Crypto Flipsider News – DeFi Hacks; SEC Probes Yuga Labs; Grayscale Sues SEC; Huobi Token Gains 65%; BNY Crypto Custody

Read in the Digest:

Mango Markets and TempleDAO lose $119 million in latest DeFi exploits.

SEC reportedly investigates the operations of BAYC creators Yuga Labs.

Grayscale files lawsuit against the U.S. SEC over denial of Bitcoin spot ETF.

Huobi Token (HT) gains 65% as Justin Sun announces Huobi revival plan.

BNY Mellon launches Bitcoin (BTC) and Ethereum (ETH) custody services.

Mango Markets and TempleDAO Lose $119 Million in Latest DeFi Exploits

Mango, a decentralized finance (DeFi) platform hosted on the Solana blockchain, has become the latest victim of a massive expploit, with a hacker making away with more than $117 million from the project’s treasury account.

According to Mango Markets, the attacker was able to steal funds from the protocolby carrying out an oracle price manipulation, through which the hacker took out a $116 million loan, leaving Mango’s treasury with a negative balance of -116.7 million.

OtterSec, a Blockchain audit firm explained that the attacker was able to “manipulate” their collateral on Mango, which in turn enabled them borrow outsized loans from the platform’s treasury

Blockchain security firm PeckShield, reported that another DeFi protocol, TempleDAO, had also fallen victim to an exploit. According to an October 11th report, a hacker transferred 1,831 ETH worth approximately $2.34 million from TempleDAO.

Flipsider:

After reports emerged that the attacker had funded $5.5M from FTX, the exchange’s CEO Sam Bankman-Fried responded by saying that his company is investigating.

Why You Should Care

The recent hacks highlight the major security flaws throughout DeFi, which many believe restricts the potential for the mass adoption of these projects.

SEC Reportedly investigates the Operations of BAYC Creators Yuga Labs

Yuga Labs, the company behind the largest NFT collection, Bored Ape Yacht Club (BAYC) is reportedly being probed by the Securities and Exchange Commission to ascertain whether the sales of its Ethereum NFTs and ApeCoin token violate federal laws.

According to the report, which cited unnamed sources, the Wall Street regulator is examining whether the issuance of BAYC NFTs operates similarly to stocks, and should therefore be bound by the same disclosure rules.

The regulator is also looking into the distribution of the Ethereum-based ApeCoin token, which first launched in March. It should be noted, however, that the instigation of a probe does not necessarily mean that the SEC intends to file a lawsuit.

As with the Ripple case, the investigation seeks to determine whether the BAYC collection, along with ApeCoin, Yuga Labs’ native cryptocurrency token, should be considered unregistered securities.

Flipsider:

While no lawsuit has yet been filed by the SEC, Yuga Labs has expressed willingness to cooperate with the SEC’s investigation.

Why You Should Care

Under Chairperson Gary Gensler’s leadership, the SEC has intensified its scrutiny of the crypto and NFT markets, launching multiple inquiries into the operations of a wide range of crypto companies that may have offered securities.

Grayscale Files Lawsuit Against the U.S. SEC over Denial of Bitcoin Spot ETF

Grayscale Investments, the world’s largest crypto assets manager, filed its opening brief against the SEC on Tuesday, October 12th, in which it challenged the regulators refusal of the proposal to convert its $12 billion spot Bitcoin trust into an exchange-traded fund, or ETF.

Grayscale filed a ‘Petition For Review‘ against the SEC at the U.S. Court of Appeals in the District of Columbia Circuit on June 29th, the same day the SEC denied the conversion of the GBTC into a spot Bitcoin ETF after citing inability to prevent fraud and protect investors’ interest.

In the brief, Grayscale claims that ETPs are treated with “special harshness” compared to futures-based Bitcoin ETFs, even though the prices of both fund formats are based on overlapping indices, and are therefore subject to the same risks.

According to Grayscale, the SEC’s denial is “capricious, discriminatory and exceeds the Commission’s statutory authority”. The brief further argued that the SEC’s “significant-market test” is a flawed process, stating that the bar set for Bitcoin-related ETFs is so high that it couldn’t possibly be satisfied.

Flipsider:

On October 6th, Grayscale launched a new Bitcoin mining fund called Grayscale Digital Infrastructure Opportunities LLC (“GDIO”).

Why You Should Care

Grayscale has asked the SEC to submit its brief by November 9th, after which Grayscale will submit a reply brief on November 30th. Both parties will then submit a final brief on December 21st.

Huobi Token (HT) Gains 65% as Justin Sun Announces Huobi Revival Plan

Huobi Token (HT), the native token of the Huobi Global cryptocurrency exchange, is today’s biggest gainer, rallying more than 25%. HT’s performance has been even more impressive in terms of the last 48 hours, as the token spiked more than 65%.

The 48 hour price chart for Huobi Token (HT). Source: CoinMarketCap

The sudden price surge has seen HT trade as high as $6.71, compared to the $4.07 recorded before the surge. The upswing in the price of Huobi’s HT comes in light of the announcement of a revival plan for the exchange and its native token.

Two days after Huobi Global’s majority shareholder Leon Li announced the sale of his entire stake in the crypto exchange, Justin Sun, the Founder of Tron, disclosed the details of the exchange’s revival plan via his Twitter account.

According to Sun, after two days on the Huobi Advisory Committee, there are plans toupgrade the exchange’s brand, empowerment, and business cooperation around the Huobi Token.

Flipsider:

Justin Sun has denied all claims that he is behind the acquisition of Huobi, clarifying that he only acts in an advisory capacity to the exchange.

Why You Should Care

The plans unveiled by Sun represent part of Huobi’s goal to expand its reach and improve its competitiveness in the crypto market.

BNY Mellon Launches Bitcoin (BTC) and Ethereum (ETH) Custody Services

The America’s oldest, and the world’s largest custodian bank, BNY Mellon, has announced that it will begin offering crypto custody services for Bitcoin (BTC) and Ethereum (ETH).

According to a press release, on October 11th, BNY Mellon began offering custodial services to select investment firms. The custodian bank will store clients’ private keys and provide limited book keeping services for their crypto assets.

The software used by BNY Mellon was developed in association with crypto custody provider Fireblocks. Furthermore, the bank will also utilize compliance software from Chainalysis, including KYT (Know Your Transaction) mechanisms.

BNY Mellon, which was selected by Circle to become the custodian of its USDC stablecoin in March, emphasized that its latest crypto move is a continuation of its trust and belief in the innovation of the evolving digital asset space.