Happy Wednesday! In today’s Daily, Cosmos co-founder Jae Kwon blames Iqlusion over North Korea-linked security risks, Italy plans to raise bitcoin capital gains tax to 42%, the U.S. calls for a reduced prison sentence for the 2016 Bitfinex hacker and more.
Meanwhile, a new a16z crypto report finds cryptocurrency activity and usage at an all-time high.
Let’s get started.
Cosmos co-founder blames Iqlusion over North Korea-linked security risks
Cosmos co-founder Jae Kwon raised concerns on Tuesday about the development and security of Cosmos Hub’s liquid staking module amid links to North Korean agents.
- “For 16 months, the LSM was developed by individuals linked to North Korea, and their contributions were integrated into the Cosmos Hub
ATOM
-3.21%
without proper security vetting,” Kwon said in a GitHub post. - The Cosmos co-founder blamed the “gross negligence” of validator hosting firm Iqlusion under the leadership of Zaki Manian.
- Iqlusion and Manian began developing the LSM in August 2021 with Jun Kai and Sarawut Sanit, who Kwon later claimed were North Korean agents and primary code contributors.
- Despite knowing about the agents’ involvement since March 2023, as Manian admitted, he failed to disclose it and other unresolved security issues until earlier this month, Kwon said.
- While critical vulnerabilities in the module were found in a 2022 audit, the same North Korean agents were responsible for fixing it.
- “Rather than taking proactive measures, such as conducting an additional audit or disclosing this issue to the Cosmos community, Zaki publicly asserted that the module was ‘ready to be deployed,'” Kwon stated.
- “Zaki’s lack of transparency and poor judgment represents a profound breach of the trust placed in Iqlusion by the Cosmos community,” he added.
- Kwon warned that the LSM’s design potentially risks the security of all staked Cosmos ATOM tokens and called for an immediate audit of the LSM and stricter oversight for future implementations.
Italy plans to raise capital gains tax on bitcoin from 26% to 42%
Italy plans to raise capital gains tax on bitcoin to 42% as part of the country’s budget for 2025, according to local newspaper Il Sole 24 Ore.
- “We foresee an increase in the tax on bitcoin capital gains from 26% to 42%,” Vice Economy Minister Maurizio Leo said, presenting measures approved by the Council of Ministers on Tuesday evening, aimed at generating resources to support families, youth and businesses.
- Since the 2023 tax year, capital gains above €2,000 ($2,180) have been taxed at 26% after several new rules for cryptocurrency taxation were introduced — a shift from the previous treatment of crypto as foreign currency, which had lower tax rates.
- Leo also said that Italy was planning to crack down on cash usage to combat tax evasion, according to the report.
US calls for reduced prison sentence for 2016 Bitfinex hacker
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U.S. prosecutors have called for a reduced five-year prison sentence for Ilya Lichtenstein over money laundering charges related to the 2016 Bitfinex hack, citing his cooperation in the case and assistance in other crypto-related criminal investigations.
- However, prosecutors are seeking a longer sentence for Lichtenstein than the 18 months they recommended for his wife and co-conspirator, Heather Morgan aka “Razzlekhan,” as he was primarily responsible for the Bitfinex hack compared to her lesser role of helping him launder the funds, according to a Tuesday filing.
- Lichtenstein agreed to forfeit over $6 billion worth of assets linked to the hack, including 94,643 BTC, as restitution, with Bitfinex likely being the sole remaining victim.
- Lichtenstein and Morgan pleaded guilty in August 2023 to conspiring to launder 119,754 BTC from the hack, then worth around $70 million, and will be sentenced on Nov. 14 and Nov. 15, respectively.
TON blockchain taps Axelar for interoperability push
The TON Foundation has selected Axelar’s Mobius Development Stack as its preferred interoperability solution, aiming to boost The Open Network’s connectivity with other blockchains.
- Axelar’s MDS will enable cross-chain asset transfers and support the development of cross-chain decentralized apps within TON’s ecosystem.
- The integration aims to prevent fragmented liquidity and reduce user confusion by providing a unified cross-chain experience, leveraging Axelar’s connectivity between Ethereum, Cosmos, Polkadot and other networks.
- Developers are also keen to tap into TON blockchain’s connection with Telegram’s 900 million users. However, its ecosystem has lacked user-friendly interoperability solutions, which has hindered seamless asset transfers across various chains.
‘Crypto is the future’ Trump proclaims despite World Liberty Financial raising less than $10 million in first-day WLFI token sales
World Liberty Financial, the much-hyped DeFi project backed by Donald Trump and his sons, sold more than 600 million WLFI on Tuesday as its token sale went live.
- The initial sale aims to generate $300 million by selling 20% of the token supply at a $1.5 billion valuation, though less than $10 million was raised on the first day amid a series of intermittent downtime on its site.
- “Crypto is the future,” Trump declared, despite the disappointing start. “Let’s embrace this incredible technology and lead the world in digital economy.”
In the next 24 hours
- Eurozone CPI inflation figures are released at 5 a.m. ET on Thursday. Est. MoM -0.1%; Core 0.1%. Est. YoY 1.8%; Core 2.7%. The ECB’s latest interest rate decision follows at 8:15 a.m. U.S. jobless claims numbers are due at 8:30 a.m.
- ECB President Christine Lagarde will speak at 10:15 a.m.
- The Avalanche Summit continues in Buenos Aires.
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