Web3 Sphere's $38.9M Loss, Terraform Lab's SEC Battle, and German Seizure of 50K Bitcoins
Summary:
Throughout January 2024, the Web3 ecosystem underwent a loss of $38.9 million due to several security incidents as revealed by DeFi security firm Quantstamp. Terraform Labs, fighting an SEC lawsuit, believes that their filed bankruptcy could potentially enhance their chances in the legal battle. In related news, German officials seized 50,000 Bitcoin during an investigation into alleged copyright infringements.
The first month of 2024 witnessed the Web3 sphere reporting losses of $38.9 million due to several security breaches. Terraform Labs believes that declaring bankruptcy could bolster their potential to contest the lawsuit from the SEC. In the meantime, German officials took possession of 50,000 Bitcoin (BTC) while examining instances of copyright infringement.
Quantstamp, a security firm focusing on Decentralized Finance (DeFi), deduced that diverse forms of attacks on Web3 initiatives such as scams, key violations and smart contract hacks led to a cumulative loss of $38.9 million in January 2024.
Radiant Capital, Gamma Strategies, Wise Lending, Socket and Goledo Finance were the top five smart contract platforms that incurred the maximum losses. Do Kwon's Terraform Labs, the creator of the now obsolete stablecoin TerraClassicUSD (USTC), hopes their move to file for Chapter 11 bankruptcy protection could aid them in contesting the lawsuit brought by the Securities and Exchange Commission.
According to CEO Chris Amani's filing on January 30, a typical SEC appeal would necessitate Terraform Labs to pledge a "supersedeas bond," valued at 110% of the overall judgement before proceedings could commence. However, their bankruptcy protections could now facilitate the company to dispute the lawsuit without the need to pledge such a bond.
The intent behind Terraform’s appeal is to affirm that the firm’s crypto assets are not officially securities, therefore the SEC’s enforcement action is out of their jurisdiction. Amani stated that, if successful, the appeal would “dissolve the single biggest claim" against Terraform Labs and would significantly advance their efforts towards compensating creditors. On January 21, Terraform Labs applied for bankruptcy in a Delaware Bankruptcy Court. Concurrently, the SEC tried to dismiss a case it opened against a crypto company called Debt Box after they falsely represented details of its case and faced potential penalties.
In related news, German local authorities have seized approximately 50,000 BTC amidst a thorough investigation into suspected copyright contraventions. The Saxony police announced on January 30 that the confiscation was linked to two individuals from Germany and Poland who bought the Bitcoin using earnings from pirated content. The value of the confiscated funds is currently over $2.1 billion.
The authorities revealed that the Bitcoin was seized post the defendants voluntarily transferring them to police-owned wallets, indicating that a final leeway hasn't been considered regarding Bitcoin utilization. It's worth noting that Germany isn't the sole country to seize Bitcoin; Glassnode data suggests that the United States has also confiscated 210,429 BTC linked to various crimes.
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Published At
1/31/2024 4:17:33 PM
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