Three top cryptocurrency stories from the past week

Quick Take

  • Wintermute was hacked for $160 million.
  • U.S. draft legislation seeks to temporarily ban algorithmic stablecoins.
  • CFTC filed a legal complaint against Ooki DAO and its members.

No week in crypto goes without eye-catching headlines. This past week saw major regulatory developments in the digital assets sector. U.S. Congress members proposed a bill banning algo stables, a DAO and all of its voting members were targeted by the CFTC and market-making firm Wintermute suffered a $160 million exploit. 

Here are the details on these three stories: 

Wintermute hacked for $160 million

On Tuesday, market-making firm Wintermute suffered a $160 million hack on its Ethereum vault address, making it one of the largest recent crypto hacks. The incident occurred because of the firm's use of a crypto "vanity address" that was found to be inherently vulnerable to theft. The address was generated with a tool called Profanity. Prior to the hack, a security disclosure report from 1inch discovered that hackers could calculate private keys of all Profanity-based addresses using GPU chips.

Wintermute’s vanity address was used as an admin account to its vault. Extracting the private key, a hacker was able to take over the specific address and use its admin privilege to then drain Wintermute’s vault. Wintermute has requested that the hacker return the stolen funds and offered a $16 million bounty. So far it has not heard back from the perpetrator.

Draft legislation seeks to temporarily ban algo stablecoins 

Some U.S. Congress members proposed a draft bill to create a federal framework for stablecoins. One of the proposals is a ban on algorithmic stablecoins backed by "endogenous collateral," or internal collateral that stablecoin issuers create by themselves. Such cryptocurrency-backed stablecoins include assets that work similarly to the now-collapsed TerraUSD (UST), whose value was supported using an algorithm as well as the project's own asset, called LUNA.

If passed, the bill would ban algorithmic stablecoins for two years and provide that dollar-denominated stablecoins be backed with cash or highly liquid assets like U.S. Treasury bonds. The draft bill also proposes that issuers of stablecoins who launch without approval from appropriate regulators may be penalized with five years in prison and a $1 million fine.

CFTC charges Ooki DAO and its members

On Sept. 22, the crypto sector witnessed yet another regulatory development concerning decentralized autonomous organizations (DAOs). U.S. regulator Commodity Futures Trading Commission (CFTC) filed a legal complaint against a DAO called Ooki, alleging that the project has been illegally running a futures exchange. 

The complaint was filed in the U.S. District Court for the Northern District of California, and alleged that the DAO was an unincorporated association involved in unlawful activity. The complaint further claimed that the Ooki DAO members who voted on the project's governance decisions with its native token are individually liable for the actions of the DAO. This has sparked a debate among legal experts, according to a report from The Block.

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