SEC sues Do Kwon and Terraform Labs, Binance’s $400m headache, USP depegs as Platypus suffers $8.5m hack

SEC sues Terraform Labs

The Securities and Exchange Commission continued the week’s enforcement action streak on Thursday by slamming Terraform Labs and its elusive CEO Do Hyeong Kwon with fraud charges. The SEC accused them of committing “a multi-billion dollar crypto asset securities fraud” and of failing to properly disclose products to investors, “causing devastating losses,” in the words of SEC Chair Gary Gensler. The collapse of Terraform Labs’ stablecoin TerraUSD was perhaps the powderkeg that set the crypto world alight in 2022, driving the consequent failure of entities such as Three Arrows Capital and FTX. Despite this, Do Kwon and Terraform Labs are apparently staging a comeback of sorts, as DL News reported in January.

Binance subsidiary Binance.US moved $400 million at parent company’s behest

News broke Thursday of a series of suspicious Binance.US outflows totalling upwards of $400 million dollars back in 2021. The transfers, while largely opaque in purpose, highlight the possibility that Binance’s US subsidiary is, or at least was, controlled by Binance proper. Binance is not authorised to operate in the States and must be distinct in all but name from Binance.US.

Blur’s trading volume surpassed OpenSea’s

Runner-up Blur took the lead from top NFT marketplace OpenSea on Wednesday in terms of trading volume, marking a new phase in the fierce rivalry between the two protocols. Blur’s trading volume was seen on Nansen.ai to be over 15% higher than OpenSea’s, owing to a token launch the day before. OpenSea, which has been the frontrunner among NFT marketplaces since its launch in 2017, was also the first public NFT marketplace.

zkSync vs. Polygon: The rollup wars

Blockchains can be slow and expensive. In response, the industry has recently developed a technical solution called “roll-ups”. They “roll up” many different transactions into one big chunk to make things faster and cheaper for everyone. There are different varieties like zero knowledge rollups, which are gaining ground, and optimism rollups, which have so far been the dominant variant.

We wrote yesterday about Polygon’s new zero knowledge rollup. And its competitor zkSync is now trying to lure developers to come build zero knowledge rollups on its blockchain. Polygon and zkSync will surely be followed by other competitors.

Celsius reaches deal to sell crypto platform to NovaWulf

Bankrupt crypto lender Celsius Network has agreed to sell off its lending platform to NovaWulf Digital Management, pending an approval by a bankruptcy court. Celsius went bankrupt last year with $1.2 billion in losses and over $5.5 billion in total liabilities, following the collapse of TerraUSD in May 2022. A bank run brought Celsius to its knees and consequent investigations by bankruptcy court examiners allege that the company made dangerous, uncollateralised loans that sped up the collapse, and that executives manipulated the price for their own gain.

USP depegs as Platypus suffers $8.5 million hack

DeFi protocol Platypus Finance was exploited for up to $8.5 million on Thursday, with its USP stablecoin depegging by 52%. Depegging refers to the process when a stablecoin deviates in value from the asset it has been pegged to. Security firm Certik revealed the flash-loan attack on Twitter. Flash loan attacks capitalise on the high-speed form of arbitrage enabled by blockchain technology to manipulate price action and drain funds. Platypus has stopped all services until it finds out more about the hack.

Other stuff worth reading up on today...

Centrifuge wants to back AAVE stablecoin GHO with real-world assets - Blockworks

Coinbase says client assets are ‘segregated and secure’ following proposed SEC rule change - Decrypt

Binance expects to pay penalties to resolve US investigations - Wall Street Journal