Twitter vigilantes are hunting crypto scammers


The main problem with amateur investigations is, of course, that they lack teeth. Twitter messages or blog posts in which crypto investigators disclose their findings are only useful to warn potential victims or expose perpetrators. The hope is that people care enough about their reputation to compensate. It happened with Divergence Ventures, and earlier with the NFT marketplace, which in September found itself at the center of another “insider trading” scandal after Twitter user Its chief producer was accused of hoarding NFTs by artists who were about to appear on the OpenSea homepage, thus capitalizing on the rise in hype. The chief producer was forced to resign.

But when shyness doesn’t prompt change, no one can do it. Many of the behaviors that cryptographic investigators uncover occur in a regulatory vacuum. “Insider trading has a very specific meaning — the use of non-public information when trading the stock market,” says Nick Price, a specialist in crypto-asset disputes at law firm Osborne Clark. “These tokens are not stocks and shares. NFTs are not regulated, so it is not insider trading.”

Fraud, such as cryptocurrency theft or smart contract tampering, can be reported to the police, Price says. But he says the level of scrutiny coming from the crypto community, and the quality of information it can gather, is “unprecedented.” For example, in October, users of the DeFi Indexed Finance protocol said they had uncovered the person who had carried out a $16 million heist on the network — although negotiations with the hacker to get the money back were ultimately unsuccessful. The team is working to “identify the competent authorities of the attack”, According to a recent post on Twitter.

An open ledger on the blockchain is a huge advantage for mischief investigation. It “leaves a much better audit trail than it does in other sectors,” Price says. “There is more information for people who want to do technical analysis.”

However, there are risks in relying on anonymous Twitter accounts to monitor the hectic, high-risk internet space. in May, Tweet embed, a Twitter-based watchdog that has made a name as a fiery scam hunter, allegedly escaped with nearly $500,000 in stolen cryptocurrency. Even excluding cases of severe scams, some worry that the system based on online summons is very vulnerable to abuse. Mitchell Amador, founder of Immunefi — a company that brokers “bug bounty” deals between hackers and DeFi developers — criticizes what he calls a “mass panopticon” and points to Twitter abuse that is raining down on Harris, a young Divergence Ventures employee who had run the wallet used to organize Airdrop operation. Harris, who is still a college student, has been targeted with dozens of satirical, sarcastic and insulting tweets. Divergence Ventures said it was not responsible for the company’s actions, but Harris still deleted her Twitter bio and remained silent on social media.

Gabagool admits that there is an “evil side” to the police through Twitter. “I think, for some people, it reminds us of a kind of ‘cancellation culture.’ But that wasn’t really my intention. For him, self-regulation is still the best path to keeping the DeFi space free and innovative. Failing that, he fears that.” Have something else arise. Nor can I guarantee that the alternative will be beneficial to society,” he says.

It may already be too late to avoid this scenario. In September, the US Securities and Exchange Commission launched an investigation into Uniswap Labs, the developer of the DeFi exchange Uniswap. SEC President Gary Gensler said that some DeFi protocols may eventually be subject to securities regulations.

The question is, are we using an open system that people made themselves? Or do we use the long arm of the state? Amador says. “Either way, we will end up with some form of regulation – there is no doubt about that outcome. For now, we’re still in that adjustment period.”


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