GM DOers!
Crypto’s on fire right now so I won’t waste any time. Here’s what I’ve got on the agenda for you today.
First up, Munchables, a gaming project on Blast was just hacked for $62 million by a North Korean hacker.
Luckily, funds were retrieved within a few hours in what’s a crazy story.
Secondly, Coinbase just announced that they’re moving more of their business onchain (on Base).
Thirdly, ETFs are heating up again – Bitcoin has seen huge inflows this week after experiencing massive outflows last week.
Fourthly, we have some updates that may indicate that an approval for Ethereum’s Spot ETF is coming in May after all. 👀
It’s already been a big week and it’s only Wednesday. Let’s dive in. ⏬
The Munchables Hacker
I honestly never thought we'd have a hacker called 'The Munchables Hacker' but crypto’s wild so here we are.
Munchables is a game built on the Blast L2 where users can deposit funds to earn "Schnibbles", which is basically food for “Munchable” characters that look like this:
By growing their Munchables, people earn rewards and Blast points – it’s kind of a ponzi.
So how did this game get hacked for over $60 million?
It all started when the Munchables team hired 4 developers from North Korea, who turned out to be one single villain.
Here’s one of the dev’s GitHub profiles, which comes with a few red flags.
They claim to know all the coding languages and tools. I doubt that even Satoshi or Vitalik are experts in all of these.
They attached their LinkedIn… Bruh, as a developer, your GitHub IS your LinkedIn.
That description is clearly generated by GPT-3.
They linked their Skype… Who TF still uses Skype?
Long story short, after this dev was hired and got access to the multi-sig, he waited until the TVL on Munchables was juicy enough, and he stole over $62 million.
Shortly after the hack occurred, ZachXBT tracked all wallets involved. Check this visual out. It’s clear that all of these wallets are either the same person, or a group that’s working together.
They even recommended each other for this role.
Oddly enough, in the end, all the funds were returned to the Munchables multisig by the hacker.
The Munchables developer has shared all private keys involved to assist in recovering the user funds. Specifically, the key which holds $62,535,441.24 USD, the key which holds 73 WETH, and the owner key which contains the rest of the funds.
506
There’s very little details as to exactly how and why the return of funds happened, but it’s likely that Blast intervened by rolling back the chain, aka by reverting transactions.
$97m has been secured in a multisig by Blast core contributors. Took an incredible lift in the background but I’m grateful the ex munchables dev opted to return all funds in the end without any ransom required. @_munchables_ and protocols integrating with it like @juice_finance…
It’s also likely that ZachXBT had a big role in this too. He said to the hacker when the exploit happened – he must’ve gotten scared of Zach. 😂
buddy I will rape you and your other North Korean devs so hard on-chain your country has another blackout
I wish we had more details about what really happened behind the scenes. All we know right now is that all funds were recovered.
This whole drama opened up a wide range of discussions regarding the centralization issues around Blast (and other L2s), because they technically had the power to intervene.
Here are some takes.
Technically, the Blast team could recover the $62m lost in the Munchables exploit since they control the bridge contract that holds the bridged ETH/stETH.
It wouldn't set a good precedent for future exploits/issues, but it is possible.
An invalid state root would need to be…
It wouldn't set a good precedent for future exploits/issues, but it is possible.
An invalid state root would need to be…
If $62mm more of hacked funds goes to NK (or is alleged to go to NK), it’s night night for crypto in the U.S.
Roll back the chain. Blast is a month old and can afford the debate.
Roll back the chain. Blast is a month old and can afford the debate.
Pacman and Blast's next move will be interesting.
They could upgrade the bridge and prevent the hacker from moving $62M, but ruin all perception of decentralization.
Or they let it rock and their users eat a $62M loss within the first month of launching.
They could upgrade the bridge and prevent the hacker from moving $62M, but ruin all perception of decentralization.
Or they let it rock and their users eat a $62M loss within the first month of launching.
Blast can get $62m in stolen ETH back because it controls the bridge to mainnet. And you got ct geniuses debating whether it would be proper to do so or not for whatever reason. That’s actually insane. There’s literally no reason for Blast not to act for the benefit of its users.
On the topic of centralization and decentralization, let’s see what Coinbase is up to…
Coinbase Making Moves (Onchain)
Max Branzburg, the Head of Consumer Products at Coinbase, shared this on X.
1/ Going forward, Coinbase is going to be storing more corporate and customer USDC balances on Base. This enables us to manage and secure customer funds with lower fees and faster settlement times, with no impact to the Coinbase user experience.
We are excited to continue to…
We are excited to continue to…
In short, Coinbase is moving its business onchain because it’s cheaper, faster and more efficient.
Soon, all crypto exchanges will move onchain. Then banks will follow suit.
Then all real world assets (bonds, stocks, real estate etc.) will be tokenized onchain.
Eventually, everyone and everything will live onchain and I couldn’t be more bullish. 🐂
Speaking of bullishness…
Bitcoin ETFs Are Heating Up Again 🔥
After a bit of a rough patch last week, where we saw a steady stream of outflows hitting $888 million over five days, Bitcoin ETFs are bouncing back!
We kicked off Monday with a fresh inflow of $15.7 million, and then Tuesday really turned things around with a whopping $418 million pouring in.
This obviously matters because when inflows are up, so is the Bitcoin price. 🚀
But things aren’t looking up just for Bitcoin…
Could We Get Spot ETH ETFs in May? 👀
Last week, we chatted about Ethereum going through a tough spot. A state authority decided to look into the Ethereum Foundation, and on top of that, the SEC began to make moves against ETH, aiming to label it as a security.
As things stood, the odds for an approval of a Spot Ethereum ETF were very low.
But things changed…
Craig Salm, the Chief Legal Officer at Grayscale, said the following in a thread:
The SEC not being proactive with current applications isn’t worrying, as they most likely have the facts they need already.
Since the SEC worked with many of the ETF providers for the Bitcoin ETF, they’re already familiar with the entities.
It’s a no-brainer for the SEC to approve spot Ethereum ETFs since they're similar to Ethereum futures ETFs, which are already approved.
Investors really want and deserve spot Ethereum ETFs
All good and dandy, and it makes us super bullish. But in response, Eric Balchunas, said that based on what they’re seeing from the SEC, the chances remain at 25% for an approval by May. Prediction markets rate it at the same odds.
Re Eth ETF approval, we are holding the line at 25% odds altho tbh it is a very pessimistic 25%. The lack of engagement seems to be purposeful vs procrastination. No positive signs/intel anywhere you look. Personally hope they do approve it but it just ain't looking good.
AND HE SMACKS A FOREHAND BACK AT THE BLOOMBERG BOYS AND THEIR ODDSMAKING HOW WILL THEY RESPOND!!!! 
(announcer voice) @JSeyff @EricBalchunas
(announcer voice) @JSeyff @EricBalchunas
Context #1: In order for the SEC to approve the Spot Ethereum ETF, they must say that $ETH isn’t a security. We know that it’s not, and they know it too. They just need to publicly and officially announce that.
Interestingly, the CFTC (Commodity Futures Trading Commission) mentioned that Ethereum is a commodity, and therefore not a security, in their latest lawsuit against KuCoin.
Hidden gem in the CFTC's KuCoin complaint 
Usually the SEC and CFTC pretend they aren't in a turf war over crypto. Today the CFTC is openly attacking the SEC's supposed investigation of ETH.
This may seem minor, but is actually pretty savage interagency drama by DC standards:
Usually the SEC and CFTC pretend they aren't in a turf war over crypto. Today the CFTC is openly attacking the SEC's supposed investigation of ETH.
This may seem minor, but is actually pretty savage interagency drama by DC standards:
Context #2: The CFTC and the SEC are like siblings keeping an eye on different parts of the financial playground! The CFTC takes care of commodities (i.e. gold) while the SEC watches over securities (i.e. stocks).
Here’s what Jake Chervinsky, Chief Legal Officer at Variant, makes of CFTC’s comment.
The cherry on top 
I read it as CFTC saying to SEC ~ "a ton of other digital assets are commodities too and you're not the only one who gets to judge them; this space belongs to us just as much as you, even if we aren't as loud about it."
But maybe that's a wishful reading
I read it as CFTC saying to SEC ~ "a ton of other digital assets are commodities too and you're not the only one who gets to judge them; this space belongs to us just as much as you, even if we aren't as loud about it."
But maybe that's a wishful reading
Wrapping Up – What a Crazy Week 🤯
Here’s my two cents on all of this…
First up, playing in new ecosystems such as Blast is risky. While the rewards could be huge (airdrops), be careful where you put your money, and how much!
Secondly, I continue to remain super bullish on Coinbase and $COIN. They’re showing how there are more use cases for corporations to hold their dollars onchain, once again leading the way into the onchain revolution.
Thirdly, the Bitcoin inflows through the ETFs remains insanely high, and there’s a massive supply shock happening right now. This week’s PRO report will break all of that down.
More importantly, the same level of supply shock is happening on Ethereum right now, which will be amplified if the ETF gets approved in May (PRO report on this is coming in a few weeks too).
So continue to stack your coins and be careful out there. ✌
Thanks for reading. And remember, you're strong, you’re powerful, you’re alpha! ❤️
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