9/2/22 FAL Weekly Digest
The FAL Weekly Digest is a source for this week’s biggest cryptocurrency-related news and updates. This newsletter features excerpts and links to this past week’s biggest news articles written by members of FAL Consulting’s writing team or gathered from other listed sources.
Crypto Exchanges Are Slipping Up
Crypto.com suing user accidentally given $10 million instead of $100
Crypto.com Suing a user who was accidentally given $10 million instead of $100
According to reports, a woman accidentally received $10.5 million from the crypto exchange Crypto.com through a mistaken transaction and then allegedly went on an extravagant spending spree.
The woman and her sister are now on the run from the law, 7NEWS reported Tuesday.
A Crypto.com spokesperson confirmed to Decrypt that the case is now “before the courts” but did not speak further on the matter.
Thevamanogari Manivel asked for a refund of $100 in May 2021 for her Visa debit card with Crypto.com, but the Singapore-based exchange mistakenly sent her one hundred thousand times more than she asked for, 7NEWS reported, citing court documents.
Rather than inform the exchange of its mistake, Manivel and her sister Thilagavathy Gangadory reportedly went shopping. The extravagant spending spree included a $1.35 million five-bedroom home as a gift and the shifting of 10.1 million funds into a joint account.
Read more on Info Hub (Premium)
Coinbase’s decimal point error in Georgia
Coinbase saw a temporary bug with the currency rate of European country Georgia. The country’s national currency, the lari (GEL), was supposed to be priced at $2.90, but the bug priced the currency at $290.
Almost 1,000 users exploited the bug, allowing them to withdraw their lari holdings at a hundred times the exchange rate. Users holding $100 worth of lari were able to withdraw it to their bank for $10,000.
Some users received notifications from their banks reading: “We have marked your transactions with Coinbase as suspicious and we’re locking all your accounts and cards… Please be aware that Coinbase may request clawback of funds. Sorry”.
Coinbase reported that the bug was exploited by 0.001% of total users or around 900 customers.
Users who have had their accounts frozen have found that all of their assets are frozen, including non-crypto-related funds. Users were able to exploit this bug by transferring crypto purchased on another platform before selling on Coinbase or by selling crypto bought on Coinbase and withdrawing.
Lawsuits
We have seen multiple different cases opened up last week against different entities as the U.S government attempts to reel in the cryptocurrency and blockchain industry. Micheal Saylor is being prosecuted by the Washington attorney general for tax evasion and they are also targeting the company he is associated Microstrategy for assisting in evading taxes. The XRP case is still ongoing after months and months of litigation with no sight of the finish line. Also denying the listing of the Bitcoin spot ETF continues to keep everyone in the unknown. These are just some of the hot topics being discussed right now.
Celsius clients file lawsuit
A group of Celsius Network custody wallet customers is suing the bankrupt lending platform in an effort to reclaim more than $22.5 million worth of funds. In a new lawsuit filed on Wednesday, individual holders of more than 64 accounts with Celsius say they retained the title to all of their crypto assets held in the firm’s custody wallets and therefore are entitled to their return. The account holders argue that Celsius cannot use their funds to pay off bankruptcy debts.
Celsius has structured their Custody and Withhold Accounts, which essentially serve as storage wallets, in a way that still enables users to maintain legal ownership of cryptocurrency. This ownership, however, is not extended to assets held in accounts that offer annual crypto earnings or borrowing services (Earn and Borrow accounts).
Only $50 million of the $210 million held by 58,300 users in custody accounts is set to be released, with all funds above $7,575 which were transferred from the Earn Program and Borrow Program into Custody and Withhold accounts not included within the released amount.
To attain that $50 million figure, Celsius lawyers have distinguished between “Pure Custody/Withhold Assets” and “Transferred Custody/Withhold Assets,” with “Pure” assets those which were not transferred from the Earn or Borrow Programs. This division of funds has not been well received by community members. In response to a Friday Twitter post from Celsius, countless community members have made it known that they want nothing short of all their funds back.
The Custody Program includes Custody Assets, Pure Custody Assets, and Transferred Custody Assets.
Around 58,300 users hold Custody Assets worth approximately $210 million in total.
Around 15,680 users hold Pure Custody Assets worth approximately $43.87 million in total.
Around 22,580 users hold Transferred Custody Assets worth approximately $11.25 million in total.
Approximately 5,500 users hold Withold or Pure Withhold Assets worth around $16 million in total
Michael Saylor sued for tax fraud
MicroStrategy and its founder Michael Saylor are being sued in civil court by Washington, DC, Attorney General Karl Racine over allegations of tax fraud.
The cloud-based computing company, the largest holder of Bitcoin among publicly traded companies, has helped "evade taxes he legally owes on hundreds of millions of dollars he’s earned while living in DC," Racine tweeted on Aug 31.
Racine described Saylor as “a billionaire tech executive who has lived in the District for more than a decade, but has never paid any DC income taxes.”
According to a press release from Racine’s office, Saylor is accused of avoiding paying income taxes in D.C through an “elaborate scheme” between 2014 and 2020. Saylor is said to have claimed to be a Florida resident (a state without income tax) but was living in D.C throughout most of the year and was enthusiastically open about his loophole.
Following a whistleblower lawsuit, Racine’s office investigated the allegations and found that Saylor had dodged paying more than $25 million in income taxes. The suit alleges that Microstrategy corroborated in the plan, including filing fake W2s statements with his Florida residence.
Read more on Info Hub (Premium)
New York fines Robinhoob’s crypto division
New York State’s financial regulator has fined the crypto arm of Robinhood Markets $30 million. Much of this fine is due to alleged violations of anti-money-laundering (AML) regulations.
Along with other deficiencies such as cybersecurity lapses, the New York State Department of Financial Services (NYDFS) penalized Robinhood Crypto for allegedly failing to devote sufficient resources to combating money laundering. Robinhood Crypto is a wholly owned subsidiary of Robinhood Markets Inc, which among other things, allows United States-based retail customers to trade stocks and options on a commission-free basis through its broker-dealer subsidiary, Robinhood Financial.
“As its business grew, Robinhood Crypto failed to invest the proper resources and attention to develop and maintain a culture of compliance — a failure that resulted in significant violations of the Department’s anti-money laundering and cybersecurity regulations,” stated Superintendent of Financial Services Adrienne A. Harris.
Mining
Bitcoin
Bitcoin’s mining difficulty jumped around 9% between August 30-31 in the last difficulty adjustment. Mining difficulty is a measurement used to indicate how difficult it is to solve the cryptographic puzzle to mine a block. The difficulty is adjusted according to the number of miners. The more miners there are on the network, the more difficult it will be to mine a block. The difficulty was expected to increase by over 6%.
Ethereum
Ethereum mining was a popular choice from the beginning to the end, as anyone from retail investors to institutional investors could start mining the coin.
Ethereum is expected to undergo The Merge between September 10-20. This will mark the switch from proof-of-work to proof-of-stake. Upon a successful update, the network is expected to undergo a triple-halving event.
Halvings are when the reward for mining is cut in half, usually scheduled through milestones such as block numbers. The Merge is expected to reduce the ETH supply by up to 90% through burning and generating deflationary pressure on the network.
Although ETH’s mining phase is nearly at its end, Ethereum’s August mining revenue was $200 million higher than it was in June.
Ethermine
Ethermine is the largest Ethereum mining pool and upon entering their webpage, a notification is shown explaining the end of PoW (Proof of Work) mining phase. The mining phase will come to an end on September 15, 2022.
Mining pools allow users to pool their resources to better their chances of mining difficult coins such as Bitcoin and Ethereum. The pool then splits the rewards amongst the pool members according to the percent of hashpower provided. Most mining pools feature 1% fees and instant payouts.
The platform also hosts mining pools for Ethereum Classic (ETC), Ravencoin (RVN), Ergo (ERGO), and Beam (BEAM). They will be offering a 0% fee promotion for the month of September for these other mining pools.
Ethermine Staking will be available soon to allow users to earn interest on their ETH without requiring the 32 ETH to become a validator; the minimum investment amount will be 0.1 ETH.
Ethereum Classic
Many miners have been speculating about the move to mining Ethereum Classic (ETC): the currency that includes Ethereum’s original blockchain before the 2016 fork to what is now known as Ethereum.
ETC’s network hashrate most recently hit an all-time-high of 44.85 TH/s on 08/25/22. Earlier today on Sept. 4, the network hit a new all-time-high of 47.92 TH/s. This suggests that miners are taking advantage of the last few days or weeks of mining Ethereum. Many of them are likely stacking up to start staking their mined ETH once The Merge is completed.
Helium
Helium (HNT) runs on a proof-of-coverage (PoC) network in which users operate hotspot devices that act as nodes. Helium was founded to build an open, affordable, and secure (decentralized) global wireless network owned and operated by people around the world.
Since their networks launch in 2019 there are nearly 1 million active hotspots operated by users. There are currently 939,913 hotspots with 64% online. The hotspots are currently in 72,488 cities spread across 182 countries. Hotspots look like minimal internet routers and don’t consume much power, unlike most other mining machines.
Helium also offers staking capabilities. To run a validator node, a stake of at least 10,000 HNT is required (worth around $47,100 at the time of writing). There are currently 3,727 validators on the network with a total of 37.27 million HNT staked- about 38% of the total supply.
The developers behind the network have proposed shifting the entire protocol to the Solana blockchain to take advantage of faster transaction speeds and compatibility with other blockchains.
HNT prices hit an all-time high of $52.71 on November 2021. For most of 2021 and up to the Terra and crypto market crashes in March 2022, the price maintained between $20 to $30. The price is now around $4.70.
Market
Market Cap: $973.02 B; up from $965.145 B last week
24h Volume: $44.852 B; down from $73.252 B last week
BTC Dominance: 38.8%; down from 39.7% last week
ETH Dominance: 19.5%; up from 18.7% last week
None of our posts or newsletters are meant to be taken as financial advice.
