XRP drops after $112.5m hack, HK mulls OTC venue regulation, JUP launches with $700m airdrop

During the last week, XRP fell after one of Ripple’s co-founders was the subject of a $112.5 million hack. In Asia, Hong Kong’s top regulatory authority revealed it would soon be consulting on crypto OTC venue regulation. And the highly anticipated JUP token of Jupiter, one of the largest decentralized exchanges (DEX) on Solana, hit markets with a $700 million airdrop. Here’s our weekly wrap with analysis of the most important news.

Ripple’s XRP drops 5% after exec hit in $112.5m hack

XRP fell 5% in one day last week, following a high-profile data breach. Initially reported as an attack on the network itself, it was later revealed that one of the co-founder’s personal accounts had been targeted instead.?

Widely reported as a loss of $112.5 million, it caused a spike in long liquidations. The co-founder targeted was Chris Larsen, who clarified soon after on X: “We were quickly able to catch the problem and notify exchanges to freeze the affected addresses. Law enforcement is already involved.”?

The breach was reported to involve 213 million XRP tokens that had been siphoned out of a large wallet on the XRP ledger blockchain, which was then split and laundered through multiple exchanges.??

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At $112.5 million, this breach has been one of the biggest reported so far in 2024. Despite this hefty sum, the situation has improved with XRP’s price recovering and the crypto community being reassured that only a single personal account was compromised, not the Ripple network itself.?

It has also since been revealed that the hacker didn’t use crypto mixer services or a DEX to hide their identity. This allowed the stolen XRP to be traced quickly, which is helping with the recovery. For instance, Binance as one of the exchanges used to launder the proceeds, has since frozen the stolen $4.2 million sent onto its platform. ?

This is, regardless, an alarming incident for Ripple. Though the network itself wasn’t targeted, the fact that the account of a senior executive – none other than a co-founder – was compromised is embarrassing and raises questions about security standards. It’s early days in 2024, but the size and brazenness of this attack suggests it may be a challenging year for crypto exchanges and their ongoing battle with malicious actors. ?

Hong Kong to consult on OTC venue regulation

Hong Kong market authorities are set to issue a consultation on the regulation of OTC crypto trading venues in the jurisdiction as part of a clampdown on fraudulent activity.?

A top Hong Kong official, Secretary for Financial Services and the Treasury Christopher Hui, wrote in a recent blog: “We believe it is necessary to bring OTC venues under regulation, and we will launch a consultation very soon on the proposed regulatory framework.”??

This consultation will cover virtual asset outlets such as shops and online platforms. In his remarks, Hui said the move was being made in direct response to the fact “some unlicensed virtual asset trading platforms” have been involved in fraud cases and misled investors.??

The Financial Services and Treasury Bureau or FSTB, the main regulatory body in Hong Kong, will oversee the consultation but no details have been given about when this will occur. In his blog, Hui simply wrote this will be “very soon”.??

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This consultation was to be expected in Hong Kong, where policymakers have been actively trying to foster a secure and viable environment for the crypto community to grow. ?

Late last year, Hong Kong’s regulator stated it wanted to develop a “vibrant sector and ecosystem” while regulating crypto. This involved a licensing regime for crypto companies, with regulatory approval required before operations can begin in Hong Kong. Elsewhere, the FSTB is consulting on legislative proposals to regulate stablecoin issuers in Hong Kong. This includes various licensing and capital adequacy requirements, and a sandbox to ascertain if such coins are fit-for-purpose. ?

Hong Kong’s approach couldn’t be more different to that of China, where cryptocurrencies have been illegal since 2021. Although Hong Kong is part of China, it is a ‘special administrative region’ and has its own executive, legislative and judicial powers. This has allowed Hong Kong to adopt a divergent approach to policing the sector and instead engage with the growing crypto industry. ?

Jupiter native token goes live in $700m airdrop

Jupiter has airdropped its long-anticipated native JUP token, with $700 million worth being issued to nearly a million wallets. This initial airdrop took the form of 1.35 billion tokens, out of a total supply of 10 billion.??

As one of the largest DEXs on Solana, with a 24-hour trading volume of $688 million, this airdrop is already one of the biggest airdrops to happen on the network, and many commentators expect it to be the largest in 2024. After an initial surge to $1.27 on the go-live data of 31 January, JUP is now trading at around $0.5 at the time of writing.??

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For months, investors have been eager to get their hands on JUP as this is a governance token with attractive attributes, including allowing members to approve, sanction and vote on all aspects of the Jupiter platform. The wait is over and, thankfully, the airdrop went without incident from a technical perspective. Given the size of this airdrop, there had been concerns that Solana would not hold up, but servers operated as normal throughout. ?

However, there was controversy around Jupiter’s novel distribution tactic. In addition to the standard airdrop, tokens were also offered to the open market via a trading pool where airdrop recipients could also sell their newly minted tokens. This allowed Jupiter to also sell JUP in a specific price range which drew criticism on X, with some observers likening it to an initial DEX offering more than an airdrop. Jupiter’s founder also took to the social network to dismiss these allegations as “blatantly false”, explaining the pool was a way to absorb selling pressure from airdrop recipients who changed their mind about the token.