On August 29th, 2022 the FBI issued a public service announcement using analysis from blockchain analytics firm Chainalysis warning that between January and March 2022, cyber criminals stole $1.3 billion in "cryptocurrencies", almost 97 percent of which was stolen from DeFi platforms. The FBI warned criminals have exploited signature verification allowing Cyber criminals to take advantage of the complexity of cross-chain functionality and open source nature of Decentralized Finance (DeFi) platforms to steal all of the platform’s investments, resulting in millions in losses. The agency has also witnessed criminals exploiting smart contracts on a blockchain that don't let funds change hands unless certain rules are met, to extract millions. Crypto bridges which allow users to transfer cryptocurrencies from one blockchain to another, such as Nomad ($190 million stolen), Harmony ($100 million stolen), Ronin ($625 million stolen), Wormhole ($326 million stolen) account for the bulk of major crypto robberies this year. Earlier, Robert Reich, former US Secretary of Labor and professor at Brandeis University, published a video (see below) denouncing all "cryptocurrencies" as a Ponzi scheme. It must be pointed out that the bitcoin blockchain and to some extent some altcoin blockchains themselves are fairly secure, the cyber crime is taking place mostly at human touch points or at the edge where bitcoin or altcoin gets converted into USD or other fiat currencies such as exchanges or crypto bridges.
In August 2022 itself, net outflows from bitcoin-related products alone totaled $29 million according to Coinshares. In the past speculation on bitcoin was around it being a new technology, anti-fiat currency and an inflation hedge. Bitcoin as of late seems to be losing its investor appeal as it has lost over 70% of its value and has given away as much as 30% of its market share since 2021 to other cryptocurrencies according to Coinmarketcap. While Professor Reich bundled all cryptocurrencies together, it can be argued that bitcoin is very different from all other cryptocurrencies which arguably could be ponzi schemes. It all boils down to regulation and decentralization, few other "cryptocurrencies" can boast bitcoin’s level of decentralization and regulatory clarity, the most important aspects of blockchain technology. The SEC is very clear that bitcoin is not a security. All other altcoins will in all likelyhood be classified as securities in the near future by the SEC.
In Part 2, I will present a detailed side by side comparison between bitcoin and all other altcoin "cryptocurrencies" to show how bitcoin is very different as it's security stems from being fully decentralized with a turing incomplete script for smartcontracts.
Showing posts with label SEC. Show all posts
Showing posts with label SEC. Show all posts
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