In a long-awaited move, Mt. Gox, the infamous Bitcoin exchange that collapsed in 2014, has finally started repaying its creditors.
This resolution to one of crypto’s most notorious scandals is not just closing a chapter to one of Bitcoin’s darkest hours but is also actively shaping the asset’s market dynamics in real time.
On July 5, Nobuaki Kobayashi, the rehabilitation trustee for Mt. Gox, announced the commencement of debt repayments to creditors in Bitcoin and Bitcoin Cash.
The repayments are facilitated through a complex network of exchanges, with each entity playing a crucial role in distributing the funds.
The scale of the repayments is staggering. Approximately 47,288 BTC, valued at roughly $2.7 billion, has already been moved from Mt. Gox-associated wallets to new addresses.
This is just the beginning, with a total of around 140,000 BTC — worth $9 billion at current prices — set to be returned to the victims in the coming weeks.
The sheer magnitude of the transfers has put the entire crypto market on edge, with traders and investors closely monitoring every movement.
On paper, the repayment process seems to be quite a logistical feat, with five exchanges — Bitbank, SBI VC Trade, Bitstamp, Kraken, and BitGo — tasked with distributing the funds. Each exchange has its own timeline for processing the payouts, ranging from immediate distribution to a 90-day window.
Both Japanese exchanges — Bitbank and SBI VC Trade — have already completed their distributions, processing the payments within hours of receiving the funds.
This swift action relieved creditors but also contributed to the ongoing market volatility as some recipients quickly sold their newly acquired Bitcoin.
Bitstamp also pledged to expedite its distributions, with exchange officials stating that it is committed to compensating investors earlier than its given 60-day window.
The immediate impact on Bitcoin’s price was swift. As news of the repayments spread, Bitcoin plummeted from approximately $62,000 to as low as $53,600 on July 4 — a 10% drop in a matter of hours.
This sharp decline triggered a wave of liquidations across the crypto market, with over $425 million in leveraged positions being wiped out.
The volatility wasn’t limited to Bitcoin; the entire cryptocurrency market felt the tremors, with many altcoins experiencing double-digit percentage drops.
However, the market’s reaction wasn’t solely due to Mt. Gox. Coinciding with these repayments was news of the German government offloading hundreds of millions of dollars worth of Bitcoin seized from criminal activities.
On July 8, a German government-labeled crypto wallet sold around $900 million worth of Bitcoin, transferring roughly 16,309 BTC in multiple transactions to various external addresses, marking its largest single-day Bitcoin liquidation.
Some of the transfers were directed to crypto exchanges such as Bitstamp, Coinbase, and Kraken, as well as market makers such as Flow Traders and Cumberland DRW.
With the German government now around halfway through its selling spree, reducing its holdings to 23,788 BTC from 50,000 BTC, traders expect Bitcoin prices to stabilize and potentially climb again once the immediate selling pressure eases.
Founded in 2010 by Jed McCaleb and later sold to Mark Karpelès in 2011, Mt. Gox quickly became the world’s largest Bitcoin exchange, handling a staggering 70% of all global BTC transactions at its peak.
This dominance made it the go-to platform for early Bitcoin adopters and played a crucial role in establishing Bitcoin’s legitimacy in its formative years.
However, in February 2014, Mt. Gox suspended all Bitcoin withdrawals, citing technical issues.
The truth soon emerged that the exchange had lost approximately 850,000 BTC in a long-standing security breach.
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This loss, valued at roughly $450 million at the time, would be worth over $48 billion at today’s prices.
The event sent shockwaves through the crypto community and severely damaged Bitcoin’s reputation, setting back mainstream adoption efforts by years.
Mt. Gox filed for bankruptcy, leaving thousands of customers in limbo.
In 2018, the case shifted to civil rehabilitation, offering a glimmer of hope to creditors.
In 2019, Karpeles was convicted of falsifying financial records, adding yet another layer to the complex legal saga.
The commencement of Mt. Gox repayments has injected a new level of volatility into an already dynamic crypto market.
However, as the dust settles, a more nuanced picture seems to be emerging.
For instance, Bitcoin has shown immense resilience since July 5, rebounding to around $59,000 after its initial plunge to $53,600.
The market’s ability to absorb such a large influx of supply speaks to the increased liquidity and maturity of the cryptocurrency ecosystem compared to its state during Mt. Gox’s collapse.
Some analysts believe that much of this selling pressure was already “priced in” before the event itself, thus explaining the relatively quick price recovery.
Furthermore, some large investors viewed the price dip as a buying opportunity, as evidenced by increased inflows into US-based spot Bitcoin exchange-traded funds (ETFs).
This institutional support has counterbalanced the selling pressure while simultaneously demonstrating BTC’s acceptance within the financial mainstream.
The broader crypto market also shows signs of decoupling from Bitcoin’s movements. Ether, for instance, has stayed above the $3,000 mark despite BTC market volatility.
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Technology giants Microsoft and Apple have decided not to join the board of artificial intelligence firm OpenAI due to increasing regulatory scrutiny.
On July 10, Bloomberg reported that Microsoft had sent a letter to OpenAI announcing its decision to withdraw from the board.
This move came about a year after Microsoft made a substantial $13 billion investment in OpenAI in April 2023.
Following Microsoft’s departure, OpenAI will have no board observers.
In its memo to OpenAI, Microsoft stated, “Over the past eight months we have witnessed significant progress from the newly formed board and are confident in the company’s direction,” adding, “We no longer believe our limited role as an observer is necessary.”
Contrary to earlier reports that Apple would also get an observer role on OpenAI’s board as part of a landmark agreement announced in June, OpenAI confirmed it would have no board observers after Microsoft’s exit.
OpenAI expressed gratitude towards Microsoft, stating, “We’re grateful to Microsoft for voicing confidence in the board and the direction of the company, and we look forward to continuing our successful partnership.”
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Cointelegraph reached out to both Microsoft and OpenAI for comments regarding the board membership but did not receive a response by the time of publication.
This news comes amid growing regulatory pressure on Big Tech firms over their potential impact on AI and industry dominance.
In June, European Union regulators announced that OpenAI could face an antitrust investigation over its partnership with Microsoft.
EU competition chief Margrethe Vestager noted that local regulators would seek additional third-party views and survey firms like Microsoft, Google, Meta, and ByteDance’s TikTok regarding their AI partnerships.
Previously, the European Commission stated that Microsoft could be fined up to 1% of its annual revenue in the EU if it fails to respond to requests for information related to its Bing search engine and associated generative AI services.
In April 2024, Apple and OpenAI were reportedly in active discussions about integrating generative AI technologies on iOS.
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The term artificial intelligence (AI) has been part of mainstream parlance since late 2022. However, whenever discussions surrounding this revolutionary technology surface, the focus seems to primarily be centered on aspects like its use of cutting-edge algorithms and the powerful hardware driving these systems.
However, an equally crucial component that often flies under the radar is the data sets that fuel these AI models. Over the past year, it’s become increasingly clear that the quality and quantity of information being fed to these complex systems are paramount to the success of AI systems. But who collects this data, and how can we ensure it is diverse, accurate, and ethically sourced?
Traditionally, AI data collection has been the domain of experts and specialized teams. This approach, while undoubtedly producing high-quality datasets, often leads to bottlenecks in the AI training process, especially when it comes to the introduction of individual biases. Therefore, it’s not just about having enough data; it’s about having the right data that represents a wide range of perspectives and use cases.
In this context, discussions pertaining to ‘decentralized AI infrastructures’ are beginning to gain a lot of traction recently, especially since they offer a legitimate solution to democratize AI data collection and accelerate innovation in the field. To this point, NeurochainAI, a ready-to-use AI infrastructure provider, leverages a community-powered module called “AI Mining,” allowing individuals to participate in various data collection and validation tasks — effectively turning its backers into a vast, diverse data collection network.
Simplifying the Complex
From the outside looking in, the genius of decentralized AI data collection systems lies in their ability to break down complex tasks into manageable, bite-sized pieces that don’t require specialized knowledge. This approach, often referred to as ‘microwork,’ allows virtually anyone with basic training to contribute to AI development.
NeurochainAI’s ‘Data Launchpad’ embodies this approach such that AI developers or companies start by submitting data collection or validation tasks. These tasks are then meticulously broken down into instructions that anyone can follow. Community members, referred to as “AI Miners,” can select tasks that interest them and complete them using their consumer hardware within their respective DePINs (Decentralized Physical Infrastructure Networks) — i.e. localized digital ecosystems leveraging consumer hardware to perform computational tasks, thus distributing the workload across a network of devices.
The collected data is subsequently validated by other community members, ensuring both accuracy and quality. Contributors are duly rewarded for their efforts, fostering a mutually beneficial scenario for both AI developers and the community.
Additionally, NeurochainAI’s model addresses one of AI’s most pressing challenges: its monumental energy consumption. Traditional AI data centers consume vast amounts of power, with some estimates suggesting that by 2027, they could consume as much electricity as the entire Netherlands.
Not only that, a study by the International Energy Agency estimates that these data centers could see their power use increase to between 620 and 1,050 TWh by 2026 — equivalent to the energy demands of Sweden and Germany, respectively. NeurochainAI’s approach distributes this computational load, potentially reducing the overall energy footprint of AI development.
Unlocking New Frontiers
As things stand, the implications of democratized AI data collection seem to be quite far-reaching and exciting. By removing some of the bottlenecks associated with “expert-only data collection” practices, it is possible that we could witness an explosion of AI applications across fields that have been historically underserved due to a lack of relevant data sets.
For instance, one can imagine AI models that can understand and generate high-quality information in rare languages (thanks to data collected by native speakers around the world). Similarly, novel medical AI use cases can also emerge, such as those that can recognize symptoms of rare diseases, trained on data contributed by patients and healthcare workers globally. The possibilities are literally endless!
Last but not least, this democratized approach could lead to more ethical and transparent AI development. When data collection is a community effort, there’s inherently more oversight and diversity in the process.
Therefore, as we look toward an AI-driven future, platforms like NeurochainAI are not just changing how we gather information for AI data training; they’re reshaping the landscape surrounding this domain altogether.
The blockchain gaming ecosystem has slowly faded from the spotlight in 2024, as other ecosystems, such as artificial intelligence and memecoins, rise to prominence. Regardless, Web 3 gaming remains a powerhouse in blockchain, with the total market capitalization standing at $15 billion, as of writing. The constant developments across the space majorly influence this – as the once simplistic one-click games become more playable and interactive and can now fairly compete with their Web 2 counterparts.
Games like Axie Infinity have pushed Web 3 gaming to greater heights, setting the standard on what play-to-earn (P2E) game models should be. As such, new games entering the blockchain gaming realm need to be of a very high standard to capture the attention of players, investors and partners. One such game, My Pet Hooligan, built on Unreal Engine 5, is doing exactly that with its enhanced gaming model that is unique for a blockchain game.
In contrast to previous Web 3 games, My Pet Hooligan introduces cutting-edge technology, artificial intelligence, AAA-quality gaming models, and an exciting realm that offers better asset rewards. The question that arises is how well My Pet Hooligan will fare in a stacked Web 3 gaming market.
In this piece, we delve into the technology, gameplay, community, and potential of My Pet Hooligan, comparing it to the best of Web 3 games – Axie Infinity.
Axie Infinity: The Rise of Playable Web 3 Games
Axie Infinity is a Web 3-based gaming ecosystem that combines the aspects of traditional gaming, crypto, NFTs, and blockchain. Set in a metaverse named Lunacia, Axie Infinity allows players to buy, breed and battle creatures (Axies) for an opportunity to earn real money rewards. The game utilizes an in-game cryptocurrency called AXS, which allows players to purchase and trade Axies and use them in battles to earn rewards.
The play-to-earn game was launched in 2018 by Trung Nguyen, Aleksander Leonard Larsen, and Jeffrey Zirlin.
The associated assets and transactions are conducted via the Ronin sidechain, a Layer-2 EVM-compatible blockchain built to scale Axie Infinity. Ronin is home to most digital assets used in the Axie Infinity ecosystem, and the project team is expanding the network to allow third-party game development studios to launch additional games.
Strengths
- Marketplace: Axie Infinity includes its marketplace that allows players to directly purchase and sell items, as well as collectible digital creatures.
- Unique Gameplay: Players in the game can buy, earn and breed their digital creatures to advance in the game.
- Early-to-market: One of the biggest strengths for Axie Infinity is launching in 2018, years before the GameFi craze during the pandemic years.
- Vibrant community: The game has attracted nearly 1 million community members across its social media pages – X (formerly Twitter), Discord, and Telegram.
Weaknesses
- Sustainability: As is with early blockchain games, Axie Infinity struggled with inflation as more players joined the game, setting back the price of its $AXS token.
- Complexity: The game requires prior knowledge in the blockchain space, which provides a barrier for new players, who require a significant amount of time and effort to understand fully.
- Cost barriers: Axie Infinity requires players to have a starting capital to buy Axies. Some of these digital assets can cost hundreds of dollars.
Technology & Market Performance
Axie Infinity is a P2E game that uses a delegated proof of stake (DPoS) consensus mechanism, with its assets and transactions housed on the Ronin sidechain. Ronin is a layer 2 EVM-compatible blockchain aiming to scale Axie Infinity and conduct faster transactions with minimized fees. The network is secured by 22 validators, 10 of which are operated by community members with the highest total combined RON stake. The remaining 12 are classified as Governing Validators and are operated by parties selected by the project team.
The game’s native token, $AXS launched in April 2018 and later was issued via a token sale on the Binance Launchpad in November 2020. Over the past year, the $AXS token has slightly dipped in value – to trade at $5.32, representing a 10% dip since July last year.
My Pet Hooligan: Building an AI-based Web 3 Gaming Ecosystem
My Pet Hooligan is the flagship interactive entertainment experience from AMGI Studios. It is a free-to-play Web 3 game that allows multiplayer competitions and socializing. The game involves players creating characters to battle against the evil overlord Metazuckbot, within the Hooliland City metaverse. Players can also fight against each other, destroy buildings and other artefacts, skate like a pro skater, hang out with friends and much more. The game developers confirmed that My Pet Hooligan will be a cross-platform game spanning PC, console and mobile.
Insert Video: https://youtu.be/dAqHfm3yhQo
Crucially, the game offers gamers several gameplay modes that cater to unique player preferences. The three major player modes include:
- Coinpocalypse: This is a treasure hunt game mode that allows players to collect coins from different players and within the game.
- Anarchy: This is a PVP game mode that allows players to fight and compete against each other in a designated zone in an elimination battle.
- Hang Out: For players who do not want to constantly battle, this mode provides a setting whereby players can explore the city at their leisure, engage in activities like skateboarding, or just chill and watch content in the game’s movie theatre.
Strengths
- AI Innovation: My Pet Hooligan ranks as the first-of-its-kind blockchain game that implements AI technology to enhance the gameplay.
- AI Entertainment: The game also offers an in-game AI entertainment studio that allows users to stream and create content and interact as their in-game avatars.
- Team strength: One of the most important factors driving My Pet Hooligan’s growth is the strong team from AGMI Studio that has worked on popular gaming titles such as Toy Story.
- Next-generation gaming: The game implements next-generation technologies such as AI to help bridge the gap between traditional gaming and Web 3 gaming, building exciting games for all players.
AMGI Studios was co-founded by Roger Paglia, Colin Brady, and Luke Paglia.
Weaknesses
The only weakness of My Pet Hooligan is that the game is still relatively young in the Web 3 gaming space and hence could be susceptible to a few bugs. Nonetheless, the team works round the clock to ensure the game is running smoothly by removing any critical bugs.
Technology and Market Performance
My Pet Hooligan is built on the KARRAT Protocol, a decentralized gaming infrastructure layer supported by its native $KARRAT token. The protocol aims to revolutionize Web 3 gaming and entertainment by integrating artificial intelligence technologies into its games.
By integrating AI, My Pet Hooligan offers players an immersive and exciting experience across Hooliland City, interacting with other gamers and earning rewards in the process. The addition of AI-driven non-playable characters (NPCs) allows gamers to build real-time animation that establishes a living, and breathing world that reacts to player interactions.
The KARRAT Protocol not only provides gaming products but also allows game developers to build products that support other industries including retail, telecom, education, and other industries. The protocol provides tools that support the creation and adoption of these industries within their games. The decentralized communities decide how these are integrated and progressed.
My Pet Hooligan leverages the $KARRAT token within its ecosystem. The $KARRAT token launched in 2024, and despite the recent downturn in crypto market fortunes has performed relatively well. The token currently trades at $0.61, an 8% growth in the past 24 hours, having reached a peak price of $1.18 in June 2024.
Futuristic Overview & Potential
My Pet Hooligan development team has a solid roadmap for the coming months, showing its potential to take over Web 3 gaming. The game has introduced AI-integrated NPC characters within its metaverse, actively contributing to the immersive nature of the game experience. Advanced AI NPCs represent the next phase in the evolution of non-player characters. According to its roadmap, the game will also include AI-driven game characters training that will be modeled on organic player behaviour.
Additionally, the game also includes staking features for NFTs, rewarding stakers with $KARRAT tokens.
Table comparing features of Axie Infinity and My Pet Hooligan
| Features | Axie Infinity | My Pet Hooligan |
| Barrier to entry | High due to entry costs | Low – Free-to-Play |
| Blockchain | Ronin | Ethereum |
| Gaming engine | Unity | Unreal 5 |
| Community | Over 1 million community members | Slightly less than 300K members |
| Tokenomics (Total supply) | 270,000,000 $AXS tokens | 1,000,000,000 $KARRAT |
| Economic Maturity | High | Medium (Growing) |
Final Words
The blockchain gaming ecosystem has seen a massive shift in attention over the past two years, with investors and crypto aficionados moving towards new technologies in the space. Nonetheless, the ecosystem continues to thrive in development and innovation. Axie Infinity has laid a strong foundation for play-to-earn models, demonstrating both the potential and challenges of blockchain gaming. On the other hand, My Pet Hooligan is pushing the boundaries with innovative AI integration and a focus on immersive, next-generation gaming experiences.
As the gaming landscape evolves, new technologies employed by projects such as My Pet Hooligan will be important in providing compelling, accessible gameplay that can compete with traditional Web 2 games.
United States-based spot Bitcoin exchange-traded funds (ETFs) have experienced their largest day of net inflows in over a month, even as the crypto market struggles. On July 8, eleven funds collectively amassed $295 million in inflows.
This marked the first time in three trading weeks that net inflows across all funds were positive.
BlackRock’s iShares Bitcoin Trust ETF led the pack with a significant daily inflow of $187.2 million.
Fidelity’s Wise Origin Bitcoin Fund followed, garnering $61.5 million.
Additionally, the Grayscale Bitcoin Trust saw a rare day of positive price action, achieving $25.1 million in inflows.
READ MORE: Bitcoin Mining Difficulty Drops Over 5% to Quarterly Low, Impacting Profitability Thresholds
This surge represents the most substantial day of inflows since June 5, when ETFs attracted over $488 million in new capital.
These developments occur amid broader market concerns related to significant Bitcoin sales by the German government and upcoming repayments to Mt. Gox creditors.
To date, the German government has moved over 26,200 BTC — valued at $1.5 billion at current prices — to exchanges and market makers.
According to Arkham Intelligence data, the government still holds 27,460 BTC, worth approximately $1.57 billion, in reserve.
Simultaneously, there are apprehensions about the potential market impact of $8.5 billion in Bitcoin as the defunct Japanese crypto exchange Mt. Gox starts repaying creditors who lost funds in a 2014 hack.
However, some analysts suggest that concerns over Mt. Gox Bitcoin sales might be exaggerated.
The price of Bitcoin has seen a decline over the past two trading weeks, dipping to $53,600 on July 5. This marks the first time the asset has traded below $54,000 since February.
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Eli Ben-Sasson, CEO of StarkWare, announced at EthCC on July 10 that StarkWare plans to introduce staking by the end of 2024 through a Starknet improvement proposal (SNIP).
If the community approves the SNIP, staking is expected to go live on testnet soon, with a mainnet launch projected for the fourth quarter.
A GitHub repository for the staking feature will be publicly accessible during its development.
In a written Q&A with Cointelegraph, Ben-Sasson explained that staking would allow Starknet tokenholders to “participate in core activities of a decentralized network.”
He added, “Over time stakers will gradually receive more responsibilities, with rewards conditioned on performing these responsibilities.
“After a PoS protocol has been fully implemented, stakers will be the key entities that maintain and operate Starknet.”
The SNIP will permit users to become stakers if they hold the minimum staking amount or delegate to an existing staker.
Participants in staking, either directly or through delegation, can expect proportional rewards based on their stake.
Rewards will follow the minting curve proposal, which was well-received by the Starknet community when published in February.
The proposal suggests that higher total minting rates will result from more tokens staked, but individual staking rewards will decrease as a percentage of the staked amount.
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Ben-Sasson explained, “The core idea of the minting curve mechanism is to strike” a balance between encouraging participation and keeping inflation in check, “and ensuring enough STRK tokens are available” for other network activities.
Starknet staking will be rolled out in stages.
Initially, stakers will need to connect to Starknet, interact with staking contracts, and follow protocol staking rules.
They will be expected to run full nodes to prepare for validation activities.
During this phase, the StarkWare team, Starknet Foundation, and the community will analyze on-chain staking data to refine parameters for subsequent updates.
Later stages will require stakers to provide real-time attestations and perform proving and sequencing activities to secure the network.
Regarding future governance, Ben-Sasson stated, “Staking power will, in due course, enable voting power, ensuring that those who are actively contributing to the network have a say in its direction and decisions.”
On May 28, the Starknet Foundation announced it would distribute 20 million Starknet (STRK) tokens to the most advanced projects on the network.
Diego Oliva, CEO of Starknet Foundation, told Cointelegraph that the team considered a “range of metrics” for the distribution as part of its Catalyst program, which aims to accelerate the development of Starknet’s Ethereum layer-2 solution based on zero-knowledge rollup technology.
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The wallet labeled “German Government (BKA)” on Arkham Intelligence has recently added 6,000 more Bitcoin, valued at $354 million, in preparation for another round of BTC sell-offs.
So far, 5,853.409 Bitcoin have been transferred to addresses associated with exchanges like Coinbase, Kraken, Flow Traders, and other unidentified or unconfirmed addresses.
The next phase involves offloading approximately $342 million worth of BTC.
This follows the previous distribution of 3,100 BTC, valued at $178 million at the time, on July 9.
Additionally, the wallet withdrew 1,700 BTC, worth $91.78 million, from Bitstamp, suggesting difficulties in selling them on the exchange.
As of July 9, the wallet’s holdings were about 26,000 BTC, worth roughly $1.5 billion, with a linked address holding 4,800 BTC.
By July 10, the holdings had decreased to approximately 18,110 BTC, worth $1.06 billion, a drop of over $400 million.
Dr. Lennart Ante, CEO of Blockchain Research Lab, told Cointelegraph that investigators from the federal state of Saxony seized the BTC funds.
He explained, “The funds are said to have originated from the illegal streaming portal Movie2k, and one of the defendants facilitated the voluntary transfer of the funds.”
“The Public Prosecutor General’s Office has sole authority over the confiscated Bitcoins.
The BKA (German State Police) just provides the wallets through which the transactions are processed,” Ante added.
He further detailed that the proceeds go to the state budget of the Free State of Saxony, but filmmakers, as victims of Movie2k, could claim parts of it, pending court decisions.
READ MORE: German Government Continues Bitcoin Sell-Off, Shifts $178 Million in BTC in One Hour
Despite the sell-off and over $1 billion in BTC entering the market, Bitcoin’s price has rebounded to highs of $58,000 after dipping to $53,900.
Ante noted that the ongoing events raise questions about the efficiency of the Saxon government’s sales strategy, suggesting auctions or OTC deals might be more effective.
Out of nearly 50,000 BTC seized, only about 13,110 BTC, worth $770 million, remain, resulting in the German government losing its BTC billionaire status.
The BTC sell-off aligns with the Mt. Gox initiation of BTC and Bitcoin Cash (BCH) repayments to creditors.
Ante remarked that this event might soon be overshadowed by new developments like the Mt. Gox payouts, which could lead to a broader distribution of Bitcoin ownership, potentially benefiting Bitcoin in the medium term.
As of now, BTC’s price stands at $58,545, with the total cryptocurrency market capitalization at $2.15 trillion, up 1.39% in the last 24 hours.
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Centralized exchanges have become the primary targets for crypto thefts in 2024, according to Cyvers’ mid-year Web3 security report.
The total volume of stolen cryptocurrency is nearing $1.4 billion this year.
The second quarter of 2024 saw over $600 million in crypto losses, doubling the amount from the same period in 2023.
This dramatic increase is largely due to a 900% rise in thefts from centralized exchanges.
“This quarter has witnessed a significant shift in attack vectors, with centralized exchanges (CEX) bearing the brunt of major incidents, while decentralized finance (DeFi) protocols show improved resilience,” the report stated.
“This trend may be attributed to the concentration of assets in centralized platforms and potentially lax security measures in some exchanges.”
Access control breaches, particularly phishing attacks, were responsible for most of the stolen funds, totaling about $490 million in Q2.
In contrast, smart contract exploits resulted in less than $70 million in losses during the same period.
DeFi protocols have managed to protect users through quick action to freeze compromised smart contracts, although Cyvers warned that new vulnerabilities in complex contracts continue to pose risks.
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Cross-chain bridges are also emerging as significant targets, with the report highlighting the $1.44 million exploit of XBridge in April.
A major incident impacting Cyvers’ Q2 data was the breach of Japanese cryptocurrency exchange DMM in May, where a compromised private key led to over $300 million being stolen.
Additionally, Turkish cryptocurrency exchange BtcTurk suffered a $50 million loss to hackers in June.
The report noted a positive trend in the recovery of stolen funds, with a 42% increase in recovered funds in Q2 compared to the same period in 2023.
However, the majority of stolen funds (around 76%) remain unrecovered.
Cyvers emphasized the need for vigilance among Web3 users, highlighting emerging threats from artificial intelligence and quantum computing, which could provide hackers with advanced tools to bypass onchain security measures.
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The German government has continued its Bitcoin sell-off, moving approximately 3,100 BTC worth around $178 million within an hour on July 9.
Additionally, they withdrew about 1,700 Bitcoin, valued at $91.78 million, from Bitstamp, recouping BTC holdings from the exchange.
At the time of writing, the government has shifted another 3,107 BTC from its main holdings, likely preparing for an imminent sell-off.
The primary government address holds around 26,000 BTC worth $1.5 billion, while the off-loading address holds 4,800 BTC worth $276.61 million.
According to Arkham Intelligence, since 7:30 am UTC on July 9, there has been a total outflow of 3,100 BTC.
Of this, 2,500 BTC were sent to an unknown B2C2 Group, 400 BTC to the centralized exchange Kraken, and 200 BTC to an unknown wallet.
The German government sold an additional $900 million worth of BTC on July 8, indicating plans to continue gradually selling its remaining $1.5 billion in Bitcoin holdings.
The 16,309 BTC sold is now worth over $930 million despite the mass sell-off, suggesting buyers remain confident at this price range.
READ MORE: Bitcoin Mining Difficulty Drops Over 5% to Quarterly Low, Impacting Profitability Thresholds
Wall Street traders anticipate a 72% chance of the US Federal Reserve cutting interest rates in September, which could boost investment in BTC.
This macroeconomic trend tends to significantly impact assets like BTC, seen as a risk-on asset, unlike gold, which attracts liquidity during geopolitical instability.
Alongside the BTC sell-off, a reduction in BTC miner activity and reserve sell-offs suggests market sentiment might be nearing its bottom.
According to Bitfinex analysts, July 6 and 7 market data indicated a local bottom, despite Mt. Gox starting its BTC and Bitcoin Cash (BCH) repayments.
Despite the BTC sell-offs by the German government and Mt. Gox repayments, several indicators suggest BTC is poised for a rebound.
BTC reached its lowest point since late February, dropping to $53,550 before rebounding to current highs of $57,600.
The relative strength index (RSI) showed a growing divergence between the falling price and rising RSI value, suggesting weakening sell pressure.
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Bitcoin’s significant sell-off might offer buy-and-hold enthusiasts a chance to purchase BTC ETF shares at lower prices.
Spot Bitcoin dropped to around $53,500, a four-month low, on Friday due to anticipated large BTC liquidations by Germany’s government and Mt. Gox, the defunct Japanese crypto exchange.
The share prices of major BTC ETFs are already being affected, and continued market volatility could lead to appealing discounts.
Bitcoin ETFs, such as Franklin Templeton Digital Holdings Trust (EZBC), VanEck Bitcoin Trust (HODL), and iShares Bitcoin Trust (IBIT), have become the benchmark for spot BTC holders since U.S. regulators approved these publicly traded funds in January.
However, the robust protections and security measures of these funds have resulted in shares trading at persistent premiums to their net asset value (NAV) since their inception, driven by institutional investments.
As of early July, the top five Bitcoin funds traded at an average premium of nearly 1%.
ETFs rely on a select group of professional market makers called “authorized participants” (APs) to maintain ETF share prices aligned with the fund’s NAV.
These APs are the only traders allowed to exchange and redeem BTC ETF shares for spot BTC, profiting from intraday pricing spreads.
Currently, only a few APs are equipped to handle BTC spot trading, making ETF shares susceptible to sharp price movements in volatile markets.
The ongoing liquidations by Germany and Mt. Gox could introduce billions of dollars of sustained selling pressure, leading to volatility and potentially wider ETF price swings, creating arbitrage opportunities for traders.
If traders are hoping for an arbitrage similar to the Grayscale Bitcoin Trust (GBTC) discounts of late 2022, they might be disappointed.
The GBTC situation, where shares traded at discounts approaching 50% of NAV, is unlikely to reoccur due to vastly improved liquidity and increasing institutional investor awareness of BTC’s value.
Bitcoin funds have already seen $398 million in net inflows since the recent sell-off.
Nevertheless, significant opportunities might still be available.
In May, shares of BlackRock’s IBIT ETF briefly dipped to a discount of nearly 2% during institutional end-of-month rebalances amid market volatility.
Other funds, including FBTC, BITB, and ARK 21Shares Bitcoin ETF (ARKB), also traded at discounts of nearly 1.5%.
With upcoming BTC liquidations from Germany and Mt. Gox, market volatility is expected to rise.
Investors should monitor ETF arbitrage opportunities closely, especially in EZBC, HODL, and IBIT, which offer attractive management fee discounts, some waiving fees entirely until 2025.
Traders willing to navigate the current volatility may find benefits.
Despite the selling pressure, BTC could see a bullish turnaround by year-end, driven by potential Federal Reserve interest rate cuts and favorable odds for Donald Trump in the upcoming U.S. presidential election.
Now is the time to look for discounts.
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