$300 Million Smart Contract Ponzi | Coinbase's $8.5 Trillion Hook Up

CRYPTO’S FRESH HITS

A pair of crypto hacks totaling nearly $200 million in losses stirred the crypto industry this week. On Tuesday, multiple users began reporting that their “hot” wallets—or internet-connected addresses used to store cryptocurrencies—including Phantom, Slope and Trust Wallet, had been emptied of funds. Blockchain analytics firm Elliptic put losses at $5.2 million in Solana’s SOL token and popular stablecoin USDC, with approximately 8,000 wallets affected. The following day, developers of the Solana blockchain said the issue “does not appear to be a bug with Solana core code, but in software used by several software wallets popular among users of the network.

The news followed Monday’s revelation from Nomad, a blockchain bridge that lets users swap tokens between multiple chains, which acknowledged that about $190 million had been taken from it after a hacker infiltrated its system. Blockchain security specialists described the attack as a “free-for-all” because the hacker’s code allowed anyone to copy it and steal tokens for themselves. Blockchain data company Chainalysis estimates that $2 billion in cryptocurrency has been stolen from cross-chain bridges across 13 separate hacks so far this year. ”  

$300 MILLION PONZI UNCOVERED  

On Monday, the Securities and Exchange Commission charged 11 people in an alleged international cryptocurrency Ponzi and pyramid scheme that raised more than $300 million from millions of retail investors worldwide. The project called Forsage recruited users to deposit their crypto assets onto the platform to fund automatically executed “smart contracts” to receive profits, but the SEC alleges these assets were instead used to deliver profits to individuals higher up in the pyramid. Forsage continued to operate even as the Securities and Exchange Commission of the Philippines and Montana’s Commissioner of Securities and Insurance issued cease-and-desist orders against the project. Authorities charged Forsage’s four foreign-based founders, who were last known to live in Georgia, Indonesia and Russia, as well as seven Americans.

Source: Forbes Digital Assets, powered by Nomics.  Prices as of 4:00 p.m. on August 4, 2022.

BLACKROCK’S CRYPTO EXPANSION

The world’s largest asset manager, with $8.5 trillion under management, will offer its institutional clients access to bitcoin through a partnership with Coinbase, the crypto exchange announced Thursday. BlackRock’s institutional clients who also own digital assets on Coinbase will now be able to use Aladdin, the asset manager’s suite of software tools, to manage their bitcoin exposure.

For BlackRock, this tie-up is the latest in its journey into the digital-assets ecosystem and a bit of an about-face. Five years ago, BlackRock’s chairman Larry Fink famously called bitcoin an “index of money laundering.” For Coinbase, this partnership could not have come at a better time. Seen as a bellwether for broader crypto sentiment, the stock is down by more than 50% year-to-date but gained nearly 15% shortly following the announcement.

MICHAEL SAYLOR STEPS DOWN AS MICROSTRATEGY CEO

Bitcoin advocate Michael Saylor is stepping down as the chief executive of software company MicroStrategy, which he co-founded and led for more than 30 years, the company announced Tuesday. Starting next week, Saylor will assume the role of executive chairman and Phong Le, the company’s president, will serve as MicroStrategy’s CEO. MicroStrategy began investing in bitcoin in August 2020 and has since turned into a vehicle for bitcoin purchases. As of June 30, 2022, the firm had held nearly $2 billion worth of the cryptocurrency.

BLOCKCHAIN 50 SPOTLIGHT

Sotheby’s: The 278-year-old art auctioneer, known for selling Picassos, van Goghs and Warhols, is now gleefully hawking cartoon primates and pixelated cyberpunks. In April 2021, Sotheby’s held its first NFT sale, moving a body of work by digital artist Pak for $16.8 million. That was only the start: Sotheby’s did more than $100 million in NFT sales last year, contributing to the auction house’s record-breaking gross sales of $7.3 billion. In September, cashing in on the craze for unique NFT profile pictures on social media, Sotheby’s sold 101 images of monkeys, part of the Bored Ape Yacht Club collection of 10,000 animal avatars, for $24.4 million. The auction house now accepts bids in fiat and cryptocurrencies.  

ELSEWHERE

Binance Taps Co-Founder Yi He to Head $7.5B Venture Arm [CoinDesk]

Planet of the Bored Apes: Inside the NFT World’s Biggest Success Story [Input Magazine]

The Crypto Market Crashed. They’re Still Buying Bitcoin [The New York Times] 

Michael del Castillo
Senior Editor 
Forbes Digital Assets

Nina Bambysheva
Reporter
Forbes Money & Markets

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