SBF Arrest

Authorities arrested Sam Bankman-Fried, the co-founder and former CEO of the collapsed cryptocurrency exchange FTX, in the Bahamas on Monday, Dec. 13. The Bahamian authorities said the US is likely to formally request extradition. Bankman-Fried faces a litany of charges brought by three separate US government bodies—the Department of Justice, the Securities and Exchange Commission, and the Commodity Futures Trading Commission.

Bankman-Fried, or SBF as he is sometimes known, reportedly funneled customer deposits to his private hedge fund, Alameda Research, to place risky bets on faltering crypto companies. FTX halted customer withdrawals last month and sought bankruptcy protection.

The SEC brought two counts of securities fraud

The SEC was the first to announce charges (pdf) against Bankman-Fried on Tuesday, Dec. 14. The SEC charged the former FTX chief with two counts of civil securities fraud. The government accused Bankman-Fried of violating the antifraud provisions of the Securities Exchange Acts of 1933 and 1934. “We allege that Sam Bankman-Fried built a house of cards on a foundation of deception while telling investors that it was one of the safest buildings in crypto,” SEC Chairman Gary Gensler wrote in a statement.

If found liable, Bankman-Fried would likely be barred from serving as an officer of a publicly traded company and banned from issuing trading securities outside of personal use. Additionally, he could be liable for civil penalties. The CFTC brought two counts of fraud

The Commodity Futures Trading Commission, the country’s top derivates regulator, charged Bankman-Fried and FTX with two counts of violating the antifraud provisions of the Commodity Exchange Act. The Commission charged Bankman-Fried with one count of fraud and one count of “fraudulent misstatements” to customers. The CFTC has not yet released a statement on the charges.

The Justice department brought 8 criminal charges

US Attorney Damian Williams, the lead prosecutor for the Southern District of New York, brought a litany of criminal charges against Bankman-Fried, including:

Conspiracy to commit wire fraud on customers
Wire fraud on customers
Conspiracy to commit wire fraud on lenders
Wire fraud on lenders
Conspiracy to commit commodities fraud
Conspiracy to commit securities fraud
Conspiracy to commit money laundering
Conspiracy to defraud the United States and violate the campaign finance law

If convicted, Bankman-Fried faces the possibility of decades in prison.

Lodestar Finance Hack - $6.9 million

Arbitrum-based lending platform Lodestar Finance was exploited on Dec. 10, 2022, according to a tweet from the project’s Twitter account on Saturday. Community reports detail that Lodestar lost roughly $6.9 million from the vulnerability. Lodestar Finance Loses $6.9 Million in an Exploit, TVL Drained, LODE Drops by 53%

Another decentralized finance (defi) platform, Lodestar Finance was hacked for $6.9 million in an exploit, a number of reports detail. “[The] protocol was exploited and deposits have been drained,” Lodestar’s official Twitter account said. “We have set all interest rates to 0 so that supply and borrow balances are not moving while we weigh recovery options.”

Lodestar says the hacker “manipulated the exchange rate of the plvGLP contract” and then “supplied plvGLP collateral to Lodestar and borrowed all available liquidity.” This allowed the exploiter to cash out “what they could.” However, a “collateralization ratio mechanism prevented them from fully cashing out the plvGLP,” the team noted on Saturday.

FTX Stored Private Keys Unencrypted

FTX previously stored private keys without encryption, the exchange’s new chief John Ray III said. The new management led by Ray took steps to secure more than $1 billion worth of digital assets.

FTX previously stored private keys to crypto wallets without encryption during Sam Bankman Fried's reign, leaving "hundreds of millions of dollars" vulnerable to theft or other malicious activity.

The revelation was part of the prepared testimony to the U.S. House Financial Services Committee from from new Chief Executive John Ray III, who said he took steps to secure more than $1 billion worth of digital assets.

Private keys are used to access and authorized funds held in crypto wallets, and they must be carefully stored on systems that simultaneously leverage encryption technology. When private keys are stored in an unencrypted fashion, they may have exposed the now-collapsed cryptocurrency exchange to unauthorized transfers, security experts say.

“FTX storing private keys unencrypted would allow any employee with internal systems access, or any external actor who is able to obtain systems access, to move, and/or steal, customer funds relatively trivially,” Nick Neuman, CEO at non-custodial wallet provider Casa, told The Block.

MetaDock Phishing Campaign - $1.4 million stolen

a new phishing campaign that has caused around 1.4M USD loss to users in two weeks. We will discuss the details and how our MetaDock @MetaDockTeam can help mitigate this threat and avoid losses.

CoinTracker Data Leak

On Dec 1st, 2022, CoinTracker discovered a leaked list of emails and referral links of CoinTracker users online. No other personal or financial information was leaked, and there is no additional action you need to take at this point, but we want to share an update on the situation with you.

What happened The breach was part of a larger data compromise that affected one of our service providers, which they have since resolved. Our own database was not compromised at any point.

What information was involved You are receiving this email because your email address was part of the leaked list. While this does not give anyone access to your CoinTracker account, there may be an increased likelihood of phishing email attempts.