Macauley Peterson

Michael McSweeney

Online gambling site Stake, which allows bets to be placed using crypto, has seen millions worth of ether and USDT transferred out of known wallets.



First reported by Web3 security firm Cyvers, the pattern of transfers includes swaps from USDT, a stablecoin, to ether.



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">🚨ALERT🚨Our AI-powered system has detected multiple suspicious transactions with <a href="https://twitter.com/Stake?ref_src=twsrc%5Etfw">@Stake</a>.<a href="https://t.co/0ZoMITOyF5">https://t.co/0ZoMITOyF5</a> address received about $16M in <a href="https://twitter.com/search?q=%24ETH&amp;src=ctag&amp;ref_src=twsrc%5Etfw">$ETH</a> <a href="https://twitter.com/search?q=%24USDC&amp;src=ctag&amp;ref_src=twsrc%5Etfw">$USDC</a> <a href="https://twitter.com/search?q=%24USDT&amp;src=ctag&amp;ref_src=twsrc%5Etfw">$USDT</a> and <a href="https://twitter.com/search?q=%24DAI&amp;src=ctag&amp;ref_src=twsrc%5Etfw">$DAI</a> All the stable coins are converted to <a href="https://twitter.com/search?q=%24ETH&amp;src=ctag&amp;ref_src=twsrc%5Etfw">$ETH</a> and distributed to different EOAs. FYI: <a href="https://twitter.com/tayvano_?ref_src=twsrc%5Etfw">@tayvano_</a> <a href="https://twitter.com/zachxbt?ref_src=twsrc%5Etfw">@zachxbt</a> <a href="https://t.co/CSGwRHEiVm">pic.twitter.com/CSGwRHEiVm</a>&mdash; 🚨 Cyvers Alerts 🚨 (@CyversAlerts) <a href="https://twitter.com/CyversAlerts/status/1698690342113931422?ref_src=twsrc%5Etfw">September 4, 2023</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
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According to Etherscan, the transactions occurred between 8:52 am ET and 10:05 am ET. At 10:08 am ET, the site’s official Telegram posted that “[d]eposits &amp; withdrawals on Ethereum &amp; BSC/ERC20 networks are undergoing temporary maintenance.”



Messages to the site’s published press email were returned as undeliverable, and a spokesperson did not return Blockworks request for comment.



However, at 1:16 pm ET, Stake posted a statement saying they were investigating but that &#8220;user funds are safe.&#8221;



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">Three hours ago, unauthorised tx’s were made from Stake’s ETH/BSC hot wallets. We are investigating and will get the wallets up as soon as they’re completely re-secured. User funds are safe. BTC, LTC, XRP, EOS, TRX + all other wallets remain fully operational.&mdash; Stake.com (@Stake) <a href="https://twitter.com/Stake/status/1698746766076588057?ref_src=twsrc%5Etfw">September 4, 2023</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
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The transfers were considered suspect in particular due to the swapping of USDT to ether (ETH), which cannot be frozen by Tether.



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<blockquote class="twitter-tweet" data-width="550" data-dnt="true">It seems that <a href="https://twitter.com/Stake?ref_src=twsrc%5Etfw">@stake</a> exploited for 6000 ETH 👀 <a href="https://t.co/bfuAT1ZnMG">https://t.co/bfuAT1ZnMG</a> <a href="https://t.co/NSAYGf1UvI">pic.twitter.com/NSAYGf1UvI</a>&mdash; Officer&#39;s Notes (@officer_cia) <a href="https://twitter.com/officer_cia/status/1698706436136829174?ref_src=twsrc%5Etfw">September 4, 2023</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
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In addition to the <a href="https://etherscan.io/address/0x3130662aece32f05753d00a7b95c0444150bcd3c">Ethereum transfers</a>, on-chain investigators have <a href="https://twitter.com/zachxbt/status/1698712407177150729?s=20">tracked</a> $17.8 million on <a href="https://bscscan.com/address/0x4464e91002c63a623a8a218bd5dd1f041b61ec04">BNB Chain</a> and $7.8 million on the <a href="https://polygonscan.com/address/0xfe3f568d58919b14aff72bd3f14e6f55bec6c4e0">Polygon PoS</a> chain.



MetaMask product manager Taylor Monahan <a href="https://twitter.com/tayvano_/status/1698713232532467837?s=20">characterized</a> the transfers as &#8220;quite methodical,&#8221; and speculated that Stake suffered a &#8220;systems compromise.&#8221;



&#8220;[I]nitial transactions were sent via the [S]take systems to addresses the hackers controlled,&#8221; she said in the <a href="https://t.me/ETHSecurity">ETHSecurity Community</a> on Telegram.



On-chain evidence <a href="https://twitter.com/0xArhat/status/1698729017342570717?s=20">indicates</a> that a private key belonging to Stake&#8217;s wallets was compromised, which Andrey Lazutkin, chief technology officer at wallet developer Tangem, said is happening with increasing frequency. 



&#8220;The only solution to this problem is to store a private key in a protected environment, where the user will not have access to it himself, and therefore no third parties (hackers, scammers or scam projects) will have access to it either,&#8221; Lazutkin told Blockworks.



Stake, a Curacao-based platform which bills itself as a “leading crypto casino,” lets customers bet on sports and online games using bitcoin (<a href="https://blockworks.co/price/btc">BTC</a>), ether (<a href="https://blockworks.co/price/eth">ETH</a>), and dogecoin (<a href="https://blockworks.co/price/doge">DOGE</a>). The platform, launched in 2017, allows betting in other currencies including the US dollar.&nbsp;



Stake has been the <a href="https://blockworks.co/news/drake-endorsed-crypto-gambling-firm-stake-lawsuit">subject of a trademark infringement lawsuit</a> in Australia and <a href="https://www.afr.com/technology/aussie-crypto-billionaire-alleges-ex-associate-embezzled-millions-20230212-p5cjvq">a separate</a> $400 million claim against the founders from a former associate.



Updated on Sep. 4, 2023 at 12:58 pm ET with additional context and at 1:20 pm ET with comment from Stake.



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More than $40M in suspicious crypto outflows from Stake raise hack fears

Sebastian Sinclair

Crypto gambling firm Stake, co-founded by Australian billionaire Ed Craven and endorsed by Canadian music artist Drake, has hit a legal snag in its bid to enter the Australian market.&nbsp;



Stake&#8217;s nationwide ambition is being challenged by a Sydney-based share trading platform of the same name, the <a href="https://www.aapnews.com.au/search/news/high-stakes-as-billionaire-s-crypto-gambling-firm-sued?q=crypto">Australian Associated Press</a> reported Friday.



The trading platform reportedly filed a Federal Court lawsuit last week, seeking to prevent the casino from using the Stake brand within Australia. Stake, the casino, is barred from providing its services in Australia, according to its website.



It argues it has already built up a reputation with the Stake name within the country and that the crypto gambling firm&#8217;s use misleads consumers into believing the two are connected.



The Federal Court is now being asked to issue orders prohibiting the gaming company from promoting itself using the Stake name in Australia, per the report.



&#8220;The [share platform] has demanded that the [casino ceases] engaging in the conduct that is complained of &#8230; and the [casino has] refused or failed to do so,&#8221; the firm reportedly wrote.



In addition to the current legal headaches, a former business associate sued the casino’s founders in February for <a href="https://www.afr.com/technology/aussie-crypto-billionaire-alleges-ex-associate-embezzled-millions-20230212-p5cjvq">$400 million</a>, accusing them of betrayal.



The company, which promotes itself as a “leading crypto casino” allowing wagers in bitcoin (<a href="https://blockworks.co/price/btc">BTC</a>), ether (<a href="https://blockworks.co/price/eth">ETH</a>), and dogecoin (<a href="https://blockworks.co/price/doge">DOGE</a>) on sports events and online games, is currently incorporated in Curacao.&nbsp;



Melbourne-based Craven and his American partner, Bijan Tehrani, have turned Stake into a significant player in the online gambling scene.&nbsp;&nbsp;



Since its founding in 2017, Stake has grown to become the <a href="https://blockworks.co/news/crypto-casino-stake-revenue">seventh-largest</a> gambling group globally, reporting nearly $2.6 billion in gross gaming revenue last year.



Over that time, Stake has attracted high-rollers and high-profile endorsements, including a $100 million-per-year deal with rapper Drake.



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Drake-endorsed crypto gambling firm Stake hit with lawsuit over name use

James Cirrone

Hamster racing: A phenomenon that very much exists.



Crypto Twitter fell in love with yet another 24-hour fadcoin, as adorable rodents were urged to race while degen crypto addicts checked the formbook to place their wagers on winners.



The elementary school pets speed down the course to the jeers and cheers of a rabid trollbox audience. Theoretically. Although, to the consternation of some gamblers, they sometimes simply fall asleep.&nbsp;



The HamstersGG betting platform combines wholesome, cute activity with the age-old desire of crypto degens to bet away huge sums of money on complete and utter nonsense. In fact, 10 years ago more than half of all blockchain transactions were <a href="https://medium.com/@lightspeedvp/at-least-half-of-all-bitcoin-transactions-are-for-online-gambling-8e14ed19564b">related to gambling</a>.&nbsp;



HamstersGG went live on July 11, 2023 and livestreamed a series of races through Twitch on Thursday. People interested in placing a wager could do so using BUSD. While deposits were accepted from either Ethereum or Binance Smart Chain, payouts appeared to rely on BSC entirely.&nbsp;



While stablecoin bets are placed for the individual races, the project also features a purportedly revenue-sharing token, HAMS. According to the project’s <a href="https://hamsters.gg/whitepaper.pdf">white paper</a>, the platform takes a 5% rake of all bets, 4% of which is distributed to token holders. The <a href="https://etherscan.io/address/0x48c87cDacb6Bb6BF6E5Cd85D8ee5C847084c7410">token’s</a> price has proved to be <a href="https://www.geckoterminal.com/eth/pools/0x479d7a7864e00668da1ee507fa1b925fb1b2ae19">volatile</a> on Uniswap so far.



The token’s lone source of liquidity, a Uniswap v2 pool with just under $100,000 with WETH liquidity, has traded $900,000 in volume on the day. At $.11 per token, HAMS currently boasts a $1.1 million market capitalization, and the token <a href="https://www.geckoterminal.com/eth/pools/0x479d7a7864e00668da1ee507fa1b925fb1b2ae19?utm_source=coingecko&amp;utm_medium=referral&amp;utm_campaign=searchresults">rose</a> as high as $.38 cents this afternoon before retreating as low as $.08 – only to climb back to $.38 under an hour later, and fall back to $.14 at press time.&nbsp;



During today’s races, there were at times over 1,000 people watching and eagerly rooting for their pre-furred steed.



At around 2:30 pm ET, people in the live chat room began complaining about not being able to withdraw their money after an earlier race concluded and subsequent races didn’t begin on schedule. Other users argued back, telling them to stop FUDing (Fear Uncertainty Doubt).



The unusual nature of the project got some people on Twitter theorizing that hamster racing may not be quite so reputable.&nbsp;



One user on Twitter claimed all the races were staged and the videos were looped. The HamsterGG account denied this in the replies, claiming the server went down due to unexpectedly high interest in rodentia, and that they were in the process of looking into it.



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">this hamster racing this is fake lmao, they just loop the streams and rename the hamsters everytime, same one wins everytime lol <a href="https://t.co/0eUkin5BWQ">pic.twitter.com/0eUkin5BWQ</a>&mdash; zoomer (@z00m3rf13d) <a href="https://twitter.com/z00m3rf13d/status/1682092125482000400?ref_src=twsrc%5Etfw">July 20, 2023</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
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As the time neared 4 pm ET with no races commencing, the viewership on the Twitch live stream dipped below 600.



With no racing activity over the last couple of hours, and reports of problems with withdrawals, some bettors are now smelling a rat, and asking whether the hamsters — Rocky, Charlie, Popcorn and Teddy, among other furry athletes — might actually be scamsters?



(The answer, at least for now, may be no. With literally seconds remaining before Blockworks sent this article live, a new race saw Sparky absolutely crush the competition and wibble his (or her) way to the finish line in around 10 seconds — to the delight of at least some of the assembled, and deeply profane, observers. At least some watchers reported, however, that the race was a replay: <a href="https://www.imdb.com/title/tt0070735/">Robert Redford</a> could not be reached for comment.)







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Crypto finds its killer app: Hamster racing for degens

The British government has rejected a proposal to regulate crypto trading and investing as if it were gambling.&nbsp;



Economic Secretary to the HM Treasury Andrew Griffith has “firmly” disagreed with the UK Parliament’s Treasury Committee’s idea to police “retail trading and investment activity in unbacked cryptoassets as gambling rather than as a financial service.”



In the May <a href="https://committees.parliament.uk/publications/39945/documents/194832/default/" target="_blank" rel="noreferrer noopener">report</a>, the Committee considered bitcoin (<a href="https://blockworks.co/price/btc">BTC</a>) and ether (<a href="https://blockworks.co/price/eth">ETH</a>) “unbacked cryptoassets” that have <a href="https://blockworks.co/news/crypto-gambling-uk-treasury">“no intrinsic value” and serve “no useful social purpose</a>.”



Griffith argued that rendering crypto trading synonymous with gambling, instead of bringing it under a “financial services regulatory framework,” would oppose established recommendations from “international organizations and standard-setting bodies.”



One such body mentioned was the UK Financial Stability Board, which published a set of nine guidelines for regulating crypto in October 2022. Nowhere in the 77-page <a href="https://www.fsb.org/wp-content/uploads/P111022-3.pdf" target="_blank" rel="noreferrer noopener">document</a> does the FSB suggest bringing crypto asset activity under the umbrella of the Gambling Commission as the Committee had requested.



Griffith also said that the gambling rules approach could fail to mitigate “critical risks” to consumers such as “market manipulation, inadequate prudential arrangements, and deficiencies in core financial risk management practices.”



The UK government published a consultation paper in February 2023 in its first major foray into crypto regulation, professing a desire to work with digital asset firms “<a href="https://blockworks.co/news/uk-crypto-regulation-in-the-works">to develop a regulatory framework</a>.”



More recently, the UK’s Financial Conduct Authority has <a href="https://blockworks.co/news/crypto-memes-regulated-uk">mulled plans to rein in crypto memes</a>.



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UK folds on plan to regulate crypto like gambling

Shalini Nagarajan

Critics have often labeled investing in crypto something akin to gambling. But if UK lawmakers get their way, the industry could soon be regulated in much the same way as casinos.



A new report from a group of UK parliamentary representatives outlines perceived risks associated with unbacked crypto assets, emphasizing a supposed lack of intrinsic value and extreme price volatility.



The findings suggest these traits expose consumers to significant gains or losses, resembling gambling more than a financial service.



&#8220;We are concerned that regulating retail trading and investment activity in unbacked crypto assets as a financial service will create a &#8216;halo&#8217; effect that leads consumers to believe that this activity is safer than it is, or protected when it is not,&#8221; the Parliament’s Treasury Committee said in a House of Commons <a href="https://committees.parliament.uk/publications/39945/documents/194832/default/" target="_blank" rel="noreferrer noopener">committee report</a> published May 17.



The report cites bitcoin (<a href="https://blockworks.co/price/btc" target="_blank" rel="noreferrer noopener">BTC</a>) and ether (<a href="https://blockworks.co/price/eth">ETH</a>) as examples of “unbacked crypto assets,” apparently delineated from asset-backed tokens such as stablecoins USDC, tether or even Pax Gold.



CryptoUK, a crypto trade association, <a href="https://cryptouk.io/resources/cryptouk-strongly-rejects-treasury-committees-crypto-gambling-claim-cryptouk-response-to-the-tsc-statement/" target="_blank" rel="noreferrer noopener">said it strongly disagreed</a> with the recommendation, arguing that this approach would overlook the sector’s intricacies and its potential for attracting investment and fostering economic growth for the UK economy.



“No other global jurisdiction has taken this approach and referencing MiCA in the EU, we need to be taking a bespoke and tailored approach for regulation within the industry to ensure the UK does not become a hostile environment for businesses to be domiciled,” the organization said in a statement.&nbsp;



“Likewise, this approach will not provide the right level of protection for UK consumers — they will likely take opportunities to invest and transact with non-UK organizations which is wholly against the objective of protecting these consumers through regulation.”



Ian Taylor, board advisor at CryptoUK, highlighted the contradiction between the Treasury’s statement and HM Treasury’s consultation proposals. The proposals aim to bring activities, such as operating trading venues and serving as intermediaries, within the scope of existing financial regulations.



“Professional investment managers see bitcoin and other crypto assets as a new alternative investment class — not as a form of gambling — and institutional adoption of unbacked crypto assets has increased significantly,” Taylor said.



“Furthermore, gambling is exempt from capital gains tax. Does the Government really wish to exclude tens of millions of pounds in tax income from gains made by the buying and selling of unbacked crypto assets?&#8221;



Blockworks has reached out to the UK’s finance ministry for comment.



<h2 class="wp-block-heading">Gambling or not, UK Treasury digs cross-border crypto</h2>



In February, the UK government <a href="https://blockworks.co/news/uk-crypto-regulation-in-the-works" target="_blank" rel="noreferrer noopener">published a consultation paper</a> to establish a regulatory framework for crypto assets, aiming to stabilize the industry.



This followed its <a href="https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1088774/O-S_Stablecoins_consultation_response.pdf" target="_blank" rel="noreferrer noopener">announcement</a> last year to introduce regulations for stablecoins and crypto assets used in payments through the Financial Services and Markets Bill.



The Treasury’s statement on likening crypto markets to gambling is not a new perspective. Todd H. Baker, a lecturer in law at Columbia Law School, wrote a <a href="https://clsbluesky.law.columbia.edu/2022/11/29/lets-stop-treating-crypto-as-if-it-were-finance/?amp=1" target="_blank" rel="noreferrer noopener">blog</a> last year comparing crypto trading to professional esports gambling, and encouraged policymakers to regulate it as such.



Not to mention, billionaire investor Warren Buffett has famously <a href="https://www.cnbc.com/video/2023/04/12/warren-buffett-on-bitcoin-and-crypto-weve-had-an-explosion-of-gambling.html" target="_blank" rel="noreferrer noopener">referred to bitcoin</a> as a &#8220;gambling token.&#8221;



The Treasury committee did acknowledge potential benefits associated with certain types of crypto assets. Among the most compelling use cases it mentioned were crypto&#8217;s ability to boost payment efficiency and reduce costs, particularly for cross-border transactions and in economically disadvantaged regions.



“We therefore welcome the government publishing proposals for how it plans to regulate crypto assets used in financial services,” the Treasury said.



However, the committee said the government should refrain from allocating public resources to support crypto asset activities that lack a clear and beneficial purpose. They pointed to the Royal Mint’s plan to launch an NFT, which was <a href="https://blockworks.co/news/uk-treasury-nft-halted" target="_blank" rel="noreferrer noopener">scrapped this year</a>.



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Regulate Crypto Just Like Gambling, UK Treasury Committee Says

Casey Wagner

<div id="highlights-block_60f87de6c211c" class="highlights">
 <ul>
 <li>TCG Capital Management leads $20 million Series A for virtual horse racing platform </li>
 <li>It is the second investment into an NFT platform Andreessen Horowitz has revealed this week </li>
 </ul>
 
</div>



Virtually Human Studio, the Australia-based startup behind online horse racing platform Zed Run, has raised $20 million in a Series A round led by The Chernin Group Capital Management. Andreessen Horowitz and Red Beard Ventures also participated in the round.&nbsp;



VHS is the latest company profiting from the growing gaming and non-fungible token (NFT) industries. Zed Run is a marketplace and gaming program for what creators refer to as “breathing NFTs,” or NFTs that change and evolve over time, similar to real-life animals.&nbsp;



Zed Run users can virtually breed, sell and buy horses. Virtual horse owners can pay entrance fees to compete in races, and the site collects fees for all of the above. Race participants that come in first, second or third receive prize money in the form of ETH.&nbsp;



It’s a concept that may sound absurd to anyone unfamiliar with the gaming and NFT industries, but the demand is there.&nbsp;



“What the team at Virtually Human Studio is building fundamentally alters what it means to be a fan,&#8221; said Jacob Smilovitz, vice president at TCG, in a statement. &#8220;Fans are now empowered to come down from the bleachers, become owners themselves and play an active role in determining the outcome of the game.”



When launched in 2019, horses on Zed Run sold for around $30, but the explosion of the NFT market has proven to be fruitful for the company.



At time of publication, the Zed Run marketplace was completely sold out, but secondary markets abound. One has a horse available for <a href="https://opensea.io/collection/zed-run-official" target="_blank" rel="noreferrer noopener">1.3 ETH</a>, or around $2,550 USD. 



It is the second NFT investment a16z has revealed this week. On Tuesday, the firm led a $100 million Series B funding round in NFT marketplace <a href="https://cms.blockworks.co/a16z-leads-100m-round-for-nft-unicorn-opensea/" target="_blank" rel="noreferrer noopener">OpenSea</a>. 



The funding rounds come amid a major moment for NFTs across industries. Galaxy Digital founder and CEO Mike Novogratz and digital media entrepreneur Gary Vaynerchuck are part of the team behind <a href="https://cms.blockworks.co/vaynerchuck-novogratz-partner-with-fanatics-for-new-nft-company-candy/" target="_blank" rel="noreferrer noopener">Candy</a>, a new sports NFT marketplace with a focus on baseball. <a href="https://cms.blockworks.co/binance-to-debut-nft-marketplace-with-warhol-dali-thursday/" target="_blank" rel="noreferrer noopener">Binance</a> recently made its NFT marketplace debut with an auction featuring works from Andy Warhol and Salvador Dali. 



Zed Run is VHS’s first major project with more than 125,000 connected users. VHS closed its first seed funding round in May 2020, according to the company.&nbsp;