Daily Crypto, Finance and Tech News Summary – June 5, 2023

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Welcome, and thank you for being part of the MyZucoins community! Dive into our daily crypto, finance and tech news summary to stay in the know.

Cryptocurrency wallet blowing up leaking coins

Explosive Breach: Cryptocurrency Assets Stolen from Atomic Wallet

In an escalating era of cryptocurrency crime, Atomic Wallet, a renowned decentralised platform, confronts a grave attack. Over $35 million has reportedly evaporated from users’ cryptocurrency reserves, with the project pledging full commitment towards investigating the exploited vulnerability. Despite the platform’s assurance of working with top security firms to track the stolen assets, specifics surrounding the attack’s methodology remain unconfirmed as of Sunday. This incident further stirs a sense of vulnerability in the cryptocurrency domain, especially when Atomic Wallet, with more than five million downloads, is subjected to such a massive heist.

The attack raised considerable concerns within the crypto community on Twitter, with numerous account holders reporting a drain in their wallet funds. While some managed to shift their assets to a safer wallet in time, others weren’t so fortunate, losing their entire cryptocurrency holding. As a safety measure, Atomic Wallet claims to store users’ private keys encrypted on their devices, rendering the firm itself devoid of access to this sensitive data. Nevertheless, red flags had been previously raised by auditing firm, Least Authority, in 2021 about the insufficiency of this security measure.

The financial fallout from this exploit is dire. A staggering $35 million has been identified as stolen so far, with one victim alone losing nearly $8 million in Tether, according to blockchain detective ZachXBT. Disturbingly, the five most significant losses account for nearly half of the identified stolen funds. As a domino effect, the price of Atomic Wallet’s ERC-20 token AWC has plummeted by 13% to $0.22, marking a disheartening 96% decline from its all-time high of $7.26, set in May 2021.

In broader context, the cryptocurrency industry has witnessed a concerning surge in attacks, with a shocking $440 million pilfered across 73 incidents in the first quarter of 2023 alone, as per Immunefi’s research. This latest exploit at Atomic Wallet accentuates the urgency of enhanced security measures and victim support. Despite the gloomy scenario, there’s a glimmer of hope, with Jito Labs’ pseudonymous CEO Buffalo and a MEV infrastructure company’s employee aiding in the recovery of $1 million worth of funds. It stands as a reminder that as much as the industry expands and evolves, so too must its safeguards and response strategies. Read more here.

Using a cryptocurrency like Zucoins with a built-in user wallet brings significant benefits. The wallet provides enhanced safety and a streamlined user experience. Users have full control over their digital assets, reducing the risk of vulnerabilities associated with third-party wallet providers. With the Zucoin wallet, users can securely store, manage, and exchange Zucoins without compromising their private keys or sensitive information. The integrated wallet simplifies transactions, making them efficient and intuitive, enhancing the overall user experience.

What’s more, the Zucoin wallet’s code utilises very few third-party code libraries, mainly Splitchain itself, the UL audited encryption library and a “text number” component (to assist with 32 decimals places), reducing the risk of supply chain attacks and vulnerabilities. In contrast, most modern apps have thousands of third-party dependencies bundled-in for additional capabilities, with any one of these third-party sources becoming a potential for compromise via an upstream supply chain attack. With the Zucoin wallet, most of these capabilities, except the mentioned three above, have been built from the ground up in order to reduce these attack surfaces. As a result, Zucoin users should have a safer and more convenient solution for managing their digital assets, ensuring peace of mind, balanced with a user-friendly experience.

US House Republicans Draft Bill to Reclassify Digital Tokens from Securities to Commodities

US House Republicans are spearheading a new draft bill designed to redefine the status of digital tokens from securities to commodities. This initiative, led by House Financial Services Committee Chair Patrick McHenry and House Agriculture Committee Chair Glenn Thompson, aims to provide a clear regulatory framework for digital assets in the US, acknowledging the unique characteristics of blockchain-based tokens. The legislation intends to establish when a project has sufficiently decentralised to classify its tokens no longer as investment contracts, a central point of contention for domestic crypto projects.

The proposed bill is part of a broader negotiation process with House Democrats and Senate counterparts, seeking to expedite discussions and ideally introduce a new law this year. This regulation would shape the US digital asset market structure, although its reception by other policymakers and President Joe Biden’s administration, as well as its likelihood of passing, remain uncertain. Treasury Secretary Janet Yellen, along with other US financial regulators, had previously called for updated laws around digital assets.

The new legislation offers a precise definition of a decentralised network. Under the proposed guidelines, a token could transition from being considered a security to a commodity, which entails fewer disclosure requirements. The bill outlines that a decentralised network should meet specific criteria, including no single entity having control for at least a year prior, no issuer or decentralised organisation holding more than 20% of network-affiliated tokens, and no marketing or issuance activities conducted three months before the network’s certification as decentralised. Furthermore, token issuances within a year must be to end-users.

If enacted, this legislation could revolutionise trading platforms for most tokens, providing a simplified route to registration as alternative trading systems with the SEC. The bill also excludes payment stablecoins from securities designation, with further legislation in the pipeline to establish a comprehensive framework for these digital assets. Read more here or here.

Splitchain offers compelling reasons for working with a protocol designed with a focus on decentralisation. The recent draft bill proposed by senior US House Republicans highlights the growing importance of fitting tokens within existing financial laws. By defining decentralisation criteria and distinguishing digital assets from securities, the bill aims to provide clearer guidelines for token projects in the United States.

Decentralisation measures ensure control is distributed across a network, reducing the influence and control of any single entity, which leads to enhanced security and transparency as people keep each other in check. The draft bill’s provisions, such as the criteria for a project to be considered adequately decentralised, demonstrate the recognition of decentralisation as a key aspect of the digital asset landscape.

As financial regulators and policymakers continue to navigate the evolving digital asset landscape, the continued focus on decentralisation in cryptocurrencies like Zucoins provide a framework for fostering a more inclusive, transparent and resilient digital ecosystem.

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