💣 Another DeFI protocol is under attack.

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In today’s news we have Grayscale filing an ETF for Ethereum, a hack on Balancer with nearly $250k stolen, and Stanford returning millions in donations from FTX.

But, Before we dive into the news.

Markets

Grayscale files for an Ethereum futures ETF (2 minute read)
Grayscale has submitted an application to establish an Ethereum (ETH) futures-based exchange-traded fund (ETF), as reported by The Wall Street Journal. The application adheres to the Securities Act of 1933, which governs commodities and spot Bitcoin (BTC) ETFs. Notably, Grayscale had previously applied for an Ethereum futures ETF under the Investment Company Act of 1940, the regulatory framework for most security-based ETFs. This contrast is significant because the Securities and Exchange Commission (SEC) has already granted approval for Bitcoin futures ETFs under both acts.

Crypto Arm of Standard Chartered Is Launching a Staking Service (2 minute read)
Zodia Custody, the crypto-focused subsidiary of multinational bank Standard Chartered, is set to introduce a yield-earning opportunity for its clients holding cryptocurrencies. Partnering with OpenEden, they are launching the "Zodia Custody Yield" service, which involves tokenizing real-world assets like treasury bills, enabling investors to earn yield while utilizing the advantages of blockchain technology. This offering allows institutional investors to benefit from off-chain yield potential for their on-chain assets while maintaining the high security standards of Zodia Custody's platform. This encompasses staking, where crypto holders lock up their digital assets to secure the blockchain and receive periodic crypto rewards in return. However, staking presents a promising earning avenue for crypto enterprises while posing regulatory challenges, especially for U.S.-based firms, as seen in legal actions by the SEC against companies like Kraken and Coinbase for offering similar products without the required risk disclosures to retail customers.

Japanese Startups Can Now Raise Funds With Crypto (3 minute read)
Japan is pioneering a shift that permits startups to issue crypto tokens instead of traditional stocks when pursuing public funding, aimed at broadening revenue streams accessible to emerging businesses. This innovative approach to equity financing operates under the Limited Partnership Act for Investment, outlining the parameters for limited liability partners to vend shares to those with unlimited liability. Japan boasts one of the most established regulatory frameworks for cryptocurrencies globally, rooted in its history as the former headquarters of Mt. Gox, the largest Bitcoin exchange at one point. In a recent development, the country also enacted stablecoin regulations in early June, enabling banks, money transfer agents, and trust companies to venture into token issuance.

Tech

DeFi protocol Balancer frontend is under attack, $238K crypto stolen (3 minute read)
Balancer, a decentralized finance protocol operating on Ethereum, has issued a warning to its users advising them to steer clear of its website due to a recent attack on its frontend. The announcement was made to the community on September 19 at 11:49 pm UTC, urging users to avoid any interaction with the Balancer user interface until further updates. While the specifics of the attack are currently under investigation and the official confirmation regarding the impact on user funds is pending, a Balancer contributor, Cosme Fulanito, has stated that Balancer’s vault remains unaffected. Nonetheless, blockchain security firms such as PeckShield and blockchain analyst ZachXBT estimate that approximately $238,000 in cryptocurrency was stolen at the time of this information.

Ledger CEO says Recover service expected to go live by end of year (4 minute read)
Being at the helm of a crypto-serving enterprise can prove challenging, a fact not lost on Ledger's CEO Pascal Gauthier. Earlier this year, the Paris-based hardware wallet manufacturer faced significant backlash over a service designed to aid users in recovering their private keys by dividing seed phrases into three shards, shared among Ledger and two security firms—CoinCover and EscrowTech. However, this concept raised concerns among Ledger's clientele, many of whom value their self-sovereignty, particularly regarding the potential reassembly and release of private keys in response to a government subpoena. In response, Ledger took a step back, delaying the initial launch to address these apprehensions. The company's CTO, Charles Guillemet, affirmed that the perceived security compromise was deemed acceptable, and Gauthier emphasized that government subpoenas weren't a worry for the typical user. Ledger assured that the recovery service would remain entirely optional, while also expediting plans to open source both its product roadmap and the Ledger Recover protocol.

Misc

Stanford to return millions in crypto donations from FTX (3 minute read)
Stanford University, based in California, has outlined its intention to reimburse all funds it had received from the now-defunct cryptocurrency exchange FTX, as reported by Bloomberg. The university confirmed it had received a total of $5.5 million in gifts from FTX-related entities between November 2021 and May 2022. The funds were primarily designated for pandemic-related prevention and research, according to a statement by a university spokesperson on September 19. Notably, both parents of former FTX CEO Sam “SBF” Bankman-Fried, namely Alan Bankman and Barbara Fried, are legal scholars with a history of teaching at Stanford Law School. This decision by Stanford to distance itself from FTX's financial support coincides with allegations against SBF's parents regarding embezzlement from the cryptocurrency exchange.

Global regulators look for US guidance on crypto, says SEC official (2 minute read)
Kristin Pauley, the assistant director of the Crypto Assets and Cyber Unit at the US Securities and Exchange Commission, highlighted the United States' historical leadership in securities regulation, extending that influence to the realm of cryptocurrencies. During a panel discussion at the Securities Enforcement Forum Central conference in Chicago, Pauley emphasized that many global regulators turn to the US for direction and leadership, particularly evident in the evolving crypto space. She underscored the importance of international cooperation among regulators, citing the SEC's collaboration with the International Organization of Securities Commissions, a global body with over 200 member nations. Pauley noted a challenge where crypto firms, even when offering products to US investors, often claim overseas jurisdiction, posing complexities for regulatory enforcement.

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