Shock Development for These 5 Cryptocurrency Projects: Liquidation and Shutdown!

Lately, we often hear that various cryptocurrency projects will cease operations or lay off some of their employees. The reason behind this is that 2022 will be a difficult year for many cryptocurrencies and this is reflected in businesses. The FTX crisis has dealt the final blow to companies that have been struggling with price drops since mid-2022. Here are the projects and platforms that have recently announced that they will stop their activities or go downs…

The reason behind Friktion’s shutdown revealed

Friktion Labs, a crypto startup that creates high-yield structured products for decentralized finance (DeFi) traders on the Solana Blockchain, said late Thursday that it is shutting down its user platform, citing the challenging “economy” of the current market environment. According to people familiar with the matter, behind the scenes there were also disagreements between the founders of the project. As we reported as Kriptokoin.com, Friktion used the statements “Costs outnumbered revenues” about the closure of the platform in a blog post.

At its peak in April and May of last year, Friktion had $150 million in deposits for client assets. According to the blog post, these vaults are 96 percent lower than their peak and are now in withdrawal-only mode. Alex Wlezien, Chief Technology Officer of the project, described the decision as an inevitable consequence of the collapse of Sam Bankman-Fried’s FTX exchange in November.

Cryptocurrency company cuts a third of its employees

Crypto services firm Prime Trust laid off a third of its staff on Tuesday, two people familiar with the matter said. The cuts greatly affected staff in Prime Trust’s communications and compliance departments, but the full picture of how many were affected by the discount was not immediately clear. One person described the move as a cost-cutting measure. Prime Trust creates crypto and fiat payment, custody and issuance services for other crypto companies, including Swan, Abra, and Okcoin.

Last week, the Prime Trust said it would suspend its business operations in Texas until January 31, after it withdrew its applications to obtain a license to send money (MTL) in the state. The company declined to comment on why the application was withdrawn at the time, but public records show that the Prime Trust was fined nearly $30,000 by Texas regulators in 2022 for operating unlicensed money transfer activities in the state.

There are important claims about LayerZero

The co-founder of LayerZero, which provides services to help blockchains bridge cryptoassets, denies accusations that a competitor is covering up the existence of a critical “backdoor” vulnerability in their code. James Prestwich, founder of cross-chain bridging service Nomad, claimed in a blog post Monday that LayerZero can bypass security checks to transmit data between blockchains without anyone’s permission.

“Vulnerability (backdoor) on the trusted side is an undisclosed ability of a trusted party that can compromise the function of the system,” Prestwich said in a tweet summarizing his findings. According to Prestwich, LayerZero has the ability to unilaterally steal or circulate funds locked on platforms using bridging services with default settings. Bryan Pellegrino, co-founder of LayerZero, said the project has backdoor-like capabilities, but denied that the platform is trying to hide them.

Error in Flare Network (FLR)

A bug has been noticed in the Flare Network (FLR) network, which is airdropped to Ripple holders and has made its mainnet launch in the past few weeks. A bug originating from the FTSO Rewards Manager destroyed the ability of users who have not yet received their rewards to receive the rewards. The developers of Flare Network stated that this bug was not abused, the contract was disabled and a new contract was activated. They also explained that unclaimed rewards from previous FTSO periods can no longer be claimed.

Cryptocurrency exchange’s delist resulted in de-peg on this coin

Finally, according to the January 31 statement, crypto exchange OKX said that Gemini exchange will delist its stablecoin GUSD as of February 1, 11 ET. The exchange said it delisted the stablecoin based on user feedback and its delisting policy. OKX added that it “continually monitors the performance of all listed projects and regularly reviews their listing qualifications.”

The Gemini Dollar (GUSD) lost parity to the US Dollar and fell 0.84 percent in the last 24 hours to $0.9851, according to data after the announcement. Available data shows that the stablecoin has experienced sharp price fluctuations over the past week. In addition, the number of active addresses holding GUSD fell to the lowest level of 2020. The supply of GUSD also fell from about $880 million to about $607 million in three months.