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Vauld CFO Jatin Mazalcar has left the Singapore-based crypto lender after it was forced to halt client withdrawals last week, two sources familiar with the matter told The Block.

While Mazalcar left the CFO role after Vauld suspended withdrawals on July 4, he’s still advising the company as a consultant, the sources said. Mazalcar only joined Vauld in May and left in June, according to his LinkedIn profile.

Mazalcar and Vauld both declined to comment to The Block.

Founded in 2018 and backed by high-profile investors, including Peter Thiel’s Valar Ventures and Coinbase Ventures, Vauld (formerly Bank of Hodlers) had cut 30% of its workforce in June to save costs amid the crypto market tumult before abruptly freezing customer accounts this month.

Vauld is based in Singapore but has most of its team in India. Its Indian co-founders, Darshan Bathija and Sanju Sony Kurian, were featured in the Forbes Asia 30 under 30 list this year.

With its operations mainly in the two countries, Vauld recently appointed legal and financial advisors in Singapore and India for potential restructuring or financing options.

A day after Vauld halted withdrawals, its London-based rival Nexo signed a term sheet with the firm for a potential acquisition. Nexo is currently undergoing a due diligence process and Vauld customers’ funds remain stuck. There’s no word so far from either Vauld or Nexo on the status of client funds. 

Earlier today, Bathija told users in Vauld’s official Telegram channel that the company is working toward a solution and will announce information on liabilities and financing plans today. The company also plans to send a letter to its creditors today, one of the sources told The Block. 

© 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.

Crypto exchange giant Binance continued to serve clients and process trades by people based in Iran, irregardless of US sanctions and a ban on doing business there, according to a report on Monday by Reuters. 

The ban dates back to 2018, when the US reimposed sanctions that had been suspended due to Iran’s nuclear deal with other major powers. Binance had said in November 2018 that it would cease trading and had asked users to liquidate their accounts. 

The Reuters investigation cites interviews with seven traders who said they avoided this ban, and continued to have access until September last year. It also says it found 11 people whose LinkedIn profiles say they traded after the ban was enacted. In addition to these details, Reuters says employees knew and joked about the tranche of Iranian users. 

Binance did not immediately respond to The Block’s requests for comment on the investigation, however founder and CEO Changpeng Zhao tweeted: “Binance has been using Reuters WorldCheck as one of the KYC [know your customer] verification tools since 2018.”

The Reuters report states that people easily avoided bans via virtual private networks (VPNs) and that the tech was even endorsed by Binance in a blog post called “A Beginners Guide to VPNs.” 

The claims relate to Binance, the entity whose holding company is based in the Cayman Islands, rather than the US entity of the company, which calls itself Binance.US. Both entities are controlled by Zhao.

The Reuters report also notes that several experts who were consulted believe continued activity in Iran may garner interest from US regulators. The structure of the business means it is protected from US scrutiny in the first instance, but could be subject to so-called “secondary sanctions” which could mean a company is cut off from access to the US financial system. 

Iran has so far had a tempestuous relationship with crypto, having also cut electric power to all 118 legal crypto mining centers in June. The move came as the country faced increased energy demand.

© 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 Financial Stability Board (FSB) called for new global rules for cryptocurrencies on Monday, and will submit a report to the G20 Finance Ministers and Central Bank Governors in October on regulatory and supervisory approaches to stablecoins and other crypto assets.

The body of regulators, government officials and central bankers pointed to recent market turmoil as evidence of risk to financial stability, highlighting that the failure of a market player can quickly transmit risks to other parts of the ecosystem and have spillover effects into traditional finance. The statement from the FSB made particular reference to “so-called” stablecoins, which have been on the agenda for several financial authorities since even before May’s Terra crash.

The FSB is an international body based in Switzerland that coordinates on and promotes international financial stability. Its members include national authorities and central banks from 24 jurisdictions, including the US, Russia and China, and conducts outreach with approximately a further 70.

But while it’s emphasizing current market issues as an impetus to act, the FSB has been looking at crypto for a while now. In February it published a report assessing risks from crypto assets, warning that they could pose to global financial stability due to their scale, structural vulnerabilities and increasing interconnectedness with the traditional financial system.

The FSB’s statement aligns with several recent comments from senior finance officials and committees. On July 5, the Bank of England’s Financial Policy Committee warned that crypto assets may one day pose a risk to the wider financial system and called for “enhanced regulation”. Last Friday, this sentiment was also echoed by US Federal Reserve vice chair Lael Brainard, who said that the sector needs “strong guardrails.”

© 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.

Crypto exchange OKX has agreed a deal with English Premier League champions Manchester City for its logo to be emblazoned on the front of its training kit for the 2022/2023 soccer season. 

After a quieter few months in terms of crypto-sports sponsorship tie-ups amid a market rout, the deal announced in a statement on Monday will also see OKX as a presenting partner of Man City’s Trophy Tour 2022, as it returns for the first time since 2019. City AM reported that the deal is worth more than £10 million ($12 million) per season. OKX didn’t immediately respond to a request for comment on that valuation.

OKX also commissioned street artist Akse P19 and Global Street Art Agency to create artworks featuring Manchester City players Erling Haaland, Jack Grealish, Joao Cancelo and John Stones, across four locations in Manchester.

OKX was announced as Manchester City’s official cryptocurrency exchange partner in March.

The deal follows Tezos opting to sponsor neighboring club Manchester United’s training kit in February. The deal was reported to be worth around £20 million a year. 

Until recently there had been a steady stream of blockbuster sports sponsorship tie-ups with crypto companies trickling through the pipeline. In November 2021, Crypto.com splurged $700 million to rename the Staples Center in Los Angeles for the next 20 years. The exchange also signed a $175 million deal with the Endeavor-owned Ultimate Fighting Championship league for logos on athletes’ kits, as well as a $100 million sponsorship deal with Formula One. 

Alongside this, Crypto.com, Coinbase, eToro and FTX all chose to run ads during the National Football League’s Super Bowl, one of America’s biggest showpiece sporting events of the year. This year’s game attracted an estimated 112.3 million viewers, a 14% increase from last year’s game, according to NBC. These were the game’s best ratings since the 2017 matchup between the New England Patriots and Atlanta Falcons drew around 113 million viewers.

© 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.

Dutch banking group ING has sold its digital asset custody and post-trade infrastructure technology Pyctor to infrastructure player Gmex Group, according to a statement on Monday. 

The tech was incubated in ING Neo’s Amsterdam innovation lab, in collaboration with major financial institutions and regulators.

Pyctor is now a service offering within Gmex. As part of the move, Gmex chairman and CEO Hirander Misra was appointed chairman of Pyctor. ING will continue its relationship with Pyctor and collaborate through ING’s digital assets team.

Olivier Guillaumond, global head of innovation labs and fintechs at ING, said in a press release that Gmex would “scale Pyctor to the next stage.”

“It brings the ideal connectivity between multiple trading parties and digital assets custodians, while addressing interoperability issues experienced in the market,” he added. 

It was first reported in 2019 that ING was looking to enter the crypto custody space. 

© 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.

Celsius has hired new counsel to advise it through a possible restructuring — weeks after the lending platform suspended withdrawals amid a drawdown in cryptocurrency prices. 

As per the Wall Street Journal, Celsius has replaced its lead restructuring counsel with a team from Kirkland & Ellis LLP. Lawyers from Kirkland & Ellis will advise Celsius on options including bankruptcy filing, sources familiar with the matter told the publication. Celsius had previously brought on lawyers from Akin Gump Strauss Hauer & Feld LLP to help the firm navigate its options. Neither Kirkland & Ellis nor Akin Gump Strauss Hauer & Feld responded to a request for comment during off market hours. 

Celsius’s management has not yet shared a path forward since the market plunge left the company in an unstable liquidity position from which it has yet to recover. Still, recent reports indicate it has brought on a team of restructuring lawyers and appointed Citigroup to advise it on potential financing options. 

In late June, The Block reported that lawyers hired by the lender were advocating for Chapter 11 bankruptcy. Chapter 11 bankruptcy allows a company to continue operations while meeting its financial obligations to indebted parties. That’s usually executed by proposing a plan of reorganization to be approved by creditors and overseen by a legal team. 

Celsius remained unable to make any public statements due to legal advice, but people with knowledge of the situation told The Block the firm was looking to avoid lengthy bankruptcy proceedings. Sources said Celsius believes much of its retail clientele would prefer the firm avoid bankruptcy and that users could show their support by engaging “HODL Mode” in their Celsius account, a security feature that keeps users from withdrawing or sending funds while activated, in the hopes that the legal team would see the strength of feeling existing among users. Celsius did not respond to requests for comment at that time.

As of June 30, Celsius shared a blog post with the community saying it was continuing to take “important steps to preserve and protect assets and explore options available to us.” 

“These options include pursuing strategic transactions as well as a restructuring of our liabilities, among other avenues,” said the post. “These exhaustive explorations are complex and take time, but we want the community to know that our teams are working with experts from many different disciplines.”

The firm said it would continue to share information “when it becomes appropriate.” It did not respond to a request for comment made during off market hours. 

Kirkland & Ellis is also representing Voyager Digital, the crypto broker and lender that filed for Chapter 11 bankruptcy last week. Its restructuring plan aims to resume account access and return value to customers.

© 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.

Omni, a non-fungible token (NFT) money market platform, was drained of about 1,300 ETH ($1.43 million) in a flash loan reentrancy attack on Sunday, according to PeckShield.

Omni allows users to stake their NFTs, usually from popular collections like Bored Ape Yacht Club, to receive tokens like ether (ETH). 

Today’s attack saw the hacker exploit a reentrancy vulnerability in the Omni protocol. Reentrancy is a known vulnerability in projects coded with Solidity that allows a rogue actor to force its smart contract to make an external call to an untrusted contract. This external call is executed before the original function and can thus be used to repeatedly re-enter the protocol to drain its liquidity.

Yajin Zhou, CEO of blockchain security company BlockSec, explained the process of the exploit to The Block, saying that the attacker deposited NFTs from a collection called Doodles. These NFTs were used as collateral to borrow wrapped ETH (WETH).

The attacker then exploited the reentrancy vulnerability by withdrawing all but one of the NFTs deposited as collateral. This action triggered a malicious callback function to the benefit of the attacker. This function allowed the hacker to use the borrowed funds to buy even more Doodles before liquidating the loan position.

Once the position is liquidated, the remaining Doodle NFT from the original collateral is returned back to the attacker. The loan position is liquidated because the value of the NFT that was initially left as collateral before the callback function was invoked was not sufficient to cover the debt position. This is where the reentrancy comes in, as the attacker is able to force through using the borrowed WETH to buy more NFTs before the liquidation occurs.

The attacker then used the Doodles acquired with the initial loan as collateral to borrow more WETH. Omni, however, did not recognize this new debt position, so the hacker could withdraw the NFTs without paying back the loan.

The attack drained more than 1,300 WETH ($1.4 million) from the protocol. Omni said that the exploit did not affect any customer funds as only internal testing funds were impacted, since the platform is still in beta testing mode.

The NFT money market platform said that it has paused the protocol pending a complete investigation. Data from Etherscan shows the exploiter has already laundered the funds via Tornado Cash, a coin mixing service for private transactions on Ethereum.

© 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.

Yam Finance, a decentralized finance (DeFi) protocol, prevented a malicious governance attack designed to cede control of its reserves to an unknown third party, the project said on Saturday.

According to a preliminary report issued by Yam DAO, the attack was launched on July 7, but detected two days later. The attacker submitted a governance proposal via internal transactions, making it difficult for community members to notice.

This malicious governance proposal included an unverified contract designed to transfer control of Yam’s reserves to a wallet address controlled by the attacker. The rogue actor was initially able to achieve a quorum for the proposal that was in danger of being passed before it was stopped by the Yam Finance team.

If the attack had succeeded, it would have been able to drain the Yam Finance treasury, which currently holds $3.1 million worth of crypto assets, according to data from DeepDAO.

Yam Finance said the attack was similar to another attempt made in December 2021.

Saturday’s attack came amid another governance tussle within the Yam ecosystem, also related to the project’s treasury. The issue was another disputed governance vote — this time, a snapshot vote — that aimed to make the project’s treasury redeemable at a pro-rata rate.

While the initial snapshot vote passed with more than a 54% majority, there are now calls for the process to be redone. Some community members have submitted a new proposal for a re-vote, claiming that the original process did not go through the usual governance procedures.

Yam Finance was one of the projects that emerged from the early DeFi boom in the summer of 2020. Originally a stablecoin protocol, the project pivoted to become a DeFi hub after a major bug occurred during a migration barely two days into the life of the project.

© 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.

Britain’s asset managers are lobbying the government for a new fund category that uses blockchain technology, the Financial Times reported on Thursday.

The Investment Association, which represents the UK’s asset management industry, is seeking approval of blockchain-traded funds that would issue digital tokens to investors, the report said.

Using blockchains’ digital ledgers to achieve greater efficiency in buying and selling mutual funds would save on costs, the association told the FT.

The group is also backing formation of a task force to investigate how blockchain technology might facilitate new products and services.

“Greater innovation will boost the overall competitiveness of the UK funds industry and improve the cost, efficiency and quality of the investment experience,” Chris Cummings, Investment Association chief, told the FT

Blockchain-traded funds could be rolled out by the middle of next year if the Financial Conduct Authority were to hasten approval, the FT reported, adding that Franklin Templeton launched the first US mutual fund using blockchain last year.

© 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.

South Korea’s Justice Minister Han Dong-hoon met with US investigators in New York last week amid the countries’ separate probes into Terraform Labs and its co-founder Do Kwon, Forkast reported, citing a statement from South Korea’s Ministry of Justice.

The minister met with Andrea Griswold, co-chief of the Securities and Commodities Task Force, and Scott Hartman, chief of the Securities and Commodities Fraud Task Force, at the US Attorney’s Office for the Southern District of New York, the report said.

The officials discussed ways to share data on crypto investigations between the Seoul Southern District Prosecutor’s Office and the Southern District of New York office, Forkast said, citing a media release.

The Seoul Southern District Prosecutor’s Office is investigating Terraform Labs and CEO Do Kwon in a possible fraud case, Forkast said.

The US Securities and Exchange Commission (SEC) won a case against Terraform Labs and Do Kwon last month establishing jurisdiction in a federal securities investigation.

A class action lawsuit was filed last month in US District Court, Northern District of California, accusing Do Kwon, Terraform Labs and others of selling unregistered securities and making false statements about the stability of the TerraUSD (UST) stablecoin and related token luna to induce investors to purchase them.

© 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.