BTC whales’ buying spree continues as another DeFi bridge is exploited | Industry Analysis| OKX Academy

BTC rises on momentum from large public buyers, but regulation worries begin to take root in Europe.

It was a volatile week for crypto markets, which saw both BTC and ETH prices increase early alongside public buys of the former from Terra and MicroStrategy. Some of these gains were erased on Thursday, prompted by fears of regulation and sell-offs in equity markets. The industry also saw another massive exploit in the decentralized finance sector — this time, on Axie Infinity’s Ronin Bridge. 

Here’s everything you need to know about these stories, and more, in this week’s edition of OKX Insights’ News of the Week.   

Michael Saylor joins Do Kwon in BTC buying spree 

MicroStrategy CEO Michael Saylor disclosed Tuesday that MacroStrategy, a subsidiary of his company, had secured a $205,000,000 loan from Silvergate Bank, using BTC as collateral, with the intent to purchase more. This comes on the heels of Terraform Labs cofounder Do Kwon allegedly transferring USDT to Binance on Monday to purchase BTC as a part of Terra’s effort to create a reserve for its stablecoin, UST.

Key takeaways

• This is Saylor’s first purchase using his company’s BTC holdings as leverage — highlighting his conviction in the asset and showing a practical use case of BTC as collateral. 
• While investors are excited about the market’s upward trajectory, some are concerned over the influence that these two individuals have on the price of an asset that is praised for its decentralization.  

Axie Infinity’s Ronin Bridge exploited for over $600M in ETH and USDC 

The team behind Axie Infinity, a popular play-to-earn blockchain game, revealed Tuesday that the bridge to its Ronin sidechain had been drained of 173,600 ETH and 25.5 million USDC. The chain’s security consisted of just nine validators. The hackers compromised five to gain a majority, then pushed through their transactions and drained the funds. Shockingly, the transactions occurred on March 23, though the exploit was not discovered until March 29. 

Key takeaways

• While a more-centralized system may be more efficient, situations like this emphasize the importance of decentralization for a permissionless blockchain. A nine validator system is a prime target for attackers — especially with half-billion-dollar sums on the line.
• This is the second high-profile bridge exploit in recent months, following the Wormhole exploit in early February, when attackers took 120,000 ETH. As cryptocurrencies become increasingly cross-chain, it will be interesting to see how security develops in this precarious area of infrastructure. 

CowSwap governance token launches on decentralized exchanges

Following in the footsteps of applications like Uniswap and 1inch, gasless exchange CowSwap has airdropped tokens to active users of its platform. Trading of this token, COW, began Monday. The airdrop accounts for 10% of the token supply and can be used to govern the protocol as a part of a decentralized autonomous organization dubbed “CowDAO.” 

Key takeaways

• DeFi users continue to be rewarded for experimenting with protocols, increasing the incentive to participate on-chain,
• The CowSwap team also announced a $23 million raise, demonstrating that there is no shortage of fundraising money in the space for early-stage projects.

Bitcoin addresses potentially linked to Cryptsy hack become active after seven years

11,325 BTC were moved from dormant Bitcoin addresses on Tuesday and subsequently linked to the Cryptsy exchange hack from 2014. Cryptsy’s former CEO, Paul Vernon, was indicted in the U.S. in January on counts of fraud and tax evasion — but his whereabouts are currently unknown. It is unclear who is in control of these funds, and the total amount was dispersed to hundreds of different addresses. 

Key takeaways

• If the authorities are able to prove that any of the involved wallets are under Vernon’s control, they might also reveal interesting details about investigations into the movement of assets on-chain.
• Some speculate that the receiving wallets may actually be controlled by the authorities, as was recently the case with the transfer of dormant coins stolen during the 2016 Bitfinex hack — one difference between the two being that the Cryptsy funds were dispersed to a number of different addresses while the recovered Bitfinex coins were sent to just one.

EU advances regulation to crack down on self-custodied crypto wallets

In an effort to apply money-laundering laws to blockchain technology, two committees of the European Parliament voted Thursday in favor of amendments to draft regulations that aim to limit the transfer of cryptocurrencies to and from anonymous wallets. If passed, this will put pressure on exchanges to collect data from self-hosted wallets for deposits and withdrawals, making the entire process more complex. 

Key takeaways

• This is not the final part of the legislative process. The proposal must still be approved by the parliament and national ministers, which will take at least a few months to be complete. 
• If this proposal is passed, many worry that cryptocurrency-service providers will be forced to reject interactions with self-hosted wallets in order to stay compliant with national regulations — as the proposal does not spell out the method of verifying the unhosted counterpart. 

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