ Hollyer said. “We want to push the entire space forward by creating and curating unique experiences that are mobile-first and will feel native to a web3 audience.”

© 2023 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.