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🟣 North Korea’s $62 Million Crypto HACK

PLUS: Coinbase Moves Onchain & ETFs Heat Up

GM DOers! 😎

Crypto’s on fire right now so I won’t waste any time. Here’s what I’ve got on the agenda for you today. 

First up, Munchables, a gaming project on Blast was just hacked for $62 million by a North Korean hacker.

Luckily, funds were retrieved within a few hours in what’s a crazy story. 

Secondly, Coinbase just announced that they’re moving more of their business onchain (on Base). 

Thirdly, ETFs are heating up again – Bitcoin has seen huge inflows this week after experiencing massive outflows last week. 

Fourthly, we have some updates that may indicate that an approval for Ethereum’s Spot ETF is coming in May after all. 👀

It’s already been a big week and it’s only Wednesday. Let’s dive in.

The Munchables Hacker 🥷

I honestly never thought we'd have a hacker called 'The Munchables Hacker' but crypto’s wild so here we are.

Munchables is a game built on the Blast L2 where users can deposit funds to earn "Schnibbles", which is basically food for “Munchable” characters that look like this:

Source: Punk9059

By growing their Munchables, people earn rewards and Blast points – it’s kind of a ponzi. 

So how did this game get hacked for over $60 million? 

It all started when the Munchables team hired 4 developers from North Korea, who turned out to be one single villain. 

Here’s one of the dev’s GitHub profiles, which comes with a few red flags. 🚩

  1. They claim to know all the coding languages and tools. I doubt that even Satoshi or Vitalik are experts in all of these. 

  2. They attached their LinkedIn… Bruh, as a developer, your GitHub IS your LinkedIn. 

  3. That description is clearly generated by GPT-3.

  4. They linked their Skype… Who TF still uses Skype? 

Source: Cygaar

Long story short, after this dev was hired and got access to the multi-sig, he waited until the TVL on Munchables was juicy enough, and he stole over $62 million. 

Source: DeFiLlama

Shortly after the hack occurred, ZachXBT tracked all wallets involved. Check this visual out. It’s clear that all of these wallets are either the same person, or a group that’s working together. 

They even recommended each other for this role.

Source: ZachXBT
Source: BoldLeonidas

Oddly enough, in the end, all the funds were returned to the Munchables multisig by the hacker.

There’s very little details as to exactly how and why the return of funds happened, but it’s likely that Blast intervened by rolling back the chain, aka by reverting transactions.

It’s also likely that ZachXBT had a big role in this too. He said to the hacker when the exploit happened – he must’ve gotten scared of Zach. 😂

I wish we had more details about what really happened behind the scenes. All we know right now is that all funds were recovered. 🙏

This whole drama opened up a wide range of discussions regarding the centralization issues around Blast (and other L2s), because they technically had the power to intervene. 

Here are some takes.

On the topic of centralization and decentralization, let’s see what Coinbase is up to…

Coinbase Making Moves (Onchain) 🔵

Max Branzburg, the Head of Consumer Products at Coinbase, shared this on X.

In short, Coinbase is moving its business onchain because it’s cheaper, faster and more efficient. 

Soon, all crypto exchanges will move onchain. Then banks will follow suit. 

Then all real world assets (bonds, stocks, real estate etc.) will be tokenized onchain. 

Eventually, everyone and everything will live onchain and I couldn’t be more bullish. 🐂

Speaking of bullishness…

Bitcoin ETFs Are Heating Up Again 🔥

After a bit of a rough patch last week, where we saw a steady stream of outflows hitting $888 million over five days, Bitcoin ETFs are bouncing back! 

We kicked off Monday with a fresh inflow of $15.7 million, and then Tuesday really turned things around with a whopping $418 million pouring in.

This obviously matters because when inflows are up, so is the Bitcoin price. 🚀

But things aren’t looking up just for Bitcoin… 

Could We Get Spot ETH ETFs in May? 👀

Last week, we chatted about Ethereum going through a tough spot. A state authority decided to look into the Ethereum Foundation, and on top of that, the SEC began to make moves against ETH, aiming to label it as a security.

As things stood, the odds for an approval of a Spot Ethereum ETF were very low. 

But things changed…

Craig Salm, the Chief Legal Officer at Grayscale, said the following in a thread

  • The SEC not being proactive with current applications isn’t worrying, as they most likely have the facts they need already.

  • Since the SEC worked with many of the ETF providers for the Bitcoin ETF, they’re already familiar with the entities.

  • It’s a no-brainer for the SEC to approve spot Ethereum ETFs since they're similar to Ethereum futures ETFs, which are already approved.

  • Investors really want and deserve spot Ethereum ETFs 

All good and dandy, and it makes us super bullish. But in response, Eric Balchunas, said that based on what they’re seeing from the SEC, the chances remain at 25% for an approval by May. Prediction markets rate it at the same odds. 

Context #1: In order for the SEC to approve the Spot Ethereum ETF, they must say that $ETH isn’t a security. We know that it’s not, and they know it too. They just need to publicly and officially announce that. 

Interestingly, the CFTC (Commodity Futures Trading Commission) mentioned that Ethereum is a commodity, and therefore not a security, in their latest lawsuit against KuCoin. 

Context #2: The CFTC and the SEC are like siblings keeping an eye on different parts of the financial playground! The CFTC takes care of commodities (i.e. gold) while the SEC watches over securities (i.e. stocks).

Here’s what Jake Chervinsky, Chief Legal Officer at Variant, makes of CFTC’s comment.

Wrapping Up – What a Crazy Week

Here’s my two cents on all of this…

First up, playing in new ecosystems such as Blast is risky. While the rewards could be huge (airdrops), be careful where you put your money, and how much!

Secondly, I continue to remain super bullish on Coinbase and $COIN. They’re showing how there are more use cases for corporations to hold their dollars onchain, once again leading the way into the onchain revolution. 

Thirdly, the Bitcoin inflows through the ETFs remains insanely high, and there’s a massive supply shock happening right now. This week’s PRO report will break all of that down. 

More importantly, the same level of supply shock is happening on Ethereum right now, which will be amplified if the ETF gets approved in May (PRO report on this is coming in a few weeks too). 

So continue to stack your coins and be careful out there.

Thanks for reading. And remember, you're strong, you’re powerful, you’re alpha!

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Disclaimer: This article is for informational purposes only and not financial advice. Conduct your own research and consult a financial advisor before making investment decisions or taking any action based on the content.

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