TLDR

• Circle executed a court-mandated freeze on $12.6M USDC stored within Zama’s privacy-focused smart contract
• The action originated from a class action lawsuit claiming Overnight Finance’s Maxim Ermilov misappropriated over $15M from treasury wallets
• Zama claims it was unexpectedly caught in the middle without prior notification of the freeze
• The entire contract pool was locked, preventing access to funds belonging to innocent Zama protocol users
• Blockchain investigator ZachXBT described the move as establishing a concerning precedent for freezing protocol contracts containing mixed user deposits

In the early hours of Saturday morning, Circle implemented a freeze on $12.6 million worth of USDC following a federal court directive to blacklist a smart contract operated by Zama, a privacy-focused protocol.

New: According to @zachxbt, @circle has frozen Zama’s confidential $USDC contract on Ethereum, locking 12.6M $USDC.

The move may be related to 12.4M $USDC deposited on May 11 by a wallet apparently linked to Overnight Finance, which recently faced allegations from holders of a… pic.twitter.com/r3uZQWPTBt

— SolanaFloor (@SolanaFloor) May 30, 2026

The action took effect at precisely 1:08 a.m. UTC on May 31, immobilizing 12,606,386 USDC tokens within the smart contract. Zama operates as an open-source cryptography company specializing in developing privacy-enhancing technologies for blockchain ecosystems.

Rand Hindi, CEO of Zama, revealed that his organization received zero advance notice before the freeze was executed. He characterized the contract as being “caught in a crossfire of another case.”

Background on the Overnight Finance Legal Action

At the heart of this matter lies Overnight Finance, a decentralized finance yield protocol responsible for creating the USD+ stablecoin alongside the OVN governance token. On May 28, three investment funds holding OVN tokens initiated a class action lawsuit in the U.S. District Court for the Northern District of California.

According to the legal filing, plaintiffs claim that Overnight Finance’s founder, Maxim Ermilov, transferred more than $15.77 million from shared treasury wallets shortly before a governance proposal achieved majority approval on May 11. Approximately $12.5 million of the transferred amount consisted of USDC, with most being deposited into Zama’s confidential smart contract infrastructure.

Ermilov has rejected these accusations. He maintains that OVN token holders possessed no legitimate authority to demand treasury fund distribution and characterized certain participants in the governance vote as “raiders.” According to his position, the wallets in question contained personal and team assets rather than communal treasury resources.

Ermilov further explained that transferring funds into Zama’s privacy system served to “hide balances from the general public to minimize personal security risks,” referencing recent kidnapping incidents targeting cryptocurrency holders.

On May 29, U.S. District Judge P. Casey Pitts issued a directive instructing Circle to freeze the USDC holdings in the specified wallet. Circle implemented the freeze later that same day.

Unintended Consequences for Zama Protocol Users

Due to the nature of Zama’s confidential USDC as a wrapper-based contract, blacklisting the address resulted in locking the complete pool instead of isolating a single user’s deposit. Consequently, other Zama platform users with no connection to the legal dispute found their assets frozen as well.

Hindi pointed out that more than 99% of the contract’s total value originated from the disputed deposit, as the contract had minimal usage prior to this transaction. In response, Zama has temporarily suspended its cUSDC, cUSDT, and cWETH contracts pending a thorough investigation.

“This is an example of collateral damage affecting a public smart contract due to the centralised architecture of the underlying asset,” Zama stated in an official communication.

Zama’s legal representatives confirmed they are actively working to segregate the flagged wallet address and reinstate access for users who should not be affected.

The plaintiffs informed the court of their willingness to provide funds to compensate innocent parties impacted by the freeze.

Questions Raised About Circle’s Blacklisting Practices

This incident contributes to mounting scrutiny regarding Circle’s wallet blacklisting methodology. Earlier in March, ZachXBT alleged that Circle improperly froze 16 wallets associated with legitimate commercial operations in relation to an unrelated sealed civil proceeding.

ZachXBT additionally claimed that Circle neglected to freeze approximately $420 million across 15 separate fraud and hacking incidents since 2022. This figure encompasses $232 million in assets stolen during the April 2026 Drift Protocol security breach, despite Circle allegedly having a six-hour opportunity to intervene.

A judicial hearing regarding the emergency restraining order has been scheduled for June 1, 2026.

Key Takeaways

• Monero employs ring signatures along with stealth addresses to ensure automatic privacy for all transactions
• Zcash leverages zk-SNARK technology to provide users with the choice between private and transparent transactions
• Bittensor operates as a decentralized artificial intelligence platform, emerging as a key player in the data ownership space
• Regulatory scrutiny has led several prominent cryptocurrency exchanges to delist Monero over compliance issues
• Growing concerns about AI surveillance and government monitoring could drive future demand for privacy-preserving cryptocurrencies

The conversation around privacy-focused cryptocurrencies has intensified in recent years. Let’s examine three prominent projects that long-term investors are monitoring closely.

While Bitcoin is frequently portrayed as providing anonymity, the reality is that nearly all Bitcoin transactions are visible and can be tracked through blockchain analysis. This transparency gap has fueled demand for digital currencies specifically engineered to shield user information, account balances, and transaction records from public view.

Within this emerging sector, three initiatives have captured significant attention: Monero, Zcash, and Bittensor. Each project employs distinct strategies for ensuring privacy and maintaining control over personal data.

Monero (XMR)

Monero debuted in 2014 with a fundamental design focused on transaction untraceability. The protocol incorporates technologies known as ring signatures and stealth addresses, which effectively conceal wallet identifiers, payment amounts, and participant identities.

Unlike many alternatives, Monero enables privacy automatically for every user. Each and every transaction receives identical protection measures, making it significantly more challenging to isolate individual users compared to platforms where privacy features are merely optional.

Over the last ten years, Monero has earned considerable credibility, supported by a dedicated user base and ongoing development efforts. Advocates argue it delivers one of the most straightforward value propositions in cryptocurrency: confidential person-to-person transactions.

That said, the project isn’t without challenges. Multiple leading cryptocurrency exchanges have delisted Monero in response to regulatory enforcement related to money laundering prevention requirements. Continued government scrutiny of privacy-focused tokens could further restrict accessibility for mainstream investors.

Nevertheless, many cryptocurrency proponents anticipate rising demand for financial confidentiality. Should this prediction materialize, Monero stands positioned as a leading option within its category.

Zcash (ZEC)

Zcash arrived on the scene in 2016, introducing a distinct privacy mechanism called zk-SNARKs, which represents sophisticated zero-knowledge proof cryptography. In contrast to Monero’s approach, Zcash makes privacy a user choice rather than a mandatory feature.

This adaptability is considered beneficial by certain observers. Both individuals and enterprises can elect to conduct either confidential or visible transactions, potentially simplifying regulatory compliance when circumstances require it.

Zcash emerged as an early innovator in zero-knowledge proof technology, which has subsequently evolved into one of the most prominent subjects in blockchain innovation. Today, this technology is being investigated for applications in blockchain scalability solutions, digital identity systems, and decentralized web platforms.

Despite its technological merits, Zcash has encountered difficulties with user adoption and community expansion. Its market performance has also left numerous investors dissatisfied over recent years. The project’s future trajectory hinges substantially on whether zero-knowledge cryptography achieves broader acceptance.

Bittensor (TAO)

Bittensor doesn’t fit the conventional privacy coin mold, yet it’s increasingly associated with initiatives centered on data sovereignty and distributed artificial intelligence systems. The platform seeks to establish an open ecosystem where machine learning algorithms can share computational intelligence and receive token incentives.

This initiative exists at the convergence of multiple emerging trends: artificial intelligence advancement, decentralization principles, open-source development, and individual data rights. With major technology corporations accumulating vast quantities of user information, certain investors view decentralized AI networks as a viable alternative to centralized data collection.

Bittensor also capitalizes on the ongoing enthusiasm surrounding AI investment. This association provides greater market traction compared to legacy privacy coins lacking connections to the artificial intelligence sector.

The trade-off involves heightened speculation. The underlying technology presents considerable complexity, and widespread real-world adoption remains unverified.

Current Landscape

Monero maintains the most established reputation as a dedicated privacy cryptocurrency. Zcash provides an entry point into zero-knowledge proof innovation. Bittensor delivers investment exposure to decentralized AI infrastructure and data sovereignty concepts.

Each of these three projects carries substantial investment risk. However, for those prioritizing digital privacy and personal data control, these represent the most frequently mentioned options in current market discussions.

Bitcoin traded near $73,700 on May 31 as traders watched whether the market could defend short-term support while analysts debated a possible rebound and a deeper cycle low later in 2026.

Bitcoin price data showed BTC trading near $73,713, up 0.28% over 24 hours. The asset remained down 4.18% over seven days, while 24-hour trading volume stood near $16.09 billion.

The 24-hour range stayed tight, with Bitcoin moving between $73,469 and $74,110. The narrow range showed that traders had not yet pushed BTC into a clear breakout or breakdown.

The market cap stood near $1.47 trillion, keeping Bitcoin ranked as the largest crypto asset by market value. However, short-term chart signals remained weak as buyers struggled to build strong follow-through.

Volume stood at about 2.73K BTC, suggesting limited participation behind the latest move. That makes the current pullback less aggressive, but it also shows that buyers have not returned with enough strength.

A stronger recovery would need higher volume and a move back above the $78,000 to $80,000 resistance area. Until then, Bitcoin remains locked between near-term support and overhead selling pressure.

Analysts watch $71.4K support and $78.2K resistance

Market analyst Marcus Corvinus said Bitcoin is approaching a decisive point. He noted that the 30-day accumulation cohort has moved underwater, with its $78,200 cost basis now acting as resistance.

That means any rebound into the $78,200 area could meet selling from holders who want to exit near breakeven. A clean move above that zone would be the first sign that buyers are taking back control.

On the downside, Corvinus pointed to the 1-month to 3-month holder cost basis near $71,400. He called that level the strongest near-term support because this group still holds unrealized profits.

If $71,400 holds, Bitcoin bulls may still have a base for another recovery attempt. If it fails, the market could face a deeper move as short-term holders lose confidence.

Ali Martinez offered a more near-term bullish signal. He said Bitcoin had printed a TD Sequential buy signal and added, “I think a rebound toward $75,000 could be in the cards.”

That setup gives traders a short-term recovery level to watch. However, a move to $75,000 would still leave Bitcoin below the heavier $78,000 to $80,000 resistance zone.

Cycle-bottom calls move focus to late 2026

Crypto Tice presented a wider cycle view, arguing that every Bitcoin cycle has followed a three-year bull market and one-year bear market pattern. The account said that if the pattern holds, the next major low could arrive in late 2026.

The post warned that traders calling a bottom now may be early. It said previous market participants made similar calls before the 2018 low near $3,200 and the 2022 low near $15,500.

The account wrote, “The cycle doesn’t care about your conviction.” It also said the cycle does not care about ETFs, institutional adoption or market narratives.

Earlier reports have shown similar caution from on-chain analysts. CryptoQuant CEO Ki Young Ju recently said Bitcoin’s bear market could last until early 2027, citing an on-chain profitability model that has tracked prior downturns.

That view does not cancel a short-term rebound. It suggests that any bounce may still occur inside a wider weak market unless long-term demand returns and selling pressure fades.

Iran risk and weak indicators keep pressure on BTC

Geopolitical risk remains another market factor. Bitcoin recently rebounded toward $74,000 after president Trump announced the end of the Hormuz naval blockade, easing some pressure from weeks of Iran-related headlines.

However, tensions have not fully disappeared. U.S. sanctions on Iran’s military-linked oil trade and uncertainty around peace talks continue to keep energy markets and risk assets sensitive to new headlines.

Bitcoin’s technical indicators also remain cautious. The Accumulation/Distribution indicator stands near 12.68 million and has moved mostly flat to slightly lower in recent months.

Earlier in 2025, the indicator rose alongside price. Since late 2025, it has weakened, showing that steady accumulation has not fully returned.

The RSI sits at 37.47, below the neutral 50 level and below its signal line at 42.41. That shows bearish short-term momentum, though BTC has not yet entered deeply oversold territory.

For now, Bitcoin’s setup remains clear. Bulls need to defend $71,400 and push BTC above $78,200 to show stronger demand. If support breaks, analysts may give more attention to the late-2026 cycle-low scenario.

Vietnam’s Ministry of Finance has proposed letting small and medium-sized enterprises use digital assets, virtual assets and intellectual property as collateral for bank loans.

The proposal is part of a draft revised Law on Support for SMEs, which is open for public consultation, according to a Friday report by Vietnam News. Under the framework, businesses could secure loans using future-formed assets, property rights, intangible assets and digital or virtual assets.

SMEs and household businesses account for more than 98% of all enterprises in Vietnam, yet outstanding loans to the segment represent only around 20% of total bank credit in the economy, per the report. The Ministry attributed the imbalance to a lack of eligible collateral, limited financial transparency and the small capital base of most SMEs.

Many startups and technology-driven companies hold valuable software, patents or intellectual property but have no land or physical assets to pledge, the report claimed. The new proposal marks a policy shift that could open up credit access for thousands of startups and tech companies currently locked out of the formal lending system.

Related: Bithumb enters Vietnam crypto license race with SSI Digital deal

Vietnam wants banks to lend on business plans

The draft also pushes credit institutions to expand lending based on credit ratings, business plans, cash flows and market potential, rather than fixed assets alone.

Beyond collateral reform, the draft law outlines incentives for green and sustainable businesses, including preferential access to credit guarantees, concessional financing and interest-rate support for circular economy and energy-saving projects. Tax incentives and support for ESG compliance reporting are also included.

The draft is currently open for public consultation.

Vietnam has become one of the most active crypto markets in the world, ranking fourth in Chainalysis’ 2025 Global Crypto Adoption Index behind India, the United States and Pakistan.

Global cryptocurrency adoption index. Source: Chainalysis

Related: Vietnam arrests ONUS-linked suspects in alleged crypto fraud case

Vietnam eyes Q3 launch of regulated crypto market

As Cointelegraph reported, Vietnam could see its first regulated crypto market activity as early as the third quarter of 2026, Deputy Minister of Finance Nguyen Duc Chi said at the Digital Trust in Finance 2026 forum.

In March, regulators opened a licensing pathway for domestic crypto trading platforms earlier this year, with five companies, including affiliates of Techcombank, VPBank and LPBank, having already passed an initial qualification round to launch the country’s first regulated exchange.

Magazine: Guide to the top and emerging global crypto hubs — Mid-2026

TLDR

• Ethereum currently trades around $2,024, battling to maintain the crucial $2,000 threshold
• Major holders with 100,000+ ETH have increased positions to 17.41 million ETH, reaching a nine-week peak
• Market observer Ted cautions that spot market interest is declining while ETFs experience redemptions, with rallies quickly reversed
• Publicly-traded Bit Digital purchased 8,568 ETH valued at approximately $20 million during recent price weakness
• Standard Chartered continues projecting a $40,000 long-term ETH valuation despite present market challenges

As of May 31, 2026, Ethereum is changing hands near $2,024, maintaining position barely above a pivotal support threshold that market participants are monitoring intensively. Recent trading activity has been predominantly range-bound following several days of sharp price swings around the psychologically important $2,000 mark.

Market sentiment appears divided. While near-term technical indicators suggest vulnerability, blockchain analytics reveal a contrasting picture beneath the surface action.

Market analyst Ted, sharing insights via X, observed that while ETH remains above the $2,000 threshold, the current configuration appears unstable. His analysis highlights diminishing spot market activity, negative ETH ETF flows, and consistent rejection of upward price attempts. According to his assessment, without a decisive close above $2,050, the probability of further downside movement remains substantial.

The $2,000–$2,050 range has emerged as the primary battleground on near-term price charts. Should buyers successfully protect this area, ETH might challenge the $2,100 level. A breakdown would likely target $1,994 initially, with deeper support positioned around $1,900–$1,850.

Major Holders and Corporate Entities Continue Accumulating

Despite sideways price movement, significant stakeholders have been discreetly expanding their ETH positions. Blockchain intelligence from Santiment indicates that addresses containing a minimum of 100,000 ETH have expanded their collective balance to 17.41 million ETH. This represents the strongest accumulation level observed in more than two months. These large holders now control 22.03% of Ethereum’s available supply.

Corporate purchasing activity remains robust as well. Nasdaq-traded company Bit Digital acquired an additional 8,568 ETH valued near $20 million, elevating its complete ETH treasury beyond 158,000 ETH. This purchase occurred precisely during the recent price decline.

Reports indicate that Bitmine’s Tom Lee has also acquired $50 million in ETH, further strengthening the accumulation thesis at present valuation levels.

This week, Standard Chartered reiterated its long-range $40,000 ETH price projection, emphasizing expansion in tokenized traditional assets and decentralized finance applications as catalysts not yet reflected in current market pricing.

Critical Price Zones Under Observation

Examining the ETH/BTC trading pair, Ethereum has experienced declining relative performance versus Bitcoin starting in August 2025. The ratio has now arrived at a significant long-term support area, with market participants anticipating a potential reversal. Analyst Daan Crypto Trades observed that previous ETH/BTC rallies were partially driven by substantial purchasers. Absent a new trigger, any recovery trajectory may develop gradually.

Trader Tardigrade identified that Ethereum is forming a pattern of ascending lows spanning multiple market cycles, a technical formation that has traditionally preceded significant recoveries. While the current pattern awaits confirmation, comparisons to previous cycle troughs maintain longer-term optimistic scenarios.

ETH faces overhead resistance at $2,050, $2,100, and $2,200, with $2,500 representing a broader objective should bullish momentum materialize. Concerning downside risk, $1,994 and $1,850 constitute the price zones attracting greatest trader attention.

Bit Digital’s most recent treasury acquisition of 8,568 ETH, executed during the ongoing price weakness, represents the latest documented institutional purchase activity.

TLDR

• Bitcoin currently trades around $73,800, registering approximately 3% decline over the last seven days.
• Crypto analyst Michael van de Poppe identifies $71K as critical support level; maintaining this zone could propel BTC toward $76,600.
• Bitcoin spot ETFs have recorded ten straight days of capital exodus, with cumulative outflows surpassing $2.97 billion starting May 15.
• Economic forecaster Timothy Peterson anticipates Bitcoin may climb through summer months but expects peak around late July.
• Technical analyst Ali Charts identifies TD Sequential buy indicator on Bitcoin charts, hinting at possible bounce to $75,000 level.

Bitcoin is currently positioned near the $73,800 mark following a dip to approximately $72,000 earlier in the week—a seven-week low. This downward movement coincided with escalating geopolitical friction involving the United States and Iran, which dampened investor appetite for risk assets. The leading digital currency has shed roughly 3% in value across the previous week.

While BTC has bounced back from its yearly bottom around $60,000 recorded in early February, market participants continue debating whether that low marked the cycle’s floor or merely represents a temporary pause ahead of further declines.

Michael van de Poppe, who founded MN Trading Capital, characterized Bitcoin’s current position as a “pivotal level.” According to his analysis, failure to maintain the $71,000 zone as support could send prices tumbling below $65,000. Yet he emphasized that this technical configuration differs significantly from February’s breakdown pattern.

Van de Poppe further noted that successfully defending current levels could enable Bitcoin to surge toward $76,600. Such an upside breakout would probably catalyze a broader rally across alternative cryptocurrencies, he suggested.

ETF Outflows Signal Market Pressure

Bitcoin spot exchange-traded funds have now experienced capital withdrawals for ten consecutive trading sessions. Aggregate net outflows have surpassed the $2.97 billion threshold since May 15. During this identical timeframe, total ETF holdings have contracted from $104.29 billion down to $94.17 billion.

Blockchain analytics platform Santiment Intelligence suggested that continued ETF outflows might indicate the market is approaching a bottom formation.

Analyst Ali Charts shared on X that Bitcoin has just activated a TD Sequential buy indicator, commenting: “I think a rebound toward $75,000 could be in the cards.”

Trader Daan Crypto Trades similarly highlighted on X that bulls must recover the $74,200 threshold, while defending $72,700 remains essential on the downside.

Bearish Case Still on the Table

Not all market observers believe the bottom has been established. Seasoned trader Peter Brandt indicated in March that $60,000 might not represent the year’s nadir, projecting Bitcoin could retest or dip marginally beneath that threshold during September or October.

Ki Young Ju, CEO of CryptoQuant, cautioned that Bitcoin’s present downtrend might extend into early 2027. He referenced historical profit-taking patterns that generally produce approximately 18 months of subdued performance before sustainable recovery materializes. According to his assessment, the bearish phase commenced in October 2025 as market participants secured profits from the preceding bull run.

Economist Timothy Peterson projected Bitcoin may edge higher throughout summer, though characterized potential gains as “relatively lackluster” and forecast prices could reach their zenith during July’s final week.

CryptoQuant’s Bull-Bear Cycle Indicator flipped positive earlier this month for the first instance since 2023. Bitcoin presently maintains its position just above the $72,700 support threshold that analyst Daan Crypto Trades identified as essential to monitor.

Key Highlights

• Trader anxiety surrounding XRP reached a three-week peak, with the bulls-to-bears ratio dropping to approximately 1.10:1.0 by May 25.
• Holders operating on 30-day timeframes are experiencing average unrealized losses approaching 47%.
• The MVRV ratio for the 30-day period has declined beneath December 2020 benchmarks, entering what analytics firm Santiment identifies as an “extreme opportunity zone.”
• United States-based spot XRP exchange-traded funds accumulated $11.88 million on May 29, contributing to $35 million in total inflows between May 20-29.
• During this identical timeframe, Bitcoin ETFs experienced $1.70 billion in outflows while Ethereum ETFs recorded $309 million in withdrawals.

The digital asset has maintained stability around the $1.35 price level despite trader anxiety climbing to its most elevated point in nearly three weeks. Blockchain metrics and institutional fund flow data present contrasting narratives regarding the token’s current market position.

According to Santiment analytics, the sentiment ratio for the cryptocurrency declined to roughly 1.10:1.0 on May 25. This movement positioned the asset within what market observers categorize as the “FUD Zone”—a territory characterized by widespread fear, uncertainty, and doubt across social platforms.

Previous instances of entering this zone have frequently preceded upward price movements. The underlying rationale is straightforward: when the majority of market participants express fear, selling momentum typically diminishes while accumulation opportunities increase.

Despite prevailing negativity, the token has avoided significant downside breaks. The price has successfully defended critical support zones hovering around $1.34.

Market analyst Ali Charts highlighted this specific $1.34 threshold. “I’m monitoring the lower boundary of the ascending channel at $1.34 as a potential accumulation area for XRP,” Ali Charts stated on the social platform X. “Should this level maintain, price objectives rest at $1.37 and $1.40.” The observation emerged as market participants assessed whether the ongoing consolidation phase would resolve upward.

30-Day Holders Face Substantial Unrealized Losses

Santiment metrics reveal that market participants trading on 30-day timeframes are underwater by an average of 47%. A significant portion appears to have liquidated positions near local bottoms following the surrender of profits accumulated during late 2024 and early 2025.

The 30-day Market Value to Realized Value (MVRV) ratio—a metric tracking unrealized gains or losses across the network—has descended below its December 2020 reading. Santiment has designated this territory as an “extreme opportunity zone,” terminology applied when the ratio touches historically depressed levels that have historically preceded price recoveries.

Santiment also identified a notable event on X. The year’s largest exchange deposit occurred Thursday—exceeding 22.80 million XRP tokens transferred to trading platforms. However, in subsequent days, 25.24 million XRP departed from exchanges. Santiment observed this substantial exchange movement coincided with a local price bottom, and that trading values have appreciated roughly 5% following this apparent capitulation event.

Institutional XRP Products Show Persistent Accumulation

While fear metrics paint a pessimistic picture, institutional investment vehicle flows demonstrate the opposite trend.

U.S.-registered spot XRP ETFs registered $11.88 million in net accumulation on May 29. Bitwise commanded the largest share at $7.36 million, with Canary’s XRPC contributing $2.38 million and Franklin’s XRPZ adding $2.14 million.

Between May 20 and May 29, these XRP investment products attracted cumulative inflows totaling $35 million. During this identical window, Bitcoin ETFs hemorrhaged $1.70 billion while Ethereum ETFs experienced $309 million in redemptions.

Aggregate assets under management across U.S. XRP ETFs currently approach $1.12 billion, with total net inflows since inception reaching $1.42 billion.

Spot Bitcoin ETFs documented $125.31 million in withdrawals on May 29, extending a redemption streak to ten consecutive trading sessions.

An outstanding development from October 2025 also lingers in the background. Bloomberg previously disclosed that Ripple Labs was spearheading an initiative to secure at minimum $1 billion through a special purpose acquisition company to amass XRP within a treasury structure. CoinDesk has contacted Ripple requesting confirmation, though no response has been furnished.

Gravity Bridge, a decentralized blockchain facilitating cross-chain transfers between Ethereum and Cosmos, was reportedly drained of roughly $5.4 million, prompting validators to halt the bridge.

Onchain analyst Specter first flagged the unusual outflows in a Saturday post on X, revealing that the bridge contract key may have been compromised. “It appears the Gravity Bridge contract key may have been compromised, resulting in the theft of $5.4M,” Specter wrote.

Security firm PeckShield also confirmed the exploit in a post, breaking down the stolen assets as approximately $4.3 million in USDC (USDC), 274 Wrapped Ether (WETH) worth roughly $553,000, $434,000 in USDt (USDT) and 14.164 PAX Gold (PAXG) tokens worth about $64,000.

Source: PeckShield

PeckShield reported that a portion of the haul had already been laundered through instant-swap service ChangeNow and through Binance, while the theft wallet was still holding around 2,102 ETH worth approximately $4.23 million at the time of its report.

Related: StakeDAO exploit creates 5.4 trillion vsdCRV but nets only $91K

Gravity Bridge acknowledges attack

Gravity Bridge acknowledged the incident on X without detailing what went wrong. “There was an unfortunate incident on Gravity,” the team wrote, adding that validators “should halt their validators and orchestrators while this incident is being investigated.” In a follow-up post, the team confirmed the bridge had been halted.

Gravity Bridge allows tokens to move freely in both directions, from Ethereum to Cosmos wallets and DEXs like Osmosis, and from Cosmos-based blockchains back to Ethereum platforms like Uniswap. Unlike bridges that rely on centralized multi-signatures or private node groups, it uses its full validator set to authorize transfers, making it one of the more decentralized bridge designs in the space, according to its website.

Gravity Bridge’s native token is Graviton (GRAV), used by validators to secure the bridge. The token is currently trading at $0.0007053, down 4% over the past day, according to data from CoinMarketCap.

Related: ‘All DeFi unsafe’ claim sparks AI security debate after April hack surge

Bridge exploits are spooking institutions

As Cointelegraph reported, JPMorgan analysts have flagged bridge security as a major challenge in an April research note, questioning whether DeFi can scale to meet institutional demand. The concern comes amid the recent Versus-Ethereum bridge attack, which was the eighth major bridge exploit of 2026, with cumulative losses across those incidents reaching $328.6 million.

Following the KelpDAO breach in April, which drained roughly $290 million and was attributed to North Korea’s Lazarus Group, total value locked across DeFi fell from nearly $100 billion to around $86 billion in just two days, with outflows hitting pools that had no direct exposure to the compromised assets.

Asia Express: North Korea denies crypto hacks, Upbit’s bank tests Ripple