Atlantis Loans

Ronin

Venus

Atlantis

<p>With the spotlight fixed on The SEC, Binance, and Coinbase this week and dominating social media platforms, it&#8217;s no surprise that some noteworthy happenings in the Web3 space have slipped under the radar.</p>



<p>Despite not capturing the same level of attention within the crypto community as the recent lawsuits, these developments undoubtedly hold the capacity to sway markets and affect investors and traders.</p>



<p><strong>Also Read:</strong> <a href="https://chaindebrief.com/we-are-in-a-crypto-liquidity-crisis-but-the-reason-is-not-what-you-think/">We Are in A Crypto Liquidity Crisis – But The Reason is Not What You Think</a></p>



<h2 class="wp-block-heading" id="1-the-cftc-8217-s-8220-precedent-setting-8221-court-battle-with-ooki-dao">1. The CFTC&#8217;s &#8220;Precedent Setting&#8221; Court Battle With Ooki DAO</h2>



<p>Late last week, the Commodity Futures Trading Commission (CFTC) <a href="https://www.coindesk.com/policy/2023/06/09/cftc-wins-lawsuit-against-ooki-dao/">won a default judgement in the United States against Ooki DAO,</a> an DeFi margin trading and lending platform.</p>



<p>The CFTC had initially filed the lawsuit against Ooki DAO in September 2022, with the judge ruling that Ooki DAO was to permanently shut down and pay a penalty of approximately USD$640,000.</p>



<p>Although no representative for Ooki DAO showed up to debate the lawsuit (hence the default judgement), the larger implication is the judgement that a decentralized autonomous organization could be held liable for legal violations as a &#8220;person&#8221; under the Commodity Exchange Act.</p>



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<blockquote class="twitter-tweet" data-width="550" data-dnt="true"><p lang="en" dir="ltr">Recall, that lacking a legal entity to wrap membership or BORG-like opCo to be proxy, DAO members in this case (&quot;Ooki&quot;) may have joint &amp; several liability to pay reg fines as an unincorporated association.<br><br>This can mean one person can be on the hook for full court damages. <a href="https://t.co/VnE6GU4eCj">pic.twitter.com/VnE6GU4eCj</a></p>&mdash; ross (@z0r0zzz) <a href="https://twitter.com/z0r0zzz/status/1667291295625408512?ref_src=twsrc%5Etfw">June 9, 2023</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
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<p>&#8220;A DAO and its members can be summoned to court by just posting its forum&#8230; and another federal court has determined DAO tokens suggest general partnership&#8221; noted<a href="https://twitter.com/z0r0zzz/status/1667309261255475200?ref_src=twsrc%5Etfw%7Ctwcamp%5Etweetembed%7Ctwterm%5E1667310513943101440%7Ctwgr%5E77634d566f71e442e74d0218501b22a3f7f9ed54%7Ctwcon%5Es2_&amp;ref_url=https%3A%2F%2Fcointelegraph.com%2Fnews%2Fooki-dao-to-shut-down-after-precedent-setting-court-battle-with-cftc"> one Twitter user.</a></p>



<p>Despite the perception of DAOs as intangible entities, the reality is that their creators must remain actively involved in the decision-making process due to the limitations of pure automation. </p>



<p>Moreover, if token holders or forum participants can be linked to the DAO, it could have far-reaching consequences in the realm of legal proceedings. </p>



<p>This raises the possibility that DAO members might bear some degree of responsibility for the future actions and outcomes of the DAO. </p>



<p>Such implications highlight the evolving legal landscape surrounding DAOs and the potential accountability that may befall their participants.</p>



<p><strong>Also Read: <a href="https://chaindebrief.com/unicefs-crypto-experiment-how-daos-will-revolutionize-humanitarian-aid/">UNICEF’s Crypto Experiment: How DAOs Will Revolutionize Humanitarian Aid</a></strong></p>



<h2 class="wp-block-heading" id="strong-2-north-korea-8217-s-booming-bear-market-strong"><strong>2. North Korea&#8217;s Booming Bear Market</strong></h2>



<p>While user activity in the crypto world remains sluggish, there is one distinctive group that persists in extracting the maximum possible value from our still-nascent industry.</p>



<p>Unfortunately, hackers and scammers have continued to target DeFi protocols, and even wallets &#8211; a cause of concern for anyone in crypto.</p>



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<blockquote class="twitter-tweet" data-width="550" data-dnt="true"><p lang="en" dir="ltr">Abandoned Atlantis Loans project exploited for $1.1 million<br><br>June 12, 2023<a href="https://t.co/eq9DnT9QU4">https://t.co/eq9DnT9QU4</a> <a href="https://t.co/z62PTSghbl">pic.twitter.com/z62PTSghbl</a></p>&mdash; web3 is going just great (@web3isgreat) <a href="https://twitter.com/web3isgreat/status/1668431932126896129?ref_src=twsrc%5Etfw">June 13, 2023</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
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<p>This week alone, two protocols, Atlantis Loans and Sturdy Finance, were exploited for USD$1.1 million and USD$775,000 in funds respectively.</p>



<figure class="wp-block-image size-full is-resized"><img decoding="async" src="https://chaindebrief.com/wp-content/uploads/2023/06/image-31.png" alt="" class="wp-image-37997" width="644" height="380" srcset="https://chaindebrief.com/wp-content/uploads/2023/06/image-31.png 793w, https://chaindebrief.com/wp-content/uploads/2023/06/image-31-300x177.png 300w, https://chaindebrief.com/wp-content/uploads/2023/06/image-31-768x453.png 768w" sizes="(max-width: 644px) 100vw, 644px" /></figure>



<p>Despite Web3&#8217;s overall progression in_ recent years, it seems that the increased activity in crypto has also presented a strong correlation with hacks, with $3.8bn in exploits happening in 2023 alone.</p>



<p>The recent Atomic Wallet exploit, which was responsible for more than $35 million in lost funds, has also been potentially linked to the North Korean Lazarus group.</p>



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<blockquote class="twitter-tweet" data-width="550" data-dnt="true"><p lang="en" dir="ltr">Update:  <br><br>Atomic Wallet Hack appears to potentially have been done by Lazarus Group/DPRK <br><br>(seeing lots of similarities in the laundering patterns to Ronin + Harmony)</p>&mdash; ZachXBT (@zachxbt) <a href="https://twitter.com/zachxbt/status/1666115739764285445?ref_src=twsrc%5Etfw">June 6, 2023</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
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<p>The collection of crypto hackers were previously responsible for exploits such as the Harmony and Ronin Bridge hack. According to <a href="https://www.nbcnews.com/tech/crypto/crypto-hacks-stole-record-38-billion-2022-led-north-korea-groups-rcna68602">one report by CNBC,</a> the group cumulatively stole $775.7 million stolen in just one month last year.</p>



<p>As we navigate deeper into the bear market, the interest in cryptocurrency will likely diminish even more if <a href="https://twitter.com/zachxbt/status/1666146149521039360?s=20">hacking incidents persist</a>, leading to an already low risk appetite plunging further.</p>



<p>Not only will these events continue to affect regular adoption, but the adverse headlines such exploits bring about will only stifle regulatory outlook for crypto, especially from an outside-in perspective.</p>



<p><strong>Also Read: </strong><a href="https://chaindebrief.com/30-crypto-hacks-over-30m-broken-down/">30 Crypto Hacks Over $30M, Broken Down</a></p>



<h2 class="wp-block-heading" id="strong-3-almost-a-million-bnb-set-for-liquidation-strong"><strong>3. Almost a Million BNB Set For Liquidation</strong></h2>



<p>Last year, the<a href="https://www.nansen.ai/research/bnb-chains-cross-chain-bridge-exploit-explained"> Binance Smart Chain Bridge halted</a> under the direction of Binance CEO Changpeng &#8220;CZ&#8221; Zhao, after an attacked managed to unlawfully issue themself 2 million $BNB tokens, valued at approximately US$566m at the time.</p>



<p>Although this managed to stop the attacker in their tracks, there was no unilateral decision amongst validators to rollback the network, and therefore the extra supply would remain on-chain.</p>



<p>The attacker then bridged their ill-gotten gains to multiple other chains, and deployed them in lending protocols to borrow stablecoins and other crypto assets against their collateral.</p>



<figure class="wp-block-image size-full"><img decoding="async" width="867" height="457" src="https://chaindebrief.com/wp-content/uploads/2023/06/image-32.png" alt="" class="wp-image-37998" srcset="https://chaindebrief.com/wp-content/uploads/2023/06/image-32.png 867w, https://chaindebrief.com/wp-content/uploads/2023/06/image-32-300x158.png 300w, https://chaindebrief.com/wp-content/uploads/2023/06/image-32-768x405.png 768w" sizes="(max-width: 867px) 100vw, 867px" /></figure>



<p>They also deposited 900,000 $BNB onto Venus Protocol on the Binance Smart Chain, and took out a $150m loan against it. </p>



<p></p>



<p>With the $BNB token plummeting 21% in light of the SEC&#8217;s recent actions, the attacker&#8217;s position in Venus Protocol has been put dangerously close to it&#8217;s liquidation threshold of $220. </p>



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<blockquote class="twitter-tweet" data-width="550" data-dnt="true"><p lang="en" dir="ltr">According to the governance proposal below, the BNB Chain core will take over the <a href="https://twitter.com/search?q=%24BNB&amp;src=ctag&amp;ref_src=twsrc%5Etfw">$BNB</a> position on Venus if the BNB price hits the liquidation threshold. <a href="https://t.co/MSUHLUTwTS">https://t.co/MSUHLUTwTS</a></p>&mdash; BNB Chain (@BNBCHAIN) <a href="https://twitter.com/BNBCHAIN/status/1668173035759697921?ref_src=twsrc%5Etfw">June 12, 2023</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
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<p>While the team behind the BNB chain has prepared to undertake the arduous task of liquidating 900,000 $BNB, it still represents approximately 0.6% of the entire supply.</p>



<p>At current prices, this represents ~USD$200m in tokens which could potentially be offloaded into the market, albeit in stages, during bearish conditions.</p>



<p><strong>Also Read: </strong><a href="https://chaindebrief.com/sec-sues-binance-and-ceo-cz-claims-bnb-and-busd-are-securities-in-latest-filings/">SEC Sues Binance and CEO “CZ”, Claims BNB and BUSD are Securities in Latest Filings</a></p>



<h2 class="wp-block-heading" id="4-u-s-regulatory-landscape-prompts-pre-emptive-moves-from-crypto-companies">4. U.S. Regulatory Landscape Prompts Pre-emptive Moves From Crypto Companies</h2>



<p>As the SEC continues to remain opaque regarding crypto regulations, companies located in the United States have begun taking precautionary actions to avoid potential legal concerns in the region.</p>



<p>Crypto.com, a leading centralized exchange platform, <a href="https://blockworks.co/news/crypto-com-suspending-us-institutional-exchange">recently announced </a>that they would be shutting down institutional trading in the US.</p>



<p>Citing limited demand from institutions and the current market landscape as the main reasons for doing so,<a href="https://blockworks.co/news/crypto-com-suspending-us-institutional-exchange"> some have suggested</a> that their sudden announcement comes in light of the SEC&#8217;s recent actions against Binance and Coinbase.</p>



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<blockquote class="twitter-tweet" data-width="550" data-dnt="true"><p lang="en" dir="ltr">BREAKING:<br><br>Robinhood to delist tokens named in the SEC lawsuit against Binance and Coinbase. This includes Solana, Polygon and Cardano.</p>&mdash; whalechart (@WhaleChart) <a href="https://twitter.com/WhaleChart/status/1666335523474997249?ref_src=twsrc%5Etfw">June 7, 2023</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
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<p>Companies that offer crypto services to retail clients have also taken to delisting any tokens that the SEC has labelled as &#8220;securities&#8221;.</p>



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<blockquote class="twitter-tweet" data-width="550" data-dnt="true"><p lang="en" dir="ltr">1.  SEC alleges that Coinbase was operating as an unregistered exchange, broker, and clearing agency<br><br>It also notes several cryptocurrencies as &quot;securities&quot;, including <a href="https://twitter.com/hashtag/MATIC?src=hash&amp;ref_src=twsrc%5Etfw">#MATIC</a>, <a href="https://twitter.com/hashtag/ICP?src=hash&amp;ref_src=twsrc%5Etfw">#ICP</a>, <a href="https://twitter.com/hashtag/NEAR?src=hash&amp;ref_src=twsrc%5Etfw">#NEAR</a>, <a href="https://twitter.com/hashtag/DASH?src=hash&amp;ref_src=twsrc%5Etfw">#DASH</a>, and more.<br><br>Full non-exhaustive list attached <a href="https://t.co/GLvUKZCgKS">pic.twitter.com/GLvUKZCgKS</a></p>&mdash; Chain Debrief (@ChainDebrief) <a href="https://twitter.com/ChainDebrief/status/1666074583479492608?ref_src=twsrc%5Etfw">June 6, 2023</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
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<p>Robinhood, a popular commission-free application for customers to trade cryptocurrency and stocks, for example, has made public their intentions to delist Cardano (ADA), Polygon (MATIC), and Solana (SOL) following a recent review.</p>



<p>eToro, a similar trading platform, has announced that they will be removing Polygon (Matic), Algorand (Algo), Decentraland (MANA), and Dash (DASH) for U.S. Customers.</p>



<p>Over the weekend, renown venture capital firm Andreessen Horowitz, better known as a16z, <a href="https://chaindebrief.com/a16zs-london-expansion-is-the-uk-set-to-become-the-next-crypto-hub/">also announced</a> the establishment of their first international office in London.</p>



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<blockquote class="twitter-tweet" data-width="550" data-dnt="true"><p lang="en" dir="ltr">The country that properly incentivizes decentralization is going to win web3 and reap the benefits.<br><br>Recognizing this, many in Congress want to foster decentralization. The SEC’s only plan is to attack it. <a href="https://t.co/CNCCporbRJ">pic.twitter.com/CNCCporbRJ</a></p>&mdash; miles jennings | milesjennings.eth (@milesjennings) <a href="https://twitter.com/milesjennings/status/1653806565227659264?ref_src=twsrc%5Etfw">May 3, 2023</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
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<p>With companies seemingly shifting away from the United States as a crypto hub, it seems that Web3, unironically, is starting to get more decentralized.</p>



<p></p>



<p><strong>Also Read: <a href="https://chaindebrief.com/bitstamps-ceo-on-regulation-bear-market-building-seeing-bitcoin-at-200/">Bitstamp’s CEO on Regulation, Bear Market Building &amp; Seeing Bitcoin at $200</a></strong></p>



<p><em>[Editor’s Note: This article does not represent financial advice. Please do your research before investing.]</em></p>



<p><em>Featured Image Credit: ChainDebrief</em></p>

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