Casey Wagner

Around $775,000 of stablecoin USDT was allegedly stolen in a phishing scheme on the Tron network, according to an investigation by risk assessment firm Global Ledger.



Global Ledger claims the funds were laundered via the TRX staking mechanism. Staking on Tron involves delegating TRX tokens to one of 27 Super Representatives, the network’s version of a validator node.



Global Ledger said the fraudsters used the SunSwap exchange to get <a href="https://blockworks.co/price/usdt" target="_blank" rel="noreferrer noopener">USDT</a> for Tron in a certain wallet. They then used <a href="https://blockworks.co/price/trx" target="_blank" rel="noreferrer noopener">TRX</a> for staking to verify their transactions and cover transaction fees, Global Ledger said.&nbsp;



The staking volume enabled the thieves to elect a specific Tron validator called “metaverse home,” a representative from Global Ledger told Blockworks. “Together with the wallet that collects the profit, approximately 100 phishing wallets participate in voting to help ‘metaverse home’ be chosen as a validator.”



With “metaverse home” selected, the validator receives the opportunity to create transaction blocks and receive a reward of 16 TRX for each block, the representative added.



“Proceeds were not cashed out through exchanges, in which case they can be traced and seized by law enforcement,” a representative from Global Ledger told Blockworks. “They were used to vote for the validator, [to] earn the cleanest money possible, [freshly] mined coins.”



The use of USDT is incidental and “metaverse home” is not linked to <a href="https://blockworks.co/tag/tether" target="_blank" rel="noreferrer noopener">Tether</a>, Global Ledger said, but its status and ability to earn money validating the blocks is certainly based on funds received from phishing USDT.



The nature of the scam shows how automated voting for a super representative can in ways permit this type of scheme, Global Ledger said.&nbsp;



“This is the first time we see such a laundering scheme,” a representative from Global Ledger said, noting that the scheme’s scale and sophistication indicates a business-like venture.



“These guys may have Slack, Jira and daily stand-ups like any other startup,” they said.



Updated Feb. 27, 2023 at 2:56 pm ET: An earlier version of this story misstated the total amount of stolen USDT.



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Tracking a Novel Scheme to Launder Tether on Tron Blockchain

David Canellis

<div id="highlights-block_6290f00d3381f" class="highlights">
 <ul>
 <li>Bitcoin has dropped 4.6% over the past week, from around $30,300 to $28,900</li>
 <li>Stablecoin dominance has surged as crypto traders seek shelter from volatility</li>
 </ul>
 
</div>



Cryptocurrency markets have shed 7% of their collective market capitalizations over the past week, while equities are enjoying a relief rally.



Of the top 10 cryptocurrencies by market capitalization (sans stablecoins and wrapped bitcoin), Ethereum rival Avalanche has been the hardest hit. Avalanche’s native token, AVAX, is down 22% since last Friday — plunging from $29.55 to $23.01 at press time.



XRP lost 7%; Polkadot is down 3.3%; and Binance Coin dropped 2.5%, according to TradingView data compiled by Blockworks. Dogecoin is now trading even thanks to a 7% surge on Friday.



Market leader bitcoin has fallen 4.6% over the past seven days, from around $30,300 to $28,900 at 11:50 am ET.



Cardano (ADA), Solana (SOL) and Ether (ETH) all sank more than 12% – the latter weighed heavily by a seven-block “<a href="https://twitter.com/koeppelmann/status/1529458000011972610" target="_blank" rel="noreferrer noopener">reorganization</a>” of its experimental beacon chain earlier this week.



Ethereum’s beacon chain is meant to facilitate the network’s switch to a <a href="https://cms.blockworks.co/proof-of-work-vs-proof-of-stake-whats-the-difference/" target="_blank" rel="noreferrer noopener">proof-of-stake</a> protocol, dubbed “The Merge.” Some industry insiders are now concerned that more work must be done to ensure the new network is secure come The Merge, which is tipped to happen sometime in August.



While crypto has felt big losses, benchmark equity indices such as the NASDAQ 100 and the S&amp;P 500 are rising after seven straight weeks of red. The tech-heavy NASDAQ is up 6% this week, while the S&amp;P has recovered 5.5%. 



<h3>TRON bucks trend to become only top cryptocurrency in the green</h3>



As it turns out, TRON is the only top 10 crypto project to make gains over the past week. The blockchain’s native token TRX is up 11%, jumping from $0.073 to $0.081.



TRON founder Justin Sun at the beginning of May launched a Terra-style algorithmic stablecoin, and stablecoin giant Tether just deployed a token tied to the Mexican peso. Both projects utilize the long-serving blockchain.



In fact, TRX is the best performing top project in May by far. Every cryptocurrency in the top 10 by market capitalization (again, not counting stablecoins or wrapped bitcoin), has collapsed more than 19% in the month-to-date — TRX is up 30%.



The same goes for TRX in the year-to-date. BTC is down almost 38% in 2022; ETH is down 52%; but TRX has risen 7.5%. The entire crypto market has tanked 46% in that time, representing $1 trillion lost from its collective capitalization. Crypto is now worth about $1.18 trillion overall.



But while TRX is an outlier, altcoins across the board are still draining fast. This has caused BTC dominance (which measures how much of the crypto market is bitcoin) to almost hit 46.5% at 11:50 am ET – its highest point since October 2021, according to TradingView’s <a href="https://www.tradingview.com/symbols/CRYPTOCAP-BTC.D/" target="_blank" rel="noreferrer noopener">CryptoCap dominance index</a>.



Bitcoin dominance is up 16% year-to-date, while ether dominance is down almost 10%, now sitting at 18%.



But those moves pale in comparison to stablecoins Tether (USDT) and Circle’s USD Coin (USDC). USDT’s dominance has surged 78% this year, while USDC’s has exploded 128%, as traders seek shelter from more volatile cryptocurrencies.



Together, those two dollar-pegged tokens are now roughly 11% of the total crypto market, up from 5.5% at the start of the year.



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Want alpha sent directly to your inbox? Get degen trade ideas, governance updates, token performance, can’t-miss tweets and more from&nbsp;<a href="https://blockworks.co/newsletter/research" target="_blank" rel="noreferrer noopener">Blockworks Research&#8217;s Daily Debrief</a>.
 
Can&#8217;t wait? Get our news the fastest way possible.&nbsp;<a href="https://t.me/blockworks_news" target="_blank" rel="noreferrer noopener">Join us on Telegram</a> and follow us on <a href="https://news.google.com/publications/CAAqBwgKMPyTxgswn6_dAw" target="_blank" rel="noreferrer noopener">Google News</a>.
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