Welcome to Around the Blockchain, Huobi Learn’s daily rundown of the crypto markets.
As crypto donations continue pouring into Ukraine’s efforts against Russia’s military attacks, fraudulent schemes luring donors to “help Ukraine” with crypto have also been reported. Phishing websites, emails and forum posts are allegedly being used to run scams convincing crypto users to donate digital currencies to addresses different from those provided by Ukrainian NGOs and the Ukrainian government. Cybersecurity and ransomware researchers such as Jake Jcybersec and Malware Hunter have found .com and .org domains established by scammers, with names like Ukraine-donate, Ukraineglobalaid and Ukrainewar.support.
Since Ukraine tweeted “airdrop confirmed” yesterday, Ethereum users have already made thousands of microdonations ranging from 0.0001 ETH to 0.01 ETH (approximately $0.30 to $30) to the country’s official Ethereum wallet. This implies that Ethereum users are attempting to game the airdrop through a Sybil attack on Ukraine’s Ethereum wallet, which entails one user making small donations from multiple wallets instead of making a single larger donation. Experts say Ukraine could airdrop the teased ‘reward’ to unique wallets and therefore, give the owner of multiple donor wallets multiple helpings of the anticipated airdrop. However, it is still unclear what items will be airdropped and how eligible recipients will be evaluated.
Washington is targeting Russia’s access to digital cash amid concerns that the Kremlin and its supporters may use crypto to evade sanctions. However, Ukraine’s request for top crypto exchanges to ban Russian users has been roundly rejected as experts say crypto’s transparency, traceability and thin liquidity make it unsuitable for evading sanctions. Furthermore, Putin has taken pains since 2014 — when Russia annexed Ukraine’s Crimean peninsula — to protect Russia against sanctions, to the tune of around $50 billion annually. According to anti-money laundering and sanctions compliance expert Sarah Beth Felix, any movement of funds likely occurred before Russia invaded Ukraine.
The IRS has filed to dismiss a lawsuit from Tezos stakers Joshua and Jessica Jarrett, saying the agency had already refunded $3,793 in taxes plus interest ($208.03) to them on 14 Feb. They sued the IRS last year, claiming they should not have been made to pay income tax on Tezos tokens gained by staking on the network. The IRS subsequently offered them a refund in Dec but they refused it so they could compel a federal court to rule on whether the IRS could tax crypto earned through staking as income (on top of taxing crypto transactions as capital gains or losses). The filing states that the IRS expects the plaintiffs to dismiss its motion to dismiss but adds that no possible exceptions will apply, and that there is “nothing left to adjudicate”.
The unique number of NFT buyers last month fell below 800,000 for the first time since Oct 2021. CryptoSlam data showed that 796,009 NFT buyers on secondary markets in Feb (down 12% from Jan) accounted for about $2.6 billion worth of sales (down 40% from Jan). Additionally, 10 of the 12 top NFT-supporting blockchains have seen a drop in sales volume in the last 24 hours, and according to Google Trends, global keyword search volume for ‘NFTs’ has fallen by 60% to 70% since late Jan. These developments coincide with the US Securities and Exchange Commission (SEC) investigating certain NFTs to determine if they qualify as securities and as such, if they should be regulated. SEC attorneys have sent subpoenas to NFT creators and crypto exchanges for more information.
The UK’s Advertising Standards Authority (ASA) has banned a floki inu (FLOKI) ad, saying its “Missed Doge? Get Floki” claim “exploited consumers’ fears of missing out (FOMO) and trivialized investment in cryptocurrency”. The ad, seen on public transport in London, also stated in smaller text at the bottom: “Your investment may go down as well as up in value. Cryptocurrency is not regulated in the UK.” This led the ASA to call the ad “irresponsible” and say the FLOKI team must “ensure they did not irresponsibly take advantage of consumers’ lack of experience or credulity by not making clear CGT (capital gains tax) could be due on cryptocurrency profits”.
Show me the money
According to data from Huobi Global, BTC fell slightly during the day, with support at 43,200 and daily charts showing high-level sideways fluctuation. Similarly, ETH saw a slight drop during the day; daily charts show signs of a downward trend. In terms of contracts, Huobi Futures data show stable open interest (OI) in both BTC and ETH futures, with a slight decrease in volume amid a relatively inactive contract market.