Hello world, we at Liminal are extremely proud to present to you the monthly edition of our Security and Regulatory Newsletter.
Liminal believes in optimising security and custody practices globally across the Web3 industry. Through our monthly newsletter, we highlight incidents pertaining to security, regulations and compliance that have happened in the past month and how one can follow better security practices to safeguard their digital assets.
We will also highlight regulatory changes that might have happened globally, which were significant to the overall ecosystem.
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Dive in and get a detailed analysis of everything security and regulation in the domain of web3 with Liminal’s Monthly Security and Regulatory Newsletter.
Web3 Security Compromises in April
Arbitrum airdrop plagued by downtime, bugs, and scams
The most anticipated airdrop happened this month, with the launch of Arbitrum protocol’s native token $ARB. Needless to say, the planned airdrop was overwhelming, and the execution was met by challenges that highlighted the vulnerabilities in incapacity to host millions of requests on Arbitrum’s website, transaction failures even at L2 chains combined with scams of duplicate $ARB airdrops and bugs discovered while processing legit addresses.
A token airdrop from the popular Arbitrum Ethereum L2 illustrated many of the challenges with airdrops: events where tokens are automatically distributed to a group of crypto wallets, in this case, based on how much they had used the platform. The tokens will ultimately be used for community voting on protocol changes but also have value in the secondary market. Users were eager to snap them up, particularly as users speculated that the price could reach $10/token (as yet, it has not, remaining around $1.38)
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$8.9 million stolen from SafeMoon
If the pump-and-dump didn’t get you, the liquidity pool compromise might have! Holders of the SafeMoon token were informed that the SafeMoon liquidity pool had been compromised, and $8.9 million had been stolen after a code upgrade introduced a bug. The attacker was able to take advantage of the bug to inflate the price of the SafeMoon token artificially, then sell it to steal the erroneous “profit”.
Terra/Luna founder Do Kwon arrested
The founder of Terra/Luna, the stablecoin that crashed dramatically in May 2022 and has subsequently been alleged to be a massive fraud, has been arrested in Montenegro.
After the collapse, Kwon became a fugitive. South Korea issued a warrant for his arrest in September, and Interpol issued a red notice. However, he remained on the rum for some time, reportedly hiding in Serbia for a time — a country with no extradition agreement with South Korea, until finally he got arrested, bringing much peace to community members who lost their funds in the crash.
Web3 Regulatory Practices for April
EU Implements 1,000 Euro Ceiling on Crypto Transfers
The European Parliament is implementing a large-scale overhaul of money laundering laws with the approval of three new draft bills.
The first adopted text requires crypto asset managers to identify their customers and associated risks, limiting anonymous crypto transfers to 1000 euros.
Illinois Proposes a Bill to Regulate Crypto
Illinois’ proposed crypto bill (House Bill 3479), also called the Digital Assets Regulation Act (DARA), seeks to regulate crypto business activity in Illinois.
The bill, which has received mostly negative reactions from the crypto industry, grants the state more power to investigate unapproved digital asset transactions and arrest those against the guidelines.
EU Passes Bill to Regulate Smart Contracts
The European Parliament passed the 2022 Data Act on March 14 with 500 votes in favour and 23 against it, which includes provisions on smart contracts. It mandates that smart contracts must have access controls, protect trade secrets, and have functions to terminate or reset.
The new rules will come into force in 2024, and companies will have to adhere to them to serve EU-based consumers.
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by Liminal
