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Cross-chain exchange Thorchain suffered a $5 million exploit on Friday. Since the attack, developers have put out an emergency release to fix the bug and have promised the treasury will be used to make the liquidity providers whole.

The exploit was announced around 10:23 UTC, with initial reports estimating the size of the hack at around 13,000 ETH ($24 million), before this was revised to around 4,000 ETH ($7.4 million), and then later to around $4.9 million. The funds taken were in ether and Ethereum-based tokens.

“This is a disappointing moment for all, but LPs and Nodes should be unaffected after all is recovered (the funds will be restored),” tweeted the official Thorchain account.

Thorchain is a protocol for swapping native assets, such as bitcoin and ether, between different blockchains but without wrapping them as tokens on other chains. Its “chaosnet” is effectively a cross-chain decentralized exchange. Thorchain is used by exchanges such as ShapeShift, which is going fully decentralized.

Halting the network

When the attack was noticed, nodes running the network halted it, preventing the attack from getting worse. The threshold to halt the network is a third of the 38 nodes running it.

Since the bug was found, Thorchain’s developers have already put out a fix and are encouraging node operators to update their software.

After the exploit occured, YFI’s Andre Cronje tweeted, “Innovation leads to exploitation. Its why hardened protocols often stop innovating, very little upside to increase risk by innovating. Its why we also see more exploits in new developing sectors.“

The price of Thorchain’s native token RUNE has since dropped 18%, falling to its current price of $4.77.

© 2021 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 Binance announced Friday that it is ceasing trading of its stock tokens. Users of Binance.com will no longer be able to buy stock tokens, effective immediately, said Binance.

Existing stock tokens holders should sell their holdings before October 14, it said. If they don’t sell by that date, their stock token positions will be closed on October 15.

The move comes three months after Germany’s Federal Financial Supervisory Authority, or BaFin, said Binance may be in violation of the country’s securities laws in connection with its stock tokens offering.

Besides the German regulator, the U.K.’s Financial Conduct Authority was also reportedly examining whether Binance complied with security rules before launching trading of stock tokens.

Binance launched stock tokens trading in April of this year via German financial services firm CM-Equity. The exchange today said CM-Equity AG is setting up its own stock tokens trading portal for residents of the European Economic Area (EEA) and Switzerland and that Binance users in these regions could utilize that portal once launched.

“Those users may transition their stock token balances to CM-Equity AG once its new portal is established,” said Binance. “The portal is scheduled to be open approximately two-to-four weeks before 2021-10-15 (UTC), and additional KYC measures will be requested by CM-Equity AG to complete the transition.”

It’s unclear why Binance had to cease its stock tokens trading service when other exchanges including FTX and Bittrex Global offer similar service via CM-Equity AG. The Block has reached out to Binance and will update this story should we hear back.

Binance also appears to be under scrutiny for its primary offering of cryptocurrency trading in several countries around the world. Regulators in the U.S, the U.K., Italy, Japan, Thailand, Poland, and the Cayman Islands, have all either issued warnings or taken action against the exchange recently.

© 2021 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

• Sharding refers to the splitting of computational load and data storage into smaller pieces and has been touted as a potential blockchain scaling solution 
• Despite the immense challenges of implementing sharding, it has the potential to overcome the blockchain trilemma
• Only a handful of protocols utilize sharding as a scaling mechanism to date, for instance, Zilliqa and NEAR
• Ethereum 2.0 is targeting to utilize sharding as a scaling solution by Q2 2022

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The People’s Bank of China (PBoC) has published a whitepaper for the country’s central bank digital currency for the first time, marking yet another step toward its official rollout.

The PBoC issued a whitepaper on Friday for its digital yuan project, also dubbed the e-CNY, which notably confirms that the digital fiat currency is designed to be programmable with smart contract features. But it has not set any concrete roadmap or timeline for an official launch.

The whitepaper at a high level explains the background, features and the progress of the e-CNY initiative that started in 2014. According to the paper, part of the bigger context that pushed China into the research and development of the e-CNY was the emergence of cryptocurrencies and the risks and challenges they brought to the existing financial system.

“Bitcoin and other cryptocurrencies adopting blockchain and cryptography technologies claim to be ‘decentralized,’ ‘fully decentralized’ while they lack intrinsic values, are highly volatile, have low transaction efficiency and consumes an enormous amount of energy. These limitations prevented them from becoming a currency,” the PBoC wrote.

“Meanwhile, cryptocurrencies are mostly being used for speculation that brings potential threats to financial security and social stability,” the central bank continued. “Some business organizations roll out the so-called global stablecoins that peg to sovereign currencies. These will bring multiple risks and challenges to the global monetary polices, payment systems as well as cross-border capital management.”

Supporting smart contracts

Under the section about the e-CNY’s design characteristics, the PBoC confirmed that one of its seven major features is programmability. This is also the first time that the Chinese central bank has officially clarified there will be programmability built into the e-CNY. 

“The e-CNY can be programmable by adding smart contracts that do not affect its currency function. Without its security and compliance being undermined, the programmable e-CNY can allow automated payments among transactional parties based on their preset conditions and rules, and hence bring innovations to business models,” the PBoC wrote in the whitepaper. 

The description to some extent comes at odds with what PBoC’s officials said in remarks in 2018 and 2019.

Mu Changchun, the head of the PBoC’s digital currency research lab and Fan Yifei, a vice governor of the PBoC, expressed contrary opinions on the “programmability” front of the e-CNY. They said the e-CNY could add on smart contracts that would help it better perform its role as a currency. But for smart contracts beyond the role as a currency, they could be “undermining the Renminbi by adding extra social or administrative functions,” he said.

In fact, the latest e-CNY test in the Chinese city of Chengdu is already experimenting the confined usage of the e-CNY for specified purposes only. In this test, the e-CNY is programmed to only be spent on subway and bus tickets, along with shared bike services.

The dozens of patents that the PBoC have been authorized also shows the technology capabilities of the e-CNY for tracing transactions to ensure funds are being spent on intended goals.

© 2021 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.

Jack Dorsey, CEO of Square, said Thursday that the payments services business is working to create “an open developer platform” focused on bitcoin-tied financial services.

Square is creating a new business (joining Seller, Cash App, & Tidal) focused on building an open developer platform with the sole goal of making it easy to create non-custodial, permissionless, and decentralized financial services. Our primary focus is #Bitcoin. Its name is TBD.

— jack (@jack) July 15, 2021

The venture is the latest bitcoin-focused project spearheaded by Dorsey. In recent months, Dorsey has outlined plans for developing an open-source hardware wallet, and bitcoin has played an increasingly significant role in Square’s financial footprint via its Cash App, as detailed in recent earnings disclosures. 

The new initiative is being led by Mike Brock, who currently serves as Strategic Development Lead for Cash App. 

In his tweet thread, Dorsey wrote that “Like our new #Bitcoin hardware wallet, we’re going to do this completely in the open. Open roadmap, open development, and open source.”

More information — including dedicated Twitter and GitHub accounts — are forthcoming, Dorsey concluded. 

During an event appearance last month, Dorsey reiterated his belief that bitcoin should ultimately become the native currency of the internet, positioning Square’s growing use of the tech as part of that goal.

“The only reason Square got into bitcoin was to that end,” he said at the time.

© 2021 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 group of Congressional representatives has proposed legislation to provide clearer definitions for digital assets and technologies, especially as they relate to securities laws.

House Reps Tom Emmer (R-MN), Darren Soto (FD-L) and Ro Khanna (D-CA) collectively introduced the Securities Clarity Act on Thursday. All three are members of Congress’s Blockchain Caucus, a coalition focused on the crypto and blockchain industry.

The bill’s authors hope to provide clarity for entrepreneurs looking to distribute their assets to the public after meeting securities registration requirements by clarifying that an investment contract asset — like a token — is separate and distinct from the companion securities offering.

“This new defined term would refer to any asset sold as part of an investment contract that would not be considered a “security” but for its sale as part of an investment contract,” the lawmakers explained in a statement.

It would directly amend the Securities Investor Protection Acts of 1933, 1934 and 1970, as well as the Investor Advisers Act of 1940 and the Investment Company Act of 1940 to reflect this understanding of the definition of security.

The lawmakers are touting it as a “technology neutral” approach in the bill, meaning that though it is specifically intended to mitigate a problem found in dealings with digital assets, it could apply to both tangible and digital assets.

The full text of the bill can be found below:

DC2C77D08279E4F78D98C9300CA75FE5.sca-xml by MichaelPatrickMcSweeney on Scribd

© 2021 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.

On July 15, PayPal announced that it was increasing limits on customer purchases of crypto to $100,000 per week for U.S. users, with no annual restrictions. 

One of the leaders in crypto at the firm, Jose Fernandez da Ponte, cited “the ever-changing needs of our customers” in the announcement. Alongside the increase in purchase limits, da Ponte also spotlighted PayPal’s efforts to expand its crypto educational services.

The online payments firm opened up its crypto services to the general public in November with a weekly limit of $20,000. 

PayPal’s crypto offerings are, however, fully custodial. Users do not have the ability to withdraw their digital assets into outside wallets.

Since launch, speculation has been rife as to when the firm will enable withdrawals outside of its own platform, which executives have confirmed to be a priority.

© 2021 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.

In December, SC Ventures, Standard Chartered’s venture arm, announced that it was partnering with Northern Trust to launch a new crypto custodian.

The plan for Zodia, as the venture was dubbed, was to start operating this year once it scored official approval from the U.K. Financial Conduct Authority, a market regulator that has been building a registry of regulated firms in the crypto space, and other regulatory conditions.

Zodia appears to have scored that FCA approval, public records now show. The FCA’s website shows that Zodia’s registration is effective dated July 15. 

As reported by The Block, the FCA has pushed to bring the country’s crypto companies under its auspices, developing a register of firms that have won its approval. The register was first announced in 2020, and the FCA recently committed to devoting more resources to its oversight of crypto firms and the building-up of the register. To date, only a handful of firms have been added to the official register. 

Standard Chartered is also working to develop an institutional crypto brokerage and exchange service in partnership with BC Group, the parent company of the Hong Kong-regulated crypto exchange OSL.

© 2021 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.

In another bid to decarbonize Bitcoin, the Californian nuclear power plant Oklo announced its 20-year partnership with the bitcoin mining firm Compass on Wednesday, according to a release. 

The first phase of the partnership beginning in the “early 2020s” will involve Oklo providing Compass 150MW of nuclear-generated energy for bitcoin mining. 

“Cryptocurrency mining offers promising pathways to accelerate the deployment of clean energy technologies, and Oklo is positioned to respond to commercial demands by offering end-users the convenience of buying clean, reliable, and cost-effective power that they can depend on,” said Oklo’s co-founder and CEO Jacob DeWitte in the statement.

In addition to this new Oklo-Compass clean bitcoin initiative, nuclear energy will also power bitcoin mining in Ohio starting this December. 

Bitcoin and other crypto derivatives such as non-fungible tokens (NFTs) have received criticism regarding their environmental impacts. Oklo and Compass now join a slew of other companies aiming to reduce their bitcoin’s environmental impact, what with some mining firms opting for hydropower energy sources and other firms using carbon offsets to reduce their environmental footprint.

© 2021 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 U.S. Department of Justice (DOJ), U.S. Department of Homeland Security (DHS), and other federal entities have launched a new tool called StopRansomware.gov, according to a Thursday release from the DOJ. 

This new resource consolidates information from federal agencies on ransomware, provides news updates on ransomware incidents, and provides a way for individuals to report ransomware attacks to the Federal Bureau of Investigations (FBI). Its goal is to stop the “fragmentation of resources” that could cause victims of ransomware attacks to “miss important information” when encountering ransomware attacks and thus mitigate ransomware risk. 

Ransomware attacks have gained national attention over the past few months — with ransomware incidents rising to the same level of priority as terrorism attacks after the May 8 Colonial Pipeline cyberattack. 

While StopRansomware.gov appears to be the first major public anti-ransomware tool from the federal government, it is not the first to form. The ransomware payment tracking tool Ransomwhere released last week crowdsources information from ransomware attacks from victims and currently states that there has been nearly $46 million in reported ransomware payments in 2021. 

Ransomwhere was created by current Stanford student Jack Cable, who was “a little surprised that there wasn’t really anything out there right now” regarding public ransomware payment data, he told The Block. It is unclear when data gathered by the FBI through StopRansomware.gov will be made public. 

The Department of Justice did share that in 2020, victims paid about $350 million to ransomware attackers — a 300% increase compared to 2019. Small businesses comprise about 75% of ransomware cases but are vastly underreported, according to the release. 

The U.S. government is also putting some financial heft behind a newly created task force focused on ransomware. According to a July 15 statement, the U.S. Department of State’s Rewards for Justice (RFJ) program is offering as much as $10 million for information on potential actors behind attacks on American infrastructure — including those involving ransomware.

Specifically, the initiative appears to show that the U.S. government is turning to the Dark Web for information about such cyberattacks. “Commensurate with the seriousness with which we view these cyber threats, the Rewards for Justice program has set up a Dark Web (Tor-based) tips-reporting channel to protect the safety and security of potential sources.”

Notable in Thursday’s announcement: “Reward payments may include payments in cryptocurrency.”

© 2021 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.