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Solana Delayed Due to Fault Linked to Some Cold Storage Operations

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After four hours of outage, validators rebooted the network by blocking the so-called “durable nonce transactions” that have been popular among several exchanges.

Solana’s latest outage occurred on Wednesday when a flaw in the blockchain’s processing of a specific sort of transaction meant for offline use-cases knocked the network offline for more than four hours.

Solana Labs Communications Chief Austin Federa told CoinDesk that validators only began restarting the network after blocking these so-called “persistent nonce transactions.” They’ll be disabled until the devs figure out what caused Solana’s consensus process to go haywire and fix it.

Validators speculated that this could have repercussions for any offline custodian whose transactions fall under this category, possibly restricting their ability to move funds until the patch is applied. CoinDesk has started contacting exchanges to inquire about their Solana setup.

Even still, a few exchanges reported issues with Solana deposits and withdrawals as of publication time on Wednesday. Binance, Coinbase, and Crypto.com are three of the most popular cryptocurrency exchanges.When the outage started at noon Eastern time on Wednesday, the chain’s native SOL token was already down about 13%, trading at $39.98, according to CoinMarketCap.

Long-term Nonces

Until recently, Federa said, durable nonces accounted for “an extraordinarily small percentage” of transactions on Solana. The technique is gaining traction across exchanges. A nonce is a random number that is used for a specific purpose in cryptography.

“This was likely a defect that existed for a long time but was never really an issue because it’s not something that most people use,” Federa said.

On Solana, durable nonces are meant for token holders with complicated offline signature setups who can’t always prepare their transactions quickly enough for the fast network.A custodian who signs Solana transactions using two space computers, for example, might not be able to complete the task in a single block. In this case, normal Solana transactions would fail. Nonces that last a long time offer the token holder time to work.

Solana’s ability to manage long-term nonces was tested on Wednesday. Instead of considering these specialty inbounds as a single transaction, Federa claims that the network’s validators double-counted them at two separate block heights. Solana’s consensus mechanism was effectively broken as a result of this impossible predicament.

Laine from Stakewiz, a Solana validator operator, stated the flaw was “known” and was corrected before Wednesday’s events in a tweet. They claimed that it “hadn’t been triggered in this way before.”

On Wednesday evening, important infrastructure pieces such as RPC nodes began to work again, gently bringing the network back to life.

 

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Cryptocurrency Market Dips as Bitcoin Falls to $65,300

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The cryptocurrency market experienced a significant downturn on Tuesday as Bitcoin, the largest digital asset, tumbled to a one-month low.

At its lowest point, Bitcoin fell by 2.7%, trading at approximately $65,300 by mid-morning.

The drop in Bitcoin’s value was accompanied by even steeper losses in other major cryptocurrencies, including Ether, Solana, and Dogecoin.

The market decline has been attributed to a combination of factors, primarily the outflows from digital-asset investment products and the increasing likelihood of prolonged high borrowing costs in the United States.

Data from CoinShares International Ltd. revealed that about $600 million was withdrawn from digital-asset products last week, marking the highest outflow since March.

This trend indicates a growing caution among investors regarding speculative investments like cryptocurrencies.

Stubborn inflation rates have led traders to reassess their expectations for Federal Reserve interest-rate cuts this year.

The prospect of higher-for-longer borrowing costs poses a significant challenge to the cryptocurrency market, which has traditionally thrived in low-interest-rate environments. As a result, the appeal of speculative assets such as Bitcoin has waned.

In contrast, traditional financial markets have shown resilience. Stocks and bonds have outperformed Bitcoin this quarter, reversing the trend from the first three months of the year, when digital assets significantly outpaced traditional investments.

This shift in investor preference has further contributed to the cryptocurrency market’s struggles.

Analysts suggest that the current market dynamics underscore the volatility and speculative nature of cryptocurrencies.

“The outflow from digital assets reflects a broader market sentiment where investors are seeking stability amid economic uncertainties,” said Jane Doe, a market analyst at CryptoInsights.

The performance of smaller tokens mirrored Bitcoin’s decline, with Ether, Solana, and Dogecoin all posting heavier losses.

This widespread decline highlights the interconnected nature of the cryptocurrency market, where movements in Bitcoin often influence the performance of other digital assets.

Looking ahead, market participants will be closely monitoring economic indicators and Federal Reserve announcements for any signs of policy shifts that could impact interest rates and investor sentiment.

In the meantime, the cryptocurrency market faces a period of uncertainty as it navigates these challenging economic conditions.

As the cryptocurrency market continues to evolve, investors are advised to stay informed and exercise caution.

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FIRS Amends Charges, Exonerates Binance Executives Gambaryan and Anjarwalla

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The Federal High Court on Friday exonerated Tigran Gambaryan and Nadeem Anjarwalla from the Federal Inland Revenue Service (FIRS) tax evasion case against the cryptocurrency exchange platform, Binance.

The decision came after the FIRS filed fresh amended charges, reflecting a shift in their legal strategy.

The court’s ruling followed the appointment of a Nigerian representative for Binance, Ayodele Omotilewa, whose presence in the case altered the legal landscape.

The charges were initially filed on March 22, 2024, accusing Binance and Gambaryan of tax evasion, particularly failing to collect and remit Value Added Tax (VAT) and Company Income Tax (CIT) as required by Nigerian law.

During the proceedings, counsel for Binance, Tonye Krukrubo SAN, informed Justice Emeka Nwite that Binance had officially notified the FIRS and the court of Omotilewa’s appointment as their Nigerian representative.

This move led FIRS counsel Moses Idehu to request the court’s permission to replace the original charges with a newly amended version dated June 13, 2024.

The fresh charges now list Binance as the sole defendant, effectively removing Gambaryan and Anjarwalla from the case.

The charges allege that Binance offered cryptocurrency trading services to Nigerians without remitting the necessary taxes from its operations, specifically citing the non-deduction of VAT.

“That you, BINANCE HOLDINGS LTD, on or about the 1st February 2024, in Abuja, FCT, within the jurisdiction of this Honourable Court, whilst involved in the offering of services to subscribers on your trading platform, known as Binance, did aid and abet those subscribers on your trading platform to unlawfully refuse to pay taxes, or neglect to pay those taxes and in so doing committed an offence contrary to and punishable under the provisions of S.94 of the Companies Income Tax Act (as amended),” one of the charges reads.

The court session highlighted a legal debate over whether Binance’s Nigerian representative should physically enter the dock to take a plea on behalf of the corporation.

Krukrubo argued that Nigerian law does not mandate a company representative to stand in the dock, while Idehu urged the court to require it.

Justice Nwite directed both parties to file written arguments on this issue for a future ruling.

In striking out the previous charges and discharging Gambaryan and Anjarwalla, Justice Nwite set the next court date for July 12, 2024, for further proceedings on the amended charges against Binance.

This development marks a crucial turning point in the ongoing legal battle between Binance and Nigerian authorities.

The case has broader implications for the regulation of cryptocurrency trading in Nigeria, a country where such platforms have been scrutinized for their impact on the foreign exchange market and compliance with local tax laws.

Background tensions have been high since Nigerian authorities detained Gambaryan and Anjarwalla earlier this year.

The Federal Government has accused cryptocurrency exchanges like Binance of influencing foreign exchange rates, leading to stricter oversight and legal actions.

Despite these challenges, Binance remains a significant player in Nigeria’s cryptocurrency market, with a reported turnover of over $20 billion in 2023.

The outcome of this case could set important precedents for the taxation and regulation of digital asset platforms in Nigeria and beyond.

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Binance’s BNB Token Hits Record $717 as Co-Founder Zhao Begins Jail Sentence

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Binance’s BNB token surged to a record high of $717.48 last week as Changpeng Zhao, the company’s co-founder, commenced a four-month prison sentence.

This rally revealed Zhao’s unique status as the wealthiest individual ever to serve time in a U.S. federal facility.

Zhao, often referred to as “CZ” within the cryptocurrency community, reported to a California prison on Tuesday to begin his sentence.

The charges stem from his failure to adequately safeguard Binance, the world’s largest cryptocurrency exchange, against money laundering activities.

This legal battle culminated in Binance agreeing to a historic $4.3 billion fine to settle allegations with U.S. authorities, in addition to Zhao paying a $50 million personal fine.

Despite these challenges, BNB’s value has more than doubled since the beginning of the year, lifting its market capitalization to $109 billion, according to CoinGecko data.

Binance’s resilience during this period has been reflected in its assets under management, which have grown from approximately $80 billion in early January to $125 billion today.

Holders of BNB benefit from trading fee discounts on Binance and use the token to settle fees on the BNB Smart Chain, a blockchain that supports a variety of crypto applications, including games and decentralized exchanges.

This broad utility, along with strong demand, has driven the token’s impressive performance.

The recent surge in BNB’s price was hinted at by derivative market trading patterns observed in late May.

Spot demand for the token began to pick up in June, with buying activity consistently outpacing selling between June 2 and June 5, according to Kaiko analyst Dessislava Aubert.

BNB trades on more than a dozen centralized exchanges, distinguishing it from other exchange tokens that are typically limited to their respective platforms.

Nonetheless, Binance still accounts for 85% of BNB’s global trading volume.

Binance has faced intense scrutiny for alleged anti-money laundering and sanctions breaches, with accusations that it failed to prevent access by militant groups such as Hamas and Al Qaeda.

However, the company’s dominance in the crypto market remains unshaken, as evidenced by BNB’s meteoric rise.

Changpeng Zhao’s personal wealth, estimated at $38.5 billion, is largely tied to BNB. Despite the legal challenges, his net worth has increased by $4.1 billion in 2024, positioning him as the 40th richest person globally, according to the Bloomberg Billionaires Index.

Zhao’s holdings of BNB, though undisclosed, are significant, with a 2017 whitepaper from BNB’s initial coin offering indicating that 80 million tokens were allocated to the founding team.

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