It’s time to ditch seed phrases for something that actually works

In Token Issue this week, we look at what can be done to finally stop crypto hackers. Plus, the latest on SBF. [Read from your browser]( Token Issue Welcome to Token Issue! Delivered every Friday, this free newsletter breaks down the biggest stories in Asia’s crypto scene and beyond. View past issues [here]( or [sign up here]( to receive future newsletters. Written by Scott Shuey Crypto journalist Happy New Year {NAME} It’s around this time every year I start thinking that this is the year I get real about security. The obvious place to start: passwords. But let’s face it - passwords suck. While almost every aspect of technology has jumped forward in leaps and bounds, every time we need to access our documents, we still need to key in a password like some caveman developer from the 1960s. The only reason that password security has evolved at all is because thieves, who have proven themselves at least as innovative as programmers, are constantly finding new ways to break into our accounts. Just how bad things have gotten was - again - highlighted this week. NFT collector [CryptoNovo]( revealed that his wallet was hacked and 10 tokens, including three CryptoPunks and a Bored Ape, were taken. [Nikhil Gopalani]( chief operating officer at RTFKT - an NFT project owned by Nike - was also hit. His wallet had over 80 tokens taken from it. [Luke Dashjr]( one of the early developers for Bitcoin, said he lost hundreds of BTC from his accounts late last year. While it’s unclear how CryptoNovo and Gopalani were hacked, Dashjr said his “seed phrases” were compromised. Seed phrases are those long strings of random words a user is given - and repeatedly told to keep safe - when they create crypto wallets. If hackers are finding a way to access that, it could mean trouble for ‌crypto holders. In this week’s premium story, Deepti Sri ‌takes a hard look at what crypto developers are doing to move beyond seed phrases and keep wallets secure. In what has to be one of the most millennial-specific advances in password security yet, one developer says their strategy is similar to Voldemort’s use of horcruxes in the Harry Potter series. If that has your attention, keep reading. – Scott  ---------------------------------------------------------------  THE BIG STORY [How crypto is killing seed phrases to usher in mass adoption]( Non-custodial wallets have been increasing in demand following the collapse of [FTX](. They have one major flaw, though: seed phrases, which can be stolen from the devices that store them. Anyone who has the seed phrase can control the wallet. But advances like multiparty computation and smart contract wallets are increasingly being seen as alternatives. Tech in Asia journalist Deepti Sri takes a look at what these developments mean for wallet security and whether it signals the beginning of the end for seed phrases.  --------------------------------------------------------------- ⭐ TO THE STARS A look at what’s pushing Web3 forward [US officials charge SBF, continue hunt for clients’ funds]( Sam Bankman-Fried has hardly been out of the news since his arrest last month. But on January 3, SBF was finally arraigned on eight criminal counts, including money laundering conspiracy, securities fraud, and wire fraud. SBF pleaded not guilty, guaranteeing a highly anticipated trial this October. The arraignment comes after FTX co-founder Gary Wang and ex-Alameda Research co-CEO Caroline Ellison [pleaded guilty to aiding]( Bankman-Fried in defrauding FTX customers last month. The former executives are cooperating with prosecutors and could potentially testify at the trial. Even FTX's former top lawyer Daniel Friedberg is cooperating with US prosecutors, [Reuters reported](. For those who just can’t wait for October, there will be plenty of sideshows to fill the time before the main event, which include everything from efforts to recover clients’ money from the now-defunct exchange to allegations that [SBF conspired with others]( to bring down TerraLabs. On December 30, US Federal prosecutors announced that they are looking into a [series of crypto transactions]( that online analysts have tied to digital wallets associated with SBF that occurred after his arrest. SBF has denied making the transactions, raising the question of whether he is blatantly trying to move funds even while under investigation, or whether - as SBF claims - someone else has been moving the funds. Oh, the drama.  --------------------------------------------------------------- 🌙 TO THE MOON Promising crypto projects we’re noticing. [DefiLlama]( The firm recently launched its new decentralized DEX aggregator. Information on DeFi exchanges has been in high demand since the fall of FTX and the new aggregator has gotten a lot of attention for its ability to aggregate prices and execute the transaction. In one 24-hour period, the new application became the second most-used app [tracked by 0x]( a popular decentralized exchange. It even surpassed Metamask and Coinbase. DefiLlama’s app is still in beta. --------------------------------------------------------------- 🌏 BACK TO EARTH The week’s biggest roadblocks 1️⃣ More FUD in 2023 Fred Wilson, co-founder of Union Square Ventures, [posted]( recently that the worst is not over for the cryptoverse. “There are entities that are insolvent but have not been restructured. There are funds that are so far under water that they may be forced to liquidate. These kinds of activities will produce ongoing sell pressure on Web3 tokens for at least the first quarter of 2023 and maybe for much longer,” he wrote. Wilson also advised investors to stay out of the market unless they have “a very strong stomach and a very long-time horizon.” 2️⃣ Don’t place your hopes on Solana’s meme coin jump There have been a lot of reasons for the fall of Solana’s [SOL token]( this past year, but the reason for its fall since November 2022 seems to be singular: FTX. The platform admitted recently that it held 134.5 million [SRM tokens]( and 3.4 million [FTT tokens]( which were collectively worth almost US$190 million before FTX halted withdrawals in November 2022. Both SRM and FTT are tokens native to the FTX platform, which is currently in bankruptcy court. Solana’s holdings today would be worth only US$20.1 million. SOL has seen a small jump recently, pushing its price back above US$10 a share, but analysts say this increase, which is due to the rise of [Bonk]( [is not sustainable](. Bonk is a [Shiba Inu]( meme token that launched on December 25. Most meme tokens, including Shiba Inu, have lost value over time.  --------------------------------------------------------------- STILL A PONZI SCHEME “Having worked in the SEC Enforcement Division for 18 yrs, including 11 as Chief of the SEC Office of Internet Enforcement, my take is that when crypto trading firms fabricate their own tokens, it’s not innovation, it’s securities fraud and counterfeiting.” - [John Reed Stark, former chief, SEC Office of Internet Enforcement]( Stark’s comments follow a [story]( that looks at the falling prices of Binance’s BNB token and its failure to be listed on US exchanges, which most analysts speculate is due to fears over regulators treating the coin as a security. --------------------------------------------------------------- MORE TO CHEW ON 1️⃣ What’s happening with Binance’s recovery fund? On November 25, 2022, Binance CEO Changpeng Zhao said company was establishing a [US$1 billion Industry Recovery Initiative (IRI)](. The fund would be used to purchase some of the struggling cryptocurrency projects that FTX had purchased before its collapse. Binance transferred US$1 billion in [BUSD]( into a wallet that is visible to the public, but a look inside the wallet shows there has been no activity since the last transfers in November. A spokesperson for Binance told Tech in Asia that the company and its co-participants in the IRI are currently reviewing and evaluating the applications received. “Further updates will be shared in the near future once they are available,” the spokesperson said. Soon after the initial announcement, Binance said it would increase the amount of the IRI to US$2 billion, if necessary. The spokesperson confirmed that Binance is still “open to ramping up the amount committed to US$2 billion if the need arises. We’ll review whether this is needed in the coming months.” You can check out the wallet [here](. 2️⃣ [Indonesia plans national crypto exchange this year]( The country’s Financial Services Authority is expected to assume the supervision of crypto assets sometime in the next two years. 3️⃣ [Crypto firm Huobi eyes 100 million users in 2023]( Justin Sun, a member of Huobi’s global advisory board, [tweeted]( that the firm is aiming to reach 100 million users by the end of this year. In 2020, the crypto exchange said it had 15 million users prior to its withdrawal from China. Huobi was also rumored to be planning to lay off 40% of its employees and cut salaries. However, Sun has reportedly said that this rumor is untrue. 4️⃣ [Binance acquisition of Gopax in final stage]( Binance has reportedly completed due diligence in its acquisition of Gopax, a Korean exchange. Gopax is one of the five major South Korean exchanges, the other four being Upbit, Bitsum, Coinone, and Corbit. Binance previously announced its acquisition of other exchanges in Japan and Indonesia. 5️⃣ [US regulators say no to Binance acquisition of Voyager Digital]( US regulators have asked a judge to stop Binance's acquisition of Voyager Digital, the bankrupt crypto lender. The Securities and Exchange Commission and other agencies have filed motions objecting to the acquisition in Voyager's bankruptcy proceedings in the Southern District of New York, according to The Block.  --------------------------------------------------------------- That’s all for this issue - we hope you liked it. WAGMI! P.S. Don't miss out on the biggest tech news and analysis. Add newsletter@techinasia.com to your address book, contacts, or safe sender list. Or simply move us into your inbox. Too many emails? Switch to a different frequency or get new content through our [preference center]( or [unsubscribe](. You can also break our hearts and remove yourself from all Tech in Asia emails over [here](  Copyright © 2023 Tech in Asia, All rights reserved. 63 Robinson Road, Singapore 068894