Crypto regulation in the world: weekly digest #135

Argentina

Javier Milei, the President of Argentina, is currently embroiled in a significant scandal involving the cryptocurrency $LIBRA. Following his endorsement of this digital token on February 14, 2025, an investigation has been launched into allegations of fraud and insider trading linked to the project.

On February 14, Milei tweeted about $LIBRA, claiming it was designed to stimulate economic growth by financing small businesses. Shortly after his endorsement, the token's value surged dramatically from $0.000001 to a peak of $5.20, resulting in a market capitalization exceeding $4 billion. Within hours of Milei's post, the value of $LIBRA plummeted to $0.15 as investors began to sell off their holdings amid concerns that the project was a scam. Reports indicated that developers withdrew approximately $100 million from the project during this time.

Following the collapse of $LIBRA, lawyers filed a lawsuit against Milei, accusing him of criminal association, fraud, and dereliction of duty. The case was initiated by members of the Right to the City Observatory and economist Claudio Lozano. A judge has been appointed to investigate these allegations further.

In response to the backlash, Milei deleted his original post and claimed he was unaware of the project's details at the time of his endorsement. His office has since distanced him from any involvement in the cryptocurrency's development. However, Karina Milei, sister of the President, was allegedly approached by Hayden Davis, a key figure behind the LIBRA project, who claimed to have paid her to influence her brother's actions regarding the cryptocurrency.

Davis reportedly boasted in text messages that he could control President Milei through payments to Karina, stating, «I send $$ to his sister and he signs whatever I say and does what I want». This revelation has intensified the political crisis for Milei, drawing severe criticism from opposition leaders and raising concerns about potential corruption within his administration.

Investing in meme coins carries significant risks due to their speculative nature and volatility. Meme coins often experience rapid and unpredictable price fluctuations, leading to potential heavy losses for investors who are not prepared for such instability. All meme coins lack intrinsic value or real-world applications, making them susceptible to market manipulation and speculative trading practices like pump-and-dump schemes in which LIBRA was also involved.

North Korea (Bybit hack)

Bybit, a major cryptocurrency exchange, has recently suffered a catastrophic cyberattack, resulting in the theft of approximately $1.5 billion worth of digital assets. This incident marks one of the largest hacks in the history of cryptocurrency, surpassing previous notable breaches.

The attack occurred on February 21, 2025, when hackers exploited vulnerabilities in Bybit's cold storage wallet system. This cold wallet, designed for enhanced security by being offline, was compromised through a manipulation of the transaction process between cold and hot wallets. The attackers were able to redirect a standard transfer of Ethereum (ETH) to an unknown wallet without triggering security alerts. The scheme of the attack can be analyzed here.

The breach involved sophisticated techniques that allowed the hackers to manipulate the signing interface used for transactions. This manipulation displayed the correct wallet address while altering the smart contract logic, enabling unauthorized transfers.

Investigations have linked the hack to the Lazarus Group, a North Korean state-sponsored hacking organization known for targeting cryptocurrency exchanges to fund its regime.

Following the breach, there was a surge in withdrawal requests from users concerned about the security of their funds. In response, Bybit's CEO, Ben Zhou, reassured customers that their assets remained secure and that the company could absorb the loss or arrange loans to cover any unrecovered funds. Despite these assurances, the incident triggered panic selling across the crypto market. Ethereum's price fell from approximately $2,823 to around $2,685 immediately following news of the hack, reflecting investor fears regarding security vulnerabilities in cryptocurrency exchanges.

The Bybit hack serves as a stark reminder of the vulnerabilities present in cryptocurrency exchanges and highlights the increasing sophistication of cybercriminals. As investigations continue and measures are put in place to enhance security protocols, both users and industry stakeholders remain vigilant against potential future threats.

USA

Tether, the issuer of the world's largest stablecoin, has been actively collaborating with U.S. lawmakers to shape a regulatory framework for stablecoins. This engagement comes as multiple bills aimed at regulating stablecoins have been introduced in Congress, including the STABLE Act, which Tether is particularly involved with.

Tether's CEO, Paolo Ardoino, has confirmed that the company is in discussions with key lawmakers, including Representatives Bryan Steil and French Hill, who are leading efforts on the STABLE Act. This act aims to establish stringent regulations for stablecoin issuance, requiring issuers to maintain one-to-one reserves with high-quality assets like U.S. Treasury bills.

The STABLE Act proposes that stablecoin issuers obtain permission from the Office of the Comptroller of the Currency and conduct monthly audits by U.S.-based accounting firms. Tether's involvement indicates its commitment to compliance and its intention to influence the legislative process positively.

In addition to the STABLE Act, other bills such as the GENIUS Act and a proposal from Representative Maxine Waters are also under consideration. These bills focus on federal oversight and consumer protection measures while allowing state-level regulatory authority.

If these proposed regulations are enacted, Tether will need to adapt its operations significantly to remain compliant and avoid problems that company has faced after MiCA regulations came into force. This includes maintaining strict asset backing and undergoing regular audits, which could impact its operational strategies and financial practices moving forward. As discussions continue, Tether's role in shaping these regulations highlights the increasing scrutiny and importance of stablecoins in the broader financial landscape.

Always remember that when receiving cryptocurrency it is necessary to check the address from which it is sent to you and the source of its origin! Otherwise, you can become a glamour of tokens with criminal origin.

News from other countries:

• FTX has recently initiated a payout process to its creditors, marking a crucial step in the aftermath of its bankruptcy.

  Creditors with claims below $50,000 are receiving approximately 119% of their adjudicated claim value, which includes a 9% annual interest accrued since November 2022. This initial payout totals around $1.2 billion.

• Russia is experiencing a significant increase in cryptocurrency-related crimes, as highlighted by the country's Supreme Court. The surge in crypto crime is attributed to various factors, including the impact of international sanctions, which have led many Russians to turn to cryptocurrencies for financial transactions and as a means of evading sanctions. Recently we wrote about Russia’s new crypto legislation.