today is Aug 18, 2022

Scams and fake news have long dodged the crypto world. This week saw two major blockchain companies and a global retailer get swept up by hack rumors or hoaxes.

There has been a spate of hoaxes and fake news in the crypto industry in the past few days in Asia and beyond, as cryptocurrency exchange FTX, blockchain gaming company Animoca Brands and global retail giant Walmart have all been caught up in a wash of hack rumors or deliberate misinformation.

Rumors began circulating online a few days ago that Hong Kong-based FTX, the world’s third-largest crypto derivatives exchange and fourth-largest spot exchange by trading volume, may have been hacked. Blockchain data shows a total of over 45,000 Bitcoin worth more than US$2 billion dollars being moved out of FTX’s wallet, across hundreds of transactions. Suspicious investors pointed to the potential of a hack, but FTX CEO Sam Bankman-Fried this morning tried to dispel the rumors.

“For those who don’t know, Bitcoin withdrawal processing involves combining together UTXOs (unspent transaction outputs) deposit addresses etc,” Bankman-Fried tweeted. ”A few days ago we consolidated some UTXOs into an address to make processing quicker.”

While rather technical, Bankman-Fried’s response offers a plausible explanation as to why so many transactions appeared to be consolidated into a single wallet. UTxOs refer to the amount of cryptocurrency left in a digital wallet after a transaction is completed, which is then stored in a UTxO database. Additionally, a single Bitcoin can be derived from multiple bytes of information.

UTxO databases amalgamate these disparate bytes for them to be spent later, and consolidating them into a single wallet, as Bankman-Fried is saying FTX has done, makes managing the funds easier and faster.

This is not the first time UTxOs have featured prominently in recent news. As the industry looked to Cardano’s Alonzo upgrade over the weekend that brought smart contract capabilities to the network, there was a hitch with one of the first decentralized apps (dApps) on the network. Minswap was forced to shut down prematurely due to “concurrency” issues, meaning Cardano was not up to the task of supporting multiple users at the same time. Some critics claimed the network’s use of UTxOs was not capable of supporting the dApps.

Some industry watchers are backing up Bankman-Fried’s defense.“Rumors of FTX being hacked, which is spreading like wildfire, are fake. Don’t pay attention to it,” said Larry Cermack, director of research at The Block, in a tweet this morning. In a Twitter thread, Cermack added that his source was FTX employees, saying there was no reason to doubt them as the likelihood of the hack is “highly unlikely.”

FTX did not respond to Forkast.News’ requests for comment by publishing time.

Animoca Brands Scam

Also in Hong Kong, blockchain gaming firm Animoca Brands, a lead investor in the blockbuster non-fungible token game Axie Infinity, has also been hit by a scam. Animoca Brands warned that an ERC-20 token on Uniswap V2 using the symbol “ANIMOCA” is fraudulently claiming to be from the company when in fact, the company has no connection to that coin at all.

By purporting to be connected to Animoca Brands, the persons associated with the fraudulent token are attempting to mislead and defraud the public through the theft of the business identity of Animoca Brands and the hijacking of its brand and reputation,” Animoca said, in a media statement.

Scammers reportedly were directing would-be investors to a fake Telegram channel called AnimocaBrands_official, where they pressured users to take part in the fake sale by sending funds to an Ethereum wallet address.Animoca Brands did not respond to Forkast.News’ requests for comment by publishing time.

Walmart and Litecoin

A sophisticated scam targeting investors misled them into believing that global retail giant Walmart was planning on accepting the cryptocurrency Litecoin in the near future. The fake “news” was disseminated yesterday via a press release on GlobeNewswire, one of the world’s largest press release distribution networks, was republished by several leading news outlets, including Reuters and CNBC, and caused a momentary 33% jump in the price of Litecoin before Walmart publicly dispelled the rumors.

While Litecoin issued a denial shortly after as well, Litecoin’s verified Twitter account initially reposted the press release, adding to the confusion. Though it was quickly taken down as it was revealed the social media team had made a mistake.

Litecoin currently ranks as only the 16th largest coin by market cap, according to data from CoinMarketCap.com, raising eyebrows at the idea Walmart might begin accepting it over other, larger coins. Trading at US$174.16 just before the announcement, Litecoin shot to a one-week high of US$231.11 before resuming trading around its previous, pre-Walmart hoax price within the hour.

But before it was dispelled, the Litecoin hoax sparked a wave of buying activity across the crypto market, as Bitcoin, Ethereum, Cardano and a host of other coins enjoyed brief price bumps as well, though none saw the same level of market excitement as Litecoin. These coins soon quieted back down to pre-hoax levels, joining the remainder of the market in largely holding steady for the day.

Globe Newswire is a press release distribution service, which distributes over 200,000 releases a year, according to its website. Intrado, the company that owns Global Newswire, said it was working with investigators on the matter, including trying to ascertain if any criminal activity was associated with the hoax. “This has never happened before and we have already put in place enhanced authentication steps to prevent this isolated incident from occurring in the future,” Intrado told Bloomberg.

Despite the slew of scams and misinformation, the market seems broadly unaffected by them in the past 24 hours, with few major tokens trading up or down by more than a single-digit percentage-wise over the past 24 hours. Bitcoin was trading at US$46,114 at press time, down roughly 10% from its position a week ago, before its adoption by El Salvador as legal tender.

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