What has been happening this week in the world of blockchain and cryptocurrencies? Current events and background reports in our weekly review.
Selected articles of the week:
Democrats are taking control of both chambers of Congress after the US midterm elections. As a result, the crypto industry loses its regulatory tailwind. For two years, Washington tended to advance the industry’s interests rather than slow them. For now, the GENIUS Act, which regulates stablecoins, remains the tangible result. By contrast, the Clarity Act, a comprehensive bill for the crypto market, failed in the Senate in September. Research firm TD Cowen considers progress unlikely over the next two years. Moreover, it expects investigations into President Donald Trump’s crypto businesses. Yet the industry’s campaign committees had spent USD 170 million. In Ohio alone, more than USD 60 million targeted crypto-critical Democrat Sherrod Brown. Nevertheless, Brown won and could take a leading oversight role in the Senate. Within the industry, however, the spending remains controversial. Even so, campaign committee Fairshake plans to stay the course in 2028 too.
With Democrats winning both chambers of Congress, the crypto industry’s chances of getting the Clarity Act passed are fading.
Blockchain association demands more speed from FINMA
The Swiss Blockchain Federation represents the country’s blockchain industry. In its first global comparison, the association ranks Switzerland 6th out of 15 financial centers. The comparison measures regulated infrastructure for securities, bonds and funds on the blockchain. With 75.62 out of 100 points, the country sits behind the US, Singapore, the United Kingdom, Germany and Japan. Switzerland achieves top scores for legal certainty and blockchain infrastructure, which the association attributes to the country’s early legal framework. On speed of implementation, however, it reaches only 6.0 out of 10 points, and on market size 5.0. The weighting is decisive. Speed, market size and AI together account for 45% of the overall score. Therefore, the association demands faster, more predictable licensing from financial regulator FINMA, along with a framework for Swiss franc stablecoins. At the same time, it says it is not seeking weaker supervision.
Switzerland takes sixth place among 15 financial centers in the SBF benchmark, leading in law and DLT infrastructure but trailing on speed.
Analysts reconstruct the Binance hack
Analytics firms have largely reconstructed the theft of around USD 6.3 billion from crypto exchange Binance in late October. According to them, preparations began at least 36 hours earlier, when a new wallet received small amounts via obfuscation service Tornado Cash. The attackers also tested their code repeatedly, most recently around four hours beforehand. Most of the loot then left the exchange’s online wallets in around 20 minutes. Normally, an exchange’s signing system checks every withdrawal before approval. However, analytics firm TRM Labs concludes from ordinary transfers on nine blockchains that this system itself signed for the attackers. Stablecoin issuers Tether and Circle, which can freeze individual addresses, intervened only around an hour after the attack began. By then, around USD 786 million had moved into the non-freezable cryptocurrencies Ether and TRX. Nevertheless, how the attackers got in remains unclear, as the announced root-cause report is still outstanding.
In the Binance hack, attackers drained most of USD 6.3 billion in about 20 minutes, using the exchange’s own signing system, TRM says.
North Korea denies allegations over Binance incident
North Korea denies being behind the theft of around USD 6.3 billion from crypto exchange Binance. This week, Kim Yo Jong, sister of ruler Kim Jong Un, called the FBI’s accusation “absurd rhetoric.” Observers widely regard crypto theft as a key funding source for the country’s weapons programs. Therefore, analysts in Seoul read the unusually quick denial as concern about tougher measures, although this remains unproven. Meanwhile, Binance itself reports that customer outflows have normalized. After the hack, the exchange had frozen withdrawals for more than two days. Over the past weekend, customers withdrew a net USD 4.72 billion. Since reopening, however, the exchange says net outflows have equaled only around 3% of assets on the platform. In addition, Binance is courting customers with fee discounts and yields of up to 10% on selected products.
North Korea rejects the FBI attribution of the USD 6.3 billion crypto theft at Binance, while the exchange reports that outflows have normalized.
Crypto investigator uncovers attack on French bank
In addition: French bank Crédit Mutuel Arkéa this week confirmed a cyberattack that moved its own money into cryptocurrencies. However, independent investigator ZachXBT had made the case public two days earlier, tracing the trail on public blockchains. ZachXBT estimates the damage at over USD 133 million, possibly higher. The bank confirms only the order of magnitude. According to ZachXBT’s reconstruction, the funds moved through swap services and partly into cryptocurrency Monero, which hides addresses and amounts. More than USD 30 million escaped an easy early freeze, the investigator says, because the report to the authorities came too late. The bank says customer assets are unaffected and the amount does not threaten its financial strength. According to the bank, part of the funds remains blocked, so the final loss is still open. Neither the bank nor the investigator has named a perpetrator, and the method also remains unexplained.
The Arkéa cyberattack moved money from the bank’s own account into crypto, and ZachXBT estimates the losses at more than USD 133 million.
