Japan’s Premier Says the Country is Committed to Fostering Web3

Mixin Network Suspends Services Amid $200 Million HackOn Monday, Mixin Network, a decentralized peer-to-peer network whose project team is based in Hong Kong, officially confirmed a substantial security breach that resulted in the loss of approximately $200 million in crypto assets from its mainnet.Photo by GuerrillaBuzz on UnsplashSeptember 23 hackThis incident, disclosed via an X (formerly Twitter) post, prompted the immediate suspension of all deposit and withdrawal services on Mixin Network until further notice.The project team outlined that the hack occurred on September 23, exposing vulnerabilities that allowed malicious actors to compromise the database of a third-party cloud service provider. Mixin Network has taken action to address the situation, enlisting the expertise of Singapore-headquartered blockchain security investigator SlowMist and the support of Google to conduct a thorough investigation and formulate a recovery plan.At the time of the breach, Mixin Network’s holdings included $94.48 million in Ether, $23.55 million in Dai, and $23.3 million in Bitcoin, as reported in an independent investigation by PeckShield. The total value of assets affected amounted to $141.32 million.Cyvers, an Israeli Web3 security firm, has also been looking into the matter on Monday. In a social media post, the firm stated:”Our internal investigation has uncovered suspicious funding transactions involving @MixinKernel hacker addresses. Two of hacker addresses received 51 $ETH from 0x1795F0eBDa5A836aE63F28CE546E72de069A8bd2 who was interacted with @HuobiGlobal and @binance.”The firm goes on to call on Binance and its CEO Changpeng Zhao (CZ) and Huobi to help identify the wallet address in question.Halting withdrawalsIn response to the security breach, Mixin Network has temporarily halted all deposits and withdrawals on its platform. These services will only resume once the vulnerabilities have been identified and fully resolved. On X, the project stated:”Deposit and withdrawal services on Mixin Network have been temporarily suspended. After discussion and consensus among all nodes, these services will be reopened once the vulnerabilities are confirmed and fixed. During this period, transfers are not affected.”Details regarding the plans to recover the lost assets for affected users have yet to be announced.Despite initial promises that Mixin Network’s Founder, Feng Xiaodong, would address the incident in a public Mandarin live stream on September 25, links to the live stream were not provided on the official social media channels or the website mixin.network.The incident has garnered criticism on the basis of a lack of decentralization. One commentator stated:”Some of those blockchain protocols are so decentralized that when their cloud database is hacked, coins are also gone.”Ongoing hacksThis security breach on Mixin Network is the latest in a series of high-profile crypto-related incidents. Ethereum Co-Founder Vitalik Buterin recently fell victim to a SIM swap attack, which resulted in the compromise of his X (formerly Twitter) account.In a statement, Buterin revealed that the hackers had successfully executed a SIM swap, a type of attack that targets the victim’s mobile phone number to gain unauthorized access to various online accounts, including social media, banking, and cryptocurrency platforms.The repercussions of the Mixin Network hack underscore the ongoing challenges faced by the crypto industry in ensuring the security and protection of digital assets. As investigations continue, affected users await further developments and the eventual resumption of deposit and withdrawal services.

A settlement agreement between failed crypto lender BlockFi and bankrupt Singaporean crypto hedge fund Three Arrows Capital (3AC) has received approval from a U.S. judge. However, the specifics of the settlement remain sealed, citing concerns raised by yet another failed crypto platform, FTX. Dispute resolvedDuring a hearing on Feb. 6, New Jersey Bankruptcy Court Judge Michael Kaplan resolved the dispute, which saw BlockFi claiming $129 million owed by 3AC, while the Singapore-based firm contended that BlockFi owed it $280 million. Judge Kaplan's decision to keep the settlement agreement sealed stemmed from a perspective that unsealing it would be counterintuitive. BlockFi had filed a motion to seal the settlement terms last month. The U.S. Trustee objected to the seal, asserting that the debtors hadn't provided sufficient justification for sealing the agreement.Photo by mk. s on UnsplashSensitive settlement termsBlockFi justified the need for confidentiality, citing the sensitive commercial nature of the terms, which could potentially impact ongoing litigation involving FTX. The approval of the settlement now paves the way for BlockFi to proceed with distributions from the lending estate to its 100,000 creditors, with the firm owing up to $10 billion. Central to the dispute were preferential payments, transactions made just before bankruptcy that could have given the recipient more than they would have received through court proceedings. The resolution of counterclaims between BlockFi and 3AC follows mediation ordered by Judge Kaplan in October, likely culminating from a two-day hearing starting on Jan. 5 aimed at resolving the matter conclusively. This settlement follows another agreement between 3AC and Genesis, settling $1 billion in claims by 3AC. The company filed for bankruptcy in July 2022, attributing the extreme fluctuations in cryptocurrency markets as the reason for its collapse. Projected 46% 3AC creditor recoveryAccording to a December report to creditors by Teneo, it's estimated that 3AC creditors will receive approximately 45.74% of their claims from the bankrupt estate. As of Dec. 18, 2023, 3AC's assets were valued at $1.16 billion, while recognized claims for distribution stood at $2.7 billion. In an ongoing effort to secure 3AC's assets, a British Virgin Islands (BVI) court froze $1 billion in assets belonging to 3AC's founders, amid the liquidation process. This move is part of a broader strategy to seek recoveries from the founders and Kelly Chen, wife of one of the co-founders. 154 claims totaling $3.4 billion were filed against the 3AC estate, with $200 million not admitted for distribution and $322 million rejected or expected to be rejected. Additionally, claims worth $76 million are currently under dispute. BlockFi, along with eight affiliates, filed for Chapter 11 bankruptcy in November 2022. The firm cited significant exposure, including obligations owed to BlockFi by FTX-linked hedge fund Alameda Research, assets on the FTX platform and an undrawn credit line from FTX. 3AC’s collapse in June 2022, followed by FTX's downfall, led to BlockFi's bankruptcy filing in late November 2022. In a separate development, OPNX, a crypto bankruptcy claims platform launched by 3AC co-founders Su Zhu and Kyle Davies, announced its cessation of operations, with plans to shut down by Feb. 14.  

China's highest judicial authorities, the Supreme People's Court and the Supreme People's Procuratorate, have released a judicial interpretation that includes the use of virtual assets to transfer illicit funds as a recognized method of money laundering. This move aims to strengthen the legal basis for investigating and prosecuting cases linked to cryptocurrency and money laundering activities.Photo by Vidar Nordli-Mathisen on UnsplashClarifying the legal status of crypto transactionsThe new judicial interpretation classifies virtual asset trading as a potential channel for money laundering. It specifies that using virtual-asset transactions or financial-asset exchanges to transfer or convert the proceeds of crime falls under the act of “disguising or concealing the source and nature of criminal proceeds and their gains by other means” as outlined in the country’s criminal law. Liu Honglin, founder of the Shanghai-based Man Kun law firm, clarified in a social media post that the interpretation does not equate all cryptocurrency trading with money laundering. According to Liu, the directive is not intended to criminalize the possession or trading of cryptocurrencies domestically but to provide clear legal guidelines for prosecuting specific illegal activities linked to crypto transactions. Impact on crypto trading and enforcementShao Shiwei, a fintech lawyer based in Shanghai, suggested that this interpretation could pose challenges for stablecoin merchants and increase legal risks for those involved in receiving illicit funds through crypto trading. The interpretation is part of broader efforts to regulate the virtual asset space, following the comprehensive ban on crypto trading activities by the People’s Bank of China and other authorities in September 2021. Despite the ban, many investors have continued to find ways to engage in crypto trading, sometimes circumventing capital control measures. For example, in May, Chinese police dismantled an underground bank that utilized the USDT stablecoin for foreign currency exchanges involving over 13.8 billion yuan ($1.9 billion). This incident underscores the ongoing challenges in enforcing existing regulations against the backdrop of innovative methods to bypass legal restrictions.