Around the Blockchain with Huobi Global (3 Feb 2022)

Welcome to Around the Blockchain, Huobi Learn’s daily rundown of the crypto markets.
Wormhole, one of the most popular bridges linking the Ethereum and Solana blockchains, lost approximately $320 million in an apparent hack yesterday. This was DeFi’s second-largest exploit to date, just after the $600 million Poly Network crypto heist; blockchain cybersecurity firm CertiK’s analysis showed that the hacker’s profits consist of $251 million worth of ETH, almost $47 million worth of SOL and over $4 million worth of the stablecoin USDC. Wormhole said ETH would be added to the bridge to ensure its wrapped tokens remain backed.
The UK’s tax agency, has updated its guidance on the taxation of returns from DeFi lending and staking in proof-of-stake (PoS) networks. The first guidance, published in Mar 2021, said the taxation of staking activity would depend on whether it amounted to a “taxable trade”. In the update, the UK may treat returns from such activity as revenue or capital, based on factors such as whether the return amount was known at the time the agreement was made, whether it was paid periodically or upon principal repayment, and whether the lending period is short- or long-term.
In light of strong objection from the crypto industry, Thailand has loosened tax laws for crypto investors, scrapping the 15% withholding tax it had initially planned to implement. The Thai Revenue Department has also published a manual detailing the new tax rules. According to tax officials, crypto income could be reported as capital gains, and the new rules would allow traders to offset their annual losses against gains made in the same year.
16 Chinese government entities, including the People’s Bank of China (PBOC), have established 15 pilot zones and 164 entities for blockchain projects to be “carried out in various fields, such as manufacturing, energy, government and tax services, law, education, health, and trade and finance”. Regulators emphasized the role of blockchain in “promoting data-sharing, optimizing business processes, reducing operating costs and improving collaboration efficiency”, and said all pilot regions should “give priority to adopting blockchain software and hardware technologies and products that are interoperable and capable of sustainable development”.
Meta Platforms lost $10.2 billion last year on its Facebook Reality Labs (FRL) division, according to its Q4 earnings report. FRL’s 2021 revenue stood at $2.3 billion, a mere fraction of the near-$116 billion generated by Meta’s family of apps, which include Facebook, Instagram and WhatsApp. After the results were released, Meta’s shares fell by over 20% in after-hours trading yesterday. CEO Mark Zuckerberg said during an earnings call with analysts that the company expects FRL’s operating loss to “increase meaningfully” this year.
Aussie billionaire and Fortescue Metals chairman Andrew “Twiggy” Forrest is suing Facebook over fraudulent crypto ads that he claims used his name to defraud victims, and from which Facebook “knowingly profits”. He is bringing forth the charges with Attorney-General Michaelia Cash’s consent, and his lawyers say that while they “do not know the precise number or identities” of the victims, “the scope of the harm is vast”. A spokeswoman for Meta Platforms (Facebook’s parent company) said it was taking a “multi-faceted approach to stop these ads” by detecting them, blocking fraudulent advertisers and, in some instances, taking legal action. But Forrest believes Facebook should do more, adding it “has shown little appetite to self-regulate or take basic steps to protect Australians from the misuse of its platform by crooks”.
Show me the money
The crypto market is once again in the red, amid heightened volatility across global financial markets. According to data from Cointelegraph Markets Pro and TradingView, BTC fell from $38,200 to $36,800 after being hit by a wave of selling yesterday. Crypto trader and pseudonymous Twitter user ‘HornHairs’ shared charts indicating a solid support level near $37,400, saying that “a move back to $38,000 is just a bearish retest unless we can reclaim $38,700”. Still, a bearish move could see the price fall even further, with bulls in trouble below $36,781.
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