Weekly Wrap: Regulations Tighten Amid Another Vanity Wallet Breach
Hacker Breaches Vanity Wallet, Steals Almost $1M
On Monday last week, a wallet address from open source vanity address generator Profanity fell victim to an attack. The perpetrator exploited an opening in the Profanity tool to breach and drain the wallet. They were able to make off with nearly $1M worth of ETH which they sent to sanctioned crypto mixer Tornado Cash.
Blockchain security firm Peckshield spotted the attack and made a Twitter post sharing the news. The tweet noted that the hacker had stolen about 732 ETH roughly $950K from an Ethereum vanity wallet address. Notably, the attack came shortly after DEX aggregator 1Inch network sent out a warning about the Profanity address generator.
Users employ the tool to generate vanity addresses; custom wallet addresses that include personalized words or characters. However, according to 1Inch Profanity addresses are unsafe as hackers could acquire the private keys to user wallets using “brute force” calculations. Indeed, just recently an attacker was able to cart off with over $3M in a breach involving multiple Profanity-generated addresses.
Japan to Roll Out New AML Policies
According to a Tuesday release, Japan is heightening efforts to combat the use of digital assets in illicit activities. The nation’s regulators will rework existing policies such as the Act on Prevention of Transfer of Criminal Proceeds. They will also unveil new remittance laws aimed at tackling money laundering using cryptocurrency.
Beneath the new laws exchange platforms will be required to share customer data between operators. This includes information such as the customer’s name and address as they transfer crypto to another exchange. Through this, Japanese authorities hope to keep track of transactions of people engaged in criminal activities.
Notably, platforms that fail to observe these requirements will face administrative guidance and corrective orders as well as criminal penalties. The law also addresses a regulatory framework for stablecoins following May’s Terra collapse and is likely to take effect next spring.
Kazakhstan Government Ready to Legalize Exchange Operations
With enough demand, Kazakhstan’s government is set to give the green light for crypto-to-cash conversions. Local news outlet Informburo shared news of this in a publication on Sept. 28. According to Kassym-Jomart Tokayev, president of the central Asian nation, the authorities have already begun revising national laws to accommodate a crypto-focused pilot project.
The Astana International Financial Center kicked off the project a few months ago in partnership with Kazakh banks and AIFC-endorsed exchange platforms. The aim was to test simultaneously opening client accounts on crypto exchanges and Kazakhstani banks. It appears the Eurasian Bank alongside exchange Intexbix recently conducted the bank’s first regulated crypto purchase using fiat.
“We are ready to go further,” Tokayev says. “If this financial instrument shows its further relevance and security, it will certainly receive full legal recognition.”
Meta Introduces NFT Cross-Posting on Facebook and Instagram
In an official announcement on Thursday, Facebook and Instagram parent company Meta revealed new developments regarding their NFT venture. All users of the popular social media platforms can now connect their digital wallets to share their non-fungible tokens. Meta has been working on this since May when they first introduced NFTs on Instagram.
Following the update, users can tag the creator and collector of their digital collectible in their posts. Of course, this depends on their privacy settings and, notably, they will not have to pay any fees to access the feature. All they have to do is link their wallets to their accounts and settle on collectibles to post.
Meta supports a slew of digital wallets including Rainbow, MetaMask, Trust Wallet, Coinbase Wallet, and Dapper Wallet. The company recently announced support for blockchain networks Ethereum, Polygon, and Flow, with plans for Solana, too.
CFTC Slams Digitex Founder Adam Todd for Price Manipulation
Adam Todd, the founder of crypto derivatives exchange Digitex, is facing a suit from the Commodities Futures Trading Commission. The regulatory agency filed the suit on claims that Todd had been operating an illegal trading platform. According to the filing, Digitex has “never been registered with the Commission in any capacity.”
The CFTC’s complaint states that the exchange is in violation of the Commodity Exchange Act (CEA). Digitex reportedly also failed to comply with the Bank Secrecy Act, an offense that could cost up to 5 years of jail time.
Additionally, Adam Todd is facing allegations of price manipulation. The CFTC claims Todd tried to pump Digitex’s native token DGTX via third-party services. With the suit, the commission hopes to impose a fine on the exchange in addition to sanctions. Notably, this comes shortly after the CFTC settled $250k charges against bZeroX and the bZx protocol founders for violating the Commodity Exchange Act.
Solana Network Suffers Another Outage
Late on Friday, the Solana blockchain went offline as it suffered yet another major outage. The Solana team informed community members of the situation in a tweet saying the network was “experiencing degraded performance.” A few hours later they were able to identify and resolve the issue putting the network in action once more.
A validator operator “Stakewiz.com” tweeted about the outage and how it occurred. The post explained that a misconfigured node had caused an unrecoverable partition in the network. A single validator reportedly propagated an invalid block, they were running a duplicate instance and producing a block from each one.
Subsequently, validators encountered either block and could not agree on the correct one. Stakewiz noted that the network codebase should have been to deal with the issue. However, for some unknown reason, it had resulted in an unrecoverable fork.
After the team uncovered the problem, they agreed to launch a cluster restart. 80% of the Solana mainnet validators joined in and they were able to bring the network back online.
