Ethereum

What DOJ’s First MEV Lawsuit Means for Ethereum (ETH)

Published

6 months ago

16 May, 2024

What DOJ’s First MEV Lawsuit Means for Ethereum (ETH)

The US Department of Justice has charged two brothers with orchestrating an attack on Ethereum trading bots, load them with conspiracy to commit wire fraud, wire fraud and conspiracy to commit money laundering. Essentially, the brothers found a way to target bots that were directing transactions in a process called maximum extractable value, or MEV, which refers to the amount of money that can be removed from the block production process by ordering transactions .

Note: The opinions expressed in this column are those of the author and do not necessarily reflect those of CoinDesk, Inc. or its owners and affiliates. This is an excerpt from The Node newsletter, a daily digest of the most important crypto news from CoinDesk and beyond. You can subscribe to receive the full newsletter here.

MEV, which is itself controversial, can be a very lucrative game dominated by automated bots that often comes at the expense of blockchain users, which is part of why so many in the crypto community have rushed to speak out against it. the DOJ complaint. However, this is not a Robinhood situation, where two brothers, Anton and James Peraire-Bueno, from Bedford, Massachusetts, stole from the rich to give to the poor.

As the DOJ filing indicates, the brothers netted approximately $25 million in at least eight separate transactions in what the DOJ alleges was a highly orchestrated and premeditated conspiracy. They created shell companies and looked for ways to launder funds safely to avoid detection. The highly technical complaint describes the process by which the exploit occurred, which the DOJ calls “the first of its kind.”

“They used a flaw in MEV Boost to push invalid signatures to preview bundles. This gives an unfair advantage via an exploit,” former Ethereum Foundation and Flashbots employee Hudson Jameson told CoinDesk in an interview. Jameson added that the Peraire-Bueno brothers also operated their own validator when mining MEV, which somewhat violates a Gentleman’s Agreement in MEV circles.

“No one else in the MEV ecosystem was doing both of these things that we knew of,” he added. “They did more than just follow the codified rules and small promises of MEV extraction.”

“It’s not some sort of Robin Hood story, because they didn’t return the money to the people from whom the MEVs extracted it,” said a pseudonymous researcher. Banteg said.

On a more technical level, the brothers were able to leverage open source software created by the company MEV Flashbots, called mev-boost, which gave them an uneven view of how the MEV bots ordered trades. (Mev-boost is an open source protocol that allows different players to compete to “build” the most valuable blocks by ordering transactions.)

“Having access to the block body allowed the malicious proponent to extract transactions from the stolen block and use them in their own block where they could mine those transactions. In particular, the malicious nominator built his own block that broke the sandwich bots’ sandwiches and effectively stole their money,” according to a report from Flashbots. autopsy in 2023.

In particular, and what is at the heart of the DOJ’s case, is that the brothers found a way to sign fake transactions in order to run the scheme. “This false signature was designed to, and indeed did, trick Relay into prematurely disclosing the contents of the proposed block to Defendants, including private transaction information,” the document states.

“I think the invalid header part will be the needle that this whole thing hinges on,” said one cryptography researcher, who asked to remain anonymous.

“I think the indictment indicates that and so maybe it’s a good thing that SDNY is very technologically savvy in this area and has made it clear where they screwed up and hinted at the inevitability of MEV in blockchains,” Jameson said.

Others have also noted the technical sophistication of the DOJ’s argument, which appears to be less an indictment of MEV or Ethereum itself than an attempt to profit by unfairly obtaining information.

“If you hope that Ethereum will always be a ‘dark forest’ where on-chain predators compete for arbitrage opportunities, then you probably don’t like this lawsuit,” said Consensys General Counsel Bill Hughes, to CoinDesk in an interview. “Luckily, I think there are only a few that are actually like that. If you would prefer that predatory behavior like this be reduced, which is the vast majority, then you will probably feel the opposite.

“The defendants’ preparation for the attack and their completely clumsy attempts to cover their tracks afterward, including numerous compromising Google searches, only help the government prove that they intended to steal . All of this evidence will look very bad to the jury. I suspect they will plead guilty at some point,” he added.

Still, others remain convinced that exploiting MEV bots designed to rearrange transactions is a good thing. “It’s a little hard to sympathize with MEV bots and block builders getting screwed by block proposers, in exactly the same way they screw end users,” the anonymous researcher said.

Jameson, for his part, said that MEV is something the Ethereum community should work to minimize on Ethereum, but that it is a difficult problem to solve. For now, the process is “inevitable.”

“Until it can be eliminated, let’s study it.” Let’s turn it on. Let’s minimize it. And since that exists, let’s make it as open as possible for everyone to participate with the same rules,” he said.

If there is a silver lining, the Flashbots team was able to correct the error that enabled the attack relatively quickly, said Ari Juels, a professor at Cornell Tech.

“There are no lasting implications,” he added. “There is of course an irony in what happened: a thief is stealing money from sandwich bots, who themselves are exploiting users in the eyes of many in the community.”

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Related Topics:DOJ ethereum Flashbots MEV Newsletters Notice The knot

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Ethereum

QCP sees Ethereum as a safe bet amid Bitcoin stagnation

Published

3 months ago

31 July, 2024

Chain Feed Staff

QCP, a leading trading firm, has shared key observations on the cryptocurrency market. Bitcoin’s struggle to surpass the $70,000 mark has led QCP to predict Selling pressure is still strong, with BTC likely to remain in a tight trading range. In the meantime, Ethereum (ETH) is seen as a more promising investment, with potential gains as ETH could catch up to BTC, thanks to decreasing ETHE outflows.

Read on to find out how you can benefit from it.

Bitcoin’s Struggle: The $70,000 Barrier

For the sixth time in a row, BTC has failed to break above the $70,000 mark. Bitcoin is at $66,048 after a sharp decline. Many investors sold Bitcoin to capitalize on the rising values, which caused a dramatic drop. The market is becoming increasingly skeptical about Bitcoin’s rise, with some investors lowering their expectations.

Despite the continued sell-off from Mt. Gox and the US government, the ETF market remains bullish. There is a notable trend in favor of Ethereum (ETH) ETFs as major bulls have started investing in ETFs, indicating a bullish sentiment for ETH.

QCP Telegram Update UnderlinesIncreased market volatility. The NASDAQ has fallen 10% from its peak, led by a pullback in major technology stocks. Currency carry trades are being unwound and the VIX, a measure of market volatility, has jumped to 19.50.

The main factors driving this uncertainty are Value at Risk (VaR) shocks, high stock market valuations and global risk aversion sentiment. Commodities such as oil and copper have also declined on fears of an economic slowdown.

Additionally, QCP anticipates increased market volatility ahead of the upcoming FOMC meeting, highlighting the importance of the Federal Reserve’s statement and Jerome Powell’s subsequent press conference.

A glimmer of hope

QCP notes a positive development in the crypto space with an inflow of $33.7 million into ETH spot ETFs, which is giving a much-needed boost to ETH prices. However, they anticipate continued outflows of ETHE in the coming weeks. The recent Silk Road BTC moves by the US government have added to the market uncertainty.

QCP suggests a strategic trade involving BTC, which will likely remain in its current range, while ETH offers a more promising opportunity. They propose a trade targeting a $4,000-$4,500 range for ETH, which could generate a 5.5x return by August 30, 2024.

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Ethereum

Ethereum Whale Resurfaces After 9 Years, Moves 1,111 ETH Worth $3.7 Million

Published

3 months ago

31 July, 2024

Chain Feed Staff

Ethereum records $17.9 billion in spot volume despite 3% drop

An Ethereum ICO participant has emerged from nearly a decade of inactivity.

Lookonchain, a smart on-chain money tracking tool, revealed On X, this long-inactive participant recently transferred 1,111 ETH, worth approximately $3.7 million, to a new wallet. This significant move marks a notable on-chain movement, given the participant’s prolonged dormancy.

The Ethereum account in question, identified as 0xE727E67E…B02B5bFC6, received 2,000 ETH on the Genesis block over 9 years ago.

Screenshot 2024 07 30 at 171307

This initial allocation took place during the Ethereum ICOwhere the participant invested in ETH at around $0.31 per coin. The initial investment, worth around $620 at the time, has now grown to millions of dollars.

Recent Transactions and Movements

The inactive account became active again with several notable output transactions. Specifically, the account transferred 1,000 ETH, 100 ETH, 10 ETH, 1 ETH, and 1 more ETH to address 0x7C21775C…2E9dCaE28 within a few minutes. Additionally, it moved 1 ETH to 0x2aa31476…f5aaCE9B.

Additionally, in the latest round of transactions, the address transferred 737,995 ETH, 50 ETH, and 100 ETH, for a total of 887,995 ETH. These recent activities highlight a significant movement of funds, sparking interest and speculation in the crypto community.

Why are whales reactivating?

It is also evident that apart from 0xE727E67E…B02B5bFC6, other previously dormant Ethereum whales are waking up with significant transfers.

In May, another dormant Ethereum whale made headlines when it staked 4,032 ETHvalued at $7.4 million, after more than two years of inactivity. This whale initially acquired 60,000 ETH during the Genesis block of Ethereum’s mainnet in 2015.

At the time, this activity could have been related to Ethereum’s upgrade known as “Shanghai,” which improved the network’s scalability and performance. This whale likely intended to capitalize on the price surge that occurred after the upgrade.

Disclaimer: This content is informational and should not be considered financial advice. The opinions expressed in this article may include the personal opinions of the author and do not reflect the opinion of The Crypto Basic. Readers are encouraged to conduct thorough research before making any investment decisions. The Crypto Basic is not responsible for any financial losses.

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Ethereum

Only Bitcoin and Ethereum are viable for ETFs in the near future

Published

3 months ago

31 July, 2024

Chain Feed Staff

BlackRock: Only Bitcoin and Ethereum Are Viable for ETFs in the Near Future

Bitcoin and Ethereum will be the only cryptocurrencies traded via ETFs in the near future, according to Samara Cohen, chief investment officer of ETFs and indices at BlackRock, the world’s largest asset manager.

In an interview with Bloomberg TV, Cohen explained that while Bitcoin and Ethereum have met BlackRock’s rigorous criteria for exchange-traded funds (ETFs), no other digital asset currently comes close. “We’re really looking at the investability to see what meets the criteria, what meets the criteria that we want to achieve in an ETF,” Cohen said. “Both in terms of the investability and from what we’re hearing from our clients, Bitcoin and Ethereum definitely meet those criteria, but it’s going to be a while before we see anything else.”

Cohen noted that beyond the technical challenges of launching new ETFs, the demand for other crypto ETFs, particularly Solana, is not there yet. While Solana is being touted as the next potential ETF candidate, Cohen noted that the market appetite remains lacking.

BlackRock’s interest in Bitcoin and Ethereum ETFs comes after the successful launch of Ethereum ETFs last week, which saw weekly trading volume for the crypto fund soar to $14.8 billion, the highest level since May. The success has fueled speculation about the next possible ETF, with Solana frequently mentioned as a contender.

Solana, known as a faster and cheaper alternative to Ethereum, has been the subject of two separate ETF filings in the US by VanEck and 21Shares. However, the lack of CME Solana futures, unlike Bitcoin and Ethereum, is a significant hurdle for SEC approval of a Solana ETF.

Despite these challenges, some fund managers remain optimistic about Solana’s potential. Franklin Templeton recently described Solana as an “exciting and major development that we believe will drive the crypto space forward.” Solana currently accounts for about 3% of the overall cryptocurrency market value, with a market cap of $82 billion, according to data from CoinGecko.

Meanwhile, Bitcoin investors continue to show strong support, as evidenced by substantial inflows into BlackRock’s iShares Bitcoin Trust (NASDAQ: IBIT). On July 22, IBIT reported inflows of $526.7 million, the highest single-day total since March. This impressive haul stands in stark contrast to the collective inflow of just $6.9 million seen across the remaining 10 Bitcoin ETFs, according to data from Farside Investors. The surge in IBIT inflows coincides with Bitcoin’s significant $68,000 level, just 8% off its all-time high of $73,000.

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Ethereum

Ethereum Posts First Consecutive Monthly Losses Since August 2023 on New ETFs

Published

3 months ago

31 July, 2024

Chain Feed Staff

Ethereum sees first monthly consecutive losses since August 2023 amid new ETFs

Available exclusively via

Bitcoin ETF vs Ethereum: A Detailed Comparison of IBIT and ETHA

Andjela Radmilac · 3 days ago

CryptoSlate’s latest market report takes an in-depth look at the technical and practical differences between IBIT and BlackRock’s ETHA to explain how these products work.

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