• Kurisu

Distrust and Malpractices are the Minefield of DeFi

The decentralized exchange (DEX), Uniswap, has been around since its launch on November 2, 2018. Recently, thanks to the boom in decentralized finance (DeFi), Uniswap has seen 24 hour trading volume in excess of $210,000,000.00 and total value locked (TVL) of over $2 Billion dollars, which places it at the top of the DEX list of exchanges. Anyone with some ETH in their wallet and a new token smart contract on their computer can run an initial coin offering (ICO) on Uniswap. The smart contract can be copied and pasted together in 5 minutes. A twitter account and telegram account can also be set up in 5 minutes.

Among the most popular actions scammers will often perform is what’s called a “rug pull”, or a liquidity drain while the ICO is ongoing or shortly afterwards. Uniswap and other similar exchanges like Sushiswap do absolutely no vetting which turns DeFi investing into a virtual minefield filled with dishonest projects and corrupt actors. Since we have entered into the Spring of another hype season in the crypto space, unsuspecting investors are at risk of suffering huge losses.

Riding on the coattails of successful legitimate DeFi tokens that have provided staggering yields, malicious rogue actors are flooding automated market makers (AMM)’s like Uniswap with fake tokens. Their modus operandi (MO) is to remain anonymous, or use faked pics and bios of the team. Not all anonymous developers are bad actors, but until there is consistency in the laws even the legitimate actors are wise to follow their legal advisors recommendations and keep their identity anonymous. This is DeFi after all, and the platforms have to be permissionless, trustless and automated in their day to day functioning with governance in the hands of the community rather than the core team of developers to remain immune from the “Travel Rule” of the FATF.

There are many ways for malicious actors to exit scam on their investors. The most obvious way is to not lock up any of the team or liquidity tokens. By not locking tokens, a devious dev could let the ICO go forward until there was sufficient ETH in the contract to satisfy their greed and then use their dev tokens to sell for the ETH in the contract. If the liquidity on Uniswap is not also locked, they can remove it from the smart contract leaving investors with bags of worthless tokens. Token launches on the YFDAI platform have to lock both dev tokens and liquidity or they will not be able to proceed.

Exit scams can occur if the devs have the power to mint new tokens with a minting function in the contract, or even change the contract if they have admin or “God privileges” to alter the code. Even if dev tokens are locked the devs could start buying tokens when the sale opens at the lowest price and then when the price peaks, dump them all, crashing the price. The contract might have bugs in it that enable certain functions to trigger like “withdraw all tokens and ETH” from the contract similar to the SYFI incident where a hacker triggered a bug connected to the rebase function that resulted in his being able to cash out $250,000. The best way to stop these types of malicious acts is to have a reputable company perform an audit of the smart contract that looks for bugs and back doors. YFDAI requires all projects launching on their platform to undergo smart contract audits. Not all projects that launch with unaudited code are necessarily frauds, but it is one of many red flags to look for. If they have the contract audited they can post it on etherscan under the contract tab. That’s where you should check for it. YFDAI’s contract has been audited and you can see the audit at this link.

Another incident that happened recently was the Hatch Rug Pull. What makes this theft interesting compared to most is that the devs behind the Hatch scam had locked their tokens via Trustswap, giving the project the impression of legitimacy. Lurking in the code however was a minting function in the contract that enabled them to mint 2 million new tokens which they then used to sell back to the contract and drain all the ETH liquidity. Trustswap’s CEO denied that they had any culpability for the loss because the software worked as it was supposed to work, and they don’t vet every project and guarantee they are not scams. Here is the response to the community from Trustswap where he confirms they only prevent #1) a) on the list “Dump Team Tokens”: Seeing as there is very little to no chance of any recourse to be had against the anonymous malicious actors who run off with the funds, nor the Trustswap service for doing anything to facilitate the crime, the Hatch investors are left holding the bag. While nobody can 100 % guarantee the legitimacy of any project, the best that can be done is to do a proper due diligence examination of the project. Many newcomers to the crypto space lack the time, knowledge, skills, experience and determination to learn how to properly vet a project before investing in it. Many investors fall for the hype and “FOMO” in to an ICO hoping and praying that they won’t be cheated.

The shortcomings of Trustswap reveals a bitter truth; many projects in the DeFi space are not fully committed to protecting investors. Instead, facades of security are used to evoke a sense of false confidence in the DeFi space which can be extremely misleading and carry grave consequences. These practices result in the continuation of dishonesty throughout DeFi and damages its overall reputation. YFDAI Brings Light to DeFi

A DeFi investor dreams of an ecosystem where the benefits of a centralized exchange can be applied to decentralized exchange offerings. YFDAI is making that DeFi dream a reality with both its DeFi Launchpad incubator and SafeSwap exchange.

To end the era of DeFi scams, YFDAI has created two innovative platforms that will revolutionize the way we trade in the DeFi space. The platforms that will usher in the next DeFi era are none other than the YFDAI LaunchPad and SafeSwap exchange.

The YFDAI Launchpad seeks to incubate new DeFi projects to meet the highest standards of security, transparency and trust. This service comes with a myriad of perks and features to help new projects not only achieve the highest security standards but also to succeed in the DeFi marketplace.

YFDAI’s SafeSwap exchange will revolutionize DeFi trading as it will only list projects that have undergone audits, locked tokens, and continue to meet significant developmental milestones. DeFi projects willing to go under audit and commit fully to transparency and security can request to be reviewed by YFDAI and list on the SafeSawp exchange. Overall, projects who wish to launch their ICO on the YFDAI LaunchPad platform and SafeSwap exchange must adhere to a basic minimum set of protocols to protect investors. Firstly, projects must lock all team tokens in a smart contract that releases the tokens after a set period of time. Furthermore, they must lock all liquidity tokens for a set period (usually 2–3 years). Also, all project contracts must be audited and pass with a third party certification. These of course are just some of standards that must be met to be listed on SafeSwap. While its impossible to prevent and stop every single act of corruption in the crypto space, SafeSwap’s robust vetting process is exactly what the DeFi space needs to reach its full potential. SafeSwap is the first DeFi exchange that’s fully committed to fostering a secure and transparent DeFi marketplace ecosystem. Through SafeSwap, users wont have to run blindfolded into the current “minefield” environment that is DeFi.

Conclusion

Had the Hatch devs attempted to launch their project on YFDAI’s soon to be released LaunchPad and SafeSwap platforms they naturally wouldn’t have been granted a listing. The DeFi industry needs to be self regulating or regulators will show up and begin enforcement actions against the service providers in the space that they can identify and serve subpoenas on.

Through its Launchpad and SafeSwap initiatives, YFDAI is poised to clean up the decentralized finance arena with its myriad of services that are designed to minimize risk and maximize security for both new and seasoned investors. To have the highest chance of security, one should always conduct their own research and manage risk appropriately. While there is no better substitute for a thorough analyses on any potential project investment, YFDAI commits itself on making your DeFi journey enjoyable, simple, and secure.


Need More Info on YFDAI? Check Below!

Website https://www.yfdai.finance Telegram Community https://t.me/yfdaifinance Telegram Announcements https://t.me/yfdai



ORIGINAL DECRYPT ARTICLE HERE: https://decrypt.co/43575/breaking-news-cftc-charges-crypto-exchange-bitmex-with-money-laundering-violations By Jason Nelson


The U.S. federal court action charged the owners of the exchange with operating an unregistered trading platform, and failing to impose anti-money laundering procedures, and other violations. Criminal charges were also filed.


n brief

  • The U.S. CFTC filed money-laundering and related charges against exchange BitMEX.

  • The regulatory enforcement agency said that BitMEX was illegally operating in the U.S.

  • Separately, the U.S. Attorney in New York filed related criminal charges against the owners, Arthur Hayes, Ben Delo, and Samuel Reed.


The Commodity Futures Trading Commission filed money-laundering and other civil charges against BitMEX, for illegally operating in the U.S. today. 

In a separate indictment unsealed today, the U.S. Attorney for the District of New York also filed criminal actions against the exchange’s owners, Arthur Hayes, Ben Delo, and Samuel Reed, for violating the Bank Secrecy Act and conspiracy to violate the Bank Secrecy Act.  

The civil action


The civil court action, filed in the U.S. District Court for the Southern District of New York charged the owners with operating an unregistered trading platform, and failing to impose anti-money laundering procedures, and other violations. Hayes, Delo, and Reed, were named as the owners and cited as operating  “BitMEX’s platform through a maze of corporate entities.”

“Digital assets hold great promise for our derivatives markets and for our economy,” said Chairman Heath P. Tarbert. “For the United States to be a global leader in this space, it is imperative that we root out illegal activity like that alleged in this case."

BitMEX was not immediately available for comment.

The civil case was brought by the Division of Enforcement’s Digital Asset and Bank Secrecy Act Task Forces.

Also named on the suit were HDR Global Trading Limited, 100x Holding Limited, ABS Global Trading Limited, Shine Effort Inc Limited, and HDR Global Services (Bermuda) Limited (BitMEX).


The scope of the case


The CFTC claimed that BitMEX “received more than $11 billion in bitcoin deposits and made more than $1 billion in fees, while conducting significant aspects of its business from the U.S. and accepting orders and funds from U.S. customers."

The CFTC said that BitMEX describes itself as the biggest derivatives-trading platform in the world and handles billions of dollars worth of transactions daily. "Much of this volume, and related transaction fees, derives from the operation of the platform from the U.S. and its extensive solicitation of and access to U.S. customers," the agency claimed. "Nevertheless, BitMEX has failed to register with the CFTC, and has failed to implement key safeguards required by the CEA and CFTC’s regulations designed to protect the U.S. derivatives markets and market participants."


The complaint


"The charges BitMEX with operating a facility for the trading or processing of swaps without having CFTC approval as a designated contract market or swap execution facility, and operating as a futures commission merchant by soliciting orders for and accepting bitcoin to margin digital asset derivatives transactions, and by acting as a counterparty to leveraged retail commodity transactions. The complaint further charges BitMEX with violating CFTC rules by failing to implement know-your-customer procedures, a customer information program, and anti-money laundering procedures."

"As alleged in the complaint, BitMEX touts itself as the world’s largest cryptocurrency derivatives platform, with billions of dollars’ of trading volume each day. Much of this volume, and related transaction fees, derives from the operation of the platform from the U.S. and its extensive solicitation of and access to U.S. customers, the complaint alleges. Nevertheless, BitMEX has failed to register with the CFTC, and has failed to implement key safeguards required by the CEA and CFTC’s regulations designed to protect the U.S. derivatives markets and market participants."

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FULL COINTELEGRAPH ARTICLE HERE:


https://cointelegraph.com/news/crypto-prediction-markets-turn-against-trump-after-first-debate

Emerging Ethereum-powered predictions platform Polymarket produced six-figure volume amid the first presidential debates.

The first debate of the 2020 U.S. presidential election had no clear winner, but crypto-powered prediction platforms are having a field day. 

Election futures on crypto derivatives exchange FTX boomed, with the platform’s CEO reporting more than $4 million in open interest trying to pick the winner between Democrat Joe Biden, and Republican Donald Trump. On FTX, Trump’s brash debate performance got a big thumbs down and drove a 10% crash in the price of futures contracts backing his re-election.

Price of TRUMP futures on FTX: FTXVolumes on FTX are amplified by leverage. On predictive platforms that do not offer leverage, more modest six-figure volumes were recorded. Polymarket saw more than $100,000 in volume flow into its ‘Will Trump win the 2020 U.S. presidential election?’ market on September 30, with sentiment similarly shifting against the incumbent president over the course of the debate. Almost 55 percent believe Trump will not win the election.

Speaking to Cointelegraph, Polymarket founder, Shayne Coplan, said the platform was designed to find answers to issues “people really want to know about rather than just things that they want to speculate:”

“The beautiful thing about markets, in my opinion, is their ability to aggregate information and synthesize it into accurate forecast. That’s what price discovery is — aggregating everyone’s opinions and knowledge and synthesizing it into one metric. And that can have incredible social and informational value.”

Polymarket is built on Ethereum (ETH), however, is exploring Matic as a scaling solution for the interim leading up to the launch of ETH 2.0. Transactions executed on the platform do not carry fees and Polymarket is non-custodial.

The platform uses an automatic market maker (AMM) for price discovery, with all market participants effectively trading against the AMM’s liquidity pool. Ideas for markets can be submitted from Polymarket’s users, and are curated by firm’s executives to ensure that the terms and conditions pertaining to specific markets are “unambiguous.”

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