It's getting hot in here

So…cash out all your Celsius funds?

Welcome back. Remember when Kevin called the LUNA crash over on the Coinsider YouTube channel just a few months ago? Well, he had another moment of clairvoyance, this time regarding BNB…sensing a pattern here.

Today: The big blockchain shutdown, more Celsius drama, and a bitcoin miner’s nightmare. Let’s go.

—Angelina

BNB Chain: “going offline, brb”

Crypto is like Game of Thrones: Just when you think your favorite characters are safe, their storylines take a turn for the worse. On today’s episode? Binance’s BNB Chain faces serious backlash from the crypto community after a major hack targeted the world’s largest crypto exchange.

What happened:

  • On Thursday, an anonymous hacker exploited a vulnerability in the Binance Bridge to send themselves 2 million of Binance’s native BNB tokens (worth about $570 million).

  • The attacker “only” got away with $110 million worth of BNB because most of the stolen tokens couldn’t be transferred off of the quickly suspended BNB Chain. Had it gone to plan, the hack would have been the second largest in DeFi history.

  • The BNB Smart Chain (BSC) was shut down to minimize losses shortly after the hack was detected. It has since resumed operations.

Binance CEO Changpeng Zhao said the issue was contained and all user funds are safe. Moving forward, BNB Chain will host on-chain governance votes to decide whether recently hacked funds should be frozen.

Big picture: The hack caused a stir, but the real drama was in the suspension of BSC. Blockchains are supposed to be decentralized, beyond the control of singular entities (like Binance’s c-suite). They’re not meant to be switched off by a central authority.

While BNB explained that the shutdown was the result of rapid cooperation between chain validators, an earlier tweet made the move appear to be a single-handed intervention. That rekindled the perennial discussion about BNB Chain’s independence from Binance.

Bottom line: BNB Chain is more centralized than Ethereum or Bitcoin, but decentralization was never its main selling point. And without the immediate intervention of a centralized authority, it’s likely that a lot more BNB tokens would have been stolen.

But...the exploit is yet another reminder that cross-chain bridges are a major vulnerability in the crypto ecosystem—some $2 billion in crypto has been stolen from bridge attacks this year alone.

Celsius Execs Turn up the Thermostat

The saga continues for Celsius. The beleaguered crypto lender’s top execs cashed out big time before filing for bankruptcy in July, according to new court records filed in bankruptcy proceedings last week.

The details:

  • Former Celsius CEO Alex Mashinsky and former CSO Daniel Leon together withdrew over $17 million in crypto between May and June 2022. Mashinsky’s wife reportedly withdrew an additional $2 million worth of tokens in May.

  • The filings also disclosed the names and trading history of all Celsius’ users—allowing anyone to connect named users with their previously anonymous crypto wallets.

This comes as a hard blow to Celsius customers. The platform had paused all withdrawals in June, explaining that “the acceleration of withdrawals would have allowed certain customers—those who were first to act—to be paid in full while leaving others behind to wait for Celsius to harvest value from illiquid or longer-term asset deployment activities before they receive a recovery.” The irony? It seems Celsius leadership was the first to act.

What’s next: The fate of customers’ funds remains among the most pressing questions in the calamitous Celsius case. The lender’s assets are due to be auctioned off later this month, but equity holders are first in line to get their money back.

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Miners Face Another Margin Squeeze

This bear market has been a tough one for bitcoin miners, with profit margins shrinking and energy costs soaring. And it just got even worse. Bitcoin mining difficulty, which was already at an all-time high, spiked more than 13% yesterday.

Cause: Cooler weather, more efficient mining machines, and reallocated ETH mining capacity post-Merge have all pitched into Bitcoin’s rising hashrate.

Effects: This spike in difficulty knocks mining revenue by an additional 10%. With that, we’ll likely see more miners go out of business in the coming weeks as crypto winter weeds out those with inefficient operations and higher energy costs.

In other news:

  • OpenSea CFO Brian Roberts and Vice President of Business Development Ryan Foutty are the latest high-profile crypto execs to resign in this bear market.

  • Binance plans to partially delist the Helium Network Token (HNT) and investors are wondering why.

  • Turkey is determined to make Istanbul a global crypto hub.

  • Bitsamp, the longest-running crypto exchange, will assist Mt. Gox creditors in the repayment of their funds.

  • FTX is partnering with VISA to offer crypto debit cards in 40 countries.

And that’s what you need on your radar today in crypto. Do you think BNB Chain is team centralized or decentralized? Shoot us a reply. See you back here on Friday!