Category: Crypto News

Crypto wallet provider Ledger has released a new feature that allows users to connect their crypto seed phrases to their passports and identification cards, but the crypto community is criticizing the firmware update.

Ledger Launches ID-based Key Recovery Service

Ledger unveiled the new service, dubbed Ledger Recover, in a Tuesday tweet, stating that it would soon be launched. As a subscription service, Ledger Recover gives users access to an additional layer of protection for their private keys. The feature requires users to provide their passports or ID card to verify their identity. 

After verification with an ID document and a selfie recording, the Ledger wallet duplicates the user’s seed recovery phrase and encrypts the duplicate. The encrypted copy, a backup linked to the verified identity, is then divided into three fragments, each secured independently by external parties, including Ledger, Coincover, and an unnamed provider.

Once put together and decrypted, the fragments can be used to reconstruct the original seed phrase. Ledger says that users will never be locked out of their crypto wallets when they utilize the new service, as their identity becomes the key. 

Crypto Community Reacts

Although Ledger clarified that the recovery service is optional, users do not have to use it, and they can continue managing their seed phrases themselves, the crypto community believes it could pose a security risk for every customer.

Social media platforms have been abuzz with criticism of the update, with prominent figures pointing out issues with the service. Mudit Gupta, chief information security officer at Polygon Labs, called the feature a “horrendous idea,” urging users to desist from enabling it. 

Ledger suffered a data breach in 2020 that exposed the physical addresses, phone numbers, and email addresses of about 300,000 users. The crypto community has referred to the unfortunate incident, insisting that the new service could lead to a repetition of the data leak.

One Reddit user said: “This is a disaster waiting to happen. I can’t actually believe what I’m reading, this seems absolutely crazy for a hardware wallet provider to encourage you to back up your seed phrase online AND give them your Passport/ID—especially one that has previously suffered a data breach!”

Leading crypto solutions provider Ripple has acquired Metaco, a Swiss-based crypto custody provider, for $250 million as it diversifies into custody solutions as a way to bring in new revenue opportunities.

Ripple Buys Metaco

According to a press release, the acquisition would enable Ripple to expand its enterprise offerings and provide its users with the technology needed to custody, issue, and settle various tokenized assets. On the other hand, Metaco will gain access to Ripple’s established base of customers, capital for new demand, and resources to continue offering its services.

Brad Garlinghouse, CEO of Ripple, said: “Metaco is a proven leader in institutional digital asset custody with an exceptional executive bench and a truly unmatched customer track record. Through the strength of our balance sheet and financial position, Ripple will continue pressing our advantage in the areas critical to crypto infrastructure. Bringing on Metaco is monumental for our growing product suite and expanding global footprint.”

Ripple said the acquisition is a milestone in its business and product strategy, considering that it shares strong crypto DNA with Metaco, top-tier institutional customers, and authorization to create enterprise-grade solutions. Metaco’s products and services are offered across various countries, including the U.S., the U.K., Singapore, Switzerland, Australia, and Hong Kong.

“Our mission has always been to enable institutions to thrive in the digital asset economy with the help of our core infrastructure and expertise, and we are delighted to join forces with the team at Ripple, who share that passion. This deal will enable Metaco to leverage Ripple’s scale and market strength to reach our goals and deliver value to our clients at a faster pace,” said Adrien Treccani, Metaco’s founder and CEO.

Ripple Expands into Custody Solutions

Furthermore, the acquisition would make Ripple the sole shareholder of Metaco while the latter continues operating as an independent brand and business unit led by Treccani. Ripple believes the deal presents an opportunity to tap into the growing crypto custody pool that several big finance industry names have stepped into. 

Ripple’s president Monica Long said working closely with Metaco has uniquely positioned Ripple for the growing institutional crypto custody market expected to reach $10 trillion by 2030.

River, a U.S based Bitcoin technology and financial services startup announced the completion of a $35 million equity round. Kingsway Capital led the Series B funding with notable investments from individuals, including Paypal co-founder Peter Thiel, Cygni, Goldcrest and Valor Equity Partners, and Esas Ventures. In a Series A round in 2021, River raised $12 million. 

In a press statement, River’s CEO, Alex Leishman, stated that the new wave of Bitcoin interest is “largely driven by business and institutional adoption”. He also added 

 “It’s not fueled by hype; this year’s bank failures and bailouts have been a wake-up call, revealing the cracks of the traditional financial system and reminding us why Bitcoin is so important—it’s a secure path to a stronger and more transparent global economy. Adopting Bitcoin with a trusted partner is no longer the speculative choice, but rather the prudent one.” 

River hopes to facilitate an honest and flourishing financial system through the use of Bitcoin. The financial services company offers a group of Bitcoin services, including Bitcoin brokerage with zero-fee recurring orders, full-reserve custody, mining, and a Bitcoin wallet that supports both on-chain and Lightning Network transactions.

River Pioneers Lightning Network Adoption

Last year, River announced the launch of River Lightning, an application programming interface (AP) that permits companies to connect their applications to the Lightning Network easily. Some crypto apps are already using River Lightning to facilitate instant Bitcoin transactions.  

Demand for Lightning transactions has continued to grow rapidly since last year, with new levels in recent weeks by rising on-chain fees. River intends to directly serve individuals and businesses and also serve the Bitcoin payments back-end for the industry. Part of the series funding will be used to further build out the B2B Lightning segment.

Leishman said that financial service companies have deep Bitcoin expertise and focus. Comparing River to other crypto companies, Leishman reckoned that the company does not take shortcuts and remains mission-driven with full-bitcoin reserves. The new funding would enable River to continue playing its part in driving Bitcoin adoption.

Paul Grewal, the chief legal officer of the largest American cryptocurrency exchange, Coinbase, has rendered an apology for his company’s description of the popular memecoin Pepe (PEPE) in a newsletter – an act that prompted Crypto Twitter to call for a boycott of the firm.

Coinbase ’Screwed Up’: Grewal

On Thursday morning, crypto influencer Borovik.eth took to Twitter to inquire why Coinbase sent out emails telling its users that Pepe is an alt-right hate symbol. Along with his post was a screenshot of the newsletter from May 10 that cited a 2016 resolution by the Anti-Defamation League (ADL) to include the frog-themed Pepe in its database of online hate symbols.

“PEPE, which was issued around three weeks ago with a comically huge supply of 420 trillion tokens, has been leading the memecoin activity. The token is based on the Pepe the Frog meme, which first surfaced on the internet nearly 20 years ago as a comic-strip character. Over time it has been co- opted as a hate symbol by alt-right groups, according to the Anti-Defamation League,” Coinbase wrote.

Borovik. eth’s disclosure riled up the fans and holders of Pepe, leading to a mass request for an apology from Coinbase and for users to start deleting their accounts with the crypto firm. The matter soon escalated as several famous crypto enthusiasts disclosed that they would sell their Coinbase (COIN) shares and move their digital assets to other exchanges like Gemini, with most ending their tweets with the hashtag “#deletecoinbase.”

Within a short time, the hashtag “#deletecoinbase” started trending on Twitter, with thousands of tweets aligned to it. As of writing time, the hashtag has more than 304,000 tweets, as per data from Tweetbinder.

By Thursday evening, Grewal posted a tweet, apologizing for the misunderstanding caused by Coinbase’s description of Pepe and admitting that the crypto exchange “screwed up.”

A ‘Fact-based Picture’

The Coinbase CLO explained that the firm had tried to provide a fact-based picture of Pepe while sharing an overview of the frog-themed coin but failed to portray the whole picture of its history.

“We screwed up and we are sorry. Yesterday we shared an overview of the $pepe meme coin to provide a fact-based picture of a trending topic. This did not provide the whole picture of the history of the meme and we apologize to the community,” Grewal said.

As Coinbase has rendered an apology and edited the newsletter to remove the description, Pepe fans expect the exchange to list the memecoin just like Binance and Crypto.com has done.

Lawyers for Sam Bankman-Fried (SBF), the founder of bankrupt cryptocurrency exchange FTX, have filed pretrial motions to dismiss most criminal charges against their client.

In a Monday filing at the United States Court for the Southern District of New York, SBF’s attorneys moved a motion to dismiss about ten charges out of the thirteen-count indictment unsealed against the CEO in February.

SBF Seeks Dismissal of Criminal Charges

During Bankman-Fried’s scheduled trial this October, he is set to face wire, securities, and commodities fraud allegations and bribery claims all tied to his role in the collapse of his multi-billion dollar crypto empire in November. He was extradited from the Bahamas in December and initially pleaded not guilty to the charges and others in previous indictments.

During the last court hearing, SBF’s attorney Mark Cohen disclosed that he would file a motion challenging the new charges brought against his client upon his extradition from the Bahamas. Cohen insisted that the FTX founder be tried only for accusations that he was deported for as the new charges were improperly brought.

In the pretrial motions, Cohen’s team is seeking the dismissal of conspiracy charges to commit wire fraud on FTX customers, Alameda Research lenders, and wire fraud on FTX customers and Alameda Research lenders. They are also requesting that charges about conspiracy to commit bank fraud be dropped on the basis that prosecutors did not “state an offense for failure to allege a valid property right.”

The attorneys also seek a dismissal of the commodities fraud charges because it alleges facts occurring almost entirely outside the US and the unlicensed money transmitting allegations on the basis that FTX was not required to register as a money services business solely for using a US bank account.

Additional Information Required

In addition, Bankman-Fried’s attorney asked the court to drop bribery and political donations charges, as they do not properly allege illegal campaign contributions and payments to Chinese officials.

Cohen and his team did not seek the dismissal of charges alleging conspiracy to commit securities fraud, securities fraud, and conspiracy to commit money laundering.

The motion also alleged that FTX collapsed due to the 2022 crypto winter, which affected many major companies and exchanges, leading several to bankruptcy. The team also seeks access to additional discovery documents as FTX “should be considered part of the ‘prosecution team.’”

The United States Department of Justice (DOJ) has launched a probe into Binance, the world’s largest cryptocurrency exchange, over possible violations of sanctions against Russians, Bloomberg reported Friday, citing sources familiar with the matter.

Binance Faces Probe for Sanctions Violations

According to the report, the DOJ’s national security division is investigating whether the Binance platform is being used to evade sanctions related to Russia’s invasion of Ukraine. The division is checking to see if the company’s employees are aiding Russians in moving funds through the exchange.

The inquiry is moving alongside an existing probe by the DOJ’s criminal division into the leading crypto exchange. Binance has also been in talks with the department to settle previous complaints about its platform being used to sidestep sanctions against Iran before strong compliance controls were implemented.

In response to questions about the DOJ’s probe, Binance said: “In 2021, Binance launched an initiative to completely overhaul its corporate governance structure, including bringing in a world-class bench of seasoned executives to fundamentally change how Binance operates globally.”

The exchange insisted that it is in full compliance with all US and international financial sanctions and that its Know Your Customer (KYC) procedures rival any in the traditional banking system. All users must go through the protocols, which involve divulging information about their country of residence and personal identification checks.

“Our policy imposes a zero-tolerance approach to double registrations, anonymous identities, and obscure sources of money,” the leading exchange added.

Binance Under Scrutiny 

One of the sources further disclosed that there was no indication that the DOJ was getting ready to agree to a non-prosecution or deferred-prosecution settlement with Binance, just like agencies do in certain cases.

The DOJ’s probe into Binance adds to a list of investigations from several regulators into the exchange’s mode of operations. Despite the platform’s claims of fulfilling legal obligations and collaborations with law enforcement, it has been under intense scrutiny from regulatory agencies.

In May 2021, the Internal Revenue Service (IRS) and the DOJ launched a probe into Binance for money laundering and tax evasion. A little over a month ago, the Commodity Futures Trading Commission (CFTC) charged the exchange with violating federal trading laws.

In addition, the Securities and Exchange Commission (SEC) also examined whether the crypto exchange offered unregistered securities during its initial coin offering (ICO) in 2017.

Deus Finance, a decentralized marketplace for financial services, has lost more than $6 million in cryptocurrencies to attackers through a public burn vulnerability on its stablecoin DEI (DEI).

Deus Finance Exploited For $6.3M

According to a tweet by blockchain security firm PeckShield, the exploit, which occurred on May 5, was executed through the BNB Smart Chain (BSC) and the Arbitrum network.

The attacker exploited a vulnerability in the DEI token’s contract on BSC. The BSC hack, front-run by a bot, led to a $1.3 million loss. The security firm noted that the DEI contract on BSC was last upgraded on April 10, 2023.

The hacker also exploited the Arbitrum network’s ARB/ETH deployments, leading to losses of more than $5 million. One Twitter user named @adamb insisted that the root cause of the hack was a basic implementation error in the DEI token contract. 

As soon as Deus discovered the hack, the protocol paused all contracts and, with the help of white hat hackers, burned all DEI tokens on chains to mitigate the damage. 

“We are currently in the process of comprehending the actual backing of DEI tokens. To achieve this, snapshots of all DEI balances are taken before the tokens are burnt. After evaluating all balances, we will formulate a comprehensive recovery and redemption plan,” Deus said.

Not the First Time

The decentralized marketplace further informed users stuck during their attempts to arbitrage after the hack that there would be an evaluation, which may allow them to reverse the transactions.

The Deus team assured users that the protocol’s current v3 system, which is isolated from DEI, was unaffected by the hack. Users were advised to stay away from the current DEI contracts until a redemption plan was finalized.

DEI lost its $1.00 peg and plunged by 71% immediately after the hack to $0.293, according to data from CryptocurrenciesToWatch. At the time of writing, the token was trading at $0.343 after a slight recovery.

Meanwhile, the recent incident is not the first attack on the Deus protocol. The platform lost over $3 million in Dai (DAI) and Ether (ETH) in March 2022 via a flash loan attack.

Publicly-traded cryptocurrency exchange Coinbase is expected to report its first quarter (Q1) earnings after the market closes on Thursday. The report might influence its share price and the general narrative surrounding the firm and crypto. 

Nonetheless, a key indicator to suggest the progress of Coinbase suggests the results might turn out negative for the company’s investors. According to a research firm called Apptopia, which monitors metrics connected to app usage, the number of individuals downloading the Coinbase app continues to decrease even though crypto prices have considerably recovered.

Tom Grant, the vice president of Apptopia Research, made a presentation this week. During his presentation, Grant said his data portrays a more bleak picture for Coinbase than consensus expectations. He shared a chart that shows how the firm’s app download continues to decrease even as trading volume has slightly increased.  

Notably, a download decline does not give complete insight into Coinbase’s performance. Given that the price of Bitcoin has doubled since last quarter and as volume bounced back, the company’s income from trading, which accounts for the most significant portion of its revenue by far likely, jumped considerably in Q1.

According to Grant, the Coinbase app saw a significant boost in the first two months of the year, then faced a considerable decline in March. This issue affected both power and casual users, constituting 20% of Coinbase’s customer base but accounting for 80% of the time spent on the app.

When Coinbase releases its earnings on Thursday, investors will speculate on its valuation by looking at volume trends. Investors will also learn how the firm plans to survive in an increasingly aggressive regulatory environment. They might look at how Coinbase’s revenue from USDC has been affected by the stablecoin’s drop in market cap. 

According to analysts, Coinbase should report a first-quarter net loss of $329 million or $1.38 per share, compared with a $429 million loss or $1.98 a share in the same quarter a year ago.

The American subsidiary of leading crypto exchange Binance, Binance.US, has backed out of an agreement with bankrupt crypto broker Voyager Digital to purchase $1 billion worth of its assets less than a week after the US government greenlighted the deal.

Binance.US Terminates Asset-Sale Plan With Voyager

According to a tweet by Voyager, Binance.US disclosed its decision to terminate the deal on Tuesday via a letter. In the notice of termination, Binance.US said it was ending the agreement as it had not been consummated as of the outside date. They requested that Voyager fully return the $10 million deposit made at the onset of the pact.

Binance.US had stepped in to rescue Voyager after bankrupt crypto exchange FTX, who was to purchase the assets, failed. The crypto exchange agreed to the purchase on December 18, with an option to back out if it was not completed by April 18 (the outside date). The purchase agreement was set to unlock 51% of users’ funds. 

However, Binance.US has stepped out of the deal due to the regulatory uncertainty that has created an unpredictable operating environment in the US. 

“Binance.US has made the difficult decision to exercise its right to terminate the asset purchase agreement with Voyager. While our hope throughout this process was to help Voyager’s customers access their crypto in kind, the hostile and uncertain regulatory climate in the United States has introduced an unpredictable operating environment impacting the entire American business community,” the exchange said.

The Second Blow

Binance’s decision to opt out of the pact marks the second time a rescue plan for Voyager’s creditors is falling through. After a series of back-and-forth movements between both parties and the US government, the crypto exchange disappointed the bankrupt entity.

Recall that several US regulators, including the Justice Department, the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC), opposed the deal for three months until last week when they reached a resolution with the court and approved it.

Notably, roughly 97% of Voyager’s creditors voted in favor of the agreement, and bankruptcy judge Michael Wiles approved it. 

Binance.US must now get rid of all customer information and accounts related to the arrangement while Voyager works towards returning customers’ funds through direct distribution.