The most
shocking news of the week is the Binance blockchain bridge hack of at least
$100 million. The Binance blockchain, also known as a BNB Chain, suspended
transactions and fund transfers after discovering the vulnerability. This vulnerability
is of particular interest as even after the discovery of malicious activity, security
systems considered such actions as valid for three more hours. The hacker forged
the low-level proof messages, allowing to mint new BNB tokens. Such an activity
was considered by the security system as actions carried out by large coin
holders. The unknown hacker was empting the bridge but for some unknown reason
he or she did not convert minted stablecoins. The BNB chain team said the
attacker has initially withdrawn 2 million BNB stablecoins worth $568 million
but managed to transfer $110 million before transactions were suspended.
Binance
chief executive Changpeng Zhao said client funds were unaffected since stolen
tokens were not taken from preexisting wallets. “The issue is contained now.
Your funds are safe. We apologize for the inconvenience and will provide
further updates accordingly,” said Zhao. However, a Venus landing protocol fell
victim to the hack as the attacker deposited 900,000 stolen BNB tokens and
borrowed $147.5 in stablecoins. So, the Venus project has now stolen tokens as
a provision. Binance may cover this bad debt by transferring the respected
amount of BNB to Venus, while Venus may sell these tokens to replenish
stablecoin deposits. Thus, placing pressure on BNB tokens may be sensible.
MTGox
lenders that suffered from the exchange bankruptcy in 2014 have finally been
given an option to get their stolen funds. They could provide their account
details and choose the payment option before January 10, 2023. Around 150,000
Bitcoins were blocked on the wallets associated with the MtGox. Crypto
investors are closely monitoring MtGox creditors’ efforts as a large sell-off
of released Bitcoins would badly affect coin prices. But creditors are unlikely
to suffer badly during the conversion of frozen Bitcoins, so a vast sell-off is
unlikely to happen.
The Cryptomarket
continues to edge lower after the European Central bank (ECB) confirmed its
fears over sustainable high inflation, and expressed willingness to bring
prices under control at no matter the cost, including economic downturn.
However, ECB’s efforts alone could not be enough to tame inflation amid many
political risks.
Rising
interest rates in the Eurozone would certainly lead to a debt crisis as many
countries of the European south are heavily indebted and are suffering from high
borrowing costs already. The ECB has to intervene in the debt market as the weakening
Euro is largely contributing to inflation. But, on the other hand supporting
the Euro requires higher interest rates. Anyway, this is not a friendly
environment for risky assets, including cryptos.
Bitcoin
prices continue to hover around $19,000. There are no reasons for digital asset
prices to rise. So, a previous first downside target for Bitcoin at $18,100 is
intact. Overall, prices may plunge to $10,000 per coin during the current
market correction.