The Securities and Exchange Commission (SEC) has charged 11 people linked to a $300 million scam, called Forsage. The project was founded in early 2020 by four friends from Georgia, Russia and Indonesia.
It quickly grew and became the most popular decentralised application (dapp) on the Ethereum blockchain. At the peak of its popularity, it accounted for a quarter of the blockchain's bandwidth. According to Dune Analytics data, Forsage contributed to a significant increase in gas fees.
The project collaborated with influencers to promote. In return, they received payment raised from the money generated by new users and additional compensation for bringing more promoters into the network. The SEC described the business model as a "textbook financial pyramid scheme."
Action against Forsage was taken in the second half of 2020 by the SEC's counterpart in the Philippines and later by the US organizations. The most high-profile trial is currently taking place in the States where the court accuses the company of taking more than $300 million from retail investors around the world.
Carolyn Welshhans, chief of the SEC’s Crypto Assets and Cyber Unit called Forsage a "fraudulent financial pyramid scheme launched on a massive scale and aggressively advertised to investors." She added that "fraudsters cannot circumvent the federal securities laws by focusing their schemes on smart contracts and blockchains." This may confirm investors' belief that regulators will become an integral part of DeFi.
Nomad Bridge loses nearly $200 million
Hundreds of alleged hackers and exploiters in Nomad Bridge's security procedures took $190 million out of the Total Value Locked (TVL) pool in just a few hours. Nomad is a bridge that enables the transfer of tokens between Avalanche, Ethereum, Evmos, Milkomeda C1 and Moonbeam. It represents an important link in the crypto world. TVL, in simple terms, served to provide liquidity and security, as well as allowed for staking and borrowing of tokens between users.
According to the DefiLlama platform, Nomad Bridge lost $190.7 million with only $651.54 left in the pot. This could have been allowed by a security flaw, a so-called exploit. So far, at least one hacker has announced that it was a security test and that he will return the funds he has taken. We don't know how much he holds and whether the others involved in this virtual "heist" also had good intentions. For now, there is little indication that the company was aware of what was about to happen.
Crypto market continues local correction
Analysis of the increases over the past 1.5 months seems to indicate a cautious approach by investors to most tokens with cyclical movements of about two weeks in length. Today, the Flow token is falling the hardest, dropping 9.4 percent as of 12:00 GMT+3 01.08.22 on the Conotoxia MT5 platform. The Flow is one of the largest tokens, ranking 34th on CoinMarketCap's list. Its total capitalization reaches nearly $2 billion. The Flow blockchain, on the other hand, is designed as the basis for a new generation of games, applications and the digital assets that power them.
Technical analysis on the hourly chart of Bitcoin (BTC) suggests that the current price of $22,700 is likely to be near a local support level. From a macro perspective, it seems that we still have to wait for any major increases. Some agencies based on analysis of historical cycles indicate that the next potential major bull market in cryptocurrencies could appear as early as 250 days.
Rafał Tworkowski, Junior Market Analyst, Conotoxia Ltd. (Conotoxia investment service)
Materials, analysis and opinions contained, referenced or provided herein are intended solely for informational and educational purposes. Personal opinion of the author does not represent and should not be constructed as a statement or an investment advice made by Conotoxia Ltd. All indiscriminate reliance on illustrative or informational materials may lead to losses. Past performance is not a reliable indicator of future results.
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