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SlowMist examines Blockchain Security in 2022 MidYear Report, etc.

By I-HODL | A Crypto Journey | 17 Aug 2022


  • SlowMist Report: Most stolen crypto on ETH blockchain is laundered through Tornado Cash.
  • Ethereum Foundation: The Merge is moving to proof of stake. That's it. Don't expect miraculous changes in speed or gas fees on layer 1. 
  • Coinbase: We're gonna pause ETH and ERC-20 withdrawals and deposits during the Merge. Deal with it.
  • Celsius gets green light to sell mined Bitcoin

(The above are all paraphrased/ my words.)

Okay, friends, it's another day in the world of crypto, and I've got some news.

Today started off as a quiet day, though I gotta admit, a quiet day in crypto is usually relatively exciting in any other branch of finance, right? So I woke up this morning, skimmed a bunch of news headlines, and my eyes skated across a report which I thought said Binance was supposedly freezing withdrawals. Yup. So you know what I did, right? My heart beat so fast and so hard, I swear I was like that guy on the Mask-

...Except I wasn't in love and trying to be romantic, I was panicking.

Listen, I levitated, my eyes nearly popped out, I had a complete meltdown, and then I went back to my computer, sat down, and read the article again. And get this, it wasn't all that. Binance is simply assuring traders and investors that funds are SAFU and that it's just like a glitchy thing with a third party provider. Man, I was like whew! Cuz I mean, however you feel about Binance, an implosion there would really rock the overall market to its core. I think we can all agree on that. 

Anyways, my little story aside, in the first news of the day, Tornado Cash is once again in the limelight as the 2022 Midyear Blockchain Security and AML Analysis report by blockchain security firm SlowMist has been released indicating that the majority of stolen funds on the Ethereum network has been funneled through the privacy mixer.  Huh. Well, color me shocked, why don't you? 

Blockchain Security observations in SlowMist 2022 Midyear Report

In its report, blockchain security firm, SlowMist, commenting on the growth of the global blockchain sector noted," Blockchain technology's efficiency, security, and scalability have continued to progress, as the advent of emergent areas such as the Metaverse and NFT marketplace has allowed blockchain to thrive."

In the area of security, however, the report reveals that there were 187 security incidents from January to June 2022, with damages totaling $1.976 billion as of June 30, and with the highest number of safety incidents recorded in May and June. It also noted that the majority of security incidents occurred on the BSC ecosystem with cross-chain bridges incurring the most losses. 

In terms of its comments on money laundering, etc., this SlowMist report is a pretty interesting read because, I guess, as security firms go, SlowMist isn't afraid to name drop, and boy, did it point fingers.

It notes:

"Money laundering tools are obviously necessary in the process of money laundering by hackers, darknet organizations, fraudsters, and Rug Pull scammers. Tornado Cash is a common money laundering platform on the ETH and BSC chain. Coinjoin tools (ChipMixer, for example), coin
mixers (Blender, CryptoMixer, for example), private wallets (Wasabi, Samourai, for example), currency exchange platforms (ChangeNOW, SimpleSwap, FixedFloat, for example), and certain trading platforms are all accessible on the bitcoin blockchain."

On the issue of the amount of stolen ETH funnelled through Tornado Cash, well, SlowMist says Tornado Cash received 74.7% of the crypto laundered on the ETH blockchain. Here's this chart by SlowMist.

1bd930d5c50d2abc9caf6df8c3820c70aa7f654c565dbf3828c724b7a5f5b328.png

ETH Money Laundering Flow Chart by SlowMist.

And so, friends, the report is a pretty detailed read. Check it out if you can.

ETH Foundation Dispels Merge Myths

In other news, the team at the Ethereum Foundation are out here clarifying facts and dispelling myths and misconceptions about the Merge. On its website, the team has listed eight misconceptions and has sought to clarify exactly what is going to occur during and after the Merge. 

The team clarifies again that the Merge is a change of consensus mechanism, not an expansion of network capacity, and will not result in lower gas fees, neither will there be a noticeable change in transaction speeds as a result of the Merge on layer 1. I guess that's why there's a lot of attention  focused on Polygon right now, right?

And in case you're thinking there'd be a mass exit after the Merge with persons withdrawing and selling their staked ETH, you can rest easy on that too, I guess, because staking withdrawals will not be enabled until the Shanghai upgrade which isn't expected until 2023. So there's that. 

Also, the team promises that there'd be no downtime during the Merge, which brings me to Coinbase. 

Coinbase to pause ETH and ERC-20 token deposits and withdrawals during Merge

Now y'all know you complain when  you can't get to withdraw funds from exchanges whenever there's any major movements in the crypto market, right? I mean, I do. I complain loudly. And so it appears as though Coinbase is getting ahead on this one. 

Yesterday, on August 16th, Coinbase published a post on its website outlining the steps it proposes to take during the Ethereum Merge migration on or around September 15th, 2022. 

The exchange is making it clear, really clear that it intends to halt all deposits and withdrawals for ETH and ERC-20 tokens during the Merge. And so, there'd be no jumping on or off the band wagon at the last minute, at least not on this platform, all right? You either buy early and strap in for the ride, whether the price  instantly skyrockets or plummets, or you wait until the Merge is over and the dust clears and you get in then. Your choice. But y'all are not gonna be blaming the exchange for any mishaps, all right? That's what I got.

Seriously though, the exchange notes that while the Merge is expected to be seamless from a user perspective, the downtime "allows us to ensure that the transition has been successfully reflected by our systems." And so, the pause is being described as a precautionary measure with the team promising to provide updates via Twitter and its status page.

On to Celsius.

Court gives greenlight to Celsius to sell mined Bitcoin

US bankruptcy judge, Martin Glenn, has given embattled cryptocurrency lender, Celsius, the greenlight to mine and sell Bitcoin to sustain or support operations during bankruptcy proceedings. The company, which is already weathering a deficit of $2.8 billion, has said that it expects the mining business to be key to its restructuring efforts though concern has been expressed about the utility related costs for running its mining rigs. Celsius owns 80,850 Bitcoin mining rigs with half of those in operation. Before filing for bankruptcy, it had plans to expand its mining rigs to 120,000 this year.

Conclusion

And so, there you have it, a relatively quiet Wednesday in the world of crypto. I've read here and there though that some people are skeptical that a lot of influencers are pumping ETH and that we can expect the price to spiral post-Merge because they'd be selling. Well, certainly not the staked ETH, right? And with ETH's market share increasing from a low of 14.3% in May to just over 20% this month, according to CoinDesk, at least one research firm, FSInsight is projecting that ETH has a good chance of exceeding Bitcoin's market cap over the next 12 months. Now what do you think of that? I'd love to hear your views.

Well, friends, that's it for me today. I'm off again in search of other stories. Until we meet again, please remember to be safe. We'll chat soon. 

 

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Your friendly, neighborhood crypto enthusiast.


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