The growth of cryptocurrency theft triggered the Securities and
Exchange Commission (SEC) to take action. On April 11, 2022, the
Division of Corporation Finance's Office of the Chief
Accountant issued Staff Accounting Bulletin. No. 121, Release No.
SAB 121 ("SAB") providing interpretive guidance for
entities to consider when they have obligations to safeguard
crypto-assets held for their platform users.
The new guidance follows another high-profile hack involving
digital currency. On March 23, 2022, cybercriminals stole 173,600
ether (ETH) and 25.5M of the stable coin USD coin (USDC) worth more
than $615 million from Ronin Network, a sidechain of the Ethereum
blockchain. Ronin Network is the payment system behind the popular
play-to-earn game, Axie Infinity. According to Ronin, the attacker
used hacked private keys in order to forge fake withdrawals.
Unfortunately, large-scale crypto thefts are not isolated events.
Last year, a similar hack of the DeFi protocol Poly
