SoFi - What is it and why are people getting rugged?

Sunday is upon us.

So here’s your weekly breakdown of all the major things that happening in the crypto markets this week. Let’s get stuck in.

1. Social Finance (SoFi) - What is it and why are people getting rugged?

Avalanche's Stars Arena, a recently launched social application, suffered a significant security breach. Attackers exploited a smart contract, draining approximately $3 million worth of AVAX tokens.

This is shortly following the exploitation of a rival SoFi application on Avalanche, Friend. Tech launched on Coinbase’s L2 solution, BASE has seen users targeted in SIM swap exploits with an estimated $385,000 with of ether lost so far.

Social Finance is a fusion of a web 2.0 experience (like X/Facebook etc)/ web 3.0 and finance to provide rewards to users through tokenising social influence and has grown real traction in 2023.

You can connect up X/Twitter for example with an ETH address associated with it, which at the surface level looks like a great way to ease the transition of transferring money and funds between one another however it opens up vulnerabilities of people being targeted by hackers.

Why it's important to investors

This incident highlights the vulnerability of emerging DeFi platforms and underscores the importance of rigorous security measures in the crypto space. Investors should exercise caution and conduct thorough due diligence before participating in new projects, even if they gain quick popularity.

When it's happening

The attack was confirmed on Saturday morning, following warnings from users about potential security issues. The exploit occurred just over a week after Stars Arena's launch and amidst positive attention from some members of the Avalanche community.

2. FTX & Sam Bankman-Fried: Trial Begins

Sam Bankman-Fried, the founder of the cryptocurrency exchange FTX, is currently facing a high-profile trial involving allegations of fraud, securities violations, and commodities fraud linked to FTX's operations.

The trial has unveiled significant revelations, including admissions by FTX co-founder Gary Wang that the exchange provided "special privileges" to Bankman-Fried's hedge fund, Alameda Research, allowing unlimited fund withdrawals.

Additionally, Paradigm, a venture firm that invested $278 million in FTX, testified that they had marked down their investment to zero dollars. This suggests substantial losses associated with their investment in FTX, raising concerns about the exchange's financial stability and practices.

Furthermore, the trial exposed a critical software bug in 2022 that resulted from how FTX handled customer deposits, leading to an $8 billion overstatement of Alameda's holdings.

Asset forfeiture attempts, revelations about token lockup adjustments, and claims of dishonesty in FTX's operations have added layers of complexity to the trial.

Why it's important to investors: 

Investors in the cryptocurrency space should closely monitor this trial as it could have broader implications for the industry. The allegations of fraud and misconduct within FTX, a major crypto exchange, raise concerns about regulatory compliance and transparency.

The trial's outcome could definitely influence future regulatory actions and investor sentiment in the crypto market.

When is it happening: 

The trial is ongoing and could last up to six weeks. Various testimonies and allegations have been presented, exposing questionable practices and emphasising the importance of regulatory compliance in the crypto space.

3. ETH ETFs Launched in the US

Three prominent U.S. investment managers, ProShares, VanEck, and Bitwise Asset Management, have introduced a groundbreaking series of exchange-traded funds (ETFs) that are linked to the value of Ethereum (ETH), the second-largest cryptocurrency in the world.

These ETFs mark a significant step forward in the cryptocurrency market as they offer investors an unprecedented opportunity to engage with Ethereum through regulated and futures-based investment products.

This is especially noteworthy because it allows investors, including those traditionally wary of the crypto space, to access Ethereum in a structured and secure manner.

These six new ETFs collectively opened with a trading volume of $1.92 million on their debut trading day. Among them, the ProShares Ether Strategy ETF took the lead with trading valued at $878,560.

The introduction of these Ethereum-focused ETFs demonstrates the growing mainstream acceptance of cryptocurrencies as investment assets and shows how traditional financial institutions are adapting to meet the demands of modern investors.

While the crypto market continues to evolve, the launch of these ETFs represents an important step forward in bridging the gap between traditional finance and the rapidly expanding world of digital assets, paving the way for broader adoption and investment in cryptocurrencies.

Why it's important to investors:

This development is significant for investors as it offers a new way to gain exposure to the cryptocurrency market, specifically ether.

These ETFs provide a structured and regulated means of investing in digital assets, potentially attracting traditional investors who may have been hesitant to enter the crypto space directly.

Furthermore, it demonstrates the growing acceptance of cryptocurrencies within the financial industry, as well as the willingness of regulators like the U.S. Securities and Exchange Commission (SEC) to consider crypto-based investment products.

4. October - Crypto of the Month

Check out our last article here to see what we think is a crypto project which will outperform most in the next bull run:

Latest Industry News

Kraken expands into the EU:

UK exchange Kraken is acquiring Dutch exchange Coin Meester B.V. as a move to expand its presence in Europe, given the Netherlands' rapidly growing economy, innovative culture, and high adoption rate of cryptocurrencies, making it a key market for further growth.

This expansion comes as Kraken has recently secured regulatory approvals for Virtual Asset Service Providers (VASPs) in Ireland, Italy, and Spain, fueling optimism for more market entries in the continent.

Huobi’s exchange HTX gets back $8M in stolen funds:

Huobi has successfully recovered the $8 million in stolen funds after a hacker drained one of its wallets containing 5,000 ETH, and the exchange has issued a 250 ETH bounty to the hacker as a reward for returning the funds, with HTX initially offering a 5% bounty worth approximately $400,000 if the hacker returned 95% of the stolen funds by October 2; this recovery follows a surge in cryptocurrency-related hacks in the third quarter of 2023, with 76 reported hacks compared to 30 in the same period the previous year, including a $200 million attack on the Mixin Network.

JP Morgan’s UK bank Chase ban’s Crypto Transactions (sigh)

Chase has announced that it will prohibit crypto transactions made by its customers starting from October 16 due to a rise in fraud and scams targeting UK consumers, becoming the latest UK lender to restrict customer access to cryptocurrencies amid concerns about their use in online scams, following actions by other banks like NatWest and Santander to impose limits and block real-time payments to crypto exchanges to protect customers from scams.

There are Fortunately, several other banks in the UK have no quarrels with transactions to exchanges, so best to potentially look at transitioning if you use Chase.

Market Movements

Total Market Cap:

• Currently sitting at $1.06 Trillion as of today.

• Floating below the Key Fibonacci level of 0.382 ($1.157 Trillion) which is acting as heavy resistance right now.

• Areas of liquidity sitting around $1 Trillion as well as below down to $870 Billion which equates to the $20,000 - $22,000 range for BTC.

  

Top 10 Cryptocurrencies:

• Bitcoin’s market cap is around $543 billion rising 7% since last month’s newsletter and Ethereum’s is just shy of $200 billion, down 0.38%.

• SOL has reclaimed its dominance of market share over the likes of DOGE and TON climbing 18% in the last month.

• The market is showing signs of strength in line with the historical patterns of growth for BTC in what is referred to as ‘Uptober’.

Key Indicators:

MVRV: 

The MVRV Z-Score uses blockchain analysis to identify periods where bitcoin is significantly over or undervalued relative to its ‘fair value’.

It can be a good sign to an investor/trader of when to buy or sell. You can read more in detail about how it can be used here.

MVRV-Z Score Currently: 0.53

Fear and Greed:

Investors need to be cautious of their own nature as their emotions could cloud their rational decision-making and judgement.

This Index is a collection of sources to track the general sentiment of the crypto market.

Fear/Greed Indicator Currently: 50

• Extreme fear can be a sign that investors are too worried. That could be a buying opportunity.

• When Investors are getting too greedy, that means the market is due for a correction.

Recommended Crypto Accounts to Check Out

That’s all from us this week, before we let you go here are some of our favourite Twitter pages for great content and deep dives on specific Crypto projects.

Shout us out if you find them valuable (we’re sure you will):

Just remember if you’re reading this, we’re so early in this journey of technology.

Zoom out, stick to your intuition and have patience - all great things come with time.