Crypto Flipsider News – $320 Million Wormhole Hack, Grayscale Launches Equity ETF, IRS Won’t Tax Unsold Staking Reward, Texas Miner Shuts Down, Binance Issues Super Bowl Warning

Read in the Digest;

Another DeFi Hack Sees Wormhole Exploited of $320 Million

Grayscale Investment Launches Equity ETF to Track the Digital Economy

The IRS Won’t Tax Unsold Staking Rewards, U.K. Tightens DeFi Tax Scheme

Biggest Miner in Texas Shuts Down Operations Ahead of Winter Storm

Don’t Listen to Celebs Trying to Sell Crypto During Super Bowl: Binance

Another DeFi Hack Sees Wormhole Exploited of $320 Million

The niggling trend of decentralized finance protocol hacks continues, with Wormhole being the latest victim. Wormhole, a communication bridge between Solana and other DeFi blockchain networks, has reported a loss of $320 million in the latest hack.

Two hours after reporting that the Wormhole network was down for maintenance, the Wormhole team announced that the hacker made away with 120,000 wETH, or wrapped Ether, making it the second-largest DeFi hack to date.

According to the reports, the network vulnerability which led to the funds stolen from Wormhole had been identified on January 13. However, on January 16, the team reportedly fixed the vulnerability by pushing out updated code on Github.

Following the hack, Paradigm security researcher “samczsun” has stated that the Wormhole team has reached out to the exploiter’s address on the Ethereum network, offering a $10 million bounty for returning the funds.

Flipsider:

Bridging Ethereum with Solana and other blockchains means that several Solana-based platforms that accept ETH as collateral could become partially insolvent if Wormhole is shut down.

Why You Should Care

The continuous exploits of DeFi protocols validate claims that the security of DeFi is yet to reach the level of accommodating the huge sums being stored within them.

Grayscale Investment Launches Equity ETF to Track the Digital Economy

Grayscale Investment, the New York-based company with $33.4 billion in assets under management, has made its debut in the exchange-traded fund business. The Grayscale Investments ETF began trading under the ticker GFOF on February 2.

The GFOF ETF tracks 22 financial services companies in the digital economy, including Silvergate Capital, PayPal, Coinbase Global, Block, Robinhood Markets, and Argo Blockchain PLC.

With the ETF, Grayscale aims to invest in companies building out the digital economy. Grayscale’s head of ETFs said, “what we’re doing here is really defining what the digital economy is as opposed to replicating Bitcoin in the form of an equity ETF.”

Grayscale has stated that the 22 tracked companies would be rebalanced quarterly. The new ETF from Grayscale is available on the NYSE Arca and carries an expense ratio of 70 basis points.

Flipsider:

With the price of Bitcoin down by almost 50%, it remains to be seen whether this ETF will see any interest.

Why You Should Care

The GFOF ETF takes Grayscale away from cryptocurrency investing, giving its investors exposure to mainstream markets.

The IRS Won’t Tax Unsold Staking Rewards, U.K. Tightens DeFi Tax Scheme

The appropriate regulation and tax schemes for cryptocurrencies continue to be a topic of concern for regulators worldwide. Under its current policy, the Internal Revenue Service tax rewards generated from staking as income, but that could change.

In a Tennessee court ruling involving Joshua Jarrett, the IRS has offered a refund on income taxes paid for unsold staking rewards. In 2019, Jarrett had paid an income tax on 8,876 Tezos tokens he earned through staking.

However, in 2021, Jarrett filed the IRS tax returns he paid, arguing that the tokens were not income but “created property.” In December 2021, the IRS was “authorized and directed to schedule an overpayment of $3,793, plus statutory interest.”

Flipsider:

While the IRS has yielded, the U.K. tax regulator has put forward stricter guidance for DeFi staking and lending.

Under its new guidance, taxing a return from lending or staking depends on whether it is considered capital or revenue.

Why You Should Care

The IRS’s concession could mean that the agency agrees that tokens generated through staking should be considered property and not income until they are sold.

Biggest Miner in Texas Shuts Down Operations Ahead of Winter Storm

Adhering to the appeal of the Texas Governor, Greg Abbot, for crypto miners to shut down their operations as the state’s power grid appeared to be failing due to incoming winter storms, the largest miner in the state has shut down.

Riot Blockchain’s communications director, Trystine Payfer, announced that the mining firm had “99% of [its] power currently shut off.” Additionally, Riot Blockchain revealed that it had begun to reduce power to its Whinstone facility as early as Tuesday.

The shutting down of mining operations is a move to conserve electricity as the storm is expected to hit parts of Texas this week.

Joining Riot Blockchain, other mining firms represented by the Texas Blockchain Council have sent a letter to the Governor of Texas assuring him they planned to shut down or reduce operations in response to the winter storm.

Flipsider:

According to data from Coinshares, Bitcoin mining accounts for 0.08% of the world’s carbon dioxide (CO2) production today.

Why You Should Care

Texas is looking to conserve more power by shutting down mining to prevent a repeat of last year’s energy shortage, which led to hundreds of deaths.

Don’t Listen to Celebs Trying to Sell Crypto During Super Bowl: Binance

Ahead of the much anticipated Super Bowl, the world’s largest crypto exchange, Binance has issued a warning to investors. Binance has asked investors to be wary of celebrity crypto endorsements during the Super Bowl.

The Binance campaign features the NBA star Jimmy Butler who explained in a short video that during the Super Bowl, which starts on February 13, “some of the biggest names” will tell you to “get into crypto.”

However, the campaign has advised investors to “trust yourself” and do their own research because these celebs “don’t know you or your finances.”