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Crypto ETFs are here to stay, downturn be damned

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Crypto ETFs are here to stay, downturn be damned

Despite a bearish cryptocurrency market, ETF issuers continue to push forward with new filings, betting that demand for digital asset funds will remain strong.

Summary

  • ETF issuers like Bitwise, ProShares, and 21Shares are advancing with new filings, including plans for Uniswap-linked and leveraged Bitcoin/Ether ETFs.
  • The crypto ETF market is crowded, with over 140 existing funds, 10 new launches this year, and more expected.
  • Bitcoin’s sharp price drop has led to significant losses for ETF buyers, with $1.5 billion withdrawn from Ether ETFs and over $3.5 billion from Bitcoin ETFs in the past three months.

This month, Bitwise Asset Management filed for a Uniswap-linked ETF, while ProShares sought approval for leveraged Bitcoin and Ether ETFs. 21Shares also resubmitted plans for funds based on Ondo and Sei, signaling progress in its efforts.

Todd Sohn, chief ETF strategist at Strategas, told Bloomberg that while firms like 21Shares and Bitwise remain committed to the long-term potential of crypto, ongoing poor performance could affect future flows.

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This comes amid a crowded market, with over 140 crypto-focused US ETFs already trading, and 10 more launched this year. A BNB staking ETF is expected soon.

Cryptos have faced renewed pressure after October’s selloff, with Bitcoin falling sharply, dragging smaller tokens down. Investors are stepping back as liquidity tightens and risk appetite wanes.

Data from Glassnode shows that buyers of U.S. spot-Bitcoin ETFs are sitting on average paper losses, having bought Bitcoin at around $84,100 per coin, while the price now hovers near $66,000. This has led to significant outflows, with over $1.5 billion withdrawn from Ether-focused ETFs and more than $3.5 billion pulled from Bitcoin ETFs in recent months.

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Charles Hoskinson confirms deal to onboard LayerZero on Cardano

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Charles Hoskinson confirms deal to onboard LayerZero on Cardano

Input Output CEO and founder Charles Hoskinson announced a deal to get LayerZero ported over to the Cardano blockchain during a keynote speech at Consensus Hong Kong on Thursday.

LayerZero is a blockchain aimed at powering institutional-grade markets that received investment from Citadel Securities on Wednesday.

The announcement comes alongside the rollout of Midnight’s mainnet, which was also revealed on Thursday morning.

Hoskinson, who was comically wearing a McDonalds uniform in a nod to the recent market downturn said: “The industry is not healthy. S*** is getting real. Twitter is a nuclear dumpster fire. Sentiment is at an all time low.”

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But he insisted it was a micro downturn, and “the macro remains bullish.”

“And to prove it, I’m excited to announce our partnership with LayerZero,” he said. “We’re bringing USDCx to Cardano with a launch date set, complete with broad wallet and exchange support. This means stablecoins with true privacy and immutability, powered by zero-knowledge tech. It’s institutional-grade, and it’s happening now — alongside Midnight’s mainnet rollout. Get ready, folks. This changes everything.”

UPDATE (Feb. 12, 2026, 02:21 UTC): Adds additional information and commentary from Charles Hoskinson.

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Paxful To Pay $4M For Moving Funds Tied to Criminal Schemes

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Paxful To Pay $4M For Moving Funds Tied to Criminal Schemes

Peer-to-peer crypto exchange Paxful has been ordered to pay $4 million after admitting it knowingly profited from criminals who used the crypto platform due to its lack of anti-money laundering checks.

The Justice Department said on Wednesday that Paxful was sentenced to pay the fine after pleading guilty in December to conspiring to promote illegal prostitution, knowingly transmitting funds derived from crime, and violating anti-money laundering requirements.

“Paxful profited from moving money for criminals that it attracted by touting its lack of anti-money laundering controls and failure to comply with applicable money-laundering laws, all while knowing that these criminals were engaged in fraud, extortion, prostitution and commercial sex trafficking,” said Andrew Tysen Duva, the assistant attorney general of the Justice Department’s Criminal Division.

Prosecutors said that from January 2017 to September 2019, Paxful facilitated over 26 million trades worth nearly $3 billion in value and collected more than $29.7 million in revenue.

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Source: Criminal Division

The Justice Department said Paxful had agreed that the appropriate criminal penalty was $112.5 million, but prosecutors determined the company didn’t have the ability to pay more than $4 million.

Paxful made millions from illegal prostitution ads

The Justice Department said Paxful marketed itself as a platform that didn’t require customer information and presented fake anti-money laundering policies that it knew “were not implemented or enforced.”

According to prosecutors, one of Paxful’s customers was the classified advertising site Backpage, which authorities shut down due to hosting ads for illegal prostitution.

“Paxful’s founders boasted about the ‘Backpage Effect,’ which enabled the business to grow,” the Justice Department said, adding that Paxful’s collaboration with Backpage and a similar site between 2015 and 2022 saw the crypto platform earn $2.7 million in profits.

Related: Crypto scam mastermind gets 20 years for $73M pig butchering scheme

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Paxful shut down its operations in November and, in a now-deleted blog post in October, said the decision was due to “the lasting impact of historic misconduct by former co-founders Ray Youssef and Artur Schaback prior to 2023, combined with unsustainable operational costs from extensive compliance remediation efforts.”

Youssef said in response to Paxful’s post that the company “should have closed down when I left the company two years ago.”