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Tether, the largest stablecoin issuer, has minted 1 billion USDT tokens on the Ethereum blockchain as part of its “inventory replenish.”

While some perceive the minting of new USDT as a catalyst for increased crypto demand, Tether CTO Paolo Ardoino told The Block that new USDT tokens are minted to support chain swap functions.

“Tether periodically works with different third parties (exchanges, hedge funds, etc.) to help them rebalance the liquidity of their USDT across different chains,” Ardoino said. “For example, since exchanges support Tether USDT on multiple chains, they might end up having most of [their] Tether USDT tokens on one chain (i.e. Tron), but they might need to process withdrawals for another chain (i.e. Ethereum). Hence such third parties ask to proceed with a chain swap.”

Chain swap refers to the process of transferring tokens from one blockchain network to another. The process allows users to bridge assets across multiple chains.

Tether’s second billion-dollar USDT mint in recent weeks

This is Tether’s second billion-dollar USDT mint in less than two months. The stablecoin issuer minted one billion USDT tokens on Ethereum in April. Minted USDT tokens sit in Tether’s treasury and are “authorized but not issued” and, therefore, are not part of its total market capitalization.

Tether remains the largest stablecoin issuer on all blockchains according to The Block’s Data Dashboard. USDT’s current total supply stands at over 83 billion tokens.

© 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.

Over the weekend, a wallet tagged as belonging to Michael Egorov, the founder of Curve Finance, made a notable maneuver by depositing 38 million Curve DAO tokens — equivalent to $24 million — into the decentralized lending platform Aave.

This action, noted by on-chain analyst Lookonchain, was part of Egorov’s plan to increase his collateral and mitigate the risk of potential liquidation. The move is particularly noteworthy due to the sheer scale of the collateral he controls. He secured his Aave loan with an astonishing 277 million CRV tokens, which accounts for 32% of the total circulating supply of CRV.

According to DeBank’s data, Egorov’s initial loan from Aave was substantial — over $64 million in stablecoins. To collateralize this loan, he supplied nearly one-third of the total circulating supply of CRV tokens, which indicates the significant role that large token holders play in the DeFi landscape.

The price of CRV has declined by 21.71% on crypto exchange Bitstamp over the past week. Source: TradingView

More CRV, better health

Lookonchain reported that Egorov’s recent deposit improved the health rating of his position from 1.3 to 1.5. This is a crucial development, as a health rate of one usually triggers liquidation. Currently, the health rate of Egorov’s position stands at a safer 1.7.

Given the volume of Egorov’s CRV collateral, a mass liquidation could cause significant market disruption by precipitously dropping the token’s price. Automated liquidations are an inherent feature of the DeFi landscape. They can trigger a cascade effect, causing the price of the collateralized asset to plummet until the market stabilizes.

© 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.

Bitcoin and ether reserves on United States-based crypto exchanges have fallen below 50% amid an ongoing regulatory crackdown in the country.

“U.S.-based crypto exchanges have been dethroned by offshore/international exchanges in terms of the amount of bitcoin they custody for their customers,” CryptoQuant said in a research report shared with The Block last week. “U.S.-based exchanges’ bitcoin reserves are down to the lowest level since January 2017,” it added.

Crypto reserves refer to the amount of respective coins and tokens held by exchanges on behalf of their users. These reserves generally facilitate trading activities — serving as a measure of liquidity. Declining crypto reserves may indicate that users are withdrawing their holdings from exchanges due to security concerns or to hold their funds in private wallets.

US crypto crackdown 

U.S. regulators continue to crack down on the beleaguered crypto sector, prompting international exchanges to gain traction.

Last week, the U.S. Securities and Exchange Commission sued Binance and Coinbase for allegedly breaking securities rules. Elsewhere, regions like Hong Kong have adopted crypto-friendly policies recently — attracting more crypto firms and users in those countries.

“The U.S. federal government and regulators are making the operation of U.S.-based crypto businesses more difficult,” said CryptoQuant. “The SEC has been unclear about how exchanges can comply with its rules. This is precisely why some exchanges have already decided to cease operations in the U.S., while other U.S.-based exchanges have announced new platforms that will operate outside the U.S.”

Last week, Hong Kong Legislative Council member Johnny Ng invited Coinbase and other crypto exchanges to establish regional operations. “I hereby offer an invitation to welcome all global virtual asset trading operators including Coinbase to come to HK for application of official trading platforms and further development plans,” Ng tweeted. “Please feel free to approach me and I am happy to provide any assistance.”

© 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.

Sturdy Finance, a decentralized lending protocol, fell victim to a security attack today, which led to a loss of 442 ether or about $800,000.  The unknown attacker took advantage of a reentrancy vulnerability that later facilitated manipulation of a faulty price oracle, thereby enabling them to siphon off funds.

In decentralized finance (DeFi) applications, price oracles are pivotal as they provide real-world price data. However, they also represent a potential target for hackers who can exploit them.

The attack on Sturdy Finance was initiated by a reentrancy attack, a method typically used to illicitly withdraw funds from DeFi protocols. This type of attack takes advantage of the ability to call a function repeatedly within a single transaction before the original function call is completed. This, in turn, allows the attacker to withdraw more funds than they would legitimately be entitled to.

After the attacker established the ability to manipulate the function calls, they then proceeded to exploit the price oracle. Sturdy Finance’s price oracle, derived from a separate “read-only” smart contract, was manipulated.

This oracle was designed to determine the accurate market value of assets in a liquidity pool managed by Sturdy’s team on the Balancer decentralized exchange, thus facilitating the trading of staked ether (stETH). However, the exploitation of the oracle enabled the attacker to drain funds from Sturdy, according to security firm BlockSec. 

BlockSec stated, “The root cause is due to the typical Balancer’s read-only reentrancy, while the price of B-stETH-STABLE was manipulated.”

Sturdy pauses markets

Sturdy Finance reacted to the attack by suspending all of its markets to prevent further potential losses, assuring its users that no other funds were in danger as a result of the breach.

“All markets have been paused; no additional funds are at risk, and no user actions are required at this time,” said the team. “We will be sharing more information as soon as we have it.”
After the attack, on-chain data shows that the attacker used the Tornado Cash mixer to obscure the activity.

In 2022, Sturdy Finance raised $3 million in a series of rounds to construct an interest-free borrowing and lending platform. The funding was led by Pantera and also saw participation from Y Combinator, SoftBank’s Opportunity Fund, and KuCoin Ventures.

© 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.

Venture investment firm Andreessen Howoritz is set to open its first overseas office in the UK later this year as the regulators in the United States continue their crackdown on crypto stateside.

In a blog post, a16z general partner Chris Dixon announced the expansion, noting the firm has “been working with policymakers and regulators across the globe, and during our discussions it has become clear that the UK government sees the promise of web3.”

The announcement comes in the wake of the US Securities and Exchange Commission’s lawsuits against Binance and Coinbase which have dragged on token prices and forced market participants to look toward alternative jurisdictions.

Coinbase Chief Legal Officer Paul Grewal says the SEC’s actions against the firm, and crypto broadly, are “hurting American competitiveness.”

The UK as a hub for Web3 

UK Prime Minister Rishi Sunak is keen on providing regulatory clarity regarding how crypto businesses should register and operate in the UK, as per a statement shared with The Block.

“We must embrace new innovations like Web3, powered by blockchain technology, which will enable start-ups to flourish here and grow the economy,” Rishi’s office said.

“That’s why I am thrilled world-leading investor, Andreessen Horowitz, has decided to open their first international office in the UK,” he added.

© 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.

London-based Gensyn, a blockchain-based marketplace protocol connecting buyers and sellers of compute power, today announced a $43 million Series A fundraise.

A16z Crypto led the round, alongside CoinFund, Canonical Crypto, Protocol Labs, Eden Block and various angel investors. No valuation was disclosed.

The backdrop to the mammoth Series A raise, as pointed out in a press release, is the AI boom driven by ChaptGPT’s success and the subsequent spike in demand it has driven for GPUs, the compute processors that enable such systems to absorb information.

Gensyn is a blockchain-based marketplace protocol that enables developers to build AI systems using connected hardware while paying on-demand. It uses a cryptographic verification system to give users confidence that the machine learning work sent via the protocol has been completed correctly.

A new industrial revolution?

“Artificial Intelligence is laying a foundation for the next industrial revolution, and the realisation of its potential requires huge computational power,” Ben Fielding, Gensyn’s co-founder, said in a written statement.

“We believe the key to useful, aligned AI is allowing everyone in the world to contribute to its development. The best way to mitigate bias and misalignment is to allow more people to build models that reflect their views. In order to do that we need open infrastructure that connects models to the core resources, crucially computational hardware, that make them function.”

Gensyn closed a $6.5 million seed round led by Eden Block in March 2022. The startup’s latest capital injection will be used to speed on its launch as well as for hiring.

© 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.