Market Summary

Bitcoin Price: US$ 30,109.93 (-0.31%)
Ethereum Price: US$ 1,788.81 (+0.28%) 

Appeals court rules Do Kwon, Terraform Labs must heed SEC subpoena served in September

• The United States Court of Appeals for the Second Circuit on Thursday rejected Terraform Labs CEO Do Kwon’s dispute of a subpoena by the Securities and Exchange Commission (SEC). The federal agency was seeking documents and testimony in connection with its investigation of whether Terra used the Mirror Protocol to sell unregistered securities.
• Kwon was served with the subpoena in September 2021 while he was attending a conference in New York City. Kwon claimed in an October filing that the SEC had violated its own rules, the Administrative Procedure Act and other regulations by serving the subpoena in person. He later also disputed the court’s jurisdiction over the case due to Terraform’s lack of contact with the United States. That court rejected those claims in February.
• The appeals court ruled that the subpoena was properly served and that the SEC could serve Terraform as a corporate entity through Kwon. Furthermore, the appeals court found that the district court did have jurisdiction over Terraform Labs and Kwon.
• The SEC began its interaction with Terraform and Kwon in this case in May 2021, according to the petition filed in October. The SEC emailed Kwon seeking his voluntary cooperation in its investigation and, acting on that request, Kwon and his legal representatives spoke to SEC attorneys in July. Terraform’s lawyers were actively negotiating with the SEC at the time the subpoena was served.
• Besides the collapse of the $40 billion Terra ecosystem, Kwon and Terraform have faced charges of tax evasion and market manipulation in South Korea. A local media outlet al tied Terraform with money laundering in a May 30 report. A series of tweets a week earlier also leveled charges of malfeasance against Terraform.

Tether is ‘instrument of freedom’ and ‘Bitcoin onramp,’ says Bitfinex CTO

• On a sun-splashed day in the Swiss Alps, the chief technology officer of Bitfinex and Tether, Paolo Ardoino, shed light on the Plan B Lugano strategy, Tether as an onramp into Bitcoin (BTC) and —crucially — his favorite pizza toppings. 
• Fresh off the plane from Norway, where Ardoino attended an increasingly Bitcoiner-friendly event, the Oslo Freedom Forum, the Italian explained that, in contrast to the WEF,there was no “shilling” in Norway.
• Tether was invited to speak at the Oslo Freedom Forum as the stablecoin is increasingly considered an “instrument of freedom.” Tether has been adopted by the Myanmar government while the Ukrainian government has accepted crypto donations, including Tether, since the onset of the Russia-Ukraine war. 
• “Tether is one of the tools to be used by distressed countries where the national currency is devaluating—where people want an edge against insane inflation.”
• Ardoino cites Turkey and Argentina as examples. The Turkish lira has lost 50% of its purchasing power and crypto, often seen as a hedge against uncertain currencies, is experiencing a second wave of interest. Ardoino also conceded that:
• “Bitcoin is great but they want the price stability, the long-term price stability. […] “Bitcoin is great for many things but it’s not yet understood by many.”

MimbleWimble adds new features for Litecoin, but some exchanges balk

• Litecoin is one of the earliest alternative coins (altcoins) that came to light after Bitcoin (BTC). Created in October 2011, it is now the 20th most valuable cryptocurrency, boasting a market capitalization of over $4 billion, according to CoinMarketCap data.
• The MimbleWimble upgrade was first conceived more than two years ago as part of the Litecoin Improvement Proposal. That was in November 2019, as the network started planning on enhancing anonymity between senders and receivers of a transaction on its network.
• And now, the MWEB is finally out following approval from the majority of nodes. The upgrade was done at Litecoin’s block height of 2,257,920 and came with significant privacy feature changes to the Litecoin network.
• But, there’s more to the MWEB than just the newly-added privacy features for LTC users. The MWEB also brings key improvements to activities on the blockchain. For instance, it helps reduce needless transaction data from the blocks to the barest minimum using its cut-through feature.
• The cut-through feature ensures that long transactions are broken down into a single one. That is, instead of recording each input and output separately, the block would only record one input-output pair, thereby removing excess data.
• Following long years of development and anticipation by its community, Litecoin (LTC) finally activated its MimbleWimble Extension Blocks (MWEB) upgrade on May 19. But, with the blockchain upgrade mainly focused on carrying out private transactions on the network, global regulations could undoubtedly be flouted. 

Tether deploys new USDT token on the Tezos blockchain

• Leading cryptocurrency stablecoin Tether has announced the launch of a new asset, Tether (USDT) tokens, built on the Tezos blockchain, and with the ambition of expanding its digital footprint across the digital payments and decentralized finance (DeFi) sector.
• According to the press release, “USDT on Tezos will power revolutionary applications across payments, DeFi, and more.” In conversation with a Tether representative, greater context was provided as to the intended utility of Tether tokens:
• “Tether tokens are not an investment but a utility for engaging in internet commerce, combating volatility, and providing a safe haven for remittances. Tether tokens can be securely stored, sent, and received across the blockchain and are redeemable for the underlying asset, subject to the terms of service and fee schedule.”
• The representative continued on to reveal the names of the 12 blockchains, including Tezos, on which the asset will become accessible.

Lithuania aims to tighten crypto regulation and ban anonymous accounts

• In its efforts to fight money laundering risks and the possible schemes of Russian elites circumventing financial sanctions, the 2.8-million nation of Lithuania is planning to tighten its scrutiny over crypto. 
• As the local Ministry of Finance announced on Wednesday, various ministries of the Lithuanian government approved legal amendments to Anti-Money Laundering (AML) and countering the financing of terrorism in the crypto sector. The amendments to the current law — should they later be approved by the Seimas, Lithuania’s legislature — would stiffen the guidelines for user identification and prohibit anonymous accounts.
• The new regulations would also tighten up demands for exchange operators — from Jan. 1, 2023, they will be obliged to register as a corporate body with nominal capital amounting to no less than 125,000 euros. The senior management of such companies would have to be permanent residents of Lithuania.
• The announcement justifies the tightened regulations with the accelerating growth of the crypto industry and specific geopolitical risks:
• “More nuanced regulation of the suppliers of crypto-services is also important considering the international regulatory tendencies and the geopolitical situation in the region when many Western countries impose financial and other sanctions on Russian Federation and Belarus.”

No more power surge: Community celebrates as Ropsten testnet merge goes live

• The Ethereum blockchain recently completed a step toward the long-awaited upgrade that will improve the platform by switching to a proof-of-stake (PoS) consensus. The Ropsten testnet successfully transitioned to PoS in what is dubbed a “dress rehearsal” for the Ethereum blockchain. 
• Since the network uses the proof-of-work (PoW) mining model, which consumes a lot of electricity, the Ethereum platform is often criticized along with Bitcoin (BTC) over its environmental impact. With the shift to PoS, the energy issues will be addressed and the platform will become more scalable, being able to process more transactions per second.
• After Ropsten’s transition, testnets Goerli and Sepolia are scheduled to transition to PoS prior to the mainnet transition, according to the Ethereum Foundation. Testnets Rinkeby and Kovan can be maintained by the community,  but they will not be monitored by the client developers anymore.
• Community members rejoiced at the milestone. Musician Jonathan Mann celebrated the merge by rocking out a Ropsten-merge-themed song, singing lyrics like “no more power surge” and “ETH to the moon.”

Legal troubles mount for Terraform Labs as Seoul police investigate

• Terraform Labs, the parent company behind the collapsed Terra ecosystem, is currently under multiple investigations from the South Korean authorities.
• The latest investigation revolves around the alleged embezzlement of Bitcoin (BTC) from the company’s treasury. According to a report published in a local daily, the Seoul Metropolitan Police Agency received an intelligence tip last month informing them of possible embezzlement of BTC by one of the employees of the firm.
• The police stated that the investigation into the alleged embezzlement of BTC from the company’s treasury had no direct connection with tainted co-founder Do Kwon, and they are investigating individual embezzlement charges at this point.
• Authorities managed to freeze the stolen funds with the help of a crypto exchange until the investigation is complete. However, the amount of the stolen funds hasn’t been disclosed.
• The Luna Foundation Guard (LFG), a fund set up by the company that held over $3 billion in Bitcoin reserves, became the focus of interest in the aftermath of the collapse. The BTC fund was used to help balance the algorithmic stablecoin TerraUSD Classic (USTC). The firm claimed all its BTC reserves were used in a futile attempt to stabilize USTC.
• In a recent interview with the Financial Times, Terraform Labs co-founder Daniel Shin denied any allegations of malpractice or fraud. He said:
• “There was no intention of deception as we just wanted to innovate the payment settlement system with blockchain technology.”

Attackers loot $5M from Osmosis in LP exploit, $2M returned soon after

• Osmosis, a decentralized exchange (DEX) built on the Cosmos network, was halted just before 3:00 am EST on Wednesday after attackers exploited a liquidity provider (LP) bug to the tune of roughly $5 million.
• The bug was first identified in a Reddit post on the official Cosmos Network page. The user, Straight-Hat3855, brought attention to a “serious problem” with Osmosis (OSMO) that allowed users to arbitrarily grow LPs by 50% simply by adding and removing liquidity. The Reddit post was quickly removed, but not before malicious actors took advantage of the bug, which saw approximately $5 million removed from liquidity pools on the Osmosis exchange.
• Following the exploit and the identification of the LP bug, the Osmosis exchange was halted at a block height of 4,713,064, according to an announcement from Osmosis block explorer Mintscan.
• Explaining how the bug worked in a series of posts in the Osmosis Discord was project moderator RoboMcGobo, who detailed how the flaw allowed attackers to add liquidity to any Osmosis LP and then immediately withdraw it for a 150% return on their initial deposit: “Essentially, the function would give 50% too many LP shares for a join,” RoboMcGobo wrote just after 4:00 pm on Wednesday, adding: “If one should have gotten 10 LP shares, 15 would be achieved out.”
• RoboMcGobo explained that the bug was “exploited intentionally by a small number of users” and “seemingly unintentionally by a few others.” According to a Twitter thread from Osmosis, four attackers were responsible for 95% of the total exploit amount, with two of the attackers voluntarily stepping forward to return stolen funds.

Anchor dev claims he warned Do Kwon over unsustainable 20% interest rate

• Anchor Protocol was originally designed to offer an interest rate of 3.6%, but this was dialed up to 20% just a week before release to attract more investors, a core developer alleged in an interview with Korean media outlet JTBC. 
• “I did not know that this would go out with such a high-interest rate. Set to 20% just a week before the release,” said the employee, referred to only as Mr. B in the Korean report:
• “I thought it was going to collapse from the beginning (I designed it), but it collapsed 100%.”
• Mr. B said that the platform was designed only to offer an interest rate of 3.6%, and this was a key component of keeping the Terra ecosystem stable as it took into account the available funds in Anchor’s war chest.
• Mr. B revealed, however, that a week before launch, the developers found out that the plans had been changed, giving investors access to a very high 20% interest for locking up their TerraUSD Classic (USTC) stablecoins in the Anchor Protocol instead.