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Decentralized exchange LeetSwap, built on Coinbase’s Layer 2 blockchain Base, recently suspended trading due to fears of a potential exploit. Furthermore, Coinbase and Base are also dealing with the aftermath of the SEC’s lawsuit.
LeetSwap Halts Trading Amid Security Concerns
Trouble is brewing in the Coinbase ecosystem as multiple challenges loom ahead. On the one hand, is the BALD coin crash, which has prompted leading DEX on the Base blockchain, LeetSwap, to halt trading. The DEX tweeted that they detected a security vulnerability in their factory, leading them to suspect compromised pool liquidity. As a result, trading was temporarily stopped for further investigation.
PeckShield, a crypto-security firm, reported that approximately 340 ETH (equivalent to $630,000) had been exploited from liquidity pairs on Base, highlighting the severity of the situation.
Bald Memecoin's Crash
Shortly before the trading pause, Bald, a popular memecoin, experienced a significant crash in value. The token's developer withdrew a substantial sum of 6,800 ETH ($12.5 million) from the liquidity pool on LeetSwap. This sudden move raised eyebrows and further added to the challenges faced by Base's leading DEX.
Base and Coinbase's Regulatory Woes
Base, as an Ethereum Layer 2 (L2) chain, empowers developers to build decentralized apps using Coinbase's products, users, and tools. However, Coinbase has been dealing with its own regulatory challenges after falling in the crosshairs of the U.S. Securities and Exchange Commission (SEC). The latter has demanded Coinbase suspend all cryptocurrency trading except for Bitcoin, and upon questioning the decision, the regulatory body filed a lawsuit against the exchange.
SEC’s Lawsuit Against Coinbase
According to the lawsuit filed by the SEC, the regulatory body deemed 13 assets on Coinbase, including Solana (SOL), Polygon (MATIC), Cardano (ADA), FIL, SAND, AXS, ICP, NEAR, CHZ, DASH, VGX, and NEXO, as securities. The SEC also accused Coinbase of failing to register as a broker, clearing agency, or national securities exchange, indicating that the exchange was not adhering to the established disclosure regime for the U.S. securities markets.
Coinbase CEO Brian Armstrong stated that the exchange had limited choices in dealing with the SEC's demands. Following the regulator's instructions would have set a dangerous precedent and conveyed the wrong message. Therefore, it found itself caught between compliance and potential harm to the cryptocurrency industry's principles.
Issues Pile Up For Coinbase
LeetSwap's trading halt and the exploits on Base's liquidity pairs have raised serious concerns about security vulnerabilities on the Coinbase-backed blockchain. Additionally, Bald's dramatic crash and Coinbase's ongoing legal battle with the SEC have further complicated matters for the platform. The situation highlights the challenges and uncertainties surrounding the crypto industry's regulatory landscape and emphasizes the need for continued vigilance and security measures to protect investors and users alike.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.