The world of cryptocurrencies is seeing the effects of two new pieces of bad news as a fresh wave of hacks target Ethereum and major US-based Stablecoin project Basis is set to close.
The world of cryptocurrencies is seeing the effects of two new pieces of bad news as a fresh wave of hacks target Ethereum and major US-based Stablecoin project Basis is set to close.
With the recent turbulence in the crypto markets resulting in price fluctuations that have broken records, the latest double whammy to hit the digital coin realm will be of interest to many CFD forex traders.
Ethereum hacks
Ethereum holdings have suffered a continued wave of cyberattacks, according to tech magazine ZDNet. The malicious activity shows no signs of stopping even though the digital coin’s pricing is averaging at an 18-month low.
ZDNet’s story cited research from cybercrime monitoring company Bad Packets LLC and revealed that the Ethereum attacks did not slow down after the downturn in the ETH/USD pair. Both miners and investors are targets as cybercriminals scan the network in attempts to identify both mining rigs and digital wallets that have an exposed port 8545.
This vulnerability allows hackers to gain control of a device and subsequently steal funds by redirecting Ethereum to their own accounts. The fall in the cryptocurrency’s value is not putting the attackers off because even small amounts from individual hacks can quickly build into sizeable sums if enough of them are successful.
Troy Mursch, Co-Founder and Security Researcher at Bad Packets, said: “Despite the price of cryptocurrency crashing into the gutter, free money is still free, even if it’s pennies a day.”
Scanning scams
The Ethereum scanning scam news story broke in June 2018 after hackers stole a reported $20m in ETH in a single operation. Before then, there had been other incidents aimed at users of the cryptocurrency.
Bad Packets also monitors so-called cryptojacking attacks and said that 2018 has been a particularly bad year for these, as detections have risen by almost 500%. Cryptojacking is an attempt to remotely take control of a device with the aim of stealing or even mining crypto coins.
A September report by the Cyber Threat Alliance that focused on the problem said: “Because this threat is relatively new, many people do not understand it, its potential significance or what to do about it.”
Stablecoin Basis to close
In another blow to the cryptocurrency sector, the US-based Stablecoin project Basis will be shutting down and returning the majority of its funds to those who have bought into it, according to news reports.
Crypto news outlet The Block cited “multiple people with direct knowledge of the situation” in its story, claiming that the majority of the funding that Stablecoin raised in a private placement in April, which amounted to $133m, will go back to investors.
The algorithmic project won the support of many major venture capital names, including Bain Capital Ventures and Andreessen Horowitz. The news story also said that Stablecoin itself will communicate directly on the reported shutdown in the coming days.
Regulatory concerns
Another industry news source reported that Nevin Freeman, Co-Founder and CEO of Reserve, a competing Stablecoin project, said that the move is the result of regulatory concerns around one of the token types that Basis uses.
He explained that as with other algorithmic Stablecoins, the protocol used by Basis implements a “secondary token” that people must purchase to keep the primary token’s stable peg in place. In this case, the secondary token is known as a “bond” token.
The bond tokens are sometimes counted as securities under US law, and the US Securities and Exchange Commission (SEC) may have had some influence in Basis’ decision to shut down.
Stablecoins
Stablecoins in various forms have grown in popularity throughout 2018, and some major fiat-backed coins have been under the spotlight in recent months.
Crypto exchanges Huobi and OKEx both added Stablecoins in October. USD Coin, True USD, Paxos and the Gemini dollar were the additions to the platforms.
Research company Diar has released an analysis that claims that the adoption of Stablecoins is increasing due to a greater number of on-chain transactions. Within a three-month period, the four major Stablecoins named above have broken the $5bn mark in on-chain transactions, according to the report.
What this means for CFDs
For CFD traders who use cryptocurrencies as underlying assets on forex markets, these new developments probably will not have much of an immediate effect. However, the factors involved, namely possible SEC involvement, reimbursement of investors and continued cyberattacks on one of the most established digital coins are all points of interest well worth keeping an eye on, especially for those traders using a news strategy approach.