Popular cryptocurrency exchange Kraken has accused “security researchers” of finding a vulnerability on their platform to then turn to “extortion” after withdrawing $3 million from the company’s treasury.

Brazilian tax authorities are preparing to summon foreign a cryptocurrency exchange to explain their operations and their cooperation with local service providers.

Iran’s central bank is launching a public trial of its national digital currency, the digital rial, targeting domestic micropayments. The trial of the central bank digital currency (CBDC) will be restricted to a popular tourist destination.

Top stories in the Crypto Roundup today:

• Kraken Accuses Security Researchers of ‘Extortion’ After Vulnerability Report
• Brazil to Question Foreign Cryptocurrency Exchanges on Local Operations
• Iran’s Central Bank to Pilot its Digital Real CBDC
• Chart of the Week: Altcoin Performance Against BTC

Kraken Accuses Security Researchers of ‘Extortion’ After Vulnerability Report

Popular cryptocurrency exchange Kraken has accused “security researchers” of finding a vulnerability on their platform to then turn to “extortion” after withdrawing $3 million from the company’s treasury.

Kraken's Chief Security Officer, Nick Percoco, detailed the events on social media, revealing a bug bounty report alerted the firm to a vulnerability allowing users to inflate their account balances by initiating deposits and receiving funds without completing those deposits.

Kraken swiftly patched the vulnerability and says no user funds were compromised, but according to Percoco, the security researcher who first found the bug allegedly shared the exploit with two others, who then "fraudulently" withdrew millions from Kraken's wallets.

The initial bug bounty report made no mention of these additional transactions. When Kraken sought more details, the researchers reportedly refused, demanding a meeting with their business development team and a hypothetical estimate of potential losses prevented by their report. Percoco condemned these actions, stating, "This is not white-hat hacking, it is extortion!"

Kraken withheld the researchers' identities, but blockchain code editor CertiK later claimed to have discovered vulnerabilities on the platform and, on social media, elaborated on their findings in a social media post, highlighting the potential for exploiting the bug to create millions in cryptocurrency.

However, CertiK also accused Kraken's security team of threatening their employees with “unreasonable” repayment demands without providing addresses for these repayments.

Bug bounty programs, commonly employed to fortify security systems, incentivize third-party hackers, known as "white hats," to uncover vulnerabilities. To qualify for a bounty under Kraken’s program, researchers must identify the bug and exploit the minimum amount needed to prove it, before returning the assets and providing details.

As these steps weren't followed, Kraken asserts the researchers are ineligible for a reward. Percoco said the firm is treating the exploit as a “criminal case” and is “coordinating with law enforcement agencies accordingly.”

Brazil to Question Foreign Cryptocurrency Exchanges on Local Operations

Brazilian tax authorities are preparing to summon a foreign cryptocurrency exchange to explain their operations and their cooperation with local service providers.

An ordinance outlining the summons is expected to be published by the federal revenue service this week. Unlike domestic exchanges, foreign platforms are not currently obligated to report transactions conducted on their platforms.

Andrea Chaves deputy secretary of inspection at the federal revenue service, noted the goal is to have information on “Brazilian wealth subject to taxation,” and whether “there’s any illegality or not.”

Wagner Lima, risk management coordinator at the revenue service, emphasized the government's interest in how these exchanges collaborate with Brazilian service providers to ensure compliance with a 2019 regulation requiring the provision of information to tax authorities.

Several prominent cryptocurrency exchanges, including Binance, Coinbase, OKX, and KuCoin, fall under the category of foreign platforms, as they maintain Portuguese-language websites while not having a physical presence in Brazil.

Iran’s Central Bank to Pilot its Digital Real CBDC

Iran’s central bank is launching a public trial of its national digital currency, the digital rial, targeting domestic micropayments. The trial of the central bank digital currency (CBDC) will be restricted to a popular tourist destination.

The trial, commencing on June 21, will allow both Iranian banking customers and tourists to experience the digital rial in Kish Island, the second-largest island in the Persian Gulf south of Iran and attracts roughly 12 million visitors annually, many drawn by its visa-free entry for several nationalities.

The pilot program builds upon an initial digital rial trial launched in 2023 where users can  buy goods and services with the CBDC by scanning a barcode through specific software.

The Central Bank of Iran has noted that the digital rial doesn’t require interbank settlement to transfer funds between buyers and sellers, unlike other electronic types of money used in the country.

Chart of the Week: Altcoin Performance Against BTC

Altcoins have been struggling against Bitcoin, which is itself stuck below the $72,000 mark, with major digital currencies including Ethereum, Solana, and Dogecoin seeing declines against BTC in June ranging from 5% to nearly 18%.

Conversely, a few altcoins including Kaspa, Uniswap’s UNI, TRX and BNB have managed modest gains against BTC.

State of the Crypto by Top Tier Exchange Volume

Build your project with CoinDesk Data

Terms | Privacy

13 Charles II St, SW1Y 4QU

London, UK

This email may include advertisements by third parties. None of the advertised or promoted products and services have been verified or approved by us and this email is not any endorsement by us of the third party or of their products or services.