Day: March 7, 2023

Algorand Wallets Hacked Again

by Blockchain News

Algorand-based wallets have been hit by security breaches in recent weeks, with MyAlgo and Algodex both experiencing hacks. MyAlgo urged users to withdraw their assets or rekey their funds after a February security breach that resulted in losses of around $9.2 million. In the past week, a targeted attack was carried out against a group of high-profile MyAlgo accounts. The cause of the breach is unknown, and the wallet provider has encouraged users to take precautionary measures to protect their assets. Meanwhile, Algodex revealed that a malicious actor infiltrated a company wallet on March 5, similar to what is happening in the Algorand ecosystem. Algodex moved the bulk of its USD Coin (USDC) and native Algodex (ALGX) tokens to secure locations, but the infiltrated wallet was responsible for providing extra liquidity to the ALGX token. The exchange confirmed that $25,000 in ALGX tokens allocated to provide liquidity rewards were taken, but it would replace this in full. The total loss from the theft was less than $55,000, and Algodex users and the liquidity of ALGX were not affected.

The Algorand Foundation’s chief technology officer, John Wood, confirmed that around 25 accounts were affected by the MyAlgo exploit, and it was not the result of an underlying issue with the Algorand protocol or software development kit (SDK). The foundation is responsible for the development and governance of the Algorand ecosystem, which aims to create a secure and decentralized platform for digital assets and applications. Algorand uses a pure proof-of-stake consensus algorithm that is designed to be energy-efficient and secure against attacks. The protocol has been adopted by a range of projects and companies in the blockchain space, including Circle, the issuer of USDC stablecoin, and the International Blockchain Monetary Reserve, a non-profit organization that aims to provide financial services to underserved communities.

The recent hacks on Algorand-based wallets highlight the importance of securing digital assets and using trusted and reputable service providers. Users should also be aware of the risks associated with storing assets on centralized platforms, which can be vulnerable to attacks and hacks. The Algorand Foundation has been working on enhancing the security of the protocol and its ecosystem by partnering with leading security firms and auditing companies. The foundation also offers grants and support to developers and projects building on the Algorand platform, with a focus on security, scalability, and usability. The foundation’s latest initiative is the Algorand Improvement Proposal (AIP) process, which allows stakeholders and developers to propose and discuss changes to the protocol and its governance. The AIP process is designed to be transparent, collaborative, and community-driven, ensuring that the Algorand ecosystem evolves in a responsible and inclusive way.

In addition to the Algorand Foundation’s efforts, users can take several measures to protect their digital assets and minimize the risks of hacks and breaches. One of the most important steps is to use strong and unique passwords for each account and to enable two-factor authentication (2FA) whenever possible. Users should also avoid sharing sensitive information online or with unknown parties, and to verify the authenticity of emails, messages, and websites before providing any information or making any transactions. Another best practice is to store digital assets in hardware wallets, which are offline devices that offer enhanced security and privacy compared to software wallets and exchanges.

As the adoption of blockchain and digital assets continues to grow, the security and resilience of the underlying infrastructure become even more critical. Algorand and other blockchain platforms must continue to invest in research, development, and education to address the evolving threats and challenges in the digital asset space. Users and stakeholders also have a role to play in promoting best practices, transparency, and accountability in the ecosystem, ensuring that the benefits of blockchain technology are realized in a safe and sustainable way.

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Argo Blockchain Increases Daily Bitcoin Production Despite Network Difficulty Spike

by Blockchain News

Publicly-listed Bitcoin (BTC) mining firm Argo Blockchain has reported an increase in its daily Bitcoin production for the month of February, despite a significant spike in network difficulty. According to the operational update released on March 7, Argo mined 162 Bitcoin or BTC equivalents during the month, translating to a daily production rate of 5.7 BTC. This is a 7% increase from the 5.4 BTC per day produced in January.

Bitcoin mining difficulty is a measure that defines how hard it is to mine a BTC block. It requires more hash rate or additional computing power to verify transactions and mine new coins. In February, the BTC network difficulty surged to new all-time highs, hitting a difficulty rate of 43 trillion on Feb. 25, as per data from Blockchain.com.

Despite the network difficulty spike, Argo’s production rate has increased, thanks to the company’s investment in new mining equipment and a focus on increasing efficiency. The news comes amid the industry anticipating the next Bitcoin difficulty adjustment expected to occur on March 10. According to data from BTC.com, the next difficulty is estimated to reach 43.4 trillion.

Argo Blockchain sold its flagship mining facility Helios to Mike Novogratz’s crypto investment firm Galaxy Digital amid the tough crypto market of 2022. However, despite the sale, Argo has continued to mine using Galaxy’s facility, and its production rate has been steadily increasing. Months before the transaction, Argo’s monthly BTC mining generated more than 200 BTC.

Argo is not the only mining firm that seems unaffected by the BTC difficulty spike in February. Other miners like Cipher Mining produced 16% more Bitcoin over January, and Marathon Digital increased its average daily Bitcoin produced by 10% compared to January. However, Hut 8 mining firm saw its daily Bitcoin production rate drop from 6 BTC in January to 5.6 BTC in February.

Argo Blockchain has been focusing on expanding its operations to capitalize on the increasing demand for Bitcoin mining services. The company recently announced plans to establish a Bitcoin mining facility in West Texas, which is expected to have a capacity of up to 200 megawatts and is slated to begin operations in Q4 2022.

In conclusion, despite the network difficulty spike, Argo Blockchain’s focus on increasing efficiency and investment in new equipment has led to an increase in its daily Bitcoin production rate. The company’s expansion plans and investment in new facilities suggest that it is well-positioned to capitalize on the growing demand for Bitcoin mining services.

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Utah Passes Law Recognizing Decentralized Autonomous Organizations

by Blockchain News

The Utah State Legislature has approved a new law, the Utah Decentralized Autonomous Organizations Act, providing legal recognition and limited liability to decentralized autonomous organizations (DAOs). This legislation, also known as the “Utah LLDs,” was passed after the combined efforts of the Digital Innovation Taskforce and the Utah Blockchain Legislature.

The Utah DAO Act defines the ownership of DAOs and protects anonymity through bylaws compliant with the act. Additionally, quality assurance DAO protocols have been introduced to ensure clear nuances in tax treatment and updated DAO functionalities. This new legislation marks an important milestone in the legal recognition of DAOs and their role in the digital economy.

DAOs are organizations that operate on a decentralized blockchain network, allowing for decentralized decision-making and management. With the increasing adoption of blockchain technology, DAOs have emerged as a new form of digital organization, and they have already begun to play a significant role in various sectors of the economy, such as finance, gaming, and art.

The Utah DAO Act provides a legal framework for DAOs, giving them the same recognition as other traditional organizations. With legal recognition, DAOs can enter into contracts, own property, and enter into legal disputes. Furthermore, the limited liability protection provided by the act reduces the legal risk associated with investing in a DAO.

The introduction of quality assurance DAO protocols is an essential aspect of the Utah DAO Act, ensuring clear tax treatment and updated functionalities. These protocols provide DAOs with a standardized method of operation, ensuring transparency, and maintaining the trust of investors.

In summary, the Utah Decentralized Autonomous Organizations Act is a significant milestone in the legal recognition of DAOs. With this new legislation, DAOs in Utah can operate with greater confidence and security, knowing that they have legal recognition and protection. As blockchain technology continues to develop, it is likely that other states will follow Utah’s lead in recognizing the role of DAOs in the digital economy.

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Hong Kong Suffers Surge in Crypto Scams in 2022

by Blockchain News

A large increase in the number of financial losses brought on by bitcoin scams has been seen in Hong Kong in the year 2022. According to reports from the local police, victims of cryptocurrency scams lost a total of HK$1.7 billion in 2018, marking a 106% increase from the previous year. In addition, the number of incidents of fraud using cryptocurrencies increased by 67 percent from 2021, reaching 2,336 cases. According to the Hong Kong police CyberDefender website, these scams were responsible for more than half of the HK$3.2 billion that was taken from citizens of the city as a result of technological crimes.

The growing usage of cryptocurrencies has made it increasingly difficult for authorities to trace the origin of monies obtained via illegal activity. Fraudsters are able to conceal their names, transactions, and ultimate destination thanks to the anonymity given by cryptographic currency transactions. Because of this, following the money trail left by criminals has become increasingly difficult for law enforcement.

The Cybersecurity and Technology Crime Bureau of the Hong Kong Police Force has provided some insights into the profile of a typical fraudster operating in the cryptocurrency industry. These con artists will claim to have extensive knowledge in the financial markets, particularly when it comes to crypto assets, precious metals, or foreign exchange goods. They often use bait to entice unsuspecting victims into downloading phony investing programs that display fictitious transactions and profits.

In order to differentiate its approach to cryptocurrency regulation from China’s total ban on cryptocurrencies, which will be implemented in 2021, the government of Hong Kong has gotten actively involved in the development of bitcoin infrastructure. The Securities and Futures Commission of Hong Kong issued a request for public comment in February on the updated proposed licensing framework for cryptocurrency exchanges, which is scheduled to go into force beginning in June 2023. Despite this, it is still very important to exercise extreme caution while investing in cryptocurrencies, as con artists continue to develop new methods to abuse the weaknesses of the market.

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South Koreans transacted $4.3 billion through illegal crypto exchanges

by Blockchain News

South Korea has been tightening its regulatory regime towards crypto exchanges, but it seems that some citizens are still engaging in illegal transactions. According to local sources, South Koreans transacted 5.6 trillion Korean won ($4.3 billion) through illegal crypto exchanges in 2022, a significant increase from the previous year. The Korea Customs Service provided the numbers, indicating that the overall amount of funds caught in economic crimes increased from 3.2 trillion won ($2.5 billion) in 2021 to 8.2 trillion won ($6.2 billion) last year.

Out of all the illicit money traffic captured by officers, crypto transactions comprised almost 70%. However, the total amount of intercepted digital assets ($4.3 billion) only accrues for 15 transactions. These transactions were aimed at purchasing foreign virtual assets with the intention of selling them in the country later. This is because the South Korean regulatory regime isolates the local market and makes the prices of foreign crypto higher for customers.

The government has been cracking down on illegal crypto exchanges since 2017, when the Foreign Exchange Transactions Act required entities involved in crypto transactions to get regulatory approval from the Financial Services Commission. Hence, the attempts to participate in the global crypto trade, from foreign players coming to the Korean market or domestic investors seeking a better exchange course abroad, are labeled “illegal.”

In August 2022, the Korea Financial Intelligence Unit took action against 16 foreign-based crypto firms, including KuCoin, Poloniex, and Phemex. All 16 exchanges have purportedly engaged in business activities targeting domestic consumers by offering Korean-language websites, running promotional events targeting Korean consumers, and providing credit card payment options for cryptocurrency purchases. These activities all fall under the Financial Transactions Report Act.

The Korean customs also reported detaining 16 individuals involved in illegal foreign exchange transactions connected to crypto assets worth roughly $2 billion. These cases demonstrate the government’s determination to crack down on illegal crypto transactions and to promote a safe and regulated crypto market.

However, some critics argue that the South Korean government’s regulatory regime is too strict, which has led to the country missing out on potential economic benefits. They suggest that a more balanced approach should be taken to ensure that the country can benefit from the growing crypto market while still maintaining a safe and regulated environment. Regardless, it is clear that illegal crypto exchanges are still a significant issue in South Korea, and the government will continue to take action to address this problem.

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China announces new financial regulator in governmental overhaul

by Blockchain News

China has announced plans for a governmental overhaul that includes the introduction of a new national financial regulator. On Tuesday, March 7, the government announced that it would abolish the China Banking and Insurance Regulatory Commission (CBIRC) and move its responsibilities to a brand new administration. This move is part of a broader reform agenda for party and state institutions in China that was called for by the country’s president, Xi Jinping.

The new financial regulator will “strengthen institutional supervision, supervision of behaviors and supervision of functions,” according to the plan. It will take over some functions of the central bank and securities regulator. The legislature is set to vote on the plan for institutional reform on Friday, March 10.

Currently, China’s financial industry is under the supervision of the People’s Bank of China (PBOC), the CBIRC, and the China Securities Regulatory Commission. There was no specific mention of reforms for the crypto industry in the announcement.

However, in February, an ex-adviser to the PBOC called upon regulators in Beijing to reconsider their harsh ban on crypto. In 2021, China banned nearly all crypto transactions, but the government has been spending millions developing its own central bank digital currency (CBDC), the digital yuan.

One of the most recent updates on the digital yuan project was the incorporation of new smart contract functionality and new use cases, including buying securities and offline payments. China also announced the establishment of the National Blockchain Technology Innovation Center in February, a state-supported institution that aims to speed up the country’s industry via blockchain technology.

The new regulatory framework is expected to improve oversight and streamline the financial sector in China. The consolidation of regulatory responsibilities into a single agency could also lead to greater efficiency and better coordination in regulating financial activities.

Overall, China’s governmental overhaul and the introduction of a new financial regulator signal the country’s commitment to strengthening its financial system and ensuring financial stability in the future.

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WeChat Adds Digital Yuan Payment Functionality

by Blockchain News

WeChat, China’s leading social networking and payment app, has now integrated the country’s central bank digital currency, the digital yuan, into its payment services, according to local reports. This move comes after Alipay, another leading payment platform, added the same functionality to its platform in December 2022. WeChat’s addition of the digital yuan fast payment function allows users to make payments on certain mini-programs and platforms that support the digital yuan.

The pilot version of the digital yuan application’s “Wallet Quick Payment Management” page currently lists 94 platforms, now including WeChat, that can be accessed. The integration enables WeChat Pay to allow digital yuan payments on certain apps, such as McDonald’s food orders and bill payments. However, users need to authorize the digital yuan wallet operator to sync their WeChat-bound mobile phone number to activate the fast payment function successfully.

According to Linghao Bao, an analyst at Trivium China, a strategic advisory firm, “Chinese consumers are so locked in WeChat Pay and Alipay, it’s not realistic to convince them to switch to a new mobile payment app. So it makes sense for the central bank to team up with WeChat Pay and Alipay as opposed to doing it on its own.”

The digital yuan, also known as the e-CNY, is being piloted in at least 26 Chinese provinces and cities. The token saw an increase in transaction volumes on Chinese e-commerce platforms during the 2023 Lunar New Year shopping season, helped by e-CNY handouts from authorities.

Alipay had announced its access to the digital yuan acceptance network in December 2022, enabling users to spend digital yuan consumption on platforms served by Alipay, including Taobao, Shanghai Bus, Ele.me, Youbao, Tmall Supermarket, and Hema.

As the digital yuan’s integration with leading payment platforms like WeChat and Alipay grows, it is expected to become more widely adopted in China, potentially challenging existing payment methods like cash and cards. The central bank’s collaboration with these platforms is likely to help broaden the appeal of the digital yuan among Chinese consumers who are already comfortable with these apps.

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Thailand Waives Taxes on Investment Tokens

by Blockchain News

Thailand’s government is taking further steps to benefit from the growth of the digital asset industry by waiving taxes on investment tokens. According to Reuters, Thailand’s cabinet has agreed to exempt companies that issue investment tokens from corporate income tax and value-added tax (VAT). This move is expected to encourage companies to access alternative ways of raising capital in addition to conventional methods like debentures.

Deputy government spokesman Rachada Dhnadirek announced the news on March 7, stating that the government expects investment token offerings to generate 128 billion Thai baht ($3.7 billion) over the next two years. However, the state estimated potential losses of tax revenues at 35 billion baht ($1 million).

Thailand has been taking several steps to clarify local crypto-related taxation rules. In early 2022, authorities suggested adopting a 15% capital gains tax for investors, but the government subsequently scrapped the plans and exempted crypto traders from the 7% VAT on authorized exchanges a few months later.

Local regulators were also working to implement wider crypto regulations last year. In March 2022, Thailand’s Securities and Exchange Commission banned the use of cryptocurrencies for payments. The Thai SEC is also continuing to work on stricter crypto regulations to protect investors. In January 2023, the financial regulator introduced new rules for crypto custody services, requiring all crypto custodians to have a contingency plan in case of unforeseen events.

Thailand’s tax waiver on investment tokens is a significant move that could help drive growth in the country’s digital asset industry. It will provide companies with an alternative means of raising capital and encourage further investment in the sector. Additionally, this move may attract more foreign investment to Thailand’s digital asset industry, as investors seek out countries with favorable regulatory and tax environments.

The tax waiver is just one of several steps taken by the Thai government to support the development of its digital asset industry. As the sector continues to grow, it is likely that more initiatives will be introduced to help drive its expansion.

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Binance Adds 11 Tokens to PoR Report

by Blockchain News

The proof-of-reserves (PoR) report of Binance, which is one of the most important and biggest cryptocurrency exchanges in the world, has been updated to include 11 new assets. MASK, ENJ, WRX, GRT, CHR, CRV, 1INCH, CVP, HFT, SSV, and DOGE are the tokens that are accounted for in the Proof of Reserves report. With this most recent upgrade, the total number of assets in Binance’s PoR system has increased to 24, with a combined worth of more than 63 billion dollars.

The Proof of Reserves (PoR) mechanism that Binance has developed is intended to give its customers with both transparency and certainty about the safekeeping of their funds. Binance claims that its Proof of Reserves (PoR) makes use of Merkle trees to add up the data that is stored on the chain. This helps to guarantee that customers’ assets are retained for them on a one-to-one basis.

The adoption of the Proof-of-Reputation (PoR) approach by other cryptocurrency exchanges comes at the same time as Binance’s Proof-of-Reputation (PoR) system is being expanded to include other coins. This comes as a direct result of the failure of FTX, which brought to light the need of more openness within the cryptocurrency sector.

Nevertheless, a number of specialists have cautioned that the PoR technique has a number of drawbacks. For instance, it does not give any information on the use of leverage, collateralization, or the proof-of-liabilities that correlate to these concepts. This information may only be disclosed if the PoR is accompanied with financial documents that detail the company’s financial position.

Binance released a significant improvement to their PoR system in February 2023, which included the incorporation of zk-SNARKs. This is an example of a zero-knowledge proof, which is a kind of proof that enables the verification of data without disclosing the data itself. According to Binance, this will result in an improvement in the level of privacy and security afforded to user data during the verification process.

 In conclusion, the incorporation of 11 more tokens into Binance’s Proof-of-Residence (PoR) system is a step in the direction of improved user confidence and visibility. Nevertheless, it is essential to keep in mind that the PoR approach is not without its flaws, and users should always proceed with extreme care whenever they engage in the usage of cryptocurrency exchanges.

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Canaan’s Q4 2022 Revenue Declines by 82.1% YoY to $56.8M

by Blockchain News

Chinese Bitcoin miner and manufacturer of application-specific integrated circuit (ASIC) mining machines, Canaan, has reported an 82.1% YoY revenue decline to $56.8 million in Q4 2022, according to a new filing with the U.S. Securities and Exchange Commission on Mar. 7. This represents a significant drop in revenue for the company, which sold 1.9 million terahash per second worth of computing power for Bitcoin mining during the quarter. However, this figure does not account for lower ASIC prices and represents a 75.8% decline from Q4 2021.

Despite the decline in revenue, Canaan’s mining revenue improved by 368.2% YoY to $10.46 million. Nangeng Zhang, Chairman and CEO of Canaan, said that the company had been “diligently improving and developing our mining business” to mitigate demand risks during the market downturn. This effort yielded more progress in early 2023, with 3.8 EH/s hash rate installed for mining as of the end of February. Accordingly, the company has made decisive investments in bolstering its production capacity and expanding its mining operations to more varied geographic regions that offer advantageous conditions.

However, the company’s net income swung to a $63.6 million loss in Q4 2022 compared to a profit of $182.0 million in Q4 2021. According to Jin Cheng, Chief Financial Officer of Canaan, the loss was due to inventory write-downs and research expenses related to its new fleet of ASICs. He said, “Considering very soft market demand and low selling price, we incurred an additional inventory write-down of RMB205.3 million, which also dampened our gross margin. In conjunction with one-time higher research and development expenses relating to the tape-out for our A13 series, our bottom line suffered losses during the quarter.”

 For the full year, Canaan’s revenue decreased by 13.8% to $634.9 million, mainly due to better industry conditions in Q1 and Q2 2022. Despite the decline in revenue, the company has a strong balance sheet, with $706 million in total assets compared to $67 million in total liabilities.

Looking ahead, Canaan expects to face continued market challenges and volatility, but remains committed to developing its mining business and investing in new technology to drive long-term growth. The company’s recent investments in production capacity and geographic expansion suggest that it is well-positioned to capitalize on any future recovery in the Bitcoin market.

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Bitcoin (BTC) $ 27,799.45 1.28%
Ethereum (ETH) $ 1,650.87 0.40%
Litecoin (LTC) $ 64.59 1.54%
Bitcoin Cash (BCH) $ 234.05 2.20%