New NFT initiatives are launched across industries; Banking agencies publish crypto guidance; Enforcement Agencies Bring Crypto Actions; Reported Crypto Hack | Baker Hostetler

New NFT initiatives announced in the jewellery, automotive and spirits industries

Of Lauren Bass

An American luxury jeweler has reportedly partnered with popular NFT (non-fungible tokens) aggregator CryptoPunk to transform the digital collectibles into wearable works of art. According to reports, for 30 ETH (roughly $50,000), current CryptoPunk holders can purchase a unique “one-of-a-kind jewelry experience” NFT, which will allow their CryptoPunk digital avatar to be recreated as a custom diamond-encrusted pendant. Only 250 “experiences” will be available. Within 24 hours of announcing this exclusive collaboration, CryptoPunk sales reportedly increased by 248 percent.

Following the debut of its premiere collection earlier this year, a South Korean motor company has reportedly launched a second NFT collection – a membership program for NFT holders that will provide access to exclusive “phygital (physical + digital) experiences that merge the real and the real digital worlds .” According to reports, these experiences include access to digital metaverses, digital content gifts, and special physical consumables.

In similar news, a French cognac distillery has reportedly teamed up with R&B superstar Usher to launch a hybrid NFT collection that uses artificial intelligence technology to transform the artist’s lyrics into digital works of art. Offered exclusively on BlockBar.com, each NFT will be priced at $500 (fiat or ETH). According to reports, NFT holders will be given the option to (i) keep NFT; (ii) resell it; or (iii) redeem your NFT for a limited edition cognac bottle.

With more brands offering NFTs, researchers have tracked how and on which collections consumers spend their money. According to a recent report, in the first half of 2022 users spent approximately $2.7 billion minting NFTs, with the majority of activity on OpenSea and more than 1 million unique wallet addresses participating. This research suggests that the NFT market remains strong.

For more information, please see the following links:

US banking agencies publish notices on crypto firms and deposit insurance

Of Robert A. Musiala Jr.

This week, the U.S. Federal Reserve and the federal agency that insures U.S. depository institutions issued a series of notices addressing the applicability of federal deposit insurance to the cryptocurrency industry. The agencies published a joint letter demanding that a certain “crypto brokerage firm … cease and desist from making false and misleading statements regarding its … deposit insurance status and take immediate action to correct such prior statements.” According to a press release, the “cryptobrokerage firm” made false and misleading statements suggesting that it was insured by federal deposit insurance and that clients of the cryptobrokerage firm were insured against the firm’s failure.

In another press release, the same two federal agencies issued an advisory — “Advisory to … Insured Institutions Regarding Deposit Insurance and Trading of Crypto Companies” — and published a related fact sheet. According to the press release, the federal deposit insurance company “does not insure assets issued by non-bank entities, such as crypto companies.” The press release notes that the council “reminds insured banks that they must be aware of how [federal deposit] insurance operates and needs to assess, manage and control risks arising from third-party relationships, including those with crypto companies.” The press release also informs US banks that “[i]n dealings with crypto companies … banks should verify and monitor that these companies do not misrepresent the availability of deposit insurance.” The advisory lists risk management and governance considerations that banks should address in their dealings with crypto companies. The advisory also clear that federal deposit insurance “does not protect a nonbank’s customers against the default, insolvency, or bankruptcy of a nonbank entity, including crypto custodians, exchanges, brokers, wallet providers, or other entities that appear to mimic banks but are not.” The advisory and fact sheet also lists additional resources for banks and crypto industry firms to consult on the subject of federal deposit insurance.

For more information, please see the following links:

Several agencies are targeting cryptocurrency fraud and violations

Of Joanna F. Wasick

Earlier this week, the Securities and Exchange Commission (SEC) announced that it charged 11 people for their roles in creating and promoting Forsage, an alleged fake crypto pyramid and Ponzi scheme, which raised more than $300 million from millions of retail investors worldwide , including in the United States. Those charged include Forage’s four founders (last known to live in Russia, the Republic of Georgia and Indonesia) as well as three US-based promoters engaged by the founders to support Forsage, and several members of the “Crypto Crusaders”, a campaign group. “As the complaint alleges, Forsage is a fraudulent pyramid scheme launched on a massive scale and aggressively marketed to investors,” said Carolyn Welshhans, acting head of the SEC’s Crypto Assets and Cyber ​​Unit. “Fraudsters cannot circumvent the federal securities laws by focusing their schemes on smart contracts and blockchains,” Welshhans said.

The US Department of Justice (DOJ) also made an announcement this week, stating that two Californians were sentenced to more than a year in federal prison for defrauding more than 2,000 investors into buying DROPS, a cryptocurrency that allegedly provided exclusive access to a profitable trade. program. According to a press release from the DOJ, most of the collected $1.9 million was used for the defendants’ personal gain. In sentencing notes, prosecutors argued that the defendants “caused significant financial harm to an extremely large number of victims and involved efforts to derail law enforcement’s efforts to root out and address injustice.”

On Monday, the New York State Department of Financial Services (DFS) issued a consent order imposing a $30 million fine on a major US cryptocurrency exchange and trading platform for allegedly failing to comply with New York’s anti-money laundering and cybersecurity laws and regulations. The case marks DFS’s first enforcement action in the cryptocurrency sector. On the same day, the New York Attorney General issued an investor alert urging any New Yorker who was defrauded or affected by the cryptocurrency crash to contact the Office of the Attorney General (OAG). The alert warns that many high-profile cryptocurrency companies have frozen customer withdrawals, announced mass layoffs or filed for bankruptcy, while investors have been left in financial ruin. The notice also encourages workers in the cryptocurrency industry who may have witnessed misconduct or fraud to submit a whistleblower complaint to the National Audit Office.

For more information, please see the following links:

Nomad Bridge hacked, stole crypto valued at approximately $200 million

Of Jordan R. Silversmith

According to reports, nearly $200 million worth of cryptocurrency was siphoned from Nomad Bridge, a major cross-chain token bridge. The attackers reportedly drained the protocol of most of its funds, drawing more scrutiny to the security of cross-chain bridges, which allow users to send and receive tokens between different blockchains. White-hat hackers and others have reportedly returned $9 million of the lost funds to the bridge, mostly in the form of stablecoins, but most of the funds are still missing. Bridges typically work by locking tokens in a smart contract on one chain and then reissuing those tokens in packaged form on another chain. However, if the smart contract where the tokens are deposited is sabotaged – as happened in this attack – the wrapped tokens will no longer have backing, which could render them worthless. In a recent report, blockchain analytics firm Chainalysis estimated that around $2 billion in cryptocurrency has been stolen from cross-chain bridges in 13 separate hacks so far this year, with attacks on cross-chain bridges accounting for 69 percent of funds stolen this year.

For more information, please see the following links:

Multiple hacks reported across various sectors of the cryptocurrency market

Of Robert A. Musiala Jr.

Several hacks were reported in the crypto market this week. According to reports, more than 8,000 Solana Network wallets have been hacked, with approximately $8 million in cryptocurrency value stolen. The hackers reportedly obtained the private keys needed to initiate and approve transactions on behalf of the wallet users, potentially indicating that a third-party service that holds the private keys for multiple wallets may have been compromised. According to reports, Slope wallets and Slope-bound Phantom wallets may have been targeted by the hackers.

In a separate incident, the ZB cryptocurrency exchange was reportedly hacked this week, with the hackers stealing approximately $5 million in crypto. According to reports, the stolen crypto was later sold on decentralized exchanges.

And in a third incident, a blockchain security firm reported a new phishing campaign targeting MetaMask wallets, which are among the most popular Ethereum Network wallets. The phishing campaign reportedly uses email to trick MetaMask users into giving the attackers their MetaMask wallet passwords. Among other things, the phishing emails will contain MetaMask logos, use a fake domain (metamaks.auction) and ask users to verify their wallet to comply with know-your-customer regulations.

For more information, please see the following links:

[View source.]