Here’s what happened in crypto today

A United States bankruptcy judge has approved Terraform Labs’ request to serve FTX Trading and FTX US with subpoenas. Meanwhile, released a reorganization plan as it prepares for a comeback, and several stable pools on Curve Finance were exploited on July 30 due to a reentrancy vulnerability in certain versions of the Vyper programming language. 

Judge allows Terraform Labs to subpoena FTX entities

U.S. bankruptcy Judge John Dorsey has permitted Terraform Labs to serve FTX Trading and FTX US with subpoenas — moves that could help the company defend fraud allegations by the U.S. Securities and Exchange Commission (SEC).

July 31 order from Judge John Dorsey. Source: Kroll

Lawyers for the FTX debtors agreed to the court order with no objections, according to the filings. Terraform Labs wants digital wallet records from entities connected to FTX to determine whether the exchange carried out a coordinated attack on the now-defunct Terra Luna ecosystem.

The collapse of the TerraUSD stablecoin in May 2022 triggered the next wave of the crypto bear market, which eventually culminated in the collapse of FTX in November. Terra co-founder Do Kwon is currently serving a four-month sentence in Montenegro after being convicted of traveling with fake documents. releases restructuring plan, hints at rebooted offshore exchange released a reorganization plan that outlines the company’s intended path to settle an “exceptionally large and complicated collection of claims.”

FTX draft plan of reorganization. Source: FTX

The document features the recognition of special “shortfall” claims by the two FTX exchange organizations against this third pool of general assets. This is intended to “compensate” the exchanges for the unauthorized borrowing and misappropriation of assets that former CEO Sam Bankman-Fried and his close associates are accused of carrying out.

SEC v. Terraform case to go ahead, judge disagrees with Ripple ruling

A U.S. federal judge has denied a motion from Terraform Labs to dismiss the lawsuit brought by the SEC.

In handing down the order, the judge also rejected a decision from another judge who made a distinction between institutional and retail sales when it came to a ruling made in the Ripple case. 

The SEC first filed a suit against Terraform Labs and its founder, Do Kwon, on Feb. 16, charging them with “orchestrating a multi-billion dollar crypto asset securities fraud.” In April, Terraform Labs’ legal representatives filed a motion for the dismissal of the suit.

However, the judge dismissed the motion on July 31, rejecting a number of objections filed by Terraform Labs.

Judge presiding over SEC/Terraform Labs case in new court filing rejects approach taken in Ripple ruling. Says he won’t distinguish between crypto assets based on how they’re sold — ie directly to institutional investors versus to retail investors on exchanges.

— Ally Versprille (@allyversprille) July 31, 2023

One of the opinions from the judge was around whether a distinction should be drawn depending on the manner of sale of the coin, such as in Ripple’s case with XRP (XRP). 

The court, however, declined to “draw a distinction between these coins [MIR and LUNA] based on their manner of sale.” 

“The Court rejects the approach recently adopted by another judge of this District in a similar case, SEC v. Ripple Labs Inc. […] Howey makes no such distinction between [primary and secondary] purchasers.”

Its rejection here could bode well for the SEC if other judges follow the ruling.

Ethical hacker retrieves $5.4M for Curve Finance amid exploit

An ethical hacker managed to retrieve $5.4 million worth of Ether (ETH) from an exploiter and return it to decentralized finance protocol Curve Finance amid a recent hack. 

#PeckShieldAlert c0ffeebabe.eth has returned 2,879 $ETH (~$5.4m) to #Curve deployer

— PeckShieldAlert (@PeckShieldAlert) July 31, 2023

A maximal extractable value bot operator with the username “c0ffeebabe.eth” used a front-running bot against a malicious hacker to secure almost 3,000 ETH. The funds were then returned to the Curve deployer address, which looks to be its rightful custodian.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

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