The hacker who took control of Tornado Cash gave up control of this protocol. But used it to disguise the funds withdrawn in the attack

The hacker who seized control of cryptomixer Tornado Cash gave up control of the service. But he used the protocol to launder digital tokens from the attack. That’s what Bloomberg writes, citing data from research firm Nansen.

The Tornado Cash project was attacked on the morning of May 20. The attacker was able to gain full control of the cryptomixer’s control. He issued 483,000 native tokens of the TORN protocol. And that gave him a majority vote in the control system.

On May 26, the hacker offered to call off his attack and return control to the Tornado Cash community. But while the protocol was under his control, he exchanged most of his tokens for Ethereum coins. And then laundered about $900,000 in them through Tornado Cash.

Our experts note that the price of TORN was around $6.4 before the hack. By May 29, it was down to $4. According to CoinMarketCap, the token has fallen in price by 37% since the hack, and by 10% in the last 24 hours.

Lightning Network protocol allows cryptocurrency payments almost instantly and without fees. Our experts tell us how the solution works, who supports it. And why it is not yet popular in the crypto market

When the Bitcoin blockchain was flooded with memcoins in BRC-20 token format in early May. The cryptocurrency faced congestion and prohibitively high fees. The world’s largest cryptocurrency exchange, Binance, was forced to shut down the ability to withdraw Bitcoins twice a day. Until an acceptable level of load on the network returns. Representatives of the exchange announced that its development team is working on integrating transfers through a solution called Lightning Network. Which, in their words, “helps well in such situations.”

The Lightning Network (LN) protocol is Bitcoin’s scaling system, acting as one solution to the problem of its limited bandwidth. With its help it is possible to carry out almost instant transfers of coins with minimal commissions.

The protocol concept was first introduced in a technical paper titled Lightning Network for Bitcoin: The Bitcoin Lightning Network: Scalable Off-Chain Instant Payments in 2015. It was authored by developers Joseph Poon and Thaddeus Drija. Since Lightning Network’s inception, the developer community has been working collectively to improve both the protocol itself. And on applications and tools that support LN transactions.

How it works

If we think of Bitcoin as a huge highway. And where countless vehicles (transactions) compete for limited space. The Lightning Network protocol acts as a dedicated lane. And which allows you to bypass a congested main road. This is achieved by creating special payment channels. In which transactions can take place instantly, with minimal fees and without the need to write each of them to the Bitcoin blockchain.

To open such a channel, participants in a coin transfer create a common address and fund it with a certain amount in Bitcoins. They can then transfer funds to each other. And the balance data on their addresses will be updated within the channel. When they close the channel, the final balance will already be written to the Bitcoin blockchain as a separate transaction.

Payment channels can be created using wallets or other Lightning Network enabled software. You can use someone else’s channel as an intermediary for transfers. And in this case, the one who opened it will receive a small commission. Since the transactions take place outside the blockchain. It is impossible to identify a separate identifier for a particular transfer. Or see its data in the blockchain browser.

What prevents this project from distributing

Despite the existing way of solving one of Bitcoin’s major problems. The Lightning Network protocol is still a long way from mass adoption. Both for private users and for businesses. The technical complexities involved in creating and managing the channels act as a significant barrier for ordinary users. LN-enabled cryptocurrencies. These tend to be non-commercial developments that suffer greatly in interface design and user experience (UX).

In addition, the lack of standards for protocols hinders the interoperability of LN-enabled software developed by different teams. This makes it difficult to connect new users. And integrating the protocol into large platforms, whose owners are obviously interested in cheaper and faster coin transfers. Another problem is the limitation of liquidity in channels. Participants are forced to block a certain amount of Bitcoin in the channel. And that in itself limits the amount of funds available for transfer and reduces the usefulness of the protocol as a whole.

The relative newness and limited acceptance of the Lightning Network creates a certain paradox. The fact is that few people trust the protocol without its widespread adoption. And its diffusion, in turn, is constrained by the relatively small number of stakeholders willing to use it.

This is largely due to the fact that the Lightning Network is itself a non-profit project. And its infrastructure development is done by volunteers. The opposite is the case with Ethereum. For example, network scaling projects like Polygon, Arbitrum, Optimism, zkSync. And others have already formed an entire industry and are worth billions of dollars.

Projects and investments

However, investors are supporting projects that integrate Lightning Network into their payment solutions. In August 2022, Lightning Labs raised $80 million in funding to develop the Taro. Which allows transactions with stablecoins using the Lightning Network. Investors in the project include former Twitter CEO Jack Dorsey and Robinhood payment company CEO Vlad Tenyev.

Also in the same period, the investment round was held by Strike. It managed to attract $80 million, which it will use to establish partnerships with major retailers to connect its own wallet. As well as acquiring for retail outlets on the basis of LN. Investors have cumulatively invested about $10 million in Amboss and Mash platforms. And both are also building LN-based payment solutions.

Bitcoin’s scaling is one of the cryptocurrency’s biggest challenges. As fees and network load increase, solutions to optimize transfers will become more and more relevant. The Lightning Network protocol is quite well-known in the community. But there are still a lot of things hindering its diffusion.

Simplifying user interfaces. And promoting interoperability and improving the overall user experience. These are also important steps toward making Lightning Network technology more accessible. Improving liquidity management and security measures. Just as important to instill confidence in users of this protocol.

Scammers took advantage of market participants’ interest in meme cryptocurrencies on “bitcoin pizza day”

Scammers earned tens of thousands of dollars on “bitcoin pizza day. In doing so, taking advantage of market participants’ interest in meme-based cryptocurrencies. The creators of several holiday-themed tokens absconded with the assets of gullible investors.

On May 22, the cryptocurrency community celebrated the 13th anniversary of the first purchase for bitcoins. It happened in 2010, when computer developer Laszlo Heinitz bought two mushroom pizzas for 10 thousand BTC.

According to Dextools, the capitalization of tokens BTCPizza, BPizza, PizzaDay and EthPizza. Which were created during the last week, at their peak reached about $150 thousand.

The creators of BPizza, after the token reached a capitalization of $100k, imposed a 100% sales tax on the coins. This was done to prevent investors from selling them. Issuer EthPizza disabled token sales when the asset’s capitalization reached nearly $40k.

BTCPizza is now labeled as a Honeypot – where fraudsters prescribe in the token’s smart contract the ability to withdraw coins only to certain wallets. PizzaDay plummeted in value to zero after a spike in value followed by a rapid series of sales.

Our experts noted that the desire of investors to buy tokens with no fundamental value. And all this followed a rapid and significant rise in the market capitalization of the meme cryptocurrency Pepe in just a few weeks. Investors are hoping to get lucky, buying tokens that could collapse in value at any moment. And then they complain that they were scammed and media didn’t warn them that it was dangerous. So once again we warn you that you can lose 100% of your investment in such projects.

ChatGPT bot plugin compatible with Solana network is open source and can be downloaded from GitHub

Solana Foundation, a nonprofit organization dedicated to maintaining and developing the Solana blockchain. The company announced the integration of artificial intelligence (AI) into it using the ChatGPT plugin developed at Solana Labs.

The project’s reputation suffered as a result of the collapse of FTX. Because the bankrupt exchange owned a large number of SOL native tokens. It also launched a decentralized exchange, Serum, on the Solana network. But the blockchain was able to survive its partner’s bankruptcy. According to CoinMarketCap, as of May 24, the Solana (SOL) native blockchain token ranks 11th in market capitalization ($7.7 billion) among all cryptocurrencies.

The new ChatGPT plugin is available for download from GitHub. It will help users simplify their understanding of Solana’s data and protocols. As well as get information about the network infrastructure and DeFi projects working in it. The plugin can be used to find and buy NFTs. And also token translation, transaction validation and other network activities.

The AI will make Solana more user-friendly, Yakovenko said. He noted that every developer should now think about how their programs will integrate with the AI. That’s because it’s a new paradigm for working with computers.

The Solana Foundation also said it has increased its grant program for AI projects from $1 million to $10 million. According to the developers, the foundation has already received 50 applications. In addition, the organization has launched a three-month experimentation program in blockchain and AI for university students.

Our experts note that Sol is not the first cryptoproject to introduce AI. In early March, Binance launched NFT generator Bicasso. The test version of the service issued 10,000 tokens in the first two and a half hours of operation.

You can still tell the difference between real people and deepfakes in videos. But soon the AI technology will become so advanced that even the human eye will stop seeing the substitution

The deepfakes technology used by cryptocurrencies to bypass verification (KYC) on crypto exchanges. Such as Binance, for example, will become more and more sophisticated. This was warned by Binance’s director of security Jimmy Su, Cointelegraph writes.

The technology behind deepfakes consists of artificial intelligence (AI) synthesizing human images. How it works: the program combines several photos of a person with different facial expressions and makes a video out of them.

Cases when fraudsters use this technology in an attempt to bypass the verification process at the exchange have increased, Su told the publication. According to him, the attackers find photos of the victim on the Internet and use them to create dipfakes.

He explained that the tools have become so advanced. And that they can even properly respond in real time to audio instructions when verifying an applicant.

“Some checks require the user, for example, to blink his left eye or look left or right, look up or down. Deepfakes today are advanced enough to execute those commands,” Su said.

So far, he said, humans can still detect deception. But the AI will evolve to the point where it will be impossible for humans to tell a fake. Su acknowledged that this is a very serious problem and for now he sees the solution only in training users in risk management.

Our experts point out that Microsoft founder Bill Gates said in January. That the development of AI is the most important innovation in recent years. And one of the pioneers of neural networks and artificial intelligence technology, Jeffrey Hinton. Now he has also joined those who see such advances as a danger to humanity. He fears that the Internet will be flooded with fake photos. As well as videos and texts. Which will be created by AI, and the average person “will no longer be able to know what is true and what is not.”

The FBI warns that scammers attract people to work overseas, promising high salaries. Upon arrival, they take away passports and force them to participate in scams related to digital currencies.

The U.S. Federal Bureau of Investigation (FBI) has warned of false job postings. Which are offered by scammers to lure people to work abroad and force them to participate in cryptocurrency scams.

According to the FBI, scammers post false job ads on social media. As well as on Internet job sites, inviting people to work in Southeast Asia. Jobs related to tech support, call centers or beauty salons are offered. Applicants are offered good wages, various benefits, travel, lodging, and meals.

Upon arrival, passports are taken away from people. And then they are forcibly held, intimidated and forced to participate in international cryptocurrency fraud schemes. Thus effectively holding them in slavery.

At the same time, victims are told that they must pay mounting debt for travel. As well as accommodation and food, and sometimes sell people to other criminal groups. People are also intimidated by threats to turn them in to local law enforcement.

Our experts point out that those looking for work abroad are advised by the FBI to be wary of strange wording in job postings. As well as offers with unusually high salaries and benefits. Also, when moving to another country, tell relatives and friends the details of the new place of work.

The Fintoch project team has withdrawn its assets and announced. That due to the transition to the new network in the coming days on the platform there may be temporary problems with the deposit or withdrawal of funds

The creators of the crypto project Fintoch stole 31.6 million USDT from customers, on-chain detective ZachXBT reported. The platform’s team withdrew funds to various addresses on Tron and Ethereum networks. Users then began complaining that they couldn’t access their assets.

The Fintoch platform positioned itself as a project of Morgan Stanley, a multinational corporation. And it provided diversified financial services. Also among other things, it offered a 1% daily return on investment. The platform assured that HyBriid’s exclusive blockchain security technology allows users to “enjoy blockchain investments with zero risk.

ZachXBT recalled that Morgan Stanley previously said it had nothing to do with Fintoch. And the Singapore government had warned investors that the project was falsely presented as licensed.

The blockchain analyst also revealed that someone like Bobby Lambert. Who is listed as the CEO on the project’s website, does not actually exist. His role was probably played by actor Mike Provenzano, ZachXBT suggested, attaching a photo.

Also the Fintoch project was widely advertised and held large-scale conferences and other events in various countries. For example in Vietnam, Malaysia, South Korea, UAE and Indonesia (in Bali).

Fintoch page in the Medium social network is now closed. And in the May 24 telegraph channel of the project was published an announcement of the upcoming launch of the public network FTC. According to the announcement, there will be a “migration and deployment of system data” in the coming days.

Our experts warn that it is necessary to check each project very carefully. And if there is news that the company is cheating somewhere, it should be the first signal to withdraw your money from such a project.

Our experts talked about the influence of news from Hong Kong on the digital asset industry. And how leading cryptocurrency exchange prices will react from opening a new cryptohub in Asia

As of June 1, retail investors in Hong Kong will be able to trade cryptocurrencies on licensed platforms. On May 23, Hong Kong’s Securities and Futures Commission (SFC) published a report on regulatory requirements for cryptocurrency trading platforms. These regulations will go into effect at the beginning of the summer.

The regulator collected comments from market participants before publishing the document. It received 152 responses, including from Binance, Coinbase, Huobi, OKX, Kaiko, Matrixport, Ripple Labs, PricewaterhouseCoopers and many others. The rules were developed in response to comments received. Any of the licensed trading platforms that will comply with them. It will be able to officially provide services in the region.

According to the document, as the regulatory mechanisms for stablecoins are scheduled to be implemented only by 2024. That is until these assets will be allowed by the commission in retail. And tokens available to retail investors must meet certain criteria. At a minimum, they must be included in two indexes from unrelated companies. Cryptocurrencies such as Bitcoin (BTC), Ethereum (ETH), Litecoin (LTC), Bitcoin Cash (BCH) meet this criterion. As well as Polkadot (DOT), Solana (SOL), Cardano (ADA), Avalanche (AVAX), Polygon (MATIC) and Chainlink (LINK).

According to the new rules, exchanges advertising specific cryptocurrencies are banned. As well as products that offer yield, staking and lending.

“Ultimately, the primary activity of a licensed trading platform is to act as an agent. And providing the ability to match orders between clients. Any other activity could lead to a potential conflict of interest. And requires additional safeguards,” the document states.

The platform operator is required to keep 98% of customer assets in a cold wallet. But for rare cases, for which a separate authorization from the SFC will be required.

Perspectives for the Asian region

The adoption of comfortable cryptocurrency legislation in Hong Kong will definitely be perceived positively by the market, our experts believe. The past few months have been marred by pressure on the industry in the United States. And because of that, many companies were forced to leave the region.

Also, prospects for cryptocurrency legislation in the EU are still unclear. And the recently adopted MiCA rules are not so transparent and do not fully reflect all the complexities. Crypto industry participants may face if they bet on the European Union.

Over the next few years, China will have an opportunity to regain some of the market lost after the ban on mining and cryptocurrencies. Access to digital assets through Hong Kong will increase capital allocation. And it will provide legal entry to the market for serious investors from one of the largest economic centers in the world.

Hong Kong’s goal is to become a major player in a region where the adoption of cryptocurrencies in countries such as Malaysia, Vietnam, Singapore And many others, at a pace outpacing the rest of the world. Our experts do not rule out the possibility that investors from mainland China will use this jurisdiction. And this will cause a new surge in investment and capitalization growth in the crypto industry. Which has been suffering from a lack of Chinese investors, who are not allowed to work with cryptocurrency, for several years now.

Positive effect on cryptocurrency market in general will be long-term

Creation of a new region with sufficient crypto-regulation. And that will allow new participants to enter the crypto industry officially. All this could be a positive factor for the cryptocurrency market in the second half of 2023, our experts believe.

Also, special attention could be paid to cryptocurrency exchanges tokens. And especially local ones, such as OKX. As they will be some of the projects that will benefit from licenses and new users coming in.

At the same time, the ban on staking, lending and other schemes for making money from crypto exchanges may make it more difficult for them to operate in the Hong Kong jurisdiction.

The news itself has more of a long-term positive effect, but in the moment, the market will have almost no reaction to the new rules. Short-term increase in volatility within standard market fluctuations of 5-10% is also possible.

The renewed approaches can potentially benefit large serious projects with a good reputation like Bitcoin, Ethereum, Tron and the like.

Just as Bitcoin and Ethereum as market leaders in terms of capitalization will be indirectly in demand. and that will lead to an increase in prices across the whole cryptocurrency market.

Government may require companies storing passwords from cryptocurrencies connected to LedgerRecover to disclose this information. Crypto Upvotes expert review

Ledger CEO Pascal Gauthier admitted that authorities could gain access to the private keys of users of hardware cryptocurrencies. And that will be connected to the new Ledger Recover service. On the What Bitcoin Did podcast, Gauthier noted that this could only happen through the courts, so it’s unlikely.

The LedgerRecover service is a voluntary feature that allows users to split a secret phrase (seed-phrase, or private wallet key) into three pieces. And send them to three third-party companies for storage.

If the secret phrase is lost, it can be recovered. At the same time, by combining these three fragments on the Ledger device and passing identification. Ledger Recover costs $9.99 a month.

The new service has sparked a wave of criticism – users were outraged by the fact that not only the owner can have access to the data on a hardware device.

Ledger shareholder and former CEO Eric Larchevec said. That governments could demand access to user funds stored on Ledger devices that subscribe to the new service. Now users are concerned. And that their funds could be blocked by the authorities if they use the service.

These comments have raised questions for Ledger users. But Ledger CEO Pascal Gauthier said such a scenario is unlikely.

According to Gauthier, it is not worrisome because governments only issue such subpoenas for serious reasons. And for example, in connection with events related to terrorism or drugs. The head of the company noted that “the average person doesn’t get a criminal court summons every day”.

Ledger postponed update due to scandal

Ledger postponed the launch of LedgerRecover, a scandalous password recovery service, due to criticism. In a letter to users, Pascal Gauthier, head of the hardware cryptocurrency wallet maker, said. That Ledger won’t introduce the new feature before publishing its open source code.

Ledger does not release all of its product codes to the public. But, according to Gauthier, the company has now learned a lesson from its “unintentional mistake in communicating” with the audience. And it will be publishing operating system and tool codes on an expedited basis.

“We’ve decided to accelerate the data discovery roadmap! We will open up as much Ledger operating system code as possible, starting with the core components of the OS, and LedgerRecover. Which will not be released until this work is completed,” he wrote.

Code openness won’t affect the security of the device or improve it in any way, the company promises. But it will make the information transparent to users. And experts will be able to verify that malicious codes are not present in the devices’ software.

A solo-mode miner was able to mine a block of Bitcoin on equipment with a processing power of 750 TH/s

On May 23, a single miner with a processing power of 750 TH/s. He successfully mined a block of Bitcoin numbered 790,958. This was reported by the administrator of Skrool pool Kon Kolivas.

The miner received a reward for the found block in the amount of 6.25 BTC (about $170,000 at the rate of $27,300).

Total hashing speed in the Bitcoin network on May 23 was 367.07 EH/s. 1 EH/s equals 1 million TH/s. Having a processing power of only 750 TH/s. This lucky miner had only 1 chance out of 489 thousand to successfully find a block.

Lucky miner – a member of the pool for solo-mining Skrool. And he will pay 2% commission (0.125 BTC, or about $3.4k). But in addition to the fee for mining the block, he receives a fee for the transaction. Which in this block was 0.249 BTC ($6.7 thousand).

With the current difficulty of mining with that kind of processing power, a miner can mine a block once every nine years on average. Meanwhile, the difficulty of mining the first cryptocurrency is growing. Since the beginning of the year, it has increased by 40%, and on May 18, the figure renewed its historical high.

Our experts note that in January 2022, a single miner with computing power of 126 TH/s mined a block of Bitcoin and received a reward of 6.25 BTC. And that was approximately $270,000 at the rate of $42,800. His odds were equal to one in 1.36 million