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Cryptocurrency exchange Huobi will close down its operation in Thailand after it was delisted as a licensed digital trading platform by local regulatory authorities. 

According to a statement released by the Thai arm of Huobi, it will permanently shut down its platform on July 1. Huobi is an exchange initially founded in China that allows its users to trade digital assets including BTC and ETH. 

Its operations had already been suspended in another ruling by SEC Thailand in September and it had since urged clients to withdraw their assets from the platform. The company said there are still assets on the platform. 

Huobi’s struggle with regulators stands in contrast to some competitors. After some initial problems with regulators in Europe, competitor Binance was recently approved in Italy and France. Earlier this month, FTX launched a licensed trading platform in Japan. 

© 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.

A decentralized finance (DeFi) protocol called Inverse Finance suffered a flash loan exploit on Thursday, with the hacker making off with about $1.2 million. 

The unknown perpetrator carried out the exploit using a flash loan using 27,000 wrapped bitcoin (worth about $579 million) at around 4:47 a.m. ET, according to on-chain data. The exploited funds included 53 BTC and 100,000 USDT. 

Flash loans are loans taken out with a requirement that the borrowed sum be returned in the same transaction. While flash loans are meant for arbitrage trading and improving capital efficiency, hackers have abused them to manipulate DeFi price data feeds — known as oracles — and carry out exploits.

This is a developing story.

© 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.

Popular crypto wallets, including MetaMask and Phantom, suffered for months from a critical vulnerability in their browser extension software, according to a report on Wednesday from cybersecurity firm Halborn.

The vulnerability, dating back to September 2021 and now fixed, put users’ funds at risk as it made it possible for hackers to extract wallet recovery seed phrases stored on computer disks. However, no exploits have yet been reported that could be tied to the vulnerability.

In the report, Halborn’s researchers said the seed phrases generated by wallet providers were being saved on users’ computers in plain text as part of the “Restore Session” feature. This meant malicious actors could gain entry using malware or physical access. Halborn added they worked with wallet providers to patch their wallets against the vulnerability.

MetaMask, the most popular web3 wallet on Ethereum, clarified that the critical security issue affected only a “small segment of users” and that the vast majority of users were not at high risk. According to MetaMask blog, there could be a “case where user keys could be found unencrypted on disk in rare edge cases.” Furthermore, it has issued mitigations on its latest browser extension version.

Meanwhile, Phantom, the most-used web3 wallet on the Solana blockchain, said it began issuing fixes in January, three months after the vulnerability was initially flagged by Halborn. Furthermore, Phantom plans on rolling out another exhaustive patch next week, it said.

© 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 work culture at crypto-exchange Kraken has turned toxic and CEO Jesse Powell is at the center of it, a new report from the New York Times claims. 

According to the report, Powell has allegedly led discussions on the company’s Slack channels where he objected to employees’ use of preferred pronouns, debated who should be able to use certain racial slurs, and called American women “brainwashed.”

Kraken also released a 31-page culture document explaining Kraken’s “libertarian philosophical values,” which included tolerance for “diverse thinking” and affirmed the right of law-abiding citizens to arm themselves. The document was released alongside what Powell called the “Jet Ski Program,” which specified that anyone who disagreed with it was encouraged to leave the company and claim four months’ pay.

Powell, a 41-year-old Bitcoin pioneer who founded Kraken in 2011 with Thanh Luu, is part of a shrinking cohort of crypto entrepreneurs who remain committed to the original vision of Bitcoin, a philosophy that challenges institutional forms of power. As mainstream interest in crypto has grown, these ideals have been challenged in the workplace. 

Kraken is one of a number of technology companies that have been embroiled in politically charged conflict during the coronavirus pandemic, as remote work, diversity, and inequality have become important issues to more employees.

The firm currently employs more than 3000 workers and, according to data compiled by The Block Research, was the fourth-largest crypto exchange by trading volume in May.

According to the Times report, on Monday Christina Yee, a Kraken executive, wrote on Slack that “C.E.O., company, and culture are not going to change in a meaningful way.” She added:

“If someone strongly dislikes or hates working here or thinks those here are hateful or have poor character,” she said, “work somewhere that doesn’t disgust you.” Employees have until Monday to decide whether to opt into the Jet Ski program.

© 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.

BitMEX co-founder Benjamin Delo received 30 months probation without home confinement for Bank Secrecy Act (BSA) violations.

The sentencing closes a legal chapter that began in the fall of 2020, when the US accused Delo and co-founders Arthur Hayes and Samuel Reed of “evading US anti-money laundering requirements” in activities related to their crypto exchange, BitMEX. Both Hayes and Delo went on to plead guilty to one count each of violating the BSA, which carries a maximum of five years in prison. 

Hayes evaded jail time, but received six months home detention as part of a two-year probationary period. Hayes will be permitted to travel to his home in Singapore for the remainder of his probation once the six-month home detention sentence is served in the US.

At today’s hearing, Judge John G. Koeltl sentenced Delo to 30 months probation without home confinement. The sentencing resolves all of Delo’s regulatory cases relating to BitMEX.

“Ben is pleased to finally draw a line under this matter and looks forward to returning his focus, time, and energy to his philanthropic work,” said a spokesperson from Smith Villazor, representing Delo.

Ahead of his sentencing, his legal team submitted a letter requesting a probationary sentence to be served in Hong Kong, where Delo resides, with no fine or jail time. Both Hayes and Delo have already paid $10 million each in civil monetary penalties to the Commodity Futures Trading Commission as part of a parallel civil action against them. 

In both cases, the prosecution sought harsher sentences than what was administered. In Hayes’ case, the DOJ called for more than the 6-12 months of jail time that normal guidelines recommend, though Hayes’ team requested probation only. In Delo’s case, it argued there should be parity between the sentences of the co-founders, and called for Delo to receive the same sentence as Hayes: two years’ probation with six months’ home detention in the US. The judge ultimately would not agree, declining to include home detention in the sentence. 

“We are pleased that the Court appropriately rejected the government’s cynical attempt to exaggerate the seriousness of the Bank Secrecy Act charge in this case,” said a spokesperson from Smith Villazor, representing Delo. “Today’s sentence of probation recognized that this case involved a compliance lapse that led to a regulatory violation – and nothing more.”

© 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.

ETNs and ETPs tracked daily by The Block had a mixed day of trading on Wednesday. 

ETC Group’s bitcoin (BTC) ETP had the best returns, up 6.20%, on a day when bitcoin threatened to cross below the $20,000 threshold. The next best was 21Shares Solana ETP, gaining 2.87% during trading in Europe. 

21Shares also had its share of underperforming ETPs on Wednesday as both its Ethereum and Polygon ETPs lost over 4% throughout the day. The company released a research note on Wednesday stating its belief that both BTC and ether (ETH) are bottoming out. 

“Bitcoin and Ethereum are close to the bottom. Even though the price of Bitcoin and Ethereum have dropped 67% and 75% from all-time highs, they will be here to stay given the strong fundamentals and increasing use cases,” the note read. 

Here’s how some of the major European crypto investment vehicles performed on Wednesday, June 15:

© 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 mining companies had another mostly positive day on the stock markets Wednesday, recovering from steep falls on Monday alongside most of the crypto sector.

Northern Data, Cipher Mining and Core Scientific’s stocks went up by +8.07%, +7.33% and +6.54%, respectively.

On the opposite end, Argo Blockchain’s stock went down by -7.67% on the London Stock Exchange. Other companies had smaller drops, including Mawson Infrastructure Group (-1.17% ) and Marathon (-1.01%).

The US Federal Reserve said Wednesday afternoon that it would be raising interest rates by 75 basis points. After the announcement, bitcoin prices fell to around $20.300 but jumped back up since.

At press time, it was around $21,800.

Here’s how crypto mining companies performed on Wednesday, June 15:

© 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.

FTX US, the US affiliate of the crypto exchange at the center of a major scuffle over US regulation, has registered its first in-house lobbyist to work on Congressional relations.

The registration was effective as of the beginning of the month and is for Eliora Katz. Katz joined FTX US in April from a position as a legislative aide for Senator Pat Toomey (R-PA), the leading Republican on the Senate Banking Committee. 

A representative for FTX US confirmed the registration and denied that the firm had plans to expand its lobbying activities into new areas.

FTX US has previously contracted firms T Cap Solutions and Rich Feuer Anderson as outside lobbyists, beginning in the fourth quarter of 2021 and alongside major new lobbying spending from several crypto exchanges. The firm terminated the T Cap Solutions contract in February.

The new registration does not yet give a dollar amount for the in-house lobbying program, but FTX US reported $100,000 in the first quarter of this year between those two contracts. The Lobbying Disclosure Act requires reporting on a fairly limited set of activities, so $100,000 is significantly less than the firm’s total spending on government relations and policy. 

That contract with T Cap centered on Charlie Thornton, a former staffer for the Senate Agriculture Committee and the Commodity Futures Trading Commission. FTX’s global CEO, Sam Bankman-Fried has appeared before the Senate Ag Committee promoting the CFTC as the appropriate regulator for cryptocurrency exchanges, as opposed to the Securities and Exchange Commission.

The argument is resonating throughout the Senate and House Ag Committees, which oversee the CFTC. The House Financial Services Committee and the Senate Banking Committee, which oversee the SEC, appear more reticent. 

In November, the firm hired Mark Wetjen, a former CFTC commissioner, to lead its government affairs team. Subsequently, FTX and Bankman-Fried have sought approval for a proposal for disintermediated derivatives trading through the CFTC. 

© 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 CEO of Celsius just shared that the team is working “non-stop” to address the lender’s withdrawal freeze, but the firm has yet to share a path forward from recent turmoil.

“We’re focused on your concerns and thankful to have heard from so many,” tweeted CEO Alex Mashinsky. “To see you come together is a clear sign our community is the strongest in the world. This is a difficult moment; your patience and support mean the world to us.”

Indeed, it’s been a challenging few days for the lender, which began when it paused withdrawals late Sunday night to stabilize its liquidity position. It took to Twitter to announce the suspension of withdrawals, transfers and swaps, citing market conditions as crypto prices cratered. The platform’s native token, CEL, dropped with the news.

Since the announcement, other lenders have sought to distance themselves from staked ether (stETH), the main culprit behind Celsius’s liquidity crunch. As The Block reported, stETH is traded with ETH on decentralized exchange Curve Finance at a usual 1:1 ratio, but that ratio has recently become unbalanced due in part to the dip in ETH price, spelling liquidity troubles for stETH holders. Celsius held a considerable amount of stETH tokens that became near impossible to convert back in the unbalanced market.

Amid the fallout, Celsius has reportedly hired a team of restructuring lawyers from Akin Gum Strauss Hauer & Feld LLP. It’s also appointed Citigroup to advise it on possible solutions and potential financing options. The bank previously advised the lender on its mining subsidiary and initial public offering plans. 

Still, this has yet to transform into a tangible plan for the firm. Withdrawals remain paused and it’s unclear when that will change. Mashinsky’s message is similar to the one the Celsius account tweeted yesterday:

“@CelsiusNetwork is working around the clock for our community. It’s all hands on deck, so there will be no Twitter Spaces this week.”

Earlier that day the firm’s account said it was “working as quickly as possible and will share information when it becomes appropriate.”

Meanwhile, policymakers are monitoring the situation. The Securities and Exchange Commission (SEC) has made it clear that it’s wary of crypto lenders, taking action against BlockFi’s high yield product and standing in the way of Coinbase’s planned Lend platform. Chair Gary Gensler referenced the fallout on Tuesday, though he did not name Celsius, comparing the halted withdrawals to the paused withdrawals during the meme stock scandal of January 2021.

“Many of the crypto lending platforms, they actually own your asset in some joint omnibus account,” said Gensler. “Then you see things like this weekend and Monday where there’s one crypto exchange, one crypto lending platform said ‘You can’t withdraw. Not now.’”

Gensler said regulators should be able to bring the same protections in crypto than it brought in traditional finance. 

© 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 53 of Season 4 of The Scoop was recorded remotely with The Block’s Frank Chaparro and Martin Green, Co-CIO & CEO at Cambrian Asset Management.

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

Panic and fear gripped the crypto market this week as falling prices and market pressure caused two industry titans — hedge fund Three Arrows Capital and lending platform Celsius Network — to face potential insolvency.

While the extended crypto market downturn has caught many market participants offside, one high-frequency trading firm managed to not only survive recent conditions but concluded trading for the month of May up 3.7%.

In this episode of The Scoop, Martin Green, Co-CIO & CEO of Cambrian Asset Management, explains why proper risk management is key to his firm’s success, and why he believes there is still a bright future ahead for the crypto industry.

According to Green, Cambrian’s risk management systems are designed to take the human element out of the equation:

“Humans aren’t designed to make great analytical judgments when their brains are filled with cortisol, serotonin or dopamine. They’re just not. So our systems are designed to take risk off, like sell along, or buy to cover a short if the market goes against us. So if we’re long, the market goes against us to some pre-programed amount… the systems will take risk off so that if the market becomes more extreme, we’ve protected our investors capital.”

Although nearly $500 billion dollars has been wiped from the total crypto market cap so far in June, Green believes the severity of this correction has likely been exacerbated by crypto’s reflexive nature.

As Green explains, “It’s highly likely that digital assets are the fastest reacting to changes in inflation and interest rate expectations, and fast-reacting things often overshoot and then pull back.”

While crypto’s volatility often draws the ire of critics who do not believe it to be a viable alternative to the current financial system, Green thinks it is important to remember is still a new technology:

“I think we have to remember — and we all do in the industry — but people outside the industry have to remember that [crypto] fundamentally… is an early stage technology. Early stage in an eventual possible adoption curve.”

During this episode, Chaparro and Green also discuss:

• What events could trigger a market rally
• Dynamic portfolio construction
• The risk of contagion in crypto

This episode is brought to you by our sponsors Fireblocks, Coinbase Prime & Cross River
Fireblocks is an enterprise-grade platform delivering a secure infrastructure for moving, storing, and issuing digital assets. Fireblocks enables exchanges, lending desks, custodians, banks, trading desks, and hedge funds to securely scale digital asset operations through the Fireblocks Network and MPC-based Wallet Infrastructure. Fireblocks serves over 725 financial institutions, has secured the transfer of over $1.5 trillion in digital assets, and has a unique insurance policy that covers assets in storage & transit. For more information, please visit www.fireblocks.com.

About Coinbase Prime
Coinbase Prime is an integrated solution that provides institutional investors with an advanced trading platform, secure custody, and prime services to manage all their crypto assets in one place. Coinbase Prime fully integrates crypto trading and custody on a single platform, and gives clients the best all-in pricing in their network using their proprietary Smart Order Router and algorithmic execution. For more information, visit www.coinbase.com/prime.

About Cross River
Cross River is powering today’s most innovative crypto companies, with banking and payments solutions you can rely on, including fiat on/off ramp solutions. Whether you are a crypto exchange, NFT marketplace, or wallet, Cross River’s API-based, all-in-one platform enables banking as a service, ACH & wire transfers, push-to-card disbursements, real-time payments, and virtual accounts and subledgers. Request your fiat on/off ramp solution now at crossriver.com/crypto.

© 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.