Cryptohack Roundup: Binance Layoffs – GovInfoSecurity

Every week, ISMG rounds up cybersecurity incidents in digital assets. This week, Binance laid off two-thirds of its staff and said it is exiting Nigeria, Chainalysis released 2023 crime statistics, Fantom said it will seek Multichain’s liquidation, hackers stole millions from the WOOFi and Seneca crypto platforms, and Hong Kong blocked six fake websites.

See Also: User Entity & Behavior Analytics 101: Strategies to Detect Unusual Security Behaviors

The American arm of crypto exchange Binance laid off more than 200 employees – two-thirds of its workforce – due to a 75% decline in revenue. The lawsuit the U.S. Securities and Exchange Commission filed against the company in June affected trading volumes and overall business, said Christopher Blodgett, chief operating officer at Binance.US, during a December deposition released Tuesday. The SEC’s temporary restraining order prompted an immediate exodus of $1 billion in crypto and fiat assets from the platform, further exacerbating the revenue drop. Binance.US also faced difficulties finding new banking partners due to regulatory scrutiny. Binance late last year settled a separate lawsuit from the U.S. Commodity Futures Trading Commission by agreeing to pay $2.7 billion. The SEC accuses Binance, Binance.US and founder Changpeng Zhao of violating securities laws. Zhao has pleaded guilty to violating the Bank Secrecy Act and has stepped down from his leadership roles.

Binance is exiting the Nigerian market and discontinuing its services involving the Nigerian fiat currency naira. It will suspend naira withdrawals starting Friday and any naira balance in Binance wallets after the deadline will be converted to the Tether stablecoin, the company said. The move comes on the heels of the Nigerian House of Representatives Committee on Financial Crimes reportedly summoning Binance CEO Richard Teng to address suspicions of financing terrorism and conducting money laundering. The committee, led by Ginger Onwusibe, issued an ultimatum for Binance management to appear before them by March 4. When Binance leadership failed to appear, the committee reportedly recommended issuing an arrest warrant to force their appearance.

Darknet markets were a significant source of illicit transactions in the crypto industry in 2023, raking in $1.7 billion in revenue and marking a rebound from the previous year, when authorities dismantled the once-dominant Hydra marketplace, Chainalysis said. Although no single marketplace has obtained the heft and scope of Hydra, smaller platforms thrived by catering to specific niches and adopting specialized roles. The Mega Darknet Market led the pack with more than $500 million in crypto inflows. Darknet market revenues have not yet reached the peak levels observed during Hydra’s reign (see: Hydra Aftermath: Where Do Criminals Lurk Now?).

Decentralized finance platform Fantom Foundation said it will seek the liquidation of the Multichain Foundation, after obtaining a default judgment against Multichain in a Singapore court. Approximately one-third of the $210 million exploited from the cross-chain protocol Multichain Bridge last July came from Fantom’s ecosystem. Following this ruling from the High Court of Singapore, the Singaporean court is expected to appoint a liquidator who will assess the damages incurred by Fantom due to Multichain’s security breach and facilitate the recovery and distribution of the missing or frozen assets. Fantom has also proposed a class action lawsuit against Multichain to allow affected users to seek redress.

Decentralized finance platform WOOFi experienced an $8.75 million exploit on the Arbitrum network. The attack occurred when an unidentified hacker used flash loans to manipulate WOOFi’s Synthetic Proactive Market Making algorithm. The company suspended the WOOFi Swap smart contracts to prevent further losses and offered the attacker a 10% white hat bounty for the return of the stolen funds.

Hackers stole $6 million from the Seneca stablecoin protocol across the Ethereum and Arbitrum networks by exploiting a bug in the protocol’s smart contract approval mechanisms, BlockSec said. Seneca’s contracts lacked code that would allow the team to pause them. Instead, users had to revoke permissions. The hacker transferred the stolen assets, totaling more than 1,900 ETH, from the project’s contract to external addresses. The Seneca team asked users to revoke previously granted permissions to prevent further unauthorized transactions.

Hong Kong’s financial regulator blocked fake websites posing as major local cryptocurrency exchanges. The counterfeit domains impersonated two licensed exchanges in Hong Kong: OSL Digital Securities and Hash Blockchain Limited, also known as HashKey. The Securities and Futures Commission took action against a total of six websites: hskexpro.com, hskex.com, hskexs.com, hskexit.com, oslexu.com and oslint.com. Users reported excessive fees and commissions and difficulties in withdrawing funds. In collaboration with the Hong Kong Police Force, the SFC added the new websites to its alert list, which includes crypto exchanges such as MEXC.