SEC crackdown on staking has uncertain implications for DeFi: Finance Redefined

Editor February 17, 2023

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#SEC #crackdown #staking #uncertain #implications #DeFi #Finance #Redefined Welcome to InNewCL, here is the new story we have for you today:

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Welcome to Finance Redefined, your weekly dose of key decentralized finance (DeFi) insights – a newsletter to bring you key developments over the past week.

The United States Securities and Exchange Commission (SEC) crackdown on crypto staking services could lead to uncertain consequences for the DeFi ecosystem.

Cyber criminals used various methods to siphon off funds through hacks and exploits in 2022, amounting to over $2.8 billion in losses. In the second week of February, the Platypus protocol was exploited, resulting in $8.5 million in losses. In another exploit-related update, the hacker behind Mango Markets wants to have controversial funds paid out as a bug bounty.

The Financial Stability Board (FSB) stated that despite providing many novel services, DeFi is not significantly different from traditional finance in its features,

The DeFi market experienced a fresh upswing thanks to a price rally in Bitcoin (BTC) and other altcoins. The recent price rally helped the DeFi market regain its $50 billion total locked value.

SEC crackdown on crypto staking has uncertain implications for DeFi: Lido Finance

According to the head of business development at Lido DAO, a US Securities and Exchange Commission crackdown on crypto staking could have unintended consequences for decentralized finance.

Jacob Blish told Bloomberg in a Feb. 13 report that the greatest risk would be if the SEC eventually concluded that no US citizen could interact with crypto staking services, including logs.

DeFi Exploits, Access Control Hacks Will Cost Crypto Investors Billions in 2022: Report

Cyber criminals used a variety of novel methods to perform hacks and exploits in 2022, stealing over $2.8 billion worth of cryptocurrencies.

According to a report by CoinGecko using data from DeFiYield’s REKT database, hackers used various methods to steal crypto in 2022. These methods include bypassing verification processes, market manipulation, crowd looting, and smart contract and bridge exploits.

BIS-funded regulator to study DeFi entry points like stablecoins

The Financial Stability Board — the financial regulator funded by the Bank for International Settlements — drives international regulations for decentralized finance.

On Feb. 16, the FSB released a report on DeFi’s financial stability risks, highlighting DeFi’s key vulnerabilities, transmission channels, and evolution. Despite providing many “novel” services, DeFi “does not differ significantly” from traditional finance (TradFi) in its features, the agency said in the report. The FSB argued that by attempting to replicate some parts of TradFi, DeFi increases potential vulnerabilities due to its use of novel technologies, high levels of ecosystem interconnections, and lack of regulation or compliance.

DeFi Protocol Platypus Suffers $8.5M Flash Loan Attack, Suspect Identified

A potential suspect has been identified in the $8.5 million attack on the Platypus decentralized finance protocol.

Blockchain security firm CertiK first reported the flash loan attack on the Avalanche-based stable swap platform via a tweet on Feb. 16, along with the alleged attacker’s contract address.

Mango Markets exploit attempts to keep disputed funds paid as a “bug bounty”.

Alleged exploiter of decentralized finance protocol Mango Markets, Avraham Eisenberg, is trying to keep his stake in crypto he gained from his so-called “highly profitable trading strategy.”

On February 15, Eisenberg’s attorneys filed a motion in a New York district court challenging a lawsuit brought by Mango seeking $47 million in damages plus interest from the date of Eisenberg’s October 2022 attack, which withdrew approximately $117 million from the record.

Overview of the DeFi market

Analytical data shows that the total market value of DeFi reached $50 billion in the past week. Data from Cointelegraph Markets Pro and TradingView shows that DeFi’s top 100 tokens by market cap had a bullish week, with most tokens trading in the green with double-digit gains.

Thank you for reading our roundup of this week’s most influential DeFi developments. Join us next Friday for more stories, insights and information in this dynamically evolving space.