🗺 Where does all of that stolen crypto go?

This week in crypto: North Korea's crypto hacking industry, Safemoon's new 100% tax, Miami's city wide crypto network, and Shopfiy adding NFTs.

North Korea Enters Crypto Market By Stealing $1.7B from Exchanges
"Haters gonna hate, and ain'ters gonna ain't!" Source: Sony Pictures

North Korea Enters Crypto Market By Stealing $1.7B from Exchanges

According to a report from the South Korean news outlet Chosun, North Korean hacker syndicates are suspected of stealing $1.7B over the last five years.

North Korea is under heavy economic sanctions, so its ability to do business with other nations is limited. It's likely that North Korea sees crypto as a means to evade these sanctions and stimulate economic activity.

North Korea has also done well on its crypto "investments," as Bitcoin is up over 50x since they started stealing it in 2017. According to Koh Myung-hyunat at the Asan Institute for Policy Studies, "North Korea is using the stolen cryptocurrency from the perspective of long-term investment" and North Korea views crypto as "the only financial asset that can be gained while it is under tight economic sanctions."

The United States has accused North Korea of committing financial cyber crimes as early as 2016. When the US Justice Department unsealed its charges against several North Koreans with theft of fiat and crypto, it also laid out the scope of North Korea's hacking efforts.

The US believes North Korean hackers targeted banks in Malta in 2019, ATMs and crypto exchanges worldwide in 2017, an Indonesian crypto exchange in 2018, and a finance firm in New York in 2021. John C. Demers, assistant attorney general for national security said, "North Korea’s operatives, using keyboards rather than guns, stealing digital wallets of cryptocurrency instead of sacks of cash, have become the world’s leading bank robbers"

After stealing the crypto, North Korea launders it using tumblers or a "peel chain" tactic, where Bitcoin is quickly moved across hundreds or thousands of wallets. This makes it tougher to track and makes the Bitcoin less likely to be flagged as stolen.

Safemoon Sets 100% Tax on Version-1 Transactions
Gordon Lunas. Source: Adult Swim

Safemoon Sets 100% Tax on Version-1 Transactions

Meme coin Safemoon (SAFEMOON) ($800M market cap) is encouraging users to upgrade to its v2 SFE token by setting a 100% tax on v1 SAFEMOON transactions.

Safemoon exploded in popularity in mid-2021, reaching a $6B market cap, before settling around $1B. The project is unique in its transaction "tax" structure, where all SAFEMOON transactions are taxed at a 10% rate. Half of that tax is redistributed to SAFEMOON holders as "reflections," and the other half is sent to liquidity providers like PancakeSwap and exchanged for Binance coin (BNB) to increase liquidity.

Safemoon has been characterized as a scam coin due to its limited utility and sketchy smart contracts. According to DoxxLocker, "a deep flaw in the automatic liquidity system built into the contract allows the developers to withdraw the generated liquidity into other wallets." DoxxLocker believes that by August 2021, $68M in reflections had been mis-distributed from the v1 tax pool. It is believed that the Safemoon team is taking this money.

The project's v2 upgrade is unpopular among SAFEMOON holders because it is not fully audited, and currently it can be difficult to sell the v2 SFM token.

When the Safemoon team announced the v2 upgrade two weeks ago, they took an unusual approach to the transition. When wallets transitioned from v1 to v2, they paid the 10% tax, but the reflections for the transfers were paid to v1 holders. This means that as more wallets transitioned to v2, the reflections grow larger for remaining v1 holders.

As of December 29, ~10% of Safemoon wallets had transitioned to v2 (not counting dust wallets). The Safemoon team discussed solutions in public, settling on a plan to lock out old wallets.On December 29, Safemoon imposed a 100% tax on v1 transactions with just hours of notice before changes went into effect. This means that if anyone does anything with a v1 SAFEMOON token besides upgrade to v2, it gets taxed away. If an investor buys the v1 SAFEMOON token on an exchange that has not upgraded to Safemoon's v2 protocol, the v1 tokens will be taxed away, and the investor will receive nothing.

Miami to Launch Decentralized Air Quality Monitor on Algorand
Photo by George Pagan III / Unsplash

Miami to Launch Decentralized Air Quality Monitor on Algorand

Miami is considered one of the leading cities in the US in terms of crypto adoption and support.  The city was one of the big winners in terms of software engineering talent in 2020, with many engineers moving out of San Francisco in favor of relocating to Miami.  The mayor has welcomed them with open arms and has generally been a very outspoken proponent of cryptocurrency.  The city is now receiving crypto in the form of MIA CityCoin, paying city employees who opt in with Bitcoin. Miami has also played host to some of the largest Bitcoin conferences in the world.

Miami is now taking its adoption of crypto a step further by partnering with a French company, PlanetWatch, to launch a city-wide network of devices that monitor air quality and publish the data to the Algorand blockchain.  The goal is to find and mitigate pollution hotspots, and to add more data to Miami’s environmental analytics.

PlanetWatch will be rewarding individuals who host these sensors with in-app tokens and other rewards through the network.  PlanetWatch uses Algorand because of its scalability, security, and carbon-negative footprint.  Some estimates say air pollution shortens human lifespan by up to 3 years.  Miami is a city of nearly 450,000 residents, which means solving the air pollution problem could lead to ~1.3m more years of life across all of their residents.

Miami Mayor Francis Suarez was quoted saying: “The data from this project will play a crucial role in our climate adaptation efforts as well as our ambitions to make Miami an epicenter for digital capital markets."

Shopify Adds NFT Support
Photo by Mike Petrucci / Unsplash

Shopify Adds NFT Support

2021 was the year of the NFT, growing from $400M/month in sales at the start of the year to about $11B/month by year’s end.  This incredible surge in transaction volume has led to a number of already-existing NFT marketplace giants, like OpenSea, cementing their place in the market.  This growth has also opened the door to many newcomers . . . and they’re not who you’d expect.  For months, rumors have circulated regarding GameStop’s new NFT marketplace built on Loopring (an Ethereum L2), and now Shopify has launched a beta NFT program for US customers.

Shopify is an ecommerce store builder with nearly 2 million individual stores built on the platform, and in 2020 it processed over $5B in sales.  According to Shopify’s NFT launch page, their new offerings let you “Mint and sell your own branded NFTs with Shopify and Shopify Payments—right from your store.”

Shopify also lists a number of ways to make NFTs on the site more attractive to buyers.  They call out 4 branded experiences that are integrated with their new platform: airdrops, tiered memberships via NFT purchases, content gating things like artwork, albums, tickets, merch, etc. based on NFT ownership, and certificates of authenticity for the NFTs they buy.

NFTs seem like a good fit for the company’s mission.  NFTs largely have opened a market for small artists to derive income from their work and Shopify exists to support individuals who create a business. They’ve even described their work as “arming the rebels against Amazon.”

For now, the Spotify beta is open to US-based Plus merchants on the platform.