Tethers Cause Traffic Jam on Ethereum

Tether, associated exchange Bitfinex and their parent company iFinex are all being investigated for fraud now by the Attorney General of New York.

The unexplained recent migration of almost a billion USD-pegged tether cryptocoins to the Ethereum network has caused 100 000 transactions to get “stuck” in processing there, Trustnodes reports.

(Graphic courtesy of Trustnodes)

The controversial tether coins have been moving from their native OMNI network and other crypto networks to Ethereum, and no one but the parties responsible can say for sure why.

“The Ethereum network has become congested with users complaining transactions are taking hours or in some rare instances, even days,” Trustnodes writes:

“The culprit appears to be Tether. They’re now taking about 50% of the entire network capacity, with USDT handling $18 billion in unfiltered trading volumes, far more than eth’s $6 billion.”

According to the outlet, tethers (USDTs), “…(are) used for arbitrage between global and local exchanges as well as to bypass national or international restrictions…on crypto trading, capital controls, and so on.”

Tethers are generated by a company called Tether.

Critics have long questioned Tether’s claims that each tether token it produces is 100% backed by equivalent real-world US dollars held by the company in reserve.

Tether, meanwhile, has attempted to pass off declarations from lawyers as legitimate audits.

Tether coins have also been linked by finance professor John Griffin and others to market manipulation of bitcoin and smaller cap cryptos.

According to the abstract of an oft-cited June 2018 paper by Griffin and grad student Amin Shams:

“Using algorithms to analyze the blockchain data, we find that purchases with Tether are timed following market downturns and result in sizable increases in Bitcoin prices. Less than 1% of hours with such heavy Tether transactions are associated with 50% of the meteoric rise in Bitcoin and 64% of other top cryptocurrencies. The flow clusters below round prices, induces asymmetric auto-correlations in Bitcoin, and suggests incomplete Tether backing before month-ends. These patterns cannot be explained by investor demand proxies but are most consistent with the supply-based hypothesis where Tether is used to provide price support and manipulate cryptocurrency prices.”

Tether, associated exchange Bitfinex and their parent company iFinex are all being investigated for fraud now by the Attorney General of New York.

Despite all this, tethers have remained popular in cryptomarkets, and the coins have reportedly supplanted bitcoins as the remittance currency of choice used by Chinese merchants selling wares to retail outlets in Moscow.

Tether’s creators may be migrating tethers off of OMNI, the network controlled by iFinex et al., in order to ensure they remain circulating no matter what happens at iFinex.

As well, for some unknown reason, in July, the world’s 7th largest and most-known crypto exchange, Binance, decided to stop supporting OMNI-based tethers in favour of tethers hosted on Ethereum.

USD tethers have been spreading onto other networks, including Liquid, for some time, but recent moves, particularly onto Ethereum, have been substantial.

According to another article at Trustnodes in July, “The number of Ethereum based USDT tokens has doubled in about a month from $600 million in June to now $1.2 billion ERC20 Tethers.”

As well:

USDT (on Ethereum) has increased by $1 billion to above $3.6 billion from the previous all time high of $2.8 billion in October.”

Tether et al. likely believe that Ethereum is a more “decentralized” network (one with more globally dispersed nodes that cannot be shut down by authorities in a single jurisdiction).

“In light of India potentially outright banning bitcoin and other cryptos,” Trustnodes writes, “code-based exchanges that automatically run on an unstoppable network might be the only somewhat convenient way of accessing crypto in the country.”

Trustnodes describes that process of trading crypto in jurisdictions under a ban as follows:

“The process here would start Over the Counter (OTC) by buying ERC20 USDT that can then easily be exchanged on dexes (decentralized exchanges) for any crypto, including Bitcoin which has been tokenized.”

Related Posts:

  • No Related Posts

InnfiRAT Malware Searches for Cryptocurrency Information in PC and Steals User’s Personal …

A new malware, InnfiRAT have recently been discovered where it searches for cryptocurrency information and browser cookie information. Scientists …

A new malware, InnfiRAT have recently been discovered where it searches for cryptocurrency information and browser cookie information. Scientists have detected a remote access Trojan described as InnfiRAT, which is equipped for digital spying and data disappearance.

Precisely, InnfiRAT is structured to access and rob personal data on the user’s system. In addition to other things, InnfiRAT is composed to search for cryptocurrency wallet information, like Bitcoin and Litecoin. Further, InnfiRAT also captures browser cookies to steal passwords and usernames and session information.

Accurately, scientific researchers describe InnfiRAT as a Trojan. The Trojans code has been written in .NET and is intended to access and to capture individual information from infected systems and explicitly cryptocurrency wallet data, which includes Litecoin and Bitcoin, the leading cryptocurrencies in the market.

Moreover, the malware additionally takes mysterious screen captures to trap any sensitive data that might be shown on a client’s display at a specific time. Besides, to stay away from identification, InnfiRAT pays special attention to virtual machine environments and can likewise check for antivirus programs. These exercises are disturbing; however, the malware is considerably more vicious in its abilities.

Furthermore, the information it swipes is sent to C&C (command and control) server, yet that is not the part of the arrangement. As a part of the procedure, it demands further instruction from the server. At times, the C&C server may inform the RAT to download additional malware into the infected computer, bringing about other problems.

When a system gets infected with a RAT, it could introduce additional malware like ransomware. Ransomware is a high-risk malware that generally is intended to encrypt records. To be more precise, it could lock the individual’s files utilizing a secure encryption algorithm which could not be decrypted without the correct software.

Nevertheless, cybercriminals are the ones who have possession of this software, and they exploit people to get it from them by paying a specific amount as payment. Moreover, InnfiRAT can be utilized to steal information like the individual’s IP address, city, district, nation, and so on, and running procedures. Besides, it can kill forms whose name contains strings, like chrome, firefox, browser, opera, to name a few.

Moreover, the list of unethical exercises empowered by this malware expands to well beyond stealing users cryptocurrency wallet like logging keystrokes, accessing individual data, formatting drives, spying the user through their webcam, arranging drives, and the list goes on.

InnfiRAT is an essential tool that can help cybercriminals to create income using misused information in various ways. Succinctly put, to avoid financial data loss, data fraud, having different accounts stolen and PC infected with other malware, and prevent different issues it is required to uninstall this RAT right away.

Cryptocurrency stays as a profitable channel for cybercriminals to produce an illegal profit, and InnfiRAT is just one of the numerous types of malware that presently include cryptocurrency-related robbery.

Related Posts:

  • No Related Posts

A DIY Bitcoin hardware wallet for $110? This developer explains how

Justin Moon, founder and instructor at Bitcoin workshop BUIDL Bootcamp, has created a do-it-yourself Bitcoin hardware wallet—that can be bought in …

Justin Moon, founder and instructor at Bitcoin workshop BUIDL Bootcamp, has created a do-it-yourself Bitcoin hardware wallet—that can be bought in parts for $110. The device, currently called the BitBoy, can send and receive bitcoins.

On top of the basics, it has two security features that make it stand out from other Bitcoin hardware wallets. It is stateless, which helps protect the device from losing funds, and it uses a QR-code-based, air-gapped feature to help keep it safe from hacks (more on those later). And these two features, combined with its low price and low barrier to entry, sent Crypto Twitter into a frenzy.

Moon posted a video—which has been watched more than 60,000 times—that showcases the retro-looking device and how it works. We caught up with the Austin-based instructor to find out more.

Meet BitBoy: a stateless, QR-airgapped DIY Bitcoin hardware wallet pic.twitter.com/4nfrNP1hlE

— Justin Moon (@_JustinMoon_) September 3, 2019

Moon told Decrypt that he only got into Bitcoin last summer and decided to create the BitBoy as a fun teaching project.

“Building a hardware wallet is a fantastic way to learn about Bitcoin private keys,” he said.

The instructor added that having a homemade option helps to achieve true self-sovereignty, since pre-packaged software could be bugged or hijacked during the supply-chain process. Instead, buying bog-standard computing equipment, such as computer chips, and building them into a hardware wallet should help to keep thieves at bay.

But the project wasn’t a one-man job. Moon said that Stepan Snigirev of Bitcoin hardware platform CryptoAdvance helped him compile some of the devices’ libraries and that he also repurposed some code from Jimmy Song’s recent Programming Bitcoin book.

As a result, BitBoy is a device that doesn’t behave like typical Bitcoin hardware wallets. It doesn’t store users’ private keys (passwords that allow the user to spend their bitcoins)–it’s a device for signing Bitcoin transactions, when the user wants to send some bitcoins. This helps the device stay more secure.

Bitcoin’s Lightning Network growth picks up

Traditionally, to create a Bitcoin transaction you will typically need to be connected to the internet. To complete the transaction, you need your private key, but if the device is connected to the internet, you’re at risk of exposing your private key, and therefore all your bitcoins, to the internet. BitBoy keeps this part of a transaction offline.

The internet-connected device sends the transaction (yet to be signed) to the device. The device signs it and sends it back. Then the signed transaction is broadcast online to the Bitcoin network. In short, it allows you to spend your bitcoins while minimizing the risk of exposing your private keys to the world.

The Bitcoin wallet’s main features

The bootstrapped hardware wallet has two main features that make it stand out from the crowd.

First, it is stateless. This means the device wipes any data it has processed whenever it is shut down, deleting all memory of the user’s private keys. As a result, the user has to type their private key in each time they use the BitBoy.

While this sounds like a serious pain point, it makes a lot of sense. While the device isn’t connected to the internet, it will be running a few simple programs and will interact with a device that is connected to the internet. Therefore, while slight, there is still a risk that it could be compromised. By being stateless, it helps to keep the user’s bitcoins safe.

Second, it uses QR codes to interact with the device connected to the internet. This creates an air-gap between the two devices, making the whole process much harder to infiltrate (try hacking air). It’s actually the same process the SafePal S1 crypto wallet uses—which we found really straightforward.

Alternatives, such as using USB cords, are riskier, according to Moon. “There are many published attacks where, for instance, power consumption leaks private keys or a malicious USB cord installs malware,” he said, adding, “Air-gapped QR codes are much better—they are a data-only communication channel.”

What’s impressive about BitBoy is that it achieves both of these, while keeping to a tight budget.

What’s next for the wallet?

Moon is now working on a complimentary desktop application to be able to safely do multisig bitcoin transactions. A multisig transaction is where two or more keys are used to sign a Bitcoin transactions. These can be held by one person or multiple people and are often used for security reasons.

Moon added, “I realized this toy could actually be useful in a multisig setup—that it wouldn’t take much work to be one of the three best multisig wallets in the world.”

But whether this would introduce any security risks is yet to be seen.

Related Posts:

  • No Related Posts

Bobby Lee returns with new Bitcoin wallets and a $200000 per Bitcoin prediction

China’s first Bitcoin exchange BTCC founder Bobby Lee has been missing from the cryptocurrency space for a while. However, he is now making a …
  • Lee’s REAL wallets will allow normal people to easily access cryptocurrencies.
  • According to Lee, investors should not be dissuaded by the up and downs of Bitcoin price, soon it will be trading at $200,000.

China’s first Bitcoin exchange BTCC founder Bobby Lee has been missing from the cryptocurrency space for a while. However, he is now making a comeback with a new startup called Ballet. The startup is focused on bringing to the industry a new set of Bitcoin wallets.

In an interview with Yahoo Finance, Lee said that the new wallets will enable “normal people, regular people access to cryptocurrency.” The first batch of the wallets are referred to as REAL and do not contain any electronic parts. For this reason, they can be used for safekeeping for private keys. In other words, Lee says:

“It’s like cash, once you load it with bitcoin, litecoin, ethereum, this device has everything it needs to access the funds.

“It can be used as a gift to give someone or you can just store it in safe deposit box and hide it somewhere at home. This is completely offline, there’s no hacking risk.”

Lee founded and run BTCC prior to the ban on trading activities in 2017. He later sold the exchange at an undisclosed amount. He spent most of last year giving speeches and on vacation. However, he decided to make a re-entrance into the crypto industry after spotting a gap.

Ballet has managed to raise $5 million in seed funding. Most of the funds are from family and friends but Ribbit Capital, a Silicon Valley capital fund backed it as well.

At the time, Lee was exiting the crypto market, Bitcoin was at its peak close to $20,000. It has since corrected lower and is currently holding ground above $10,000. Lee is predicting that Bitcoin will soon rise to levels above $50,000 and even hit $200,000.

“We are in one of many, many cycles to come. Any cycle will take us to higher and higher heights. I’m quite confident sitting on my bitcoin investment that in a very short amount of time we’ll exceed $20,000 and go to $50,000, $100,000, even $200,000.

He continued:

“When I say a short time, I don’t mean minutes or hours, I mean maybe months, if not a few years.”

Read also: Bitcoin market update: BTC/USD slow weekend trading stuck in a narrow range

Related Posts:

  • No Related Posts

Beware, Bitcoin QR Generator Scammers on the Loose, Warns Researchers

Researchers from ZenGo, a cryptocurrency wallet provider, published a worrying report late last month claiming that there are, in fact, a plethora of …

Next time you plan on using one of those Bitcoin QR generator websites to simplify your cryptocurrency transactions, just take a moment to verify its authenticity first. Chances are you’re about to fall prey to a scam.

Researchers from ZenGo, a cryptocurrency wallet provider, published a worrying report late last month claiming that there are, in fact, a plethora of fake Bitcoin QR scam generating websites out there ripping unsuspecting users of their precious Bitcoins.

bitcoin qr scam

4 of the top-5 Bitcoin QR Generators on Google Are Fake

This is perhaps the most alarming bit to have come out of the report as the researchers found that four out of the top-five search results against the keyword “Bitcoin QR Generator” turned out to be scams.

For the uninitiated, a Quick Response code — or simply QR code — is a type of matrix barcode commonly used for storing data in a machine-readable optical label. These codes come handy in Bitcoin transactions by enabling users to quickly generate a QR code for their Bitcoin wallet and share it with the payer. This is much more time-efficient and less error-prone as compared to having to manually type a complicated wallet address.

The scam highlighted by the ZenGo researchers in their Aug 29 report is simple yet highly effective. It generates a QR code at the request of the unsuspecting victim without displaying any suspicious behavior whatsoever.

However, the QR code thus generated links itself to the scammer’s Bitcoin wallet instead of the victim’s, which means any payment made using the QR code shared by the victim is actually deposited in the wallet of the scammer.

Security researcher and ZenGo co-founder Tal Be’ery added:

“[..]the scammers do not even bother with generating their fake QR themselves, instead they shamelessly call a blockchain explorer API [..] to generate the QR for their address.”

bitcoin paper wallet

Just How Successful Are These Scammers?

The ZenGo research team studied the Bitcoin public addresses associated with these scam QR generating sites and found that they have collectively duped people of Bitcoin worth about $20,000.

One of these addresses saw 21 transactions over the course of two months, accumulating 0.58 BTC in that period.

The researchers, however, say that this could be just the tip of the iceberg as the scam is likely to be far more menacing considering that scammers probably periodically switch to different wallets to avoid raising suspicion.

Some of these scam websites also walk the extra mile to avoid detection just in case the victim becomes suspicious. For example, Tal Be’ery noted that a few of these scammers copied their own wallet address to the victim’s clipboard.

“[..] If victims verify the QR code by pasting the value in the clipboard, thinking it’s the address they previously copied to get a QR for, it will match.”

Buy Cryptocurrency

Calculate
Recipient
Summary
USD
BTCETHLTCXLMXRPZEC

Visa and Mastercard

I agree to the terms & conditions

You buy :

In dollars :

To email :

How to Stay Safe From Bitcoin QR Generator Scams?

To steer clear of these scammers, ZenGo advises users to stick to only trusted websites to generate their Bitcoin wallet QR codes (instead of using random sites found on Google search).

Besides, users are advised to verify the newly generated QR code using a wallet app before sharing it with peers. For added protection, ZenGo also recommends using a trusted Threat Intelligence Service to avoid questionable websites and services.

What about you, though? Did you ever come across any scammy services that tried duping you of your Bitcoin stash? If you did, share your experience in the comments below along with any advice you might have for fellow users.


Images are courtesy of Shutterstock, Twitter.

As a trusted news outlet in the blockchain and cryptocurrency industry, BeInCryptoalways strives for the highest journalistic standards and adheres to a strict setof editorial policies. BeInCrypto is an independent website with authors and managementthat may personally invest in cryptocurrencies or blockchain startups.

Related Posts:

  • No Related Posts