Gemini Trust, the cryptocurrency platform run by Tyler and Cameron Winklevoss, said redemptions by customers for its Earn program are being delayed after its partner in the product, Genesis Global, paused withdrawals on its borrowing platform amid a liquidity crunch. From a report: Genesis is one of the main borrowers of Gemini Earn, a product used to generate yields for its customers, according to Gemini Earn's website. Gemini is working with Genesis to allow users to redeem funds as 'quickly as possible.' The delay doesn't impact any other Gemini products and services, the New York-based firm said in a statement.

"The past week has been an incredibly challenging and stressful time for our industry. We are disappointed that the Earn program SLA will not be met, but we are encouraged by Genesis' and its parent company Digital Currency Group's commitment to doing everything in their power to fulfill their obligations to customers under the Earn program," the statement said. Genesis suspended lending withdrawals, as the spectacular collapse of crypto exchange FTX shocked the digital-asset industry. The firm said it has hired advisers to explore all possible options, including new funding, and will deliver a plan for its lending business next week. Genesis' lending business had previously been affected by its exposure to bankrupt crypto hedge fund Three Arrows Capital. Trading and other services at Genesis remain operational.

An anonymous reader quotes an excerpt from an Ars Technica article: In the United States, the lack of regulatory clarity threatens to slow down not just mainstream adoption of new technologies but also innovation in digital payment options, potentially cutting off consumers and businesses nationwide from sought-after conveniences, simply because regulators can't keep up with how digital assets are being used today. "There has to be some clarity that comes out, some standards, some ideas of the dos and the don'ts and some structure around it," said May Zabaneh, PayPal's vice president of product in blockchain, crypto, and digital currencies during a Money 20/20 session focused on how people use crypto to make digital payments. "Otherwise, that mainstream adoption will really be inhibited." According to Zabaneh, digital payment processors need government agencies to ensure much more stability before the companies can confidently "explore the potential" of using digital assets like stablecoins or central bank digital currencies to provide alternative payment options in e-commerce. She said that even though PayPal has a responsibility to continue innovating in digital payments, efforts can become stalled because "there needs to be more clarity around regulation," particularly regulations around consumer protection and the tax implications of using digital assets. These are areas US agencies have only just begun considering, and that's holding innovation back. "In order for things to become mainstream, they have to be easily accessible, easily adoptable," she said.

Zabaneh was not alone in calling for regulatory clarity to drive innovation. Executives from other payment processors like Checkout.com, cryptocurrency exchange platforms like Coinbase, and banks like JPMorgan Chase all repeated the same call in their sessions, warning that US fears over digital assets involved in financial crimes created hard-to-navigate compliance risks for those most invested in driving innovation. The executives said the US is moving so slowly in passing laws and establishing rules that industry leaders will start to conduct business elsewhere. Experts at Money 20/20 said this is already happening. The US wants to be on the leading edge of digital currencies, but tension remains between what President Joe Biden wrote in an executive order this year concerning the country's economic "interest in responsible financial innovation" and the wide-ranging security risks, including those to consumers and businesses, as well as to national security. To keep fintech leaders doing business in the US and participating in what's become a trillion-dollar market, Tufts University cybercrime expert Josephine Wolff told Ars she thinks the country must first prove it can prevent illegal activity and other security risks associated with digital assets. [...]

The US government has struggled to keep up with the way digital assets are used but seems determined to crack down on illegal uses while simultaneously pushing aggressively forward with government-backed digital assets, like a central bank digital currency. Wolff said that because many in the government don't know how digital currencies are used, both legally and illegally, legislators are unsure how to regulate new digital assets. Meanwhile, digital payment technologies continue to evolve. New uses emerge, and policymakers are continuing to look at the US's existing financial regulatory framework while asking basic questions. Is this digital asset considered a form of currency like a security (such as bitcoins), or is it being traded like a commodity (such as non-fungible tokens)? Or is some new legislation, such as the Stablecoin Transparency Act, needed to regulate emerging digital assets? Until mainstream adoption of technologies makes evident the most common uses of digital assets, regulators will continue struggling to make clear laws defining how digital assets can be used. Wolff told Ars it's a difficult policy agenda to navigate because "each of these new digital assets we see creates new opportunities for crime." "The United States is trying to balance two somewhat at-odds priorities: We want this technology to be sufficiently regulated and traceable so that we can conduct law enforcement investigations and hold criminals accountable," Wolff told Ars. "But we also want it to be flexible enough that people can invent new things and experiment with new models and innovate. So I understand why companies are saying, 'Well, look, we could innovate more if you told us exactly what's allowed.'"

"Regulation of the financial services industry has a bad name, and rightfully so," said Consumer Financial Protection Bureau's director, Rohit Chopra, but CFPB was motivated to activate a dormant authority in the Consumer Financial Protection Act to ensure the US benefits from "a more decentralized and neutral consumer financial market structure" that "has the potential to reshape how companies compete in the sphere."

"That could mean the most innovative companies capture the largest parts of the US payments market," reports Ars, citing Wolff. "And as the market favors technologies and consumers adopt trusted digital assets, that could help regulators who still aren't sure how to craft policy for digital assets."

Gizmodo points out that the United Kingdom's next prime minister, Rishi Sunak, "is a certified Crypto Bro who once requested that the Royal Mint issue an NFT." From the report: During his tenure as finance minister under former PM Boris Johnson, Sunak was in charge of advancing a number of crypto-related initiatives that sought to normalize digital currencies and integrate them into the British economy. By all accounts, he is the first crypto enthusiast to serve in the UK's top office. He's also the first person of color and the youngest PM -- 42 years old -- that Britain's had in 200 years. To be fair, Sunak's efforts at crypto promotion have at least trended towards regulation and taxation as opposed to total laissez faire deregulated madness -- though those efforts could, ultimately, simply normalize a phenomenon that critics say is redundant at best and a privacy hazard at worst. In April, Sunak announced a series of programs to turn the UK into what he called a "global cryptoasset technology hub." Among the initiatives announced at the time was a plan to integrate stablecoins into the national payment system, thus "paving their way for use in the UK as a recognized form of payment." Considered to be the least volatile form of cryptocurrency, stablecoins have seen more interest by governments than other forms of crypto -- though projects like Terra and Tether have shown the potential danger in putting too much faith in the assets' stability.

Sunak's plans also suggested creating additional regulations that would've helped further incorporate crypto into the UK's economic and legal framework, thus spurring greater investment in the space. "The measures we've outlined today will help to ensure firms can invest, innovate and scale up in this country," Sunak wrote in a press release published at the time. Another ambitious initiative pushed by Sunak was the Financial Services and Markets Bill, a piece of legislation that would give local governments in Britain broad discretion to regulate cryptocurrencies, thus further assimilating them into the nation's economy. The bill, which has not yet passed, is currently being looked at by Parliament.

At the same time, Sunak also recently backed a study to look at the potential benefits of creating a central bank digital currency (CBDC), or "Britcoin" as he dubbed it. Proponents of CBDCs argue that they could have benefits for spenders, making payments "faster, cheaper, and more secure," as one op-ed puts it. However, critics argue that they are unnecessary and could ultimately spell huge privacy troubles, given the trackable nature of crypto and digital currencies. Despite his crypto track record, analysts have suggested that is is unlikely Sunak will have time to focus much on any web3-related initiatives in the near term. Given Britain's current economic dumpster fire, any work on "Britcoin" might have to take a backseat.

"Hackers are on a roll in 2022, stealing over $3 billion in cryptocurrency," writes Slashdot reader quonset (citing figures from blockchain analytics firm Chainalysis). "And the year isn't over yet.

"For comparison, in 2021, only $2.1 billion in crypto currency was stolen during the entire year."

CBS News reports: A big chunk of that $3 billion, around $718 million, was taken this month in 11 different hacks, Chainalysis said in a series of tweets posted Wednesday. ctober is now the biggest month in the biggest year ever for hacking activity, with more than half the month still to go," the company tweeted.

In past years, hackers focused their efforts on attacking crypto exchanges, but those companies have since strengthened their security, Chainalysis said. These days, cybercriminals are targeting "cross-chain bridges," which allow investors to transfer digital assets and data among different blockchains.... Cross-chain bridges remain a major target for hackers, with three bridges breached this month and nearly $600 million stolen, accounting for 82% of losses this month and 64% of losses all year," Chainalysis said....

All told, Chainalysis said there have been 125 hacks so far this year.
"Cryptocurrency is not federally regulated or FDIC insured like a bank account," the article concludes, "which means if an account gets hacked, the government will not work to restore a customer's funds."

Coinbase is being sued by Veritaseum Capital LLC, which alleges that the crypto exchange has infringed on a patent awarded to Veritaseum founder Reggie Middleton. CoinDesk reports: According to Veritaseum, Coinbase has used the patent for some of its blockchain infrastructure, and the company is seeking at least $350 million in damages. Middleton and Veritaseum in 2019 settled a case with the U.S. Securities and Exchange Commission (SEC), paying nearly $9.5 million over charges surrounding the initial coin offering (ICO) for the company's VERI token/ "Veritaseum's website says it 'builds blockchain-based, peer-to-peer capital markets as software on a global scale,'" adds Reuters, which first reported the lawsuit. "Thursday's lawsuit accuses Coinbase features including its website, mobile app and Coinbase Cloud, Pay, and Wallet services of infringing a patent covering a secure method for processing digital-currency transactions."

"Veritaseum Capital's attorney Carl Brundidge of Brundidge Stanger said Friday that Coinbase was 'uncooperative' when they tried to settle out of court."

Jamie Dimon didn't mince words when a US lawmaker mentioned the executive's history of criticizing cryptocurrencies. From a report: "I'm a major skeptic on crypto tokens, which you call currency, like Bitcoin," the JPMorgan Chase chief executive officer said in congressional testimony Wednesday. "They are decentralized Ponzi schemes." Stablecoins -- digital assets tied to the value of the US dollar or other currencies -- wouldn't be problematic with the proper regulation, and JPMorgan is active in blockchain, Dimon said. The comments represent the latest criticism leveled against digital currencies by Dimon, who once called Bitcoin "a fraud" before eventually saying he regretted the comments.

Bitcoin represents 40% of the $1 trillion outstanding crypto assets, according to Forbes' director of data and analytics. "An estimated 46 million adult Americans already own it according to New York Digital Investment Group..."

"But can you trust what your crypto exchange or e-brokerage reports about trading in the most important digital currency?" One of the most common criticisms of bitcoin is pervasive wash trading (a form of fake volume) and poor surveillance across exchanges. The U.S. Commodity Futures Trading Commission defines wash trading as "entering into, or purporting to enter into, transactions to give the appearance that purchases and sales have been made, without incurring market risk or changing the trader's market position." The reason why some traders engage in wash trading is to inflate the trading volume of an asset to give the appearance of rising popularity. In some cases trading bots execute these wash trades in tokens, increasing volume, while at the same time insiders reinforce the activity with bullish remarks, driving up the price in what is effectively a pump and dump scheme. Wash trading also benefits exchanges because it allows them to appear to have more volume than they actually do, potentially encouraging more legitimate trading.

There is no universally accepted method of calculating bitcoin daily volume, even among the industry's most reputable research firms. For instance, as of this writing, CoinMarketCap puts the latest 24-hour trading of bitcoin at $32 billion, CoinGecko at $27 billion, Nomics at $57 billion and Messari at $5 billion....

As part of Forbes research into the crypto ecosystem using 2021 data, we ranked the 60 best exchanges in March. More recently we conducted a deeper-dive into the bitcoin trading markets.... Our study evaluated 157 crypto exchanges across the world. Here are our main findings:


- More than half of all reported trading volume is likely to be fake or non-economic. Forbes estimates the global daily bitcoin volume for the industry was $128 billion on June 14. That is 51% less than the $262 billion one would get by taking the sum of self-reported volume from multiple sources....

- The biggest problem areas regarding fake volume are firms that tout big volume but operate with little or no regulatory oversight that would make their figures more credible, notably Binance, MEXC Global and Bybit. Altogether, the lesser regulated exchanges in our study account for approximately $89 billion of the true volume (they claim $217 billion).
Forbes adds that their report "builds on top of the important work done by other digital asset researchers such as Bitwise, which estimated in a March 2019 white paper that 95% of CoinMarketCap's bitcoin trading volume was fake and/or non-economic."

Their article includes some other interesting findings, including an observation that Tether "continues to be a dominant player in the crypto trading economy, especially when it comes to trades against bitcoin. Its current market capitalization is $68 billion, despite questions about its reserves."

Thanks to Slashdot reader rrconan for sharing the article...

Over the past year, crypto companies like FTX, Coinbase and Crypto.com have shelled out tens of millions of dollars to attract new customers. "Fortune favors the brave," Matt Damon famously said in a Crypto.com TV spot as he tried to induce Americans to open their digital wallets. Now a core metric of how successful they were has been returned, and experts say it's an eye-opening one: not successful at all. From a report: The number of people who invested in crypto has not expanded since last September before the push began, according to a new study led by Pew Research Center. The results, released Tuesday, build off an initial survey in September. Back then, Pew researchers asked 10,371 Americans if they have "ever invested in, traded, or used a cryptocurrency." Some 16 percent said they had. Last month, the nonprofit asked another sample group -- slightly smaller, at 6,034 Americans -- the same question. The number hadn't grown, with the same 16 percent saying they had at some point invested or traded in the alternate currency.

The results suggest that, despite numerous splashy campaigns by crypto interests, the great majority of Americans remain immune to their sales pitches. "It's pretty striking that for all the spectacular commotion around crypto in the last year, the number of people who invest or trade in crypto didn't budge," said Lee Rainie, Pew Research Center's director of internet and technology research, who spearheaded the study. "Attempts to bring in new buyers to the market didn't seem to move the needle at all."

An anonymous reader quotes a report from Gizmodo: Blockdata, a crypto research firm, released an updated blog post Tuesday showing who's been the most active investors in the crypto scene from September 2021 through June 2022. Researchers noted big tech firms including the likes of Tencent, Microsoft, PayPal, Samsung, and Alphabet (Google) are putting big money into crypto companies and startups. Some of these companies, like PayPal, have been a longtime and verbal supporter of blockchain tech (thanks in part to its co-founder Peter Thiel). Still others, like Google, have been much more subdued. [...] What Google chooses to invest in may help answer where the company wants to see blockchain tech go, or what it may want to incorporate into its own tech infrastructure. In the report, Alphabet, the parent company of Google, sat at the top of the pile showing it had put over $1.5 billion into crypto companies over four rounds of investment. Some of the company's overall funds went to the likes of Dapper Labs, the company that was behind the NBA's Top Shot and UFC Strike licensed video NFTs. The company was also behind CryptoKitties, a NFT-based game that's seen the price of its products tank.

What makes this more complicated is there are actually two of Google's investing arms involved in this fundraising. GV (Google's investing arm once called Google Ventures) helped fund Dapper Labs and another crypto infrastructure company Voltage, which got $6 million in total investments at the start of 2022. CapitalG, the company's independent private equity firm, had a hand in the $550 million raised by Fireblock, a crypto custody firm, as well as investments with digital currency venture capital company Digital Currency Group Of course, this was all before the most recent crypto crash, which has seen a multitude of once-strong crypto companies layoff thousands of workers. Though it's not like this is the first time we've heard about Google's parent company Alphabet with their big financial interest in blockchain companies. They've been investing in this tech since 2016, according to the Blockdata report. Previous reports showed they had put money into crypto companies like Ripple (which just like many small altcoins since the recent crypto crash, isn't doing too hot). Google had previously made much wider investments across a wider variety of blockchain-based companies. That was then, and this is now. Blockdata analysts said this limited slate of investments is an attempt to make concentrated bets on a small set of companies, but even with executive's stated hopes for blockchain tech, it's hard to see all investments truly panning out.

Though it was fourth in the size of its contributions, Samsung was leading the pack in the number -- and eye-twitching variety -- of crypto ventures it was making it rain on over an incredible 13 rounds of investing. A total of $979.26 million went to the likes of Dank Bank, a NFT platform for trying to monetize "memes and other iconic moments in internet history." They put more of their funds behind Yuga Labs, the creators of the Bored Ape Yacht Club NFTS. They put down their investment in March, but in April, users on the group's official Instagram and Discord were scammed of nearly $13.7 million worth of NFTs. Still, founders said many of BAYC's rather strange initiatives like a Bored Ape "Metaverse" are still moving full steam ahead. They also put money into Sky Mavis, the makers of the crypto-based "play-to-earn" game Axie Infinity. That investment probably didn't do them any wonders considering its token bridge suffered one of the biggest hacks in crypto history earlier this year. The game has struggled to recover after that blow, though players had already been leaving the platform before hackers snatched away bridge funds. "Blockdata's research shows that 81 of the top 100 public companies have made some kind of past or present crypto investment," adds Gizmodo. "2021 showed the absolute highest amount of overall investment in blockchain companies. Funding totals have increased by a factor of 14 from 2019 to last year."

Tornado Cash, a popular cryptocurrency service that allows users to mask their transactions, was sanctioned by the US Treasury Department after North North Korean hackers relied on it to launder illicit gains, officials announced on Monday. The sanctions bar American companies and individuals from doing business with it. From a report: The platform facilitates anonymous transactions by mixing funds from different sources before transmitting them to the ultimate beneficiary. Tornado Cash has been used to launder more than $7 billion in virtual currency, a senior Treasury official said in a press conference. North Korea's Lazarus Group has laundered about $450 million through the service, according to the official. It was also used to launder more than $100 million in the June hack of the Harmony blockchain's Horizon Bridge, which allows crypto trading between other blockchains, the official said.

Described by administration officials as the go-to mixer for cyber criminals, Tornado Cash became the second such service targeted by the Treasury Department. In May, the agency issued sanctions against Blender.io, which was also allegedly used by North Korean hackers to launder illicit proceeds from hacking. Following the sanctions, it appears Blender.io is no longer operating, the official said. The action against Tornado is a "watershed" moment and the Treasury's "most significant action in the crypto space to date," said Ari Redbord, head of legal and government affairs at TRM Labs, a blockchain analysis firm used by governments and financial institutions to fight fraud, money laundering and financial crime, in an email. "This designation sends a message that the US government will not tolerate mixing services that cannot stop illicit actors from using their services."

"There's a new cryptocurrency in town," quips SFGate. "But the only crash you'll experience with this one is from sugar." Inspired by the recent headlines and discussion around cryptocurrency, Hostess decided to capitalize by debuting their own edible investment: Enter $TWINKcoin, the latest limited-edition Twinkie iteration to hit shelves.

"We saw an opportunity to release a new take on fan-favorite Hostess Twinkies, to create the best investment consumers can make to satisfy their snacking needs," a Hostess representative told Decrypt. "With more than 12,000 cryptocurrencies already in existence, $TWINKcoin is the first coin-shaped golden sponge cake of its kind. And, what's more, it's a currency with a stable value — it's always delicious!"

Compositionally, $TWINKcoins are indistinguishable from original Twinkies, with the same dense cake and synthetic cream filling; but instead of the classic cylindrical mold, the pecuniary pastries are formed into coin-shaped discs.

jd writes: NIST has announced winners of its post-quantum cryptography battle of the giants.

CRYSTALS-Kyber has been chosen for standard encryption, CRYSTALS-Dilithium, Falcon, and SPHINCS+ were chosen for digital signatures. Falcon is recommended by NIST as a backup for Dilithium where shorter keys are needed, and SPHINCS+ uses a different mathematical technique than all of the other submissions, so if it is found that there's a flaw in the maths for the others, then there's something to fall back on.

There is still a final round for public key encryption algorithms. The remaining candidates are BIKE, Classic McEliece, HQC, and SIKE.

The mailing list members probably wish that they could use Slashdot's moderation system about now, as some of the discussions have been extremely heated. This was especially true for the signature system Rainbow, which is used by the ABC Mint crypto-currency, which was rejected after what was claimed to be a catastrophic flaw was reported, with allegations that it could be broken over a weekend on a laptop, followed by counter-allegations that many of the other algorithms had significant flaws in them also. (This is likely why SPHINCS+ is a backup.)

Another area that was hotly debated was CPU design flaws, particularly HertzBleed, which got the well-known crypto maestro Bernstein rather annoyed. As SIKE is a final round candidate, NIST seem to be satisfied with his explanation for why CPU design flaws should not be considered. It is to be seen how this debate progresses.

What exactly happened after El Salvador president Nayib Bukele made Bitcoin a legal tender for the country? "As Bitcoin has dropped more than 50 percent of its value this year, there have been suggestions that El Salvador's investment has pushed the country to the brink of bankruptcy," writes a Salvadoran political/human rights journalist in the New York Times.

"However, implying that the country's risk of default derives from the crypto-enthusiasm is wrong: The economic turmoil preceded and is bigger than that." The article notes that prior to their move into Bitcoin, "the Salvadoran economy was already stretched. Total debt amounted to about 90 percent of G.D.P., a large chunk of which had been accumulated by prior administrations or spurred by pandemic-related expenses."

But what are we missing with this focus on Bitcoin? Mr. Bukele has weaponized Bitcoin to whitewash his government's growing authoritarianism on the world stage. By spreading his propaganda, Bitcoin believers are promoting a product — and lining their pockets — at the expense of our rights and livelihoods.... Over the past three months, the government has used a state of emergency to imprison almost 40,000 people, often without defense. Mr. Bukele has begun to crack down on press freedom, through a gag law that prohibits reproducing messages from gangs and his government hasn't investigated the illegal use of Pegasus spyware to monitor dozens of journalists who cover El Salvador, including me, from independent news outlets between 2020 and 2021. Reporters have already fled the country, fearing reprisal for doing their jobs....

It's pretty obvious to anyone who visits any place in El Salvador other than its beaches that Mr. Bukele is not building a techno-utopia; he's building a run-of-the-mill authoritarian state in a tech disguise. Bitcoiners would do well to remember that when they cheer for Mr. Bukele, they're not ushering in the technology of the future; they're enabling a regime that's violating the human rights of its citizens. After all, the economic freedom Bitcoin promises is worth nothing to Salvadorans if it's the only freedom we can hope to have.
But even ignoring human rights issues — the Bitcoin experiment remains unpopular in El Salvador: Remittances account for more than 20 percent of El Salvador's G.D.P., because of a large diaspora mainly based in the United States. But, according to the Central Bank of El Salvador, only 1.5 percent of remittances went through digital wallets in April, which shows Salvadorans haven't gotten onboard with Bitcoin despite the promise of needed savings. And Mr. Bukele's plan for selling his Bitcoin bonds has stalled.

Just one year into Mr. Bukele's Bitcoin experiment, average Salvadorans can tell that Bitcoin isn't working for them. In May, a national poll showed that 71 percent of Salvadorans said they didn't see any benefit from the law for their family economy. Another found that about two of every 10 Salvadorans support the decision to adopt Bitcoin. Those Salvadorans haven't adopted the currency. A paper published in April by the National Bureau of Economic Research concludes that "despite the legal tender status of Bitcoin and the large incentives implemented by the government, the cryptocurrency is largely not an accepted medium of exchange in El Salvador...." A December national poll showed that only about 11 percent of respondents believed the main beneficiaries of the Bitcoin law are the people, while about 80 percent believed it's either the rich, foreign investors, banks, businesspeople or the government.

Crypto's structural flaws make it an unsuitable basis for a monetary system, according to the Bank for International settlements (BIS). Instead, monetary systems could be built around central bank digital currencies (CBDCs), which are digital representations of central bank money. CoinDesk reports: The BIS, an association of the world's major central banks, dedicates a 42-page chapter in its "2022 Annual Economic Report" to laying out a blueprint for the future of the global monetary system. In that vision, there is room for only some of crypto's underlying technical features, like programmability and tokenization, not for cryptocurrencies themselves. "Our broad conclusion is captured in the motto, "Anything that crypto can do, CBDCs can do better,'" said Hyun Song Shin, an economic adviser and head of research at the BIS, during a press briefing on Monday.

The chapter, which will be published Tuesday ahead of the full report, identifies a number of limitations of crypto, including the lack of a stable nominal anchor. In monetary policy that is a variable -- such as a currency peg -- that can be used to control price levels. Stablecoins, cryptocurrencies pegged to the value of assets like sovereign currencies, are the crypto world's search for such an anchor, Shin said. Stablecoins attempt to "piggyback on the stability of real money issued by central banks."

Shin said the recent crash of terraUSD, a dollar stablecoin with a market capitalization of $18 billion in early May that rapidly lost its peg, illustrated how stablecoins, despite their name, are unstable and don't make good units of account. Unlike other leading stablecoins, such as USDC and USDT, which are reportedly backed by dollar-denominated reserves, terraUSD is an algorithmic stablecoin backed by another cryptocurrency (in this case LUNA) with an algorithm in place to regulate supply and demand of the stablecoin and maintain its peg. "The second important finding is that crypto and stablecoins fail to achieve the full network effects that we normally expect of money," Shin said. Money, Shin said, is the perfect example of a virtuous circle of greater use and greater acceptance. Crypto's decentralized nature, on the other hand, achieves exactly the opposite, namely fragmentation.

A new report finds that blockchain systems might not be working as well as many crypto enthusiasts assume. From a report: The report was commissioned by the Defense Advanced Research Projects Agency, or DARPA, and the work was done by the software security research company Trail of Bits. Trail of Bits CEO Dan Guido says blockchain -- the public ledgers that keep track of cryptocurrencies, which are replicated on computers around the world -- isn't the egalitarian tech its advocates claim. "It's been taken for granted that the blockchain is immutable and decentralized, because the community says so," says Guido. But in practice, he says, these networks have evolved in ways that concentrate power in the hands of certain people or companies, including the large pools of "miners" whose computers earn virtual currency by maintaining the blockchains.

Guido's team calls these potential situations "unintended centralities" -- situations in which someone gains leverage over the decentralized system, creating opportunities for tampering with the record of who owns what. Another example in the report of this kind of concentration is the fact that 60% of Bitcoin traffic is handled by just three internet service providers. "Let's say somebody with great top-down control of the internet in their country starts to interfere with that network," Guido says. By slowing down or stopping legitimate blockchain traffic, an attacker could become the "majority" voice in the consensus of what's written to a blockchain at that moment. "They can rewrite history. They can censor transactions. They can make it so that you can't spend your Bitcoin," says Guido. "It's definitely something people would want to do if they want to 'grief' the network."

CNN reports: "The price of bitcoin breached $19,000," reports CNN, "and ethereum fell below $1,000 Saturday morning, extending the brutal crypto bear market to new lows." Bitcoin plunged nearly 10% in less than 24 hours, adding to a series of sustained losses over the last several months. It now sits below $20,000 for the first time since November 2020, down more than 70% from an all-time high of $68,000 per coin in November 2021. Bitcoin has lost $900 billion in value since that peak. Ether is also experiencing a so-called crypto winter. The second-largest digital token plummeted 10% on Saturday to $975, its lowest level since January 2021. The coin has lost 80% of its value from its record high last November.... The crypto world is reeling from the $60 billion collapse last month of two other major tokens, Terra-Luna and Celsius. Those losses have increased doubts about the general stability of digital currency.... Still, even at $20,000, about half of all bitcoin wallets are still sitting on profits, according to an analysis by the Columbia Business School cited by The New York Times. The study also found that 61% of bitcoin addresses had not sold anything in the last 12 months, suggesting that a total run on crypto may be avoidable.
Bitcoin has now lost more than 70% of its value in about seven months. But CBS News notes that even then, "many in the industry had believed it would not fall under $20,000." The overall market value of cryptocurrency assets has fallen from $3 trillion to below $1 trillion, according to coinmarketcap.com, a company that tracks crypto prices. A spate of crypto meltdowns has erased tens of billions of dollars of value from the currencies and sparked urgent calls to regulate the freewheeling industry. Last week, bipartisan legislation was introduced in the U.S. Senate to regulate the digital assets.

Three Arrows Capital failed to meet demands from lenders to stump up extra funds after its digital currency bets turned sour, tipping the prominent crypto hedge fund into a crisis that comes as a credit crunch grips the industry. Financial Times reports: The group's failure to meet margin calls this past weekend makes the group the latest victim of an acute fall in the prices of many tokens like bitcoin and ether that is rippling across the market. Singapore-based Three Arrows is among the biggest and most active players in the crypto industry with investments across lending and trading platforms. Lenders have sharply tightened up how much credit is on offer following tremors over the past month.

Celsius, a major crypto financial services company, blocked withdrawals last week, while a pair of major tokens collapsed in May. US-based crypto lender BlockFi was among the groups that liquidated at least some of Three Arrows's positions, meaning it reduced its exposure by taking collateral the fund had put down to back its borrowing, according to people familiar with the matter. Three Arrows, which made a "strategic" investment in BlockFi in 2020, had borrowed bitcoin from the lender, the people said, but had been unable to meet a margin call. One of the people said the liquidation had occurred by mutual consent.

"Even many Axie regulars say it's not much fun, but that hasn't stopped people from dedicating hours to researching strategies, haunting Axie-themed Discord channels and Reddit forums, and paying for specialized software that helps them build stronger teams..."

Bloomberg pays a visit to the NFT-based game Axie Infinity with a 39-year-old player who's spent $40,000 there since last August — back when you could actually triple your money in a week. ("I was actually hoping that it could become my full-time job," he says.) The reason this is possible — or at least it seemed possible for a few weird months last year — is that Axie is tied to crypto markets. Players get a few Smooth Love Potion (SLP) tokens for each game they win and can earn another cryptocurrency, Axie Infinity Shards (AXS), in larger tournaments. The characters, themselves known as Axies, are nonfungible tokens, or NFTs, whose ownership is tracked on a blockchain, allowing them to be traded like a cryptocurrency as well....

Axie's creator, a startup called Sky Mavis Inc., heralded all this as a new kind of economic phenomenon: the "play-to-earn" video game. "We believe in a world future where work and play become one," it said in a mission statement on its website. "We believe in empowering our players and giving them economic opportunities. Welcome to our revolution." By last October the company, founded in Ho Chi Minh City, Vietnam, four years ago by a group of Asian, European, and American entrepreneurs, had raised more than $160 million from investors including the venture capital firm Andreessen Horowitz and the crypto-focused firm Paradigm, at a peak valuation of about $3 billion. That same month, Axie Infinity crossed 2 million daily users, according to Sky Mavis.

If you think the entire internet should be rebuilt around the blockchain — the vision now referred to as web3 — Axie provided a useful example of what this looked like in practice. Alexis Ohanian, co-founder of Reddit and an Axie investor, predicted that 90% of the gaming market would be play-to-earn within five years. Gabby Dizon, head of crypto gaming startup Yield Guild Games, describes Axie as a way to create an "investor mindset" among new populations, who would go on to participate in the crypto economy in other ways. In a livestreamed discussion about play-to-earn gaming and crypto on March 2, former Democratic presidential contender Andrew Yang called web3 "an extraordinary opportunity to improve the human condition" and "the biggest weapon against poverty that we have."

By the time Yang made his proclamations the Axie economy was deep in crisis. It had lost about 40% of its daily users, and SLP, which had traded as high as 40 cents, was at 1.8 cents, while AXS, which had once been worth $165, was at $56. To make matters worse, on March 23 hackers robbed Sky Mavis of what at the time was roughly $620 million in cryptocurrencies. Then in May the bottom fell out of the entire crypto market. AXS dropped below $20, and SLP settled in at just over half a penny. Instead of illustrating web3's utopian potential, Axie looked like validation for crypto skeptics who believe web3 is a vision that investors and early adopters sell people to get them to pour money into sketchy financial instruments while hackers prey on everyone involved.
The article does credit the company for building its own blockchain (Ronin) to provide cheaper and faster NFT transactions. "Purists might have taken issue with the decision to abandon the core blockchain precept of decentralization, but on the other hand, the game actually worked."

But the article also chronicles a fast succession of highs and lows:

• "In Axie's biggest market, the Philippines, the average daily earnings from May to October 2021 for all but the lowest-ranked players were above minimum wage, according to the gaming research and consulting firm Naavik."

• Axie raised $150 million to reimburse victims of the breach and repair its infrastructure. "But nearly two months later the systems compromised during the hack still weren't up and running, and the executives were vague about when everything would be repaired. (A company spokesperson said on June 3 that this could happen by midmonth, pending the results of an external audit....):

• Days after the breach it launched Axie: Origin, a new alternate version with better graphics/gameplay — and without a cryptocurrency element.

• About 75% of the 39-year-old gamer's co-players have "largely" stopped playing the game. "But at least one was sufficiently seduced by Axie's potential to take a significant loan to buy AXS tokens, which he saw as a way to hedge against inflation of the Argentine peso. The local currency has indeed lost value since he took out the loan, but not nearly as much as AXS."

Thanks to long-time Slashdot reader Parker Lewis for sharing the article

Tether, the operator of the world's most used cryptocurrency, said it had reduced the amount of commercial paper in the reserve backing its $74 billion stablecoin, revealing information about its holdings while dollar-pegged assets face tougher scrutiny from regulators. From a report: Tether Holdings had assets totaling at least $82.4 billion as of March 31, along with $82.2 billion in liabilities relating to the digital tokens it issues, according to an assurance from Cayman Islands-based MHA Cayman. Tether is the issuer of USDT, a stablecoin which relies on a reserve of US dollar and dollar-equivalent assets to maintain a one-to-one peg with the currency. The quality of those reserves have previously been called into question for an over-reliance on assets with limited liquidity, with criticism levied at Tether over its lack of transparency on the matter.

The crypto company was brought under an intense spotlight over the last week following the collapse of algorithmic stablecoin Terra, which briefly knocked USDT off its peg with the dollar during a period of mass market instability. In a statement on Thursday, Tether noted a 17% decrease in its commercial paper holdings to $20.1 billion compared to the previous quarter, and added that it had completed a further 20% reduction on that amount since April 1, which will be included in its upcoming report for the second quarter. Conversely, Tether said it had increased its investments in money market funds and US Treasury bills, rising more than 13% to a total of $39.2 billion. The average rating of its commercial paper and certificates of deposit has increased from A-2 to A-1, it added, while secured loans have decreased by $1 billion.

Thieves are targeting digital currency investors on the street in a wave of "crypto muggings," police have warned, with victims reporting that thousands of pounds have been stolen after their mobile phones were seized. From a report: Anonymised crime reports provided to the Guardian by City of London police, as part of a freedom of information request, reveal criminals are combining physical muscle with digital knowhow to part people from their cryptocurrency. One victim reported they had been trying to order an Uber near Londonâ(TM)s Liverpool Street station when muggers forced them to hand over their phone. While the gang eventually gave the phone back, the victim later realised that $6,150-worth of ethereum digital currency was missing from their account with the crypto investing platform Coinbase.

In another case, a man was approached by a group of people offering to sell him cocaine and agreed to go down an alley with them to do the deal. The men offered to type a number into his phone but instead accessed his cryptocurrency account, holding him against a wall and forcing him to unlock a smartphone app with facial verification. They transferred $7,400-worth of ripple, another digital currency, out of his account. A third victim said he had been vomiting under a bridge when a mugger forced him to unlock his phone using a fingerprint, then changed his security settings and stole $35,300, including cryptocurrency.