Cryptocurrencies

Ledger vulnerability put entire DApp ecosystem at risk: Finance Redefined

The Ledger connector vulnerability put the entire DeFi ecosystem at risk, with market experts asking users to remain cautious of using DApps even after Ledger released a patch.

Welcome to Finance Redefined, your weekly dose of essential decentralized finance (DeFi) insights — a newsletter crafted to bring you the most significant developments from the past week.

The past week in DeFi saw an unprecedented chain of events unfold on Dec. 14 when a malicious actor exploited a vulnerability in the Ledger hardware wallet’s connector library. The exploit put the entire decentralized application (DApp) ecosystem at risk. On-chain analysts and DApps like SushiSwap and MetaMask advised users not to interact with their wallets at all.

Ledger released a patch within hours to contain the vulnerability, but the exploiter drained over $650,000 in assets from multiple victims. However, considering the number of wallets and DApps at risk, the drained amount was considerably lower than it could have been.

Bitcoin ecosystem reinvigorated by memecoins, new protocols

Bitcoin miners’ revenue has reached all-time highs in part due to increased on-chain fees.

The Bitcoin ecosystem has witnessed a dramatic recovery as the market cap of BRC-20 tokens surpassed $4 billion shortly after their invention in January.

According to a Dec. 15 research report by cryptocurrency exchange Bitget seen by Cointelegraph, Bitcoin (BTC) miners’ earnings from on-chain fees have surged from 1.7% in August to 19.57% by November. Meanwhile, daily mining revenue from block rewards surged past $40 million in November. The namesake digital asset has gained 161% year-to-date.

Invented by Bitcoin developer Casey Rodarmor in January, BRC-20 tokens have surged in popularity as one of the largest technological advancements in a 15-year-old blockchain. Bitcoin Ordinals is a numbering system that assigns a unique number to each satoshi, or 1/100 millionth of a Bitcoin, enabling tracking and transfer. Combined with the inscription process, which adds a layer of data to each Satoshi, users can mint unique digital assets on the Bitcoin blockchain.

First Trust files for Bitcoin ‘Buffer ETF’ with SEC

Asset manager First Trust has filed for a Bitcoin buffer ETF with the SEC, intending to help investors mitigate risk by targeting downside protection.

The financial services firm First Trust is the latest company to file for a Bitcoin (BTC) exchange-traded fund (ETF) — but not a spot ETF.

On Dec. 14, First Trust submitted a Form N1-A filing with the United States Securities and Exchange Commission (SEC) to launch a new Bitcoin-linked product called the First Trust Bitcoin Buffer ETF.

According to the prospectus, the fund is designed to participate in the positive price returns — before fees and expenses — of the Grayscale Bitcoin Trust or another exchange-traded product (ETP) that provide exposure to the performance of Bitcoin.

What are stealth addresses, and how do they work?

Stealth addresses in cryptocurrencies act like secret codes for transactions, providing enhanced privacy by generating unique addresses for each payment.

The purpose of crypto stealth addresses is to enable privacy for each transaction, concealing the recipient’s identity and transaction history.

Crypto stealth addresses are a privacy-enhancing feature in blockchain technology that lets users receive money anonymously. Unlike conventional public addresses, stealth addresses provide distinct, one-time addresses for every transaction. The recipient’s actual address is kept secret when a sender transfers funds using a stealth address; the transaction is broadcast to the network.

Majority of UK MPs ‘lack crypto knowledge,’ says industry association

According to CryptoUK, MPs Andrew Griffith and Lisa Cameron were among the top crypto proponents in the U.K. government.

The self-regulatory trade association CryptoUK has reported roughly 5% of all members of Parliament (MPs) in the United Kingdom have publicly spoken on crypto and blockchain, suggesting a lack of knowledge.

In a report released on Dec. 14, CryptoUK analyzed the sentiment of MPs between 2022 and 2023, finding that only 37 lawmakers specifically mentioned crypto and blockchain — 5.7% of the 650 members. Some of the top voices in the U.K. government in 2023, according to CryptoUK, included MP and former Economic Secretary Andrew Griffith and crypto proponent Lisa Cameron.

“It’s important that MPs from all parties and from all corners of the UK get to know the cryptoasset industry better,” said a CryptoUK spokesperson. “Almost five million people […] in the UK have some sort of cryptoasset exposure, while tens of thousands of people work in the industry in the UK, supporting their local economies and helping the British economy grow.”

Security engineer pleads guilty to Nirvana Finance exploit and one other hack

Shakeeb Ahmed was arrested for hacking an unspecified DEX, and then admitted to the Nirvava Finance hack too.

A software engineer pleaded guilty in the Southern District Court of New York on Dec. 14 to one count of computer fraud in connection with the hacking of Nirvana Finance and an unnamed decentralized cryptocurrency exchange. The United States Attorney’s Office said the case was the first-ever conviction for hacking a smart contract.

Shakeeb Ahmed, described as a “senior security engineer for an international technology company,” was arrested in July in connection with the hack of the unnamed exchange on or about July 2 and 3, 2022. According to the U.S. Attorney’s Office statement:

Ahmed returned all but $1.5 million to the exchange, which “agreed not to refer the attack to law enforcement.” The exchange “allowed users to exchange different kinds of cryptocurrencies, and paid fees to users who deposited cryptocurrency to provide liquidity on the Crypto Exchange.”

Which world leaders have made big promises on crypto?

From Nayib Bukele to Donald Trump, many current and former heads of state across the globe have used crypto and blockchain as political tools.

Few world leaders have been openly supportive of digital assets while in office or while they were campaigning. Though the technology is relatively young and untested as a political issue, many candidates have staked their reputations on crypto and blockchain.

Now the former president of El Salvador as he campaigns for his next term in office, Nayib Bukele is arguably the most outspoken head of state in the world on cryptocurrency. He pioneered a legislative path to make Bitcoin (BTC) legal tender in El Salvador in 2021. He directly tied his presidency to the cryptocurrency, periodically boasting about buys on X — formerly Twitter.

Under Bukele, BTC kiosks have been installed across El Salvador, and the president reported in December that the country’s Bitcoin investments were profitable after the crypto market downturn of 2022. In 2024, El Salvador’s Ministry of Education plans to introduce a Bitcoin education program for public schools.

Decentralized applications pause Ledger Connect as exploit fix deployed

Ledger has since attributed the exploit to a phishing attack on a former employee.

More decentralized applications (DApps) have temporarily disabled their front-end user interface for Ledger Connect amid an exploit on Dec. 14.

Developers of the nonfungible token (NFT) platform OpenSea said on Dec. 14 that users should “not connect to any dApps using Ledger Connect until further notice.”

Meanwhile, the decentralized finance (DeFi) protocol Lido Finance stated its “front-ends have been switched off as a precautionary measure whilst the Ledger connect issue is being investigated.”

US accounting standards board rules will reflect institutional crypto assets’ fair value

The U.S. FASB has decided that crypto assets will be represented at their fair value in accounting beginning late next year.

Crypto companies and institutions holding crypto assets will be able to record the value of their crypto more realistically under accounting rule changes in the United States.

The Financial Accounting Standards Board (FASB) finalized the new rules on Dec. 13. The FASB is the organization that sets accounting and reporting standards for the U.S. Generally Accepted Accounting Principles (GAAP). GAAP-standard financial reports are required from companies that trade on public markets in the United States.

Web3 chess game developer shutters play-to-earn due to ‘heavy cheating’

Both in-game Checkmate token rewards and NFT gameplay modes will be disabled.

Developers of the blockchain chess game Immortal Game are pulling the plug on its play-to-earn (P2E) and nonfungible token (NFT) features due to rampant cheating.

According to the Dec. 13 announcement, while developers continue to build Immortal Game as an online chess hub and may incorporate further decentralized technologies in the future, its goal of “giving a real opportunity for people to earn an income through chess” through Immortal Game has failed.

“We found that by offering large amounts of cash with no limit barrier to entry, we encouraged heavy cheating on the platform and degraded the user experience for our legitimate player base who want a fair and safe place to play chess online,” Immortal developers wrote. “The unintended consequence of offering money to players has increased the unfair practices.”