SEC - Page 101

In response to a significant cyberattack, WazirX, one of India’s leading cryptocurrency exchanges, has launched a bounty program aimed at freezing and recovering stolen assets.

The exchange detailed several immediate actions in a post on X, including filing a police complaint and reporting the incident to the Financial Intelligence Unit (FIU) and CERT-In.

WazirX’s co-founder, Nischal Shetty, also posted separately, stating that the exchange is contacting over 500 other exchanges to block the identified addresses linked to the stolen funds.

“Cooperation from these exchanges is crucial as the stolen assets move through various platforms,” Shetty emphasized.

To incentivize the freezing and recovery of stolen assets, WazirX is preparing a bounty program.

This initiative is part of their broader strategy to enhance efforts in tracing the stolen funds.

READ MORE: Worldcoin Faces Allegations of Price Manipulation Amid Token Unlock Delay

The team is also engaging with expert groups specializing in tracking cryptocurrency transactions to provide continuous monitoring and support during the recovery process.

WazirX expressed gratitude for the support from the broader Web3 ecosystem, highlighting the necessity for a collective effort to resolve the issue and uphold the ethos of Web3 communities.

Shetty noted that the team is currently analyzing data to understand the extent of the damage caused by the attack.

“This analysis is crucial for formulating an effective recovery plan and ensuring that all possible measures are taken to address the impact on customer funds,” Shetty stated.

In addition to internal efforts, WazirX is collaborating with forensic experts and law enforcement agencies to identify and apprehend the perpetrators.

This collaboration aims to ensure justice for the culprits and maximize the recovery of stolen assets.

The WazirX breach resulted in a substantial loss of approximately $235 million, making it the second-largest hack of a centralized exchange in recent times, only surpassed by the DMM exploit on May 31, which saw a loss of $305 million.

Crypto investigator ZachXBT revealed in a Telegram post on the “Investigations by ZachXBT” channel that the alleged main attacker’s wallet still holds over $104 million in funds, which have yet to be offloaded.

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New regulations from South Korea’s financial security regulator, aimed at protecting users buying and storing crypto assets with virtual asset service providers (VASPs), came into effect on July 19.

Named the “Virtual Asset User Protection Act,” the law requires VASPs to implement several measures to safeguard users’ crypto, as outlined in a July 17 statement from South Korea’s Financial Services Commission (FSC).

Key mandates include obtaining insurance against hacking and malicious attacks on user assets, keeping customer crypto assets separate from the exchange’s holdings, and ensuring customer deposits are securely held in banks.

Additionally, VASPs must conduct due diligence to prevent money laundering and report suspicious transactions to the regulator.

“VASPs should maintain a surveillance system for suspicious transactions at all times and immediately report suspicious trading activities to the Financial Supervisory Service (FSS),” the statement emphasized.

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“After investigations by the financial and investigative authorities, those found guilty of unfair trading activities may face criminal punishment or penalty surcharge,” it further noted.

Concerns have been raised by South Korean crypto exchanges regarding potential mass delisting of tokens due to the new regulations.

On July 3, Cointelegraph reported that 20 South Korean crypto exchanges plan to review 1,333 cryptocurrencies over the next six months as part of these laws.

According to the Digital Asset Exchange Alliance (DAXA), “the possibility of mass delisting occurring all at once is unlikely.”

In parallel, South Korea’s ruling party, the People’s Power Party, proposed delaying the implementation of the country’s tax on crypto trading profits.

On July 12, the party submitted this proposal, citing deteriorating sentiment towards crypto assets.

They argued that swiftly imposing taxes on virtual assets is “not advisable at this time.”

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Asset management firm BlackRock has announced a fee of 0.25% for its spot Ethereum exchange-traded fund (ETF) ahead of its potential launch next week.

BlackRock’s S-1 registration statement, filed on July 17, outlines that the fee will accrue daily at an annualized rate of 0.25% of the fund’s net asset value.

This fee is payable at least every three months in US dollars, in-kind, or a combination of both.

The firm also mentioned it might waive all or part of the fee for certain periods and plans to do so upon the fund’s launch.

BlackRock’s spot Ether ETF will initially trade at a 0.12% fee until either 12 months pass or the fund accumulates $2.5 billion in net assets, whichever occurs first.

This approach mirrors the fee structure of the iShares Bitcoin Trust.

Other firms have also detailed their proposed fees and waiver periods in their S-1 registration forms. Franklin Templeton’s spot Ether ETF will charge the lowest fee at 0.19%.

The Bitwise Ethereum ETF and VanEck Ethereum ETFs are set at 0.20%, while the 21Shares Core Ethereum ETF’s fee is 0.21%.

Both Fidelity and Invesco Galaxy will offer a 0.25% fee, similar to BlackRock.

However, several firms, including Bitwise, Fidelity, Franklin Templeton, 21Shares, and VanEck, have proposed waiving their fees initially.

READ MORE: Nigerian Stakeholders Advocate SEC to Classify Bitcoin and Ether as Commodities for Regulatory Clarity

VanEck will waive its fee for the first 12 months or until the fund reaches $1.5 billion in net assets. Bitwise will waive its fee for the first six months or $0.5 billion in net assets.

Franklin Templeton has set a waiver until January 31, 2025, or $10 billion in net assets.

Fidelity’s fees will be waived until January 1, 2025, after which they will increase to 0.25%.

Meanwhile, Grayscale will maintain a fee of 2.5% for its spot Ether ETF but will offer a more competitive fee of 0.25% for its newly approved Grayscale Ethereum Mini Trust.

Grayscale plans to use 10% of its spot Ethereum ETF to establish the Ethereum Mini Trust, providing $1 billion in seed funding.

Reports indicate that BlackRock, Franklin Templeton, and VanEck have already received preliminary approval from the United States securities regulator.

Bloomberg ETF analyst Eric Balchunas expects the S-1s to be signed off next Monday, allowing the spot Ether ETFs to start trading on Tuesday, July 23.

Bitwise’s chief investment officer, Matt Hougan, speculated that the spot Ether ETFs could attract up to $15 billion in inflows within the first 18 months of trading, similar to the spot Bitcoin ETFs’ performance since their launch six months ago.

If approved, the spot Ether ETFs will be listed on the Nasdaq, New York Stock Exchange, and the Chicago Board Options Exchange.

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Ethereum‘s price may decline after the initial excitement surrounding spot Ethereum exchange-traded funds (ETF) fades, especially if its supply continues to grow at the current rate, according to an analyst.

“If the supply of ETH keeps increasing by ~60k/month like it has been since April, then by Dec the supply will be back to what it was at the merge,” noted crypto trader and Into The Cryptoverse founder Benjamin Cowen in a July 19 X post.

This refers to the period when Ethereum transitioned to its proof-of-stake consensus model in September 2022.

Post-Merge, Ethereum became deflationary, reducing its supply by approximately 455,000 ETH by April 2024.

However, since then, the supply has increased by about 150,000 ETH. Cowen suggests that if this trend continues, Ethereum’s supply might revert to pre-Merge levels.

“If the supply of ETH keeps increasing at 60,000 ETH per month, then we will see the supply revert to what it was back at the merge,” Cowen reiterated.

He also highlighted, “If it follows 2016, then ETH/BTC final capitulation will not start until September 2024, which would be enough time for the novelty of the spot ETF relative to BTC to potentially wear off.”

Cowen predicts Ether’s price might drop within the next “3-6 months,” despite his belief that in 1.5 years, the price will “likely be higher” than its current value.

READ MORE: Worldcoin Faces Allegations of Price Manipulation Amid Token Unlock Delay

At the time of publication, Ether is trading at $3,507, according to CoinMarketCap.

Onchain analyst Leon Waidmann recently highlighted a “supply crisis” for Ethereum, pointing out that exchange balances have dropped to 10.2% while 39.3% of ETH is locked in smart contracts.

“Most investors don’t realize how tight the ETH supply side is,” Waidmann noted in a July 16 X post.

Meanwhile, the Chicago Board Options Exchange (CBOE) announced on July 19 that five spot Ethereum ETFs would begin trading on July 23, pending regulatory approval.

These include the 21Shares Core Ethereum ETF, Fidelity Ethereum Fund, Invesco Galaxy Ethereum ETF, VanEck Ethereum ETF, and Franklin Ethereum ETF.

On May 23, the United States Securities and Exchange Commission (SEC) approved rule changes allowing the listing of several spot Ether ETFs.

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