TLDR

• Kraken transitions kBTC wrapped Bitcoin infrastructure from LayerZero to Chainlink CCIP
• Move triggered by April 2026 Kelp DAO bridge exploit that resulted in $292 million losses
• Industry-wide shift sees more than $3 billion in TVL move from LayerZero to Chainlink platforms
• Kraken becomes fourth major protocol to abandon LayerZero, following Kelp, Solv, and Re
• Coinbase previously adopted Chainlink CCIP for approximately $7 billion in wrapped token assets

Cryptocurrency exchange Kraken has confirmed its decision to transition away from LayerZero as the underlying cross-chain technology for kBTC, its wrapped Bitcoin offering, opting instead for Chainlink’s Cross-Chain Interoperability Protocol (CCIP).

The strategic shift follows a devastating April 2026 security breach at Kelp DAO that resulted in $292 million in stolen funds. Security researchers believe the attack was orchestrated by North Korea’s notorious Lazarus Group, who exploited vulnerabilities in Kelp’s LayerZero-based bridge operating with a single-verifier setup.

According to Kraken’s official statement, the exchange selected Chainlink CCIP due to its “enterprise-grade infrastructure with strict security and risk management requirements.”

Chainlink’s CCIP infrastructure operates with 16 independent node operators that must validate every cross-chain transaction. The protocol features built-in rate limiting mechanisms and maintains both ISO 27001 and SOC 2 Type 2 security certifications.

Launched in 2024, Kraken’s kBTC maintains a 1:1 backing ratio with Bitcoin. Current data from DeFiLlama shows the token commands approximately $260 million in market capitalization with around $333 million in total value locked.

The infrastructure transition encompasses multiple blockchain networks including Ethereum, Ink, Unichain, and Optimism, with additional chains planned. Chainlink will provide infrastructure support for all future wrapped asset products from Kraken.

A Pattern of Departures From LayerZero

Kraken represents the fourth significant protocol to discontinue LayerZero infrastructure following the Kelp security incident. Previous departures include Kelp DAO itself, along with Solv Protocol and Re. Combined, these three protocols account for approximately $2.57 billion in total value locked.

A Chainlink representative verified that more than $3 billion in TVL has transitioned to Chainlink infrastructure in recent weeks, including assets from Tydro, the primary lending protocol operating on Kraken’s Ink blockchain network.

LayerZero initially disputed accountability for the Kelp breach. While the company had previously advised Kelp to implement a more secure multi-signer configuration, LayerZero later acknowledged inadequate communication contributed to the incident.

Post-exploit investigation revealed that 47% of applications utilizing LayerZero infrastructure operated with single-verifier configurations, identical to the setup exploited during the Kelp attack.

LayerZero has subsequently announced it will discontinue support for 1/1 Decentralized Verifier Network configurations and has initiated deployment of enhanced security protocols.

Industry Response

The decentralized finance ecosystem mobilized through the DeFi United initiative, successfully raising over $320 million to restore rsETH backing and provide compensation to impacted users.

Coinbase executed a comparable infrastructure migration last year, designating Chainlink CCIP as the exclusive bridge solution for approximately $7 billion in wrapped token assets.

In related corporate developments, Kraken’s parent entity Payward filed an application this month seeking federal trust charter status to operate as a federally chartered cryptocurrency banking institution.

Key Takeaways

• Senate Banking Committee approved the Digital Asset Market Clarity Act (CLARITY Act) with a 15-9 vote
• Bipartisan support emerged as two Democratic senators sided with all 13 Republican members
• A minimum of 60 votes will be required for passage during the full Senate floor proceedings
• Unresolved ethical questions surrounding Trump’s cryptocurrency ventures continue to pose challenges
• House approval remains necessary before the legislation can reach the president for final signature

During Thursday’s proceedings, the Senate Banking Committee greenlit the Digital Asset Market Clarity Act, commonly referred to as the CLARITY Act, through a bipartisan 15-9 decision. This legislative measure aims to establish a comprehensive regulatory structure for digital asset enterprises and cryptocurrency markets across the United States.

The committee’s entire Republican contingent of 13 senators cast affirmative votes. Two Democratic members—Senators Ruben Gallego and Angela Alsobrooks—broke from their party to endorse the measure. The remaining nine Democrats opposed the bill.

Committee Chairman Tim Scott emphasized that the legislation prioritizes consumer safeguards, encourages technological advancement within American borders, and addresses national security considerations related to digital currencies.

Top-ranking Democrat Elizabeth Warren mounted vigorous opposition to the measure. She characterized the legislation as being “written by the crypto industry for the crypto industry” and suggested Republican colleagues were advancing President Trump’s private cryptocurrency financial interests.

Senator Cynthia Lummis, a prominent Republican advocate for the bill, defended CLARITY as legislation that benefits both law enforcement capabilities and consumer welfare. She countered Warren’s assertions throughout the committee hearing.

Negotiations Shape Final Committee Decision

Private discussions conducted throughout the markup session proved instrumental in securing Democratic support. Chairman Scott committed to entertaining additional amendments, which introduced enhanced investor safeguards and more precise regulatory guidelines for decentralized finance platforms.

Democratic Senator Mark Warner championed strengthening protections specifically for decentralized finance initiatives. His concerns found expression in eleventh-hour amendments that garnered substantial bipartisan backing.

Senator Alsobrooks characterized her affirmative vote as “a vote to keep working in good faith,” emphasizing that further deliberations would be necessary before she commits to supporting the final floor measure. Gallego expressed similar reservations.

The markup session featured debate over more than 100 proposed amendments. The majority were rejected along partisan divisions. These included provisions addressing stablecoin oversight, anti-money laundering measures, cryptocurrency mixer regulations, and prohibitions on federal bailouts for digital asset firms.

Ethical Conflict of Interest Questions Remain Outstanding

Among the most contentious unresolved matters is an ethics clause. Democratic lawmakers seek regulations preventing government officials, including the sitting president, from financially benefiting from cryptocurrency assets under their regulatory purview. Trump’s family operates World Liberty Financial and has launched memecoins.

White House advisor Patrick Witt informed attendees at Consensus Miami 2026 earlier this month that any provision specifically targeting the president would face rejection. He insisted any ethics framework must apply “across the board.”

Digital Chamber’s Cody Carbone informed media representatives that reaching consensus on the ethics provision will probably be necessary before floor consideration. He indicated leadership will only schedule a vote once confident of securing the requisite 60 votes.

The legislation now proceeds toward consolidation with comparable legislation approved by the Senate Agriculture Committee. Following that merger, a unified version will advance to the full Senate for floor consideration, then to the House of Representatives.

Blockchain Association CEO Summer Mersinger described Thursday’s outcome as a “defining moment,” asserting that enduring digital asset policy frameworks require bipartisan foundations.

The Senate’s legislative timeline presents constraints. Industry analysts suggest the vote must likely occur before August, preceding the summer recess and midterm election campaign season.

Signal has warned that it may leave Canada if the country’s proposed lawful access bill forces the company to weaken its privacy tools. 

The warning came from Udbhav Tiwari, Signal’s vice president of strategy and global affairs.

Tiwari said Signal “would rather pull out of the country” than break the privacy promises made to users. He also warned that Bill C-22 “could potentially allow hackers” to target weaknesses built into electronic systems.

Canada says the bill supports law enforcement

Bill C-22, also called the Lawful Access Act, 2026, seeks to update Canada’s rules for digital data access. Parliament records show the bill is now under review by the House of Commons Standing Committee on Public Safety and National Security after second reading on April 20.

The Canadian government says the bill would help law enforcement and CSIS respond to crime and national security threats. Public Safety Canada says Part 2 does not create new powers to intercept communications, but would make electronic service providers able to comply with existing legal orders.

Moreover, Apple and Meta have also opposed parts of Bill C-22. Reuters reported that both companies warned the bill may force firms to weaken encryption. Public Safety Canada said the law would not require companies to create a “systemic vulnerability.”

Meta said Part 2 of the bill may require companies to build systems that weaken encryption or allow outside surveillance tools. The company asked Canada to amend the bill and add stronger safeguards around encryption and company challenges to government orders.

Windscribe joins privacy backlash

Signal is not alone in warning about a possible exit. Windscribe, a VPN provider based in Canada, said it may follow Signal if Bill C-22 passes in its current form. The company said the proposal may force VPN services to log identifying user data.

The debate has drawn privacy groups into the fight. The Electronic Frontier Foundation said Bill C-22 may require services to retain metadata for one year and warned that metadata can reveal who users contact, when they communicate and where they go.

Canada’s digital rules remain in focus

The dispute comes as Canada works on other digital policy measures. Crypto.news reported in April that Canadian lawmakers advanced Bill C-25, a proposal that would ban crypto donations in federal elections due to concerns over traceability and campaign finance rules.

Bill C-22 is not yet law. It still needs committee review, further House stages, Senate approval and royal assent before taking effect. Signal’s warning now places encryption at the center of Canada’s lawful access debate.

Gemini reported $50.3 million in total revenue for the first quarter of 2026, up 42% from a year earlier. 

The company said the increase came from services, interest income and over-the-counter activity, while transaction revenue stayed almost flat at $24.1 million.

The results show how Gemini is moving beyond its original crypto exchange model. Exchange revenue fell 27% to $17.2 million as spot trading slowed. Total trading volume dropped to $6.3 billion from $13.5 billion in the same quarter last year.

Credit card revenue leads growth

The largest gain came from Gemini’s credit card business. Credit card revenue rose nearly 300% year over year to $14.7 million. Gemini said the increase came from user growth, with about 13,100 new card sign-ups in Q1 and 123,700 cumulative new cardholders over the past four quarters.

Services revenue and interest income rose 122% to $24.5 million. That segment now accounts for 49% of total revenue, compared with 31% in Q1 2025. The shift shows that credit cards, interest income, custody and advisory services are now a larger part of Gemini’s business mix.

Gemini president Cameron Winklevoss said “the momentum we have built in diversifying our revenue will only accelerate.” The comment came as the company closed a $100 million private placement from Winklevoss Capital, funded in Bitcoin.

Costs remain high despite revenue growth

Gemini’s revenue rose, but costs also increased. Total operating expenses climbed 73% year over year to $144.5 million. The company linked the increase to compensation, marketing and credit card-related costs tied to its wider business expansion.

The company posted a net loss of $109 million, improved from a $149.3 million loss a year earlier. Adjusted EBITDA came in at a loss of $59.9 million, only slightly better than the $61.6 million loss reported in Q1 2025.

Gemini pushes into regulated markets

Gemini also reported progress in regulated market products. Its Olympus unit received a Derivatives Clearing Organization license from the CFTC in April, giving the company in-house clearing infrastructure for futures, options, perpetual contracts and prediction markets.

The license followed a December 2025 Designated Contract Market approval for Gemini Titan. In its latest update, Gemini said its prediction markets product has passed 100 million contracts traded across more than 20,000 traders since launching in December.

Meanwhile, the growth update comes after a difficult period for Gemini’s public-market story. Earlier reporting from crypto.news said shareholders sued Gemini, claiming its IPO filings misled investors about its business strategy and later pivot toward prediction markets.

That case followed layoffs, executive exits and a stock decline after the company’s public listing. Gemini’s Q1 numbers now give investors a clearer picture of the new model: higher revenue from services and credit cards, weaker exchange trading, and continued losses as the company builds a broader financial marketplace.

Key Points

• Terror attack survivors have petitioned a federal court in Manhattan to compel Tether to release $344 million in immobilized USDT
• The stablecoins are connected to Iran’s Islamic Revolutionary Guard Corps (IRGC), designated as sanctioned by U.S. Treasury officials
• Legal counsel Charles Gerstein is leveraging cryptocurrency platforms’ freezing capabilities to enforce decades-old terrorism judgments
• USDT’s centralized structure allows Tether to freeze, blacklist, and reallocate tokens — unlike decentralized cryptocurrencies like Bitcoin or Ether
• Gerstein has employed identical tactics in additional proceedings involving Arbitrum, the KelpDAO breach, and Railgun DAO privacy protocol

Individuals holding outstanding U.S. judicial awards connected to Iranian-sponsored terrorism have submitted a court filing requesting a Manhattan federal judge to compel Tether to release over $344 million in immobilized USDT.

The legal petition was lodged Thursday with the Southern District of New York. It focuses on stablecoins that Tether immobilized following the U.S. Treasury’s Office of Foreign Assets Control (OFAC) identification of two Tron blockchain addresses as property of Iran’s Islamic Revolutionary Guard Corps.

The petitioners represent survivors and relatives of those killed in attacks connected to Iranian-supported organizations. The group includes those who survived the 1997 Hamas suicide attack in Jerusalem. These individuals collectively possess billions of dollars in outstanding judicial awards against Iran.

The plaintiffs are requesting judicial intervention to compel Tether to immobilize the digital assets and redistribute an identical sum — 344,149,759 USDT — to a digital wallet managed by their attorneys.

Charles Gerstein, the attorney spearheading the litigation, has been developing a legal framework centered on utilizing cryptocurrency platforms’ integrated control mechanisms to obtain compensation for terrorism victims.

Why Tether’s Centralized Structure Creates Legal Opportunities

Unlike Bitcoin or Ether, USDT is controlled by a centralized entity. Tether possesses the technical capacity to immobilize wallet addresses, blocklist accounts, and under certain circumstances, eliminate balances and redistribute tokens to alternative addresses.

Gerstein’s legal position is direct: Tether has already immobilized the assets following OFAC sanctions. This demonstrates Tether possesses both the capability — and, according to the petitioners, the legal duty — to redirect those assets to the judgment holders.

This situation differs from proceedings involving stolen digital assets, where ownership legitimacy can be contested. In this instance, OFAC has already officially identified the wallets as IRGC property, an organization the U.S. government designates as a state terrorism sponsor.

The petitioners contend this identification renders the immobilized USDT “blocked property” of a terrorist entity, making it vulnerable to confiscation under federal statutes.

Broader Campaign Focused on Cryptocurrency Infrastructure

This represents not Gerstein’s initial effort to collect terrorism awards through cryptocurrency channels. He is simultaneously directing litigation concerning immobilized assets on Arbitrum connected to the KelpDAO security breach, which allegedly involves North Korea’s Lazarus Group.

In that proceeding, Gerstein contended that Ether immobilized following the breach represented North Korean assets. That position faces greater legal complexity, as the Aave platform disputed whether stolen assets ever legitimately became the perpetrators’ property.

The Tether proceeding, Gerstein maintains, presents fewer complications. The ownership matter has essentially been resolved through OFAC’s official designation.

He is simultaneously advancing another proceeding against Railgun DAO privacy protocol employing comparable methodology.

The underlying legal principle suggests that if cryptocurrency infrastructure can immobilize sanctioned holdings, judicial authorities may similarly possess authority to instruct those systems to reallocate the holdings to victims possessing enforceable awards.

As of the submission date, no judicial determination has been rendered. The proceeding remains active in the Southern District of New York.

Key Highlights

• Hana Bank acquires 6.55% ownership in Dunamu through $670M transaction with Kakao

• Major South Korean bank secures position in crypto infrastructure with Dunamu purchase

• Kakao reduces Dunamu ownership to 4.03% following the sale

• Transaction strengthens banking sector’s ties to South Korea’s leading crypto exchange platform

• Deal reflects accelerating convergence between traditional banking and digital asset markets

In a significant development for South Korea’s financial sector, Kakao has agreed to transfer a portion of its Dunamu ownership to Hana Bank for 1 trillion won, equivalent to approximately $670 million. This strategic move positions Hana Bank prominently within the nation’s rapidly expanding cryptocurrency ecosystem while establishing deeper connections between conventional banking institutions and digital asset infrastructure.

Kakao Reduces Dunamu Position to Raise Capital

Through its investment arm, Kakao Investment will transfer a 6.55% equity position in Dunamu to Hana Bank via an all-cash deal. Following the completion of this transaction, Kakao’s ownership will decline from 10.58% down to 4.03%. According to company statements, the divestment will provide capital resources for upcoming investment opportunities.

Upon closing in June, Hana Bank will emerge as the fourth-largest stakeholder in Dunamu. Bank representatives indicated the acquisition aligns with their strategic initiative to expand into innovative financial services. The deal provides Hana Bank with immediate access to the parent organization behind Upbit, South Korea’s dominant cryptocurrency trading platform.

Kakao’s relationship with Dunamu dates back to 2013, when the company initially operated as a content aggregation platform. The firm pivoted toward financial technology with the introduction of StockPlus in 2014, eventually launching Upbit in 2017, which quickly established itself as the country’s premier crypto exchange.

Hana Bank Accelerates Blockchain and Crypto Initiatives

Hana Bank has demonstrated growing commitment to cryptocurrency solutions and distributed ledger technology. The institution previously formed an alliance with Crypto.com this past March focused on facilitating stablecoin transactions for international tourists. The Dunamu acquisition represents a continuation of this comprehensive digital asset strategy.

The partnership extends beyond equity investment to include collaborative development of a Korean won-pegged stablecoin infrastructure. This initiative aims to enable payment processing, transaction settlement mechanisms, and various digital financial products. Furthermore, the deal positions Hana Bank alongside a cornerstone entity in South Korea’s crypto framework.

Traditional financial institutions across South Korea have accelerated their digital asset initiatives. Woori Bank announced a collaboration with MoonPay in April targeting a won-backed stablecoin initiative. Consequently, Hana Bank’s investment in Dunamu underscores intensifying rivalry among the country’s leading financial institutions.

Dunamu Strengthens Banking Partnerships Amid Expansion

Dunamu maintains a dominant position within South Korea’s cryptocurrency landscape through its operation of Upbit. The platform commands the largest share of domestic trading activity by volume. This success has transformed co-founders Song Chi-hyung and Kim Hyoung-nyon into billionaires.

This equity transfer comes as Dunamu prepares for a planned combination with Naver Financial. The all-stock merger arrangement values the resulting entity at approximately $13.6 billion. If completed, the consolidation would establish a comprehensive fintech powerhouse spanning payment systems, insurance products, securities services, and cryptocurrency operations.

Regulatory changes in South Korea have recently liberalized corporate cryptocurrency investment policies. Publicly traded corporations can now allocate up to 5% of their equity capital toward digital assets. Therefore, the Dunamu transaction exemplifies growing mainstream acceptance of cryptocurrency within Korea’s established financial infrastructure.