Centra Tech’s co-founder is headed to prison, and Bancor Network narrowly avoids disaster.
- John Bolton’s tell-all book says Trump wanted to “go after” bitcoin
- Crypto community rallies to support phishing victim
- Centra Tech co-founder headed to prison
- Bancor Network discovers bug putting a fortune at risk
President Trump instructed Treasury Secretary Steve Mnuchin to “go after bitcoin”, according to a new book written by former national security advisor John Bolton. In “The Room Where It Happened,” Bolton describes an argument between Trump and Mnuchin arguing about imposing sanctions and tariffs on trade with China. The conversation took place in 2018, when bitcoin was pulling very strong against the dollar, but it’s unclear what prompted the reference to bitcoin in this particular conversation. Trump has never been a fan of cryptocurrency, as comments in 2019:
“I am not a fan of Bitcoin and other Cryptocurrencies, which are not money, and whose value is highly volatile and based on thin air,” he tweeted. “Unregulated Crypto Assets can facilitate unlawful behavior, including drug trade and other illegal activity….”
But Mnuchin, one of the longest-serving members of the Trump administration, has taken a more measured approach. He may have no plans to buy bitcoin but does not have a problem with digital asset initiatives, such as the Libra project, as long as they adhere to U.S. regulations.
Protocol Podcast host Eric Savics revealed that he’d lost his entire Bitcoin savings after being duped by the faux KeepKey app he downloaded from Google’s Chrome Web Store. He entered the seed phrase for his wallet and just like that, lost a nest egg worth about $110,000. Savics tweeted his misfortune on June 12, saying he’d hoped to buy an apartment with his savings.
The crypto community was there in Savics’ moment of need, however. A few days after he tweeted about the theft, Savics had received about 0.709 BTC in donations from strangers. He vows to return the donations should he recoup his lost savings.
For all of its benefits, cryptocurrency is still a prime target for fraud and theft. Economist Nouriel Roubini responded to Savics’ tweet saying, “1 of the 1000s of daily scams in Bitcoin/Shitcoins world. THERE ZERO SECURITY IN SHITCOIN LAND! Billions lost daily to such scams & crypto robberies. If anyone steals my credit card or bank account info I get 100% refunded with a 1 min call.”
Google’s Chrome store has increasingly become a hotbed for crypto phishing scams impersonating hardware wallet programs, with a large number of fake Ledger extensions having been identified on the platform in recent months.
In March alone, a single scam extension was estimated to have absorbed 1.4 million XRP — currently valued at $269,000.
In April, Google removed 49 malicious extensions from Chrome’s web store that had been identified as crypto phishing scams.
Founder of cryptocurrency firm Centra Tech Robert Farkas pled guilty to fraud in federal court this week. Farkas faces between 70 and 87 months in prison, as well as a $250,000 fine. Farkas’ co-founders Sohrab Sharma and Raymond Trapani face trial later this year.
Centra Tech was a scam from the start. Though the company promised to launch a “Centra Card” that could be used wherever Mastercard or Visa were accepted, that was a lie. Centra Tech never had any kind of partnership or license with either of those companies.
The founders also made false claims about the company’s nonexistent CEO “Michael Edwards.” They said Edwards was an alumnus of Harvard University with a master’s degree in business administration and had more than 20 years of experience in the banking industry. They also lied about other team members of the company and about having a money transmitter license in 38 states so as to dupe investors into betting more money on their initial coin offering, or ICO.
Floyd Mayweather and DJ Khaled both backed the Centra Tech ICO, which was held in the summer of 2017. The SEC charged both celebrities for unlawfully promoting crypto coin without revealing they’d been paid to do so.
Mayweather, who was involved with two other ICOs, ended up paying $300,000 in disgorgement, a $300,000 penalty and nearly $15,000 in prejudgment interest. DJ Khaled, on the other hand, had to pay $50,000, a $100,000 penalty, and nearly $3,000 in prejudgment interest.
Time for another round of bad news/good news. The bad news is that a bug rendered the latest version of Bancor Network smart contract vulnerable to hacking. The good news is that Bancor caught the flaw before anyone’s accounts were impacted. Bancor is a DeFi blockchain protocol designed to facilitate cross-chain cryptocurrency trades.
Bancor, along with help from two “anonymous agents,” rescued $545,000 before malcontents got their hands on it. Bancor discovered the bug at midnight and quickly alerted its community. It then exploited the bug to whisk about $410,000 in at-risk funds away to safety. Two automatic front-runners noticed the transactions and made their own moves to the tune of another $135,000. It’s believed those funds will be returned to their rightful owners.
So, crisis narrowly averted, but at least one person thinks this problem could’ve been avoided months ago:
According to Tal Be’ery, a security research manager and co-founder of ZenGo, his team warned about the risks of approval exploits — like the one suffered by Bancor — three months ago.
“In almost every DApp, when the user connects to it, they unknowingly provide the smart contract associated with the DApp, full access to all of their funds, regardless of their actual usage. Therefore, even if the user only actually sent a transaction equivalent to $1, an attacker abusing a smart contract vulnerability can withdraw all of the user’s holdings of that specific asset,” wrote Alex Manuskin, in a report, on March 23.
Bancor is now advising users to check if they interacted with the faulty contract, and if so, perform a small conversion on Bancor.network to revoke all previous approvals to the old version of the smart contract. Full details on how to keep safe can be found in the official Bancor Telegram chat.
That’s the news roundup for June 20, 2020. Check in next week for the latest news of cryptocurrency innovation and regulation around the world!
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