We are only a few days into the new month and already most investors can’t wait for August to end. The little hope they had, that things would improve this time around, is quickly diminishing in the face of a relentless onslaught of negative news.
With stories of hackers making off with millions of dollars worth of crypto on one side, and the Securities and Exchange Commission declaring war on Ponzi schemes embedded in the digital assets market on the other, there is nowhere to turn for besieged investors.
As the dream of a decentralized market teeters on the edge of doom, it seems no one really knows what the best course of action might be.
Hacking Issues Causing More Problems
It is a well-known fact that the crypto markets have always been particularly vulnerable to hackers, but the recent spike in online heists has been very alarming. Hackers are having a field day on different online platforms, to the tune of hundreds of millions of dollars.
The start of August brought a lot of misery to the developers of the “crypto bridge” Nomad, as hackers identified and exploited a flaw in their security system and managed to steal close to $200 million worth of cryptocurrency.
Besides the fact that so much was stolen in a very short time, what is more worrying, is the ease with which it was done. After the initial hack, users with no programming knowledge at all were able to copy the initial transaction, and as a result, the hack quickly escalated into a free-for-all before Nomad was able to catch on and stem the flow.
Unlike other well-known platforms, such as Binance and Coinbase, Nomad is what is referred to in the industry, as a “crypto bridge.” It is a link between two platforms that allows users to switch from one currency to another, for example, from BIT to ETH.
What this means is that Nomad is vulnerable to hacking from both ends, which is why similar platforms are regularly targeted by hackers.
Tech lead at Web3 security firm Immunefi, Adrian Hetman, was very critical of Nomad’s security protocols in this instance. He said developers should learn that they are running critical pieces of software and should always put security first.
Responding to this, Nomad said it is working with TRM labs, a security firm, and law enforcement agencies to trace the stolen funds, find the culprits, and hopefully recover the stolen tokens.
Ponzi Probe Adds Another Nail to the Coffin
In the meantime, while Nomad was being hacked, The Securities and Exchange Commission was launching an operation to clamp down on the multitude of Ponzi schemes and fraudulent businesses that have flooded the crypto industry.
11 people were charged with various acts of fraud in connection to the creation and promotion of Forsage, a Ponzi scheme that defrauded $300 million from unsuspecting victims across the globe, including the United States.
Among the group of accused individuals were the four founders of the scheme, who are known to be residing in Russia, the Republic of Georgia, and Indonesia. Three other suspects are based in the United States and have been charged for their role in promoting and endorsing Forsage on their website.
The SEC claims that the defendants were issued a cease-and-desist order back in September 2020, but rather than comply, they carried on with their actions, even going as far as using YouTube videos to deny the allegations.
Referring to what has been a growing trend in Ponzi Scheme circles, Carolyn Welshhans, of the Crypto Assets and Cyber Units division of the SEC, said that fraudsters cannot be allowed to avoid the federal securities regulations by focusing their schemes on blockchains and smart contracts.
This has been a big issue in recent years, with many criminal elements preferring to target investors in the digital assets industry, which, historically, has had a more relaxed approach to protecting the public.
Final Word
There is no respite on the horizon for crypto investors. Even the brief resurgence that was seen in the wake of positive news from the US Jobs report about the increase in job prospects was short-lived. The market soon went back to the slow descent that has been typical since the meltdown started a few months ago.
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