EthereumPoW (ETHW), the Proof-of-Work fork of the Ethereum network, has seen its first significant smart contract exploit since the network split from ETH after the Merge upgrade.

In a lawsuit the U.S. Securities and Exchange Commission (SEC)  has claimed Ethereum transactions fall under U.S. jurisdiction. The lawsuit was filed against crypto influencer Ian Balina over his alleged failure to register a cryptocurrency as a security before launching an initial coin offering (ICO) in 2018.

South Korean authorities have asked Interpol, an international organization that facilitates police cooperation and crime control across borders, to issue a red notice against Terra founder Do Kwon.

Top stories in the Crypto Roundup today:

• EthereumPoW Suffers First Smart Contract Exploit
• SEC Claims Ethereum Transactions Fall Under US Jurisdiction
• South Korea Asks Interpol for Red Notice Against Terra’s Founder
• Ethereum Issuance Post Merge

EthereumPoW Suffers First Smart Contract Exploit

EthereumPoW (ETHW), the Proof-of-Work fork of the Ethereum network, has seen its first significant smart contract exploit since the network split from ETH after the Merge upgrade.

Blockchain security infrastructure firm BlockSec first warned users of a replay attack on the network during the weekend. The attack leveraged legitimate transactions on Ethereum alongside decentralized finance (DeFi) application Gnosis and multi-token extension OmniBridge.

A replay attack can occur when a malicious entity intercepts and repeats a valid transaction on a legitimate chain and manages to replay it on a different chain by treating them as the same asset. These attacks are possible after blockchains fork, as they can be treated as the same chain.

According to BlockSec the replay exploit wasn’t “on the chain level” but rather the result of a smart contract vulnerability.  Neither ETH nor ETHW were exploited, but rather OmniBridge’s smart contract mistakenly paid out funds on the Proof-of-Work chain.

SEC Claims Ethereum Transactions Fall Under US Jurisdiction

In a lawsuit the U.S. Securities and Exchange Commission (SEC)  has claimed Ethereum transactions fall under U.S. jurisdiction. The lawsuit was filed against crypto influencer Ian Balina over his alleged failure to register a cryptocurrency as a security before launching an initial coin offering (ICO) in 2018.

In a bold move, the SEC claimed it had the right to sue Balina, not only because his case concerns transactions made in the United States, but also because the Ethereum network falls under the government’s jurisdiction.

Per the regulator, the ETH sent to Balina was “validated by a network of nodes on the Ethereum blockchain, which are clustered more densely in the United States than in any other country.” To the SEC, this means that “those transactions took place in the United States.”

The SEC is seemingly suggesting that because more of Ethereum’s nodes are operating in the United States, ETH transactions globally should be considered of U.S. origin. Etherscan data shows 45.85% of all Ethereum nodes are operated from the United States.

South Korea Asks Interpol for Red Notice Against Terra’s Founder

South Korean authorities have asked Interpol, an international organization that facilitates police cooperation and crime control across borders, to issue a red notice against Terra founder Do Kwon.

Kwon is reportedly refusing to co-operate with a probe into the $40 billion implosion of the tokens within the Terra ecosystem earlier this year. Red notices are issued for fugitives wanted either for prosecution or to serve a sentence.

South Korean authorities have reportedly also asked the country’s foreign ministry to cancel Do Kwon’s passport as he was “obviously on the run and has no intention to appear before us for questioning.” Kwon has said he is not trying to evade authorities.

Ethereum Issuance Post Merge

Ethereum’s transition from Proof-of-Work and into Proof-of-Stake came with a critical question: whether ETH will remain inflationary or turn into a deflationary asset. The Merge was preceded by various upgrades, including EIP-1559, which installed a fee-burning mechanism.

Since EIP-1559 was implemented, around 6,500 ETH have been burned per day, leading to an issuance rate drop to an average of 2.5% until the beginning of this month.

With the Merge, Ethereum’s issuance rate is expected to decline by 80% to 90%, with new supply coming only from staking rewards.

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