Cryptos Drop As DeFi Platform Hack Hurts

Cryptocurrencies declined close to 2 percent in the past 24 hours amidst a hack in the DeFi platform Curve Finance.

Overall crypto market capitalization has fallen to $1.16 trillion, from $1.19 trillion a day earlier, as concerns of a potential DeFi contagion engulfed cryptosphere.

Reports of Curve Finance, a decentralized exchange being affected by a multi-million hack ruined sentiment, causing more than 85 percent of the top 100 cryptocurrencies to trade in the red zone. According to the warning notice posted by coinmarketcap.com, several stable pools utilizing the programming language Vyper 0.2.15, have been compromised due to a defective reentrancy lock.

The exploit has led to Curve Finance’s utility token, Curve DAO Token (CRV), losing 3 percent overnight, 16 percent in the past week and 21 percent on a 30-day horizon.
75th ranked Compound (COMP) another DeFi lending protocol led losses with an overnight decline of more than 9.5 percent. DeFi protocol Aave (AAVE) ranked 44th overall followed with losses of more than 9 percent. 60th ranked Synthetix (SNX), a decentralized exchange token also associated with DeFi declined 7.4 percent. 54th ranked Theta Network (THETA) and 62nd ranked Injective (INJ), both belonging to the DeFI space shed more than 4 percent.

The Dollar’s strength resulting in the Dollar Index, a measure of the Dollar’s strength against a basket of 6 currencies rising close to half a percent overnight to 102.27 also contributed to weak sentiment for cryptocurrencies.

In another major development, Judge Jed Rakoff of the U.S. District Court of the Southern District of New York has rejected a motion filed by defendants Terraform Labs and its CEO Do Kwon to dismiss the SEC’s complaint against it. The court concluded that the defendants used false and materially misleading statements to entice U.S. investors to purchase and hold on to defendants’ products. The judge ruled that because those products were unregistered investment-contract securities that enabled investors to profit from the supposed investment activities of defendants and others, the motion to dismiss had to be denied. The ruling assumes significance as it does not endorse the view taken by Judge Analisa Torres in the landmark XRP ruling. The ruling had concluded that XRP was not an investment contract, providing Ripple Labs a partial win against the SEC.

Recent revelation by Coinbase that the SEC had asked it to delist all cryptocurrencies except Bitcoin added to the negative sentiment concerning cryptocurrencies. Solana (SOL), Cardano (ADA), Polygon (MATIC), The SandBox (SAND), all listed in the lawsuit by the SEC against Coinbase are trading with overnight losses of more than 2 percent.

Speculation linking the BALD meme coin, that recently suffered a rug-pull, to someone associated with Alameda Research also exacerbated the weak crypto market sentiment.

Bitcoin shed 1.6 percent overnight to trade at $28,858.43.

Ethereum also declined 1.7 percent in the past 24 hours and is currently changing hands at $1832.73.

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