In this week’s edition of The Context, Mt. Gox moves the market, CertiK moves some crypto, and Assange moves out
[Trustee in Bitcoin? 🤝]
The trustee of bankrupt Bitcoin exchange Mt. Gox announced that it will distribute roughly $9B to creditors starting next month.
What Journalists Said 🧑💻:
Brady Dale (Axios) explained the backstory: “Once upon a time, Mt. Gox, an exchange based in Japan, was the biggest place in the world to trade bitcoin. It was hit by several security breaches and shut down in 2014.” Japan took custody and has been liquidating it for 10 years. During that time, trustees found more Bitcoin (and BTC’s price exploded).
The announcement coincided with a steep price drop for BTC, wrote Nina Bambysheva (Forbes) as investors worry creditors will sell en masse. But according to analysts, many Mt. Gox holders “‘have already sold their claims in the secondary claims market.’” Plus, capital gains tax will be massive, given that Mt. Gox filed for bankruptcy when BTC was at $451.
PR Perspective 🔎:
This news has been linked to the drop in Bitcoin prices from around $62,000 to where it sits now at about $60,000. Reports like the one from Forbes make this reactionary response look temporary - time will tell if the start of repayments has more than a nominal effect.
[Kraken the Code? 🦾]
The CSO of crypto exchange Kraken accused security research firm CertiK of exploiting a bug to steal millions in crypto, then extorting the exchange for more.
What Journalists Said 🧑💻:
Katherine Ross (Blockworks) explained: A CertiK researcher found an issue, then “shared the bug with two colleagues, and they withdrew roughly $3 million from the Kraken accounts after the first researcher proved the bug by crediting their account with $4.” But according to Kraken CSO Nick Percoco, before revealing themselves as CertiK and returning the funds, the exploiters, “insisted on a meeting between the business development team and Kraken.”
To Kraken’s CSO, this is outside the bounds of a bug bounty and more like “extortion,” noted Tim Craig & Liam Kelly (DL News). “The unusual duration — and whopping $3 million size — of CertiK’s exploit sparked a flurry of questions. Usually whitehat tests of cyberdefences pick off a minimal amount of money simply to demonstrate the vulnerability.” What’s more, CertiK sent a portion through Bitcoin mixer Tornado Cash, which could be a sanctions violation.
CertiK contends that this was all a normal whitehat hacking operation and argued that “the multimillion-dollar sum was necessary to test the limits of the exchange,” wrote Zoltan Vardai (Cointelegraph).
PR Perspective 🔎:
Taking millions of dollars, routing a portion through Tornado Cash, and then holding the sum ransom is certainly a questionable definition of “white-hat hacking”. CertiK’s claims otherwise have attracted plenty of side-eye.
[WikiLeaks Out?👋 ]
The cypherpunk founder of WikiLeaks, Julian Assange, pleaded guilty to one count of breaking US espionage laws and was released from a UK prison for time served.
What Journalists Said 🧑💻:
A founding member of AssangeDAO is taking credit for crypto having “‘bankrolled Assange’s freedom,’” wrote Pedro Solimano (The Defiant). It raised 17,422 ETH ($59.5M), an estimated 11,000+ of which went to his legal defense.
“The history of Wikileaks and crypto has been closely intertwined,” wrote Sam Reynolds (CoinDesk). “When facing a financial blockade, [WikiLeaks] adopted bitcoin for donations, providing vital funding for Wikileaks and simultaneously enhancing BTC's legitimacy and utility.”
It’s true, said Mark Sellman (The Times). “Bitcoin built the WikiLeaks war chest.” The anti-establishment publisher of classified docs raised $244 million in Bitcoin, an anti-establishment currency. “The currency gave the activist a perfect financing tool to resist government control.”
PR Perspective 🔎:
From WikiLeaks to single-issue voters crypto is starting to prove its use as a war chest for niche causes, which isn’t too far-fetched given Bitcoin’s censorship-resistant philosophy.
[Tweet Of The Week]
Credit: @snubbedseason
[DeFi Definitions]
A segment exploring one particular aspect of DeFi. View previous entries here.
This week: ‘White Hat Hack’ by Andrew Wickerson.
White hat hacking, also known as ethical hacking, is a practice where skilled and knowledgeable individuals, referred to as white hat hackers, legally and ethically assess and evaluate the security of computer systems, networks, and software applications. White hat hackers employ their expertise to identify vulnerabilities, weaknesses, and potential threats that could be exploited by malicious attackers.
White hat hacking involves a systematic and controlled approach to testing the security defences of a target system. It typically includes various methodologies, tools, and techniques aimed at uncovering weaknesses in the system's infrastructure, configurations, applications, or protocols. These activities may involve scanning networks, analyzing code, simulating attacks, exploiting vulnerabilities, and attempting to gain unauthorized access to the target system.
The main objectives of white hat hacking are to: identify vulnerabilities, evaluate security controls, verify compliance, enhance security posture & foster a proactive security culture.
It is crucial to note that white hat hackers adhere to strict ethical guidelines, ensuring that their activities do not cause harm, compromise data integrity, or violate any laws or regulations.
Overall, white hat hacking serves as a valuable practice to identify and mitigate security risks, protect sensitive information, and enhance the resilience of computer systems and networks against potential attacks.
The usual disclaimer: This newsletter collates the main themes and headlines of the week in DeFi/crypto/metaverse/Web3/NFT land and tries to provide unbiased context. It's aimed at anyone who wants to keep an eye on the space. It's put together by a team at YAP and doesn't contain any promotion of our clients (if one is mentioned, we'll flag that).
The team: Founder Samantha Yap and consulting editor Jeff Benson, Ewan Brewster, Andrew Wickerson, and Emma Murphy. Your feedback is, as always, welcome. Ping us at thecontext@yapglobal.com. Old newsletters can be found here.
This newsletter is prepared by YAP Global, an international P.R. Consultancy focusing on helping cryptocurrency, Decentralised Finance (DeFi) and brands through impactful storytelling. Find out more about us here.