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This cryptocurrency can financially take you places or we guarantee you that this digital asset will never ever fall into loss. These are just a handful of assurances the fraudsters use to lure a person into frauds. On one hand people admire the assets’ decentralized nature, while authorities are trying hard to get a grip on the sector. Recently, the Financial Stability Oversight Council (FSOC) member said that “FTX came as a shock to the market”, CNBC reported.
The Vulnerable Cryptosphere
The financial stability regulator calls for Congress for regulatory guidelines on cryptocurrencies that do not fall under the securities category. The council pointed out that the FTX collapse sheds light on concerns associated with virtual currencies highlighted in a report they issued in October 2022.
Cryptosphere has seen a fine share of hacks in the global market. This is due to the fact that the sector is open to anyone and developers can easily create tokens via a moderate coding knowledge. In November 2021, when the crypto market and a Netflix show dubbed Squid Game was gaining popularity, a project called SQUID emerged from nowhere and attracted GenZ and millennials seeking easy money. It was a rug pull planned to steal user funds, leaving the investors holding their bags.
In February 2022, developers started experimenting with Wormhole network’s code. The test was meant to fix the bug but eventually left a loophole for hackers. The attack cost them $326 Million. One of the most interesting hacks happened between 2011-2014. Attackers entered Mt. Gox crypto exchange in 2011 and started transferring Bitcoin from the company. They reportedly stole 850,000 BTC by 2014.
In August 2021, a developer hacked Poly Network for “fun”, and stole $610 Million worth of crypto assets. He eventually returned the funds except for $33 Million, which the company happily accepted and offered him a job in their organization. The sector saw its biggest hack during the first quarter this year. Axie Infinity’s Ronin Bridge started witnessing a rise in demand so they downed the security to keep up, not realizing they’d lowered the gates for attackers to corrupt the system.
This shows how their decentralized nature is both a boon and a curse for the crypto community. It can make or break users’ financial backbone in a blink of an eye. The Federal Trade Commission (FTC) issued an article for crypto awareness. The document includes sections dealing with frauds in the sector.
Many people are against the fact that governments are seeking control over virtual currencies. But they need to ask this question, if the sector is this vulnerable, won’t the investors require a sense of security if they enter such space?
Anurag is working as a fundamental writer for The Coin Republic since 2021. He likes to exercise his curious muscles and research deep into a topic. Though he covers various aspects of the crypto industry, he is quite passionate about the Web3, NFTs, Gaming, and Metaverse, and envisions them as the future of the (digital) economy. A reader & writer at heart, he calls himself an “average guitar player” and a fun footballer.
