Polkadot’s
DeFi protocol Acala has suffered greatly after coming under attack. Hackers
minted 1.2 billion aUSD native stablecoins, causing a drop of 98%. The Acala
team is struggling to eliminate Depeg problems, but the situation remains
unstable.
Inglorious
Tornado Cash, that helps obfuscate the origins and destinations of
cryptocurrency transactions making them hardly traceable, has been blacklisted
by the U.S. Treasury. It is an open-source software based on Ethereum
blockchain, and not the company. Although it is not a company, Tornado Cash’s
unnamed developer was detained in Amsterdam. “Despite public assurances
otherwise, Tornado Cash has repeatedly failed to impose effective controls
designed to stop it from laundering funds for malicious cyber actors on a
regular basis and without basic measures to address its risks,” said Treasury
Undersecretary Brian Nelson. He promised to “aggressively pursue actions
against mixers that launder virtual currency for criminals and those who assist
them”. Many crypto players along with traditional companies like Microsoft
supported sanctions. All accounts in USDC related to the mixer were blocked.
The Infura platform, that host many Ethereum-based applications, blocked its
API for Tornado Cash users. AAVE blocked
all accounts that was associated with Tornado Cash apparently blocking the
wallets of cyber security expert Anthony Sassano and the founder of the Tron
Justin Sun. The reasons for blocking accounts were cited as unknown spam
mailings sending 0.1 ETH from one of the Tornado Cash deposits.
All these
sanctions together with the support from DeFi projects raise many questions,
including whether governments can sanction open-source software and sanction
individuals who used it. But the major fact is clear – the decentralization and
apartness of cryptocurrency projects is a myth while regulatory risks are extremely
high.
Bitcoin
continues to rebound following the Nasdaq 100 index which has posted new highs
not seen since May. A temporary break of the digital asset’s downside trend occurred as forced sales from
distressed project like 3AC, NEXO and other insolvencies have ceased. Consumer
prices in the United States slowed down in July and this eased pressure on
risky assets, including stocks and cryptos.
Market
wisdom says you should never try to outperform the Federal Reserve (Fed). When
the monetary watchdog raises interest rates it is better to switch on the
defense mode, while in cases when rates are lowered, more aggressive tactics
should be used. The Fed is withdrawing liquidity from the market now and is
raising interest rates to slow down lending and decrease money supply. However,
this cannot last long as the U.S. public debt is at 125% of the GDP. Nobody can
ignore this fact, not even the Fed.
So, there
are only a few ways to deal with it: raise taxes and cut spending, or to
devalue the Dollar, which is less painful for the economy. So, any asset that
could provide shelter from the U.S. Dollar depreciation would be in great
demand. Bitcoin may have chances to become one of these assets in time.