Weekly Crypto Roundup: new rules, serious report cards and even more hacks

As several crypto firms reported falling earnings in the second quarter of 2022, a growing number of traders are facing the ripple effect of the meltdown spreading from the crypto industry to mainstream companies, triggering regulators worldwide to act.

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Increasing regulations

This week, US Senators Debbie Stabenow and John Boozman proposed the Stabenow-Boozman bill, which aims to give the Commodities Futures Trading Commission (CFTC) the primary responsibility for regulating Bitcoin and Ether. Currently, the crypto industry is struggling to navigate the regulatory overlaps of the CFTC – which is believed to be more tolerant of crypto innovation – and the Securities and Exchange Commission (SEC), which is known to take legal action against a number of crypto companies.

The SEC has thousands of full-time employees and a budget approaching $2 billion, while the CFTC has fewer than 1,000 full-time employees and a budget well under $500 million.

The proposal comes as Bitcoin’s value more than halved this year to touch prices below $19,000, and a number of crypto lending/trading platforms struggled to maintain operations — or simply suspended user transfers and withdrawals.

On the other side of the Atlantic, the Indian government is keeping a close eye on the crypto sector.

In a written reply to the Rajya Sabha on Tuesday, Finance Minister Pankaj Chaudhary reported that the Directorate of Enforcement is investigating Indian crypto exchange WazirX. The platform was alleged to have laundered around Rs 2,790 crore.

“In one of the cases, investigations so far have revealed that an Indian crypto exchange platform, Wazirx, operated by Zanmai Labs Private Limited in India, was using the fenced infrastructure of the Cayman Island-based exchange BINANCE. Furthermore, it has been found that all crypto transactions between these two exchanges was not even recorded on the blockchains and was thus shrouded in mystery,” he said, according to PTI.

The Enforcement Directorate also froze Rs 64.67 crore in WazirX’s bank deposits. WazirX today issued a statement saying that regardless of the regulator’s actions, deposits and withdrawals were proceeding as usual. The exchange is also considering its options.

Saylor no longer CEO

The American company MicroStrategy is known for its business intelligence services, but those in the crypto world are more likely to call it a “whale”, referring to high-profile cryptocurrency buyers whose moves can greatly affect the market. At last count, MicroStrategy held approximately 129,699 BTC.

However, this week MicroStrategy co-founder and billionaire Michael Saylor announced that he is stepping down from the role of CEO and taking on an executive chairman position instead, so he could focus on acquiring more cryptocurrency. Mr. Saylor has been the CEO of the company for over 30 years.

MicroStrategy’s stock is up 14.56% over the past five days, the most since early May.

Still, this didn’t change the company’s second-quarter results, which showed that Bitcoin’s loss had also hit its balance sheet hard. Total revenue for the quarter fell to $122.1 million and net loss came in at over $1 billion.

“Net loss for the second quarter of 2022 was $1.062 billion, or $94.01 per diluted share, compared to $299.3 million, or $30.71 per diluted share, for the second quarter of 2021,” it said in the company’s official release. on Tuesday.

In other news, Jack Dorsey’s Block, which pushed for mass crypto adoption, is also taking steps to address the current state of the crypto economy. The company is slowing hiring, and also plans to cut its investment target by $250 million.

Block’s shares have risen by 22.49% in the past five days.

Two strikes in one week

This week was a painful one for many crypto traders who invested in Solana, the ninth largest blockchain by market capitalization. On Tuesday and Wednesday, around 8,000 wallets were hacked and their crypto funds were quickly drained. A number of ecosystem members stepped in to investigate the cause of the hack, and evidence pointed to the vulnerability possibly stemming from Solana’s digital wallet Slope.

“We feel the community’s pain, and we were not immune. Many of our own employees and founders’ wallets were emptied,” said Slope Wallet’s official statement published Thursday.

It added that the team was working with developers, security experts and protocols in the ecosystem to “identify and correct.” The Slope wallet team confirmed that while it had some hypotheses regarding the exploit, it had no “solid” answers yet.

This latest incident shows how traders and new users often pay the heaviest price when it comes to decentralized blockchain projects, whose founders are not accountable to investors during such crises.

Solana merchants weren’t the only ones out of luck. Crypto bridge Nomad, which helps move crypto assets between blockchains, was also exploited this week. Hackers took over $190 million on Tuesday, but later returned about $9 million.

Crypto bridges are a common target for hackers, with the Ronin bridge hack leading to the theft of around $600 million earlier this year. This is one of the biggest crypto hacks on record.

While “white hat hackers” flag security breaches or try to take funds to draw attention to vulnerabilities in a project, analytics platforms have also revealed that North Korean state hackers are resorting to crypto exploits to avoid sanctions.