Decentral Block Post

Arbitrum-based lending protocol Lodestar Finance was exploited in a flash loan attack on Dec. 10. According to Lodestar, the attacker manipulated the price of the plvGLP token before borrowing all platform liquidity using the inflated token.

In a Twitter thread, Lodestar explained the attack flow. The attacker first manipulated the exchange rate of the plvGLP contract to 1.83 GLP per plvGLP, "an exploit that by itself would be unprofitable", said the company.

Then, the attacker supplied plvGLP collateral to Lodestar and borrowed all available liquidity, cashing out part of the funds "until the collateralization ratio mechanism prevented a full liquidation of the plvGLP."

Following the hack, "several plvGLP holders also took advantage of the opportunity and also cashed out at 1.83 glp per plvGLP." The hacker was able to burn a little over 3 million in GLP, making profit on the "stolen funds on Lodestar - minus the GLP they burned.", noted the DeFi platform.

The attacker made around $5.8 million in profit. Lodestar states that nearly 2.8 million of the GLP (about $2.4 million) was recoverable, which should be used to repay depositors. The company is trying to negotiate a bug bounty with its exploiter:

Bitcoin (BTC) is too “decentralized and transparent” for former FTX CEO Sam Bankman-Fried, says Cathie Wood.

In a tweet on Dec. 10, Wood, who is CEO of investment giant ARK Invest, delivered a fresh damning appraisal of the FTX saga.

Wood: SBF "couldn't control" Bitcoin

As the legal ramifications of FTX and Bankman-Fried, also known as SBF, continue, Bitcoin loyalists are giving him little sympathy.

ARK’s Wood is now firmly among them, not mincing her words as BTC price action continues to trade around 20% down over the month.

“The Bitcoin blockchain didn’t skip a beat during the crisis caused by opaque centralized players,” she wrote.

Crypto exchange Binance began investigating suspicious behavior on its platform after noticing abnormal price movements for certain trading pairs involving Sun Token (SUN), Ardor (ARDR), Osmosis (OSMO), FUNToken (FUN) and Golem (GLM) tokens. Nearly 40 minutes into the investigation, Binance CEO Changpeng ‘CZ’ Zhao revealed that the price movements “appears to be just market behavior.”

On Dec. 11 at 3:10 am ET, Binance issued a notice about abnormal price movements for some trading pairs. The exchange began an investigation to narrow down suspicious accounts responsible for the issue. To investors’ relief, Binance’s investigation did not point to the possibility of compromised accounts or stolen API keys.

In CZ’s words:

“One guy deposited funds and started buying. (Hackers don’t deposit). Other guys followed. Can’t see linkage between the accounts.”

However, the exchange took a proactive measure against possible manipulation. It temporarily blocked withdrawals for some accounts that made profits during the volatility, which according to CZ, sprouted complaints across social media.

Bitcoin (BTC) price had a mixed reaction on Dec. 9 after the November report on United States producer prices showed a 7.4% increase versus 2021. The data suggested that wholesale costs continued to rise and inflation may last longer than investors had previously believed. Oil prices are also still a focus for investors, with crude WTI hitting a new yearly low at $71.10 on Dec. 8. 

The United States Dollar Index (DXY), a measure of the dollar’s strength against a basket of top foreign currencies, sustained the 104.50 level, but the index traded at 104.10, a 5-month low on Dec. 4. This signals low confidence in the U.S. Federal Reserve’s ability to curb inflation without causing a significant recession.

Trader gutsareon noted that the choppy activity caused leverage longs and shorts to be liquidated, but it was followed by a failed tentative dump below $17,050.

According to the analysis, the open interest stagnation on futures contracts indicated low confidence from bears.

Regulatory uncertainty could have played a key role in limiting Bitcoin's upside. On Dec. 8, the United States Securities and Exchange Commission (SEC) issued new guidance that could see publicly traded companies disclose their exposure to crypto assets.

Crypto exchange Binance closed a trader account on Dec. 9 after a user complained about the exchange's response for alleged funds theft. Binance CEO Changpeng “CZ” Zhao said the firm does not want to service "unreasonable" clients.

A user by the name of CoinMamba on Twitter started complaining about the lost funds on Dec. 8, claiming that a leaked API key tied to crypto trading firm 3Commas was used "to make trades on low cap coins to push up the price to make profit."

The trader claims in a series of tweets that Binance was unable to provide him with appropriate support:

Binance CEO also took to Twitter on Dec. 9 to clarify the situation:

As the user continued to complain on the social media platform, CZ admitted in another tweet to be considering putting the user's account “in off boarding (withdrawal only) mode", claiming "we don’t want to service people who are unreasonable.” The tweet was later deleted, but is still available as a screenshot in the thread. The user's account was then closed, with three days to withdraw funds.