Ethereum Sunday Fears Bring Monday Quagmire

Ethereum’s Sunday scaries bring Monday morass

Ethereum, the self-proclaimed “computer world,” has a severe case of “I don’t like Mondays” after a series of PR black eyes.

On Monday, the U.S. Attorney’s Office for the Southern District of New York announcement that Ethereum developer Virgin Griffith pleaded guilty to conspiring to violate the International Emergency Economic Powers Act (IEEPA) by telling North Korean officials how to use cryptocurrency to evade economic sanctions and fund the country’s nuclear weapons program.

The DOJ statement says Griffith formulated plans to help the North Korean regime in 2018 and then traveled to North Korea in April 2019 to make a presentation to local officials, although the US State Department has denied Griffith permission to travel to the so-called Hermit Kingdom. . (Griffith seems confused about Crypto Costanza’s standard tactic of acting illegally, then pleading ignorance of the law and asking for forgiveness.)

The DOJ says Griffith and his co-conspirators “provided instructions on how the DPRK could use blockchain and cryptocurrency technology to launder money and evade sanctions,” including using smart contracts. Griffith hatched a plan to facilitate crypto exchanges between North and South Korea, attempted to recruit other US citizens into the program, and attempted to introduce North Korean agents to service providers. unspecified crypto and blockchain.

Griffith’s charge carries the threat of a potential maximum of 20 years behind bars when he is sentenced on January 18, 2022 by U.S. District Judge P. Kevin Castel. However, Griffith reportedly made a deal to drop his defense in exchange for a custodial sentence of up to six and a half years.

Griffith did not win court sympathy after he violated his bail conditions in May by attempting to access his crypto holdings on the Coinbase exchange, ostensibly to pay his lawyers. Monday’s plea deal included a court order allowing Griffith to access his Coinbase account for the express purpose of transferring payment to his lawyers.

After Griffith’s arrest in November 2019, Ethereum founder Vitalik Buterin issued a statement in which he “refuses[d] take the convenient route of throwing Virgil under the bus, because I strongly believe that would be wrong.

Buterin then justified this position by stating his belief that Griffith “derived no personal benefit from the trip” and gave North Korea “any kind of real help to do anything wrong.” Which only confirms that Buterin is not a local fisherman constantly scanning the horizon for signs of an NK missile test launch entering the Sea of ​​Japan.

Buterin also signed a petition calling for Griffith’s release from prison and the dropping of all charges against him. As of Monday, the petition had only garnered 532 signatures, suggesting that few Ethereum users shared Buterin’s desire to stick with former comrades who felt above the law.

DeFi… it’s a gas

The UK is currently experiencing a petrol shortage which has led to panic buying not seen since the start of the COVID-19 pandemic in the spring of 2020. Meanwhile, gas is also an extremely expensive commodity on DeFi platforms based on Ethereum, where at least one transaction hit absurd new highs on Monday.

Early Monday morning, reports have surfaced of an ERC-20 token transfer of approximately USD 100,000 from Tether (USDT) on the Ethereum-based decentralized exchange DeversiFi. The transaction cost the sender nearly 7,700 ETH in gas fees, or about $23.7 million in greenbacks. That’s a new record for the network and a hefty premium on a transaction that would normally have resulted in gas charges of around $40-50 (which is still ridiculously high, kind of like inhaling straight diethyl ether).

The transaction came from a wallet owned by the Bitfinex exchange, whose parent company also controls the stablecoin Tether. DeversiFi started a few years ago as an offshoot of Bitfinex – DeversiFi was originally known as Ethfinex – and the two companies announced a new partnership last Thursday that ironically promised “the first bridge between a centralized and decentralized Layer 2 (L2) exchange, enabling fast, low-cost transfers for ERC-20 tokens, starting with Tether tokens.

As speculation about the suspicious transaction mounted, DeversiFi tweeted a statement referring to “erroneously high gas charges”. The company said it was “investigating the cause” of the apparent confusion while ensuring that “no customer funds on DeversiFi are at risk” and that “operations are not affected”.

Bitfinex then tweeted that the charges would be “supported by third party integrations with Bitfinex”, adding that Bitfinex would “look forward to DeversiFi’s investigation and resolution of this matter on their end”.

However, Paolo Ardoino, CTO of Tether and Bitfinex, later tweeted that in the “worst case scenario, Finex will take care of it with its [sic] company funds. It’s a rather benevolent gesture considering that the fat-fingered fault is allegedly on the other side of the ledger. Still, Ardoino may have felt very embarrassed after posting a tweet on Sunday saying that the new Bitfinex-DeversiFi partnership was “working like a charm!”

Speculation has now turned to the unknown miner who received that “erroneous” $23.7 million salary. The said miner ranked ninth among ETH miners over the past week, credited with just under 3.2% of all blocks mined.

As Monday progressed, word got out that the miner returned all of the excessive gas fees to DeversiFi, except for around 290 ETH ($1.4 million), and Ardoino announced that the “rest will come soon. “. That said, given that Monday’s events involved the trusted nefarious nexus that is Bitfinex/Tether, where nothing is ever as it seems (or its backers would have you believe), the industry will be watching to see if there are additional links to this mysterious miner. emerge in the next few days.

Evidence of futility

In the latest Buterin-based development of the day, the second-largest Ethereum mining pool officially calls it the end of this month. Hangzhou-based SparkPool said last week that it had stopped providing services to new Chinese customers in line with Beijing’s latest crackdown on anything crypto.

But the company released a new statement on Sunday announcing “a complete shutdown of all SparkPool services and operations for existing users, domestically or abroad,” effective Sept. 30. SparkPool said the abrupt stop was made “for the purpose of ensuring safety”. assets of our users.

SparkPool launched operations in 2018 and has grown to be over a fifth of Ethereum’s hash rate, just a few points behind favorite Ethermine. All ETH miners face potential judgment when the technology moves from a Proof-of-Work (PoW) consensus mechanism to the new Proof-of-Stake (PoS) model, which will further centralize control of the network in the hands from a few “validators” who have accumulated large amounts of pre-mined ETH tokens.

To follow The CoinGeek Crypto Crime Cartel series, which dives into the flow of groups – from BitMEX for Binance,, Blockstream, Metamorphose, Coinbase, Ripple and Ethereum– who co-opted the digital asset revolution and turned the industry into a minefield for naïve (and even experienced) market players.

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