Traders Are Selling Themselves Their Own NFTs To Drive Up Prices

The NFT marketplace is rife with people buying their own NFTs in order to drive up prices, according to a report released this week by blockchain data firm Chainalysis. Engadget reports: Known as “wash trading,” the act of buying and selling a security in order to fool the market was once commonplace on Wall Street, and has been illegal for nearly a century. But the vast, unregulated NFT marketplace has shown to be a golden opportunity for scammers. The report tracked instances of the same traders selling the same NFTs back and forth at least 25 times, a likely incident of wash trading. It identified a group of 110 alleged NFT wash traders who have made roughly $8.9 million in profit from this practice. Researchers also discovered significant evidence of money laundering in the NFT marketplace in the last half of 2021. The value sent to NFT marketplaces by addresses associated with scams spiked significantly in the third quarter of 2021, worth more than $1 million worth of cryptocurrency, according to the report. Roughly $1.4 million dollars of sales in the fourth quarter of 2021 came from such illicit addresses. “NFT wash trading exists in a murky legal area. While wash trading is prohibited in conventional securities and futures, wash trading involving NFTs has yet to be the subject of an enforcement action,” wrote the authors of the report.

Read more of this story at Slashdot.

More Than 80% of NFTs Created For Free On OpenSea Are Fraud Or Spam, Company Say

An anonymous reader quotes a report from Motherboard: OpenSea has revealed just how much of the NFT activity on its platform is defined by fakery and theft, and it’s a lot. In fact, according to the company, nearly all of the NFTs created for free on its platform are either spam or plagiarized. The revelation began with some drama. On Thursday, popular NFT marketplace OpenSea announced that it would limit how many times a user could create (or “mint”) an NFT for free on the platform using its tools to 50. So-called “lazy minting” on the site lets users skip paying a blockchain gas fee when they create an NFT on OpenSea (with the buyer eventually paying the fee at the time of sale), so it’s a popular option especially for people who don’t have deep pockets to jumpstart their digital art empire.

This decision set off a firestorm, with some projects complaining that this was an out-of-the-blue roadblock for them as they still needed to mint NFTs but suddenly couldn’t. Shortly after, OpenSea reversed course and announced that it would remove the limit, as well as provided some reasoning for the limit in the first place: The free minting tool is being used almost exclusively for the purposes of fraud or spam. “Every decision we make, we make with our creators in mind. We originally built our shared storefront contract to make it easy for creators to onboard into the space,” OpenSea said in a tweet thread. “However, we’ve recently seen misuse of this feature increase exponentially. Over 80% of the items created with this tool were plagiarized works, fake collections, and spam.”

Read more of this story at Slashdot.

DeFi Platform Qubit Finance Begs Hacker To Return $80 Million In Stolen Funds

Qubit Finance took to Twitter last night to beg hackers to return more than $80 million in stolen cryptocurrency this week. ZDNet reports: On Thursday, the DeFi platform said their protocol was exploited by a hacker who eventually stole 206,809 binance coins from Qubit’s QBridge protocol, worth more than $80 million according to PeckShield. An hour after the first message, the company explained that they were tracking the exploiter and monitoring the stolen cryptocurrency. They noted that they contacted the hacker and offered them the maximum bug bounty in exchange for a return of the funds, something a number of other hacked DeFi platforms have tried to middling success. They shared multiple messages on Twitter that they purportedly sent to the hacker offering a bug bounty of $250,000 and begging for a return of the stolen funds.

“We propose you negotiate directly with us before taking any further action. The exploit and loss of funds have a profound effect on thousands of real people. If the maximum bounty offer is not what you are looking for, we are open to have a conversation. Let’s figure out a situation,” the Qubit Finance Team wrote. The company later explained in a blog post that their Qubit protocol “was subject to an exploit to our QBridge deposit function.” […] Blockchain security company CertiK released a detailed explanation of how the attack occurred and has been tracking the stolen funds as the hackers move them to different accounts. “For the non-technical readers, essentially what the attacker did is take advantage of a logical error in Qubit Finance’s code that allowed them to input malicious data and withdraw tokens on Binance Smart Chain when none were deposited on Ethereum,” CertiK explained.

Read more of this story at Slashdot.

Quantum Computers Are a Million Times Too Small To Hack Bitcoin

MattSparkes shares a report from New Scientist: Quantum computers would need to become around one million times larger than they are today in order to break the SHA-256 algorithm that secures bitcoin, which would put the cryptocurrency at risk from hackers. Breaking this impenetrable code is essentially impossible for ordinary computers, but quantum computers, which can exploit the properties of quantum physics to speed up some calculations, could theoretically crack it open.
[Mark Webber at the University of Sussex, UK, and his colleagues] calculated that breaking bitcoin’s encryption in this 10 minute window would require a quantum computer with 1.9 billion qubits, while cracking it in an hour would require a machine with 317 million qubits. Even allowing for a whole day, this figure only drops to 13 million qubits. This is reassuring news for bitcoin owners because current machines have only a tiny fraction of this — IBM’s record-breaking superconducting quantum computer has only 127 qubits, so devices would need to become a million times larger to threaten the cryptocurrency, something Webber says is unlikely to happen for a decade. The study has been published in the journal AVS Quantum Science.

Read more of this story at Slashdot.

Cryptocurrencies Tumble As Global Investors Reduce Risk

New submitter NoMoreDupes shares a report from CoinDesk: The crypto market was in a sea of red on Friday as bitcoin, the world’s largest cryptocurrency by market capitalization, tumbled more than 10% over the past 24 hours. It appears that global investors have entered the year with a reduced appetite for risk, and so the correlations between speculative assets such as cryptocurrencies and equities have increased, which results in widespread losses. Bitcoin is down roughly 40% from its all-time high of almost $69,000, while the S&P 500 is down about 7% from its peak, compared with a 10% drawdown in the Nasdaq 100 Index.

Alternative cryptocurrencies (altcoins) led the way lower on Friday given their higher risk profile relative to bitcoin. Ether, the world’s second-largest cryptocurrency by market cap, was down about 13% over the past 24 hours, compared with a 14% drop in AVAX and a 16% drop in FTM over the same period. Despite the losses, some analysts still foresee a short-term bounce. “We expect BTC to find a bid around the $35K mark, close to 50% from the top. In the short term, we can bounce to challenge the $45K-$50K zone, but the overall outlook remains bearish as liquidity remains tight,” Pankaj Balani, CEO of Delta Exchange, a crypto derivatives trading platform, wrote in an email to CoinDesk.

Read more of this story at Slashdot.

Jack Dorsey Announces Bitcoin Legal Defense Fund

Former Twitter CEO and Block founder Jack Dorsey has announced plans to create a “Bitcoin Legal Defense Fund” with Chaincode Labs co-founder Alex Morcos and Martin White, who appears to be an academic at the University of Sussex. CoinTelegraph reports: The announcement was sent on a mailing list for Bitcoin developers, bitcoin-dev, at 13:45 UTC on Wednesday from an email address appearing to belong to Dorsey. The announcement stated the fund will help provide a legal defense for Bitcoin developers, who are “currently the subject of multi-front litigation.” “Litigation and continued threats are having their intended effect; individual defendants have chosen to capitulate in the absence of legal support,” the email stated, referencing open-source developers who are often independent and, therefore, susceptible to legal pressure.

The announcement went on to describe the Bitcoin Legal Defense Fund as a “nonprofit entity that aims to minimize legal headaches that discourage software developers from actively developing Bitcoin and related projects.” “The main purpose of this Fund is to defend developers from lawsuits regarding their activities in the Bitcoin ecosystem, including finding and retaining defense counsel, developing litigation strategy, and paying legal bills,” it stated. Initially, the fund will include volunteers and part-time lawyers for developers to “take advantage of if they so wish,” although, the email also states that “the board of the Fund will be responsible for determining which lawsuits and defendants it will help defend.” According to the email, the fund’s first project will be to take over the existing defense of Ramona Ang’s “Tulip Trading Lawsuit” against developers for alleged misconduct over access to a Bitcoin (BTC) fortune.

Read more of this story at Slashdot.

The Associated Press Is Starting Its Own NFT Marketplace For Photojournalism

The Associated Press, or AP, has announced that it’s starting a marketplace to sell NFTs of its photojournalists’ work in collaboration with a company called Xooa. The Verge reports: It’s billing its foray into NFTs as a way for collectors to “purchase the news agency’s award-winning contemporary and historic photojournalism” and says that the virtual tokens will be released at “broad and inclusive price points” (though it’s hard to tell what types of prices resellers will want on the AP marketplace). The news outlet says its system will be built on the “environmentally friendly” Polygon blockchain and that the NFTs will “include a rich set of original metadata” to tell buyers when, where, and how the photos were taken. It says its first collection, launching January 31st, will include NFTs featuring photos of “space, climate, war and other images to spotlights on the work of specific AP photographers.”

Buyers will be able to pay for NFTs from the market using either credit cards or Ethereum — AP says the MetaMask will be the first wallet supported but that there are plans to add support for others. There will be virtual queues to buy NFTs as they’re released by AP, with “Pulitzer Drops” containing more limited-edition NFTs happening every two weeks — the FAQ says these particular images will “have increased scarcity to preserve their status.” Buyers will be able to resell those NFTs on the site’s secondary market. AP says that the proceeds from the NFTs’ sale will be used to fund its journalistic endeavors. It’ll also get revenue whenever they’re resold on its marketplace — the FAQ says there’s a 10 percent fee associated with reselling, and Xooa spokesperson Lauren Easton told The Verge in an email that the two companies would share that fee. Easton also told us that the “photographers will share in all revenue collected,” but didn’t specify what their cut would be. The NFT marketplace is set to open on January 31st, but you can get on a waitlist now to get “priority access” and a higher waitlist ranking if you refer others to sign up.

Read more of this story at Slashdot.

Crypto Platform ARBIX Flagged As a Rugpull, Transfers $10 Million

Arbix Finance, an audited and supposedly trustworthy yield farming platform, has been flagged as a ‘rugpull,’ deleting its site, Twitter, and Telegram channel and transferring $10 million worth of deposited cryptocurrency. Bleeping Computer reports: Rugpulls, otherwise known as “exit scams,” are when pseudo-anonymous platforms or cryptocurrencies are created twith the ultimate goal of collecting funds for an allegedly legitimate “service” and then disappear with deposited funds. Because decentralized networks are inherently untrustworthy, entities like CertiK attempt to evaluate them through audits that analyze a token’s smart contracts for signs of fraud, vulnerabilities, privacy problems, etc. In Arbix’s case, CertiK’s conducted an audit on November 19th, 2021, whose findings had initially been a reason for users to trust Arbix Finance.

However, today CertiK tweeted that Arbix is now classified as a rugpull after the token’s smart contract was detected minting 10 million ARBIX to addresses under the owner’s control and then dumping them for Ethereum. The operators of Arbix also moved $10 million in funds deposited by users to “unverified pools,” where they were converted to Ethereum. The scammers then transferred the Ethereum to Tornado.cash, which acts as a mixer to make it harder to trace the funds. The funds and their movements are being traced, but the chances of them being recovered are slim at this point.

Read more of this story at Slashdot.

US Returns $154 Million In Bitcoins Stolen By Sony Employee

The United States has taken legal action to seize and return over $154 million purportedly stolen from Sony Life Insurance Company Ltd, a SONY subsidiary, by an employee in a textbook business email compromise (BEC) attack. BleepingComputer reports: “According to the government’s complaint, Rei Ishii, an employee of Sony Life Insurance Company Ltd. (“Sony Life”) in Tokyo, allegedly diverted the $154 million when the company attempted to transfer funds between its financial accounts,” the Justice Dept said today. “Ishii allegedly did this by falsifying transaction instructions, which caused the funds to be transferred to an account that Ishii controlled at a bank in La Jolla, California.”

According to court documents, Ishii switched the transfer address for a Sony Life transaction to use a Silvergate Bank account under his control. Ishii later converted the stolen funds into more than 3879 bitcoins via A Coinbase set up to automatically transfer all added funds to an offline cryptocurrency cold wallet […]. After converting the money to cryptocurrency, Ishii also tried persuading his supervisor and several Sony Life executives not to help investigators by emailing them a ransom note typed in English and Japanese. “If you accept the settlement, we will return the funds back. If you are going to file criminal charges, it will be impossible to recover the funds,” the note read. “We might go down behind all of this, but one thing is for sure, you are going to be right there next to us. We strongly recommend to stop communicate (sic) with any third parties including law enforcement.”

However, on December 1, following an investigation in collaboration with Japanese law enforcement authorities, the FBI seized the 3879.16242937 BTC in Ishii’s wallet after obtaining the private key, which made it possible to transfer all the bitcoins to the FBI’s bitcoin wallet. […] Tokyo’s Metropolitan Police Department arrested the 32-year-old Ishii the same day and criminally charged him on suspicion of obtaining $154 million dollars following fraudulent money transfers from mid-May.

Read more of this story at Slashdot.

Crypto Miners in Kazakhstan Face Bitter Winter of Power Cuts

Illegal miners and mass relocations after a ban on crypto mining in China have overloaded energy grid. From a report: Matthew Heard, a software engineer from San Jose, is worried about his 33 bitcoin mining machines in Kazakhstan. In the past week, they kept getting shut off in an attempt by the national grid to limit the power being used by crypto miners. “It has been days since my machines have been online,” he said. “During the last week, even if my machines do come on, they barely stay on.” Kazakhstan has been struggling to cope with the huge popularity of crypto mining, driven this year partly by the steep rise in value of cryptocurrencies and partly by a mass migration of miners to its borders after China made mining illegal in May.

After three major power plants in the north of the country went into emergency shutdown last month the state grid operator, Kegoc, warned that it would start rationing power to the 50 crypto miners that are registered with the government, and said they would be “isconnected first” if the grid suffers problems. Heard set up in Kazakhstan in August and his machines are managed by Enegix, a company that rents out space to run crypto mining machines. He said his income has dropped from an average of $1,200 worth of bitcoin per day to $800 in October, and in the past week his machines have only been on for 55 per cent of the time. Machine owners are not notified when shutdowns are going to happen or when they will go back online, he said.

Read more of this story at Slashdot.