Decentralised crypto exchange dYdX has revealed additional steps to prevent trading-related risks after having burnt $9 million of its insurance money to pay for user losses. The decentralised exchange increased its margin requirements on several markets on November 18, 2023 after an alleged targeted attack on the YFI token triggered massive liquidations.
A day earlier, on November 17, 2023 dYdX activated its insurance fund to reimburse customers’ trading losses after a profitable trade targeting long holdings on the YFI token resulted in the liquidation of almost $38 million in positions.
The move was described as a “targeted attack” on the exchange by dYdX founder Antonio Juliano.
According to him, YFI’s open interest in dYdX increased from $0.8 million to $67 million in a couple of days because of one individual’s actions. Juliano said the same person attempted to attack the SUSHI market on dYdX a few weeks ago.
"We did take action prior to the price crash to increase initial margin ratios for $YFI, but this was ultimately insufficient. The actor was able to withdraw a significant amount of $USDC from dYdX just prior to the price crash," he said.
The exchange’s team said in a post on X (previously Twitter) that “highly profitable trading strategies have now been banned on dYdX”, referring to the language used by Mango Markets’ exploiter Avraham Eisenberg in his $116 million 2022 attack.
Lee Jeong-hoon, the former chair of Bithumb, one of South Korea's largest cryptocurrency exchanges, is embroiled in a legal struggle and might face an eight-year prison sentence, with a verdict set for January 18, 2024.
According to prosecutors, Lee Jeong-hoon intended to revamp Bithumb’s governance to gain from exchange coins, circumventing financial regulations.
According to local Korean media reports, authorities believe Lee sought to restructure Bithumb's governance in order to profit from exchange tokens while skirting financial restrictions. The investigation has been continuing since October 2018, when the previous chair reportedly cheated a total of 100 billion won ($70 million) during discussions for the acquisition of Bithumb from Kim Byung-gun, chair of the cosmetic surgery company BK Group.
Prosecutors believe Lee was aware of issues with the BXA token listing, but failed to inform Kim. Despite the concerns with the listing, Lee allegedly collected funds without alerting Kim about the decision not to list the BXA coin.
Prosecutors in South Korea sought an eight-year prison sentence for Lee. However, Lee’s defence has called the charges into question, pointing out inconsistencies in Kim’s testimonies and questioning his credibility.
Gabby Dizon, the co-founder of Yield Guild Games, has said that a renewed focus on free-to-play gaming will help boost Web 3.0 game adoption. He said the most popular Web 3.0 games in 2024 would shift away from play-to-earn (P2E) and instead focus on being totally free-to-play to attract players.
He said that unlike games, such as Axie Infinity Classic, which require players to buy at least three Axie non fungible tokens (NFTs) to play, the new wave of hyper-successful Web 3.0 games will seek to remove as many financial and technical barriers to entry as possible.
“There’s this big realisation that for millions of people to be able to get into a game, they have to be free-to-play first. There’s an evolution of the business model where the games are free to play, and then at some point along the way while you’re playing, then you’re able to mint an NFT or start earning tokens, but a lot of new games aren’t really starting with requiring NFT ownership at the start,” he said.
He added that the move is a big part of the solution to speculative Web 3.0 gaming bubbles. By building games that players want to keep playing, they will reinvest their money in the game, preventing the in-game economy from becoming a cash-generating machine, he said.
November has seen losses of $173 million in cryptocurrency. Two incidents are responsible for 91% of these losses. Hackers stole $114 million from Poloniex after draining its “hot wallets.” Another incident involving a phishing scheme resulted in a loss of $27 million. This spike in losses follows a relatively quiet October, when confirmed losses from hacks and fraud were only $32.2 million.
Despite the increase in losses, cryptocurrency remains a popular investment choice. Over $7 billion in cryptocurrency has been illicitly laundered through cross-chain crime this year. North Korea's Lazarus Group is linked to the theft of around $900 million worth of cryptocurrency between July 2022 and July 2023.
Decentralised exchanges (DEXs), cross-chain bridges, and coin swap services have processed $7 billion of illicit funds, according to blockchain analytics firm Elliptic. The rise in cryptocurrency losses highlights the importance of security when investing in these assets. Investors should take steps to protect their cryptocurrency holdings, such as using secure wallets and keeping their private keys confidential.