GM DOers! š
Cryptoās on fire right now so I wonāt waste any time. Hereās what Iāve 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 whatās a crazy story.
Secondly, Coinbase just announced that theyāre moving more of their business onchain (on Base).
Thirdly, ETFs are heating up again ā 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 Ethereumās Spot ETF is coming in May after all. š
Itās already been a big week and itās only Wednesday. Letās dive in. ā¬
The Munchables Hacker š„·
I honestly never thought we'd have a hacker called 'The Munchables Hacker' but cryptoās 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 āMunchableā characters that look like this:
By growing their Munchables, people earn rewards and Blast points ā itās 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.
Hereās one of the devās GitHub profiles, which comes with a few red flags. š©
They claim to know all the coding languages and tools. I doubt that even Satoshi or Vitalik are experts in all of these.
They attached their LinkedInā¦ Bruh, as a developer, your GitHub IS your LinkedIn.
That description is clearly generated by GPT-3.
They linked their Skypeā¦ Who TF still uses Skype?
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.
Shortly after the hack occurred, ZachXBT tracked all wallets involved. Check this visual out. Itās clear that all of these wallets are either the same person, or a group thatās working together.
They even recommended each other for this role.
Oddly enough, in the end, all the funds were returned to the Munchables multisig by the hacker.
506
Thereās very little details as to exactly how and why the return of funds happened, but itās likely that Blast intervened by rolling back the chain, aka by reverting transactions.
Itās also likely that ZachXBT had a big role in this too. He said to the hacker when the exploit happened ā he mustāve gotten scared of Zach. š
I wish we had more details about what really happened behind the scenes. All we know right now is that all funds were recovered. š
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.
It wouldn't set a good precedent for future exploits/issues, but it is possible.
An invalid state root would need to beā¦
Roll back the chain. Blast is a month old and can afford the debate.
They could upgrade the bridge and prevent the hacker from moving $62M, but ruin all perception of decentralization.
Or they let it rock and their users eat a $62M loss within the first month of launching.
On the topic of centralization and decentralization, letās see what Coinbase is up toā¦
Coinbase Making Moves (Onchain) šµ
Max Branzburg, the Head of Consumer Products at Coinbase, shared this on X.
We are excited to continue toā¦
In short, Coinbase is moving its business onchain because itās 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 couldnāt be more bullish. š
Speaking of bullishnessā¦
Bitcoin ETFs Are Heating Up Again š„
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. š
But things arenāt looking up just for Bitcoinā¦
Could We Get Spot ETH ETFs in May? š
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 changedā¦
Craig Salm, the Chief Legal Officer at Grayscale, said the following in a thread:
The SEC not being proactive with current applications isnāt 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, theyāre already familiar with the entities.
Itās 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 theyāre seeing from the SEC, the chances remain at 25% for an approval by May. Prediction markets rate it at the same odds.
(announcer voice) @JSeyff @EricBalchunas
Context #1: In order for the SEC to approve the Spot Ethereum ETF, they must say that $ETH isnāt a security. We know that itās 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.
Usually the SEC and CFTC pretend they aren't in a turf war over crypto. Today the CFTC is openly attacking the SEC's supposed investigation of ETH.
This may seem minor, but is actually pretty savage interagency drama by DC standards:
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).
Hereās what Jake Chervinsky, Chief Legal Officer at Variant, makes of CFTCās comment.
I read it as CFTC saying to SEC ~ "a ton of other digital assets are commodities too and you're not the only one who gets to judge them; this space belongs to us just as much as you, even if we aren't as loud about it."
But maybe that's a wishful reading
Wrapping Up ā What a Crazy Week 
Hereās my two cents on all of thisā¦
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. Theyāre 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 thereās a massive supply shock happening right now. This weekās 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. ā
Thanks for reading. And remember, you're strong, youāre powerful, youāre alpha! ā¤
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