Author: Gabby

A Bitcoin-focused decentralized finance platform has halted its cross-chain operations after an attacker generated roughly 1,000 unauthorized synthetic Bitcoin tokens, valued at approximately $76.7 million, on its Monad deployment. The exploit was detected by blockchain security firm PeckShield and on-chain analytics service Lookonchain, who reported the incident on Tuesday.

Early analyses from multiple researchers indicate that the breach did not stem from a vulnerability in the Monad network itself. Instead, the attack appears to have been facilitated by compromised administrative access tied to Echo Protocol’s infrastructure. Shortly after the unauthorized minting, the exploiter moved part of the fraudulent tokens into decentralized lending markets. According to Onchain Lens, 45 eBTC were deposited as collateral into the lending protocol Curvance, allowing the attacker to borrow approximately 11.29 wrapped Bitcoin, worth nearly $868,000 at the time.

After securing the borrowed assets, the attacker bridged the WBTC to Ethereum, swapped the tokens into ETH, and later routed 385 ETH through the crypto mixing service Tornado Cash, according on-chain investigators. PeckShield separately estimated that 384 ETH, valued around $822,000, had already been transferred to the mixer. Most of the unauthorized supply remains untouched. Lookonchain and DeBank data show the attacker still controls about 955 eBTC, valued at over $73 million. DefiPrime founder Nick Sawinyh noted that the remaining tokens appear stranded because Monad’s current lending and decentralized exchange liquidity cannot absorb an exit of that size.

Sawinyh warned that for anyone using newly launched lending markets on new chains, the key takeaway is to verify what collateral can be minted and who holds the authority to mint it. He emphasized that if a lender cannot disclose which keys can produce that collateral, it represents a significant risk.

While Echo Protocol initially confirmed only that it was investigating a security incident impacting its bridge on Monad, blockchain developer Marioo later stated that the issue stemmed from an admin private key compromise rather than a smart contract failure. According to Marioo, the eBTC contract functioned as intended, but several operational weaknesses allowed the attack to escalate. These included a single-signature admin role, the absence of a timelock mechanism, no minting cap or issuance rate limit, and a lack of collateral verification checks on Curvance for newly minted eBTC.

Curvance acknowledged the incident shortly afterward and confirmed that the affected Echo eBTC market had been paused as a precaution. The protocol added that its isolated market structure prevented the issue from spreading to other lending pools and stated there was no indication that Curvance’s own smart contracts had been compromised. On the network side, Monad co-founder Keone Hon said the blockchain itself continued operating normally and had not been breached. In a later update, Hon stated that security researchers estimated around $816,000 in actual value had been extracted through the exploit despite the much larger unauthorized mint.

Echo Protocol, which operates as a Bitcoin liquidity and yield platform across multiple chains including Aptos and Monad, said cross-chain transactions had been suspended while the investigation continues. The team added that future updates would be shared through its official channels. This incident adds to a growing list of DeFi security events this month alone, including a recent $11.6 million exploit involving Verus Protocol’s Ethereum bridge. Earlier this year, Drift Protocol lost roughly $285 million in an exploit, while Kelp DAO suffered a separate attack resulting in losses of about $292 million. More recently, THORChain halted trading after blockchain investigator ZachXBT flagged a suspected $10 million exploit, and Transit Finance disclosed a deprecated smart contract attack that led to losses of nearly $1.88 million.

Kevin Warsh is about to be sworn in as the new Federal Reserve chair on Friday, following Senate confirmation with a 54-45 vote. He steps into the role previously held by Jerome Powell, who remains on the Board of Governors. The timing is critical: traders have sharply reduced their bets on interest rate cuts, with market indicators suggesting that monetary easing is unlikely in the near term. According to recent data, the probability of a rate reduction before 2027 has plummeted to around 38%, a stark contrast to the 96% chance seen earlier in the year. The CME FedWatch tool indicates a 98.8% likelihood that rates will remain unchanged through June, and over 94% odds of no change through July. The Federal Open Market Committee is scheduled to meet on June 16-17, where they will also release updated economic projections, putting pressure on Warsh to clarify his stance on monetary policy. This environment of higher-for-longer rates has implications for Bitcoin and other cryptocurrencies, as it tends to tighten dollar liquidity. Recent reports show Treasury yields climbing, with the 30-year yield near 5.07% and the 10-year around 4.53%. Concerns about Fed independence have also surfaced, with Senator Elizabeth Warren warning that a Trump-controlled Fed might favor the president’s interests, including potential special treatment for his family’s crypto venture. Meanwhile, the Commodity Futures Trading Commission faces leadership gaps, prompting lawmakers to urge President Trump to nominate a full bipartisan commission. The CLARITY Act could expand the CFTC’s oversight of digital commodities, but without new appointees, the agency’s ability to address market volatility and new technologies remains uncertain.

In a significant legal development, Electric Solidus Inc., the company operating as Swan Bitcoin, is facing a $970 million lawsuit from the PCT Litigation Trust. The lawsuit, filed in the U.S. Bankruptcy Court for the District of Delaware, aims to recover digital assets and cash that were allegedly transferred out of Prime Trust just before its collapse in 2023.

According to court documents, the trust claims that Swan moved approximately 11,994 Bitcoin, over $24 million in cash, around $5 million in stablecoins, and more than 91,000 XRP from Prime Trust prior to the custodian filing for bankruptcy. The lawsuit argues that these transfers were made using non-public information, allowing Swan to avoid the financial turmoil that later affected other Prime Trust clients.

The complaint specifically highlights that a senior Prime Trust executive, who also served as a paid advisor to Swan, alerted Swan CEO Cory Klippsten before critical meetings with Nevada regulators. Swan then requested to move its entire business away from Prime Trust on May 25, 2023, just one day before the regulator meeting. This timing, the trust argues, was not coincidental and allowed Swan to act on insider knowledge.

Swan Bitcoin has responded to the allegations by asserting that customer assets held in trust accounts are not part of the bankruptcy estate. A company representative stated that these assets belong to individual customers and cannot be used to repay general unsecured creditors. Swan expects the courts to rule in its favor on this matter.

The dispute centers on the legal classification of the assets: whether they were owned by Swan, its customers, or should be returned to the Prime Trust estate for creditor distribution. The court will need to examine the custody agreements, the timing of the transfers, and the alleged use of insider information.

Prime Trust’s downfall began in June 2023 when Nevada regulators declared the company insolvent and unable to fulfill customer withdrawals. The custodian later filed for Chapter 11 bankruptcy, revealing that it had used customer funds to cover withdrawals since late 2021 and owed clients approximately $82 million in missing deposits and fiat currency. This new lawsuit against Swan adds another layer to the complex legal aftermath of Prime Trust’s failure, emphasizing ongoing concerns about crypto custody practices and the treatment of customer assets in bankruptcy proceedings.

The U.S. Securities and Exchange Commission is reportedly developing an innovation exemption that would permit blockchain platforms to trade tokenized versions of publicly listed stocks, including tokens created without explicit authorization from the issuing companies. According to Bloomberg, the proposal may be announced as early as this week, signaling the agency’s interest in broadening tokenized securities trading beyond traditional exchanges into cryptocurrency markets.

Sources familiar with the matter indicate that the SEC has discussed requiring tokenized shares issued by third parties to carry the same rights as conventional common stock, such as voting privileges and dividend entitlements. Tokens failing to meet these standards could face delisting. Commissioner Hester Peirce is said to be instrumental in advancing this initiative, though final details remain subject to change.

Wall Street firms are increasingly exploring tokenization, with Intercontinental Exchange—parent of the NYSE—preparing a blockchain platform for around-the-clock trading and settlement. Crypto exchange Bullish recently acquired transfer agent Equiniti in a $4.2 billion deal to bolster its tokenization business. Proponents argue that tokenized equities could provide international investors or those without brokerage access a pathway to invest in companies like Nvidia and Tesla via crypto platforms.

However, internal SEC opposition persists, with concerns that third-party tokenization without issuer involvement could fragment markets. Brett Redfearn of Securitize warned that multiple token wrappers for the same company could confuse investors about share valuations. Tokenized private market offerings have also drawn objections from companies like OpenAI and Anthropic, which have publicly opposed unauthorized products tied to their valuations.

The SEC’s discussions come shortly after the Senate Banking Committee advanced the CLARITY Act, legislation aimed at creating a federal framework for digital assets, which is set for a Senate vote next month.

The U.S. Securities and Exchange Commission has officially eliminated a long-standing rule that prevented defendants in enforcement settlements from publicly contesting the agency’s accusations. This policy, initially put in place in 1972, had been criticized for creating an appearance that the SEC was shielding itself from scrutiny, according to regulatory officials.

SEC Chair Paul Atkins announced the rescission, stating that the previous requirement forced settling parties to agree not to publicly dispute the Commission’s claims. Atkins emphasized that this change removes what he described as an unnecessary constraint on defendants’ ability to criticize the agency during settlement agreements. Under the old framework, companies or individuals could not deny the allegations or allow others to do so on their behalf, a rule originally justified to avoid the perception that sanctions were being applied for actions that did not occur.

In a related statement, SEC Commissioner Hester Peirce supported the move, arguing that imposing forced silence on defendants does little to enhance market transparency or protect investors. Peirce noted that transparent enforcement of securities laws is essential for fostering free markets, and allowing both parties to speak freely after settlements contributes to that openness. She also suggested that the SEC’s enforcement staff should have confidence in their investigations without relying on speech restrictions.

Peirce has previously criticized this policy, especially during the Biden administration when the SEC, under former Chair Gary Gensler, aggressively pursued cryptocurrency firms. In early 2024, she argued that the practice undermined regulatory integrity. More recently, the SEC submitted its rescission proposal to the Office of Management and Budget before finalizing the change.

Crypto companies have increasingly challenged this rule as the SEC ramped up enforcement actions against digital asset entities. In 2023 alone, the agency initiated 46 crypto-related actions and collected $281 million in penalties through settlements. Since President Donald Trump returned to office, the SEC has dropped or settled several major crypto cases from the previous administration, including a high-profile $50 million settlement with Ripple Labs in May 2025.

The SEC also clarified that it may still require certain defendants to admit liability or wrongdoing in future settlements, and existing no-deny provisions will no longer be enforced.

The native token of Hyperliquid, HYPE, has experienced a significant price increase of nearly 24% over the past six days, bringing it within striking distance of its record peak. This rally is attributed to a confluence of factors including regulatory progress, exchange-traded fund (ETF) interest, stablecoin expansion, and the introduction of synthetic assets on the platform.

Data from Santiment reveals that HYPE climbed from approximately $38.32 on May 13 to around $47.65, marking a six-day gain of about 24%. The token is now trading within $12 of its all-time high, with social dominance spiking to 1.79% on May 14—significantly above its normal range. Technical indicators from TradingView show HYPE/USDT on KuCoin near $48, with the Relative Strength Index (RSI) at 64.91, indicating strong buying momentum without being overbought. The Moving Average Convergence Divergence (MACD) remains positive, with the blue line above the signal line and rising green histogram bars.

A key catalyst has been the CLARITY Act, which cleared a crucial U.S. Senate committee on May 14. This bill aims to establish clearer market structure rules for digital assets, boosting sentiment for crypto trading platforms like Hyperliquid. Additionally, Bitwise has added demand for HYPE by announcing that it will allocate 10% of the management fee from its Bitwise Hyperliquid ETF (ticker BHYP) to hold HYPE on its balance sheet. This move aligns with Hyperliquid’s model, where roughly 99% of protocol revenue is used to buy and burn HYPE. BHYP began trading on the NYSE on May 15 with a 0.34% sponsor fee, waived for the first month on the first $500 million in assets. Bitwise noted that HYPE’s market cap has exceeded $11 billion, making it the tenth-largest crypto asset.

The rally is also supported by the deepening of USDC infrastructure on Hyperliquid. Circle has become the technical deployment partner for USDC on the platform, while Coinbase serves as the official USDC treasury deployer. USDC remains the primary collateral and quote asset across Hyperliquid’s ecosystem. According to reports, USDC supply on Hyperliquid has grown to about $5 billion, doubling year-over-year amid rising stablecoin demand on decentralized exchanges. Furthermore, the launch of SPCX, a synthetic SpaceX pre-IPO perpetual by Trade.xyz, has contributed to the bullish sentiment. The SPCX market implies a $1.78 trillion valuation for SpaceX, and HYPE added approximately 7% following its introduction.

Republican legislators in the U.S. House are working to transform a temporary prohibition on a central bank digital currency into a lasting restriction, as Congress prepares to vote on a major housing bill this week. According to Congressman Mike Flood, the revised version of the 21st Century ROAD to Housing Act removes what he calls a “backdoor green light for a CBDC” by making the ban indefinite instead of letting it expire in 2030.

The Senate Banking Committee initially introduced the housing package in March, focusing on supply, affordability, mortgage access, and manufactured housing rules. Senators Tim Scott and Elizabeth Warren led the legislation, which passed the Senate with a strong bipartisan vote of 84 to 6. Hidden within the bill was a clause that prevented the Federal Reserve or regional banks from issuing a digital dollar without congressional approval, but only until December 31, 2030.

House Republicans now aim to eliminate that sunset clause before the bill returns to the Senate. Representative Warren Davidson argues that the current deadline essentially creates a launch window for a government-issued digital currency. In a statement, he said, “The US House of Representatives could deliver a unifying win this week with bipartisan housing affordability legislation. Instead, they currently plan to deliver a go-live date for Central Bank Digital Currency, using housing as the Trojan Horse.” He also warned that the 2030 sunset works as a pre-launch development period, urging a full and permanent ban on CBDCs in the United States.

Separately, House Majority Whip Tom Emmer continues to lobby senators to pass his Anti-CBDC Surveillance State Act, which cleared the House in July. The bill would block the Federal Reserve from creating or issuing a central bank digital currency, framing the issue around privacy and financial freedom. Emmer stated, “The Chinese Communist Party uses a central bank digital currency to surveil and control its people,” adding that his legislation “bans our government from ever creating this Orwellian tool.”

Earlier attempts to halt a digital dollar through standalone legislation have stalled. Senator Mike Lee introduced the “No CBDC Act” to prohibit both the Federal Reserve and Treasury from issuing a CBDC, but the proposal failed to advance. Outside government, criticism of CBDCs often centers on surveillance and state control, though the Human Rights Foundation notes that they could improve financial access for underserved populations while also posing privacy risks. According to the Atlantic Council, only Nigeria, Jamaica, and the Bahamas have fully launched CBDCs, with many other countries still in pilot or research phases.