?? BNB Chain Hacked!
Welcome to Web3 pills, the daily crypto newsletter that’s here to remind you that if it’s “not your keys” then it’s “not your crypto”.
Here are your ??’s for today:
BNB Chain Hacked!
Despite having the 3rd largest marketcap of any blockchain, the BNB Smart Chain (formerly known as Binance Smart Chain) often goes under the radar. Yesterday however, BNB Chain was back in the spotlight for all of the wrong reasons.
The trouble began brewing when the official Twitter handle of BNB Chain put out the following tweet:
The ‘irregular activity’ that was referenced turned out to be a pretty serious hack of one of BNB’s cross-chain bridges, the BSC token hub. The hacker was able to discover an exploit that let them print extra BNB tokens (worth roughly $570 million). They then immediately began draining the hacked funds to other chains, and succeeded in getting?~$100 million of the funds off the blockchain.
It should be noted, that this is not the first bridge exploit that has happened this year. As of August, Chainalysis?had reported?that a whopping?$2 billion?had already been lost in 13 separate crypto bridge hacks. Add this to the list of casualties.
Losing that much money in a hack is painful enough to begin with, but in many ways, that was just the start of BNB Chain’s problems. While it could be considered a good thing that the BNB Chain was able to coordinate to halt the chain before the hacker could move any funds, it revealed some major problems with the BNB Chain.
The BNB Chain is considered by many to be a centralized chain, and for good reason. It was originally launched by the Binance team (based on a fork of Ethereum Go), and has been heavily influenced by CZ and the Binance team that runs the largest crypto exchange in the world.
Even to this day, there are only 21 validators on the blockchain, giving it an extremely low “nakamoto coefficient” of only 7, which makes it’s consensus mechanism highly centralized.
The Binance team has been trying to distance itself from the blockchain to give off the appearance of decentralization, even taking Binance out of the name by rebranding to “Build N’ Build” Chain (yes that’s really what BNB stands for).
However, yesterday CZ made it extremely obvious just how much control they still have over the chain. The argument goes, if they were able to halt the chain this quickly for a hack, what’s stopping them from halting it for other reasons in the future?
One of the core value props of blockchains is that they are supposed to be decentralized, permissionless and immutable. Pausing chains, rolling back transactions or hard forking chains all work against these core tenants.
In fact, I’d go as far as to say that any blockchain that begins to do that, is really just another centralized database, that’s less efficient than most.
Celsius doxxes it’s customers
If you are (or should I say, were?) a Celsius customer, these past few months have not been fun for you. As most people know, Celsius was a cryptocurrency lending company, that went bankrupt in the aftermath of the 3AC (3 Arrows Capital) liquidations back in June.
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Celsius was attracting users with high yields of up to 18%, that would be generated by participating in “DeFi” activities such as on-chain borrowing & lending. As it turned out, Celsius was not decentralized finance in any sense of the word. This became obvious the moment they faced insolvency and halted withdrawal of customer funds (not your keys, not your crypto!)
Furthermore, it turned out that the way they were generating this yield was by making HIGHLY risky investments and loans, including massive under collateralized loans to 3AC.
In the time since the news broke of Celsius’ insolvency, almost every update has been bearish. First it was revealed that their head of institutional lending program, had extremely limited experience in finance. Before this role, she had been working as a designer at a footwear store and participating in porn videos (No, I’m not making this up).
Now, I’m not one to judge anyone’s career paths; however, when it comes to managing a book of $300 billion in assets, I’d generally like to see a different set of experiences leading up to that role. Anyways…
Yesterday, more bad news came for Celsius customers, if you can believe that. In a?14,500-page long document, the unobfuscated records of EVERY SINGLE CUSTOMER on the platform were made public for anyone to look up.
The public information included details such as: customer names, crypto wallet IDs, transaction types and amounts held of each token. ??
This is obviously a massive breach of customer privacy, and it also leaves their customers open to possible harm and other problems.
I don’t think anyone in the world wants the public to know that level of detail about their finances, and worse still, these transactions might have doxxed other wallets of users if they had used them to interact with a Celsius wallet.
To add insult to injury, the data leak also revealed that key executives such as CEO Alex Mashinsky, his wife Kristine, and CSO Daniel Leon, withdrew $10 million, 2 million CEL, and $7 million respectively, before the firm’s liquidity issues had become public.
Not only is this a scumbag move, but this is most likely criminal. Overall, Celsius is a case study in literally everything a company can do wrong.
Alex Mashinksy is a bad human being, and our industry will be in a better place when him and the other Celsius execs are hopefully sitting in jail cells.
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NFT OF THE DAY
Ethereum NFTs tend to dominate the industry when it comes to trading volume. However, there are many other promising NFT collections on other blockchains.
Today, I wanted to highlight a promising collection on Cardano called?Disco Solaris. Disco Solaris is trying to create an online ‘decentralized retrotopian universe’, launch a media franchise and experiment with a new storytelling model.
I think the artwork is extremely unique and the community vibes are astounding. I found this blue-skinned Disco Solaris #5539, had been sold on?jpg.store?for 2600 ADA just a few days ago.