HTX has been hit with sanctions from the European Union and the United Kingdom’s Foreign Commonwealth & Development Office.

In the wake of these measures, TRM Labs highlighted that HTX had started rapidly rotating through addresses on-chain, making it harder to identify its holdings.

This problem was compounded by HTX choosing to change its proof-of-reserves, obscuring the location of its reserves in a new “ThirdParty” category that’s supposed to describe funds held at third-party custodians.

HTX claims that users can still verify the funds by reaching out to the custodians in question, but HTX has failed to respond to our requests for the identity of that custodian.

Read more: HTX moved $1.3 billion from reserves to undisclosed ‘ThirdParty’

Before these transitions, HTX published a proof-of-reserves that contained a variety of addresses.

Protos has attempted to track the stETH in one of those addresses to its final destination and believes that this path may revealing something about how HTX has been functioning.

Let’s start with the May 1 proof of reserves, which noted there were 71,853.22 stETH, at today’s price worth about $135 million, in the address 0x18709e89bd403f470088abdacebe86cc60dda12e.

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On May 30, shortly before HTX was due to generate its June proof-of-reserves where funds were moved to “ThirdParty,” these funds were moved to 0x7C103bbAE0DA51AE929dE97A98633668ddE80d04.

Moments later, they were transferred to 0x8fCA4adE3a517133fF23ca55CdAea29C78C990b8, an address labeled on Etherscan as Poloniex 7.

Shortly after, they were transferred again to 0x29065a4C1f2F20d1E263930088890d6F49Fe715a, an address that Etherscan labels as Poloniex 10.

Finally, moments later, they were transferred to 0x176F3DAb24a159341c0509bB36B833E7fdd0a132, an address labeled on Etherscan as Poloniex 9.

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This address, 0x176F3DAb24a159341c0509bB36B833E7fdd0a132, used to be labeled as “Justin Sun 4” on Etherscan before being listed as a Poloniex address.

This pattern of transactions shows a large quantity of funds moving from HTX to a Poloniex address where they have been commingled with the Poloniex reserves.

Read more: Poloniex and the $1.3B bitcoin question

The wrapped BTC wrinkle

This isn’t the first time that HTX has relied heavily on Poloniex to hold certain assets.

Often, more than half the BTC held at HTX has been in a tokenized form, specifically a tokenized form that seemed to be held by Poloniex.

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This often represented hundreds of millions of dollars worth of value.

Poloniex was unwilling to disclose the addresses where it presumably (hopefully) holds that BTC to Protos.

Got a tip? Send us an email securely via Protos Leaks. For more informed news and investigations, follow us on X, Bluesky, and Google News, or subscribe to our YouTube channel.

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The CLARITY Act’s delay until September could briefly pressure crypto prices before removing a major source of uncertainty, according to Bitwise CIO Matt Hougan.

What happened

Senate leaders have postponed consideration of the CLARITY Act until September, ending efforts to advance the crypto market structure bill before the August recess.

Senate Majority Leader John Thune confirmed that the chamber would not vote on the legislation before lawmakers left Washington. He said the bill would be prepared for consideration after senators return.

The delay followed several days without a cloture filing, the procedural step needed to limit debate and move toward a floor vote. As reported by crypto.news, Thune filed cloture on spending legislation, nominations and a college sports bill but not the CLARITY Act.

Bitwise Chief Investment Officer Matt Hougan said the delay could produce a brief negative market reaction as traders adjust their expectations.

“If the Polymarket odds break solidly lower into the teens at least so we can put the uncertainty behind us,” Hougan wrote.

Hougan said crypto prices could “wobble for a minute” before the market potentially recovers during the fall.

Why the CLARITY Act delay matters

The CLARITY Act would establish a federal market structure for digital assets and divide oversight responsibilities between the Securities and Exchange Commission and the Commodity Futures Trading Commission.

For U.S. crypto companies and investors, the bill could replace parts of the current enforcement-led system with statutory rules covering token classifications, trading platforms and digital-asset intermediaries.

However, Republicans need Democratic support to advance it. The Senate’s cloture threshold requires 60 votes, while Republicans hold 53 seats. That means at least seven Democrats must support the procedural motion if every Republican votes in favor.

Negotiations have focused on ethics restrictions for elected officials and their families, illicit-finance safeguards, stablecoin rewards and protections for noncustodial software developers.

Sen. Cynthia Lummis said lawmakers had spent 11 months working on the legislation and continued negotiating daily. Crypto.news reported that Lummis had pushed for a vote before the recess but acknowledged that several provisions remained unresolved.

Sen. Elizabeth Warren also said she supports passing crypto legislation but opposes the current CLARITY Act. She cited concerns involving political conflicts of interest, consumer protection, national security and financial stability.

Crypto market reaction remains limited

Crypto prices showed no immediate broad sell-off following the delay. Bitcoin remained above $64,400, while Ethereum held above $1,900 and XRP traded near $1.05 at the time covered by the initial report.

Prediction markets had already priced in much of the legislative risk before Thune confirmed the postponement. Polymarket’s probability of the bill becoming law in 2026 fell from above 70% earlier in the year to around 17% as the recess approached.

That decline followed repeated Senate scheduling setbacks. Crypto.news previously reported that the bill was absent from the Aug. 4 floor schedule, while no cloture motion had been filed.

Hougan’s comments suggest another drop into the teens could bring a final repricing of the near-term legislative outlook. His view differs from a warning issued earlier in the week by Bernstein, which said a failed vote or delay could trigger another crypto sell-off before a later recovery.

What Comes Next for the CLARITY Act

Senators are expected to continue negotiating during the August recess before returning in September.

Thune has said the bill will be placed near the top of the Senate agenda, but lawmakers must still reach a bipartisan agreement, file cloture and secure 60 votes before beginning full consideration.

The Senate could also amend the House-passed version. Any changes would require the House to approve the revised text before the bill could reach President Donald Trump.

A crowded September calendar and the approaching midterm elections leave lawmakers with a narrower window. Until a bipartisan deal or cloture filing emerges, passage in 2026 will remain uncertain.

In light of the catastrophic low-entropy bug in Coldcard hardware wallets, linked to publicly observed thefts beginning on July 30, Bitcoin holders have started to re-evaluate the trust assumptions in their hardware wallet setups. 

How Coldcard’s entropy flaw worked

The Coldcard devices were equipped with apparently functional STM32 “true random number generators” (TRNGs) that rely on physical processes to produce an unguessable seed phrase.

However, after Coldcard creator NVK decided to initiate a firmware rewrite to switch from a GPL-licensed free software model to a read-only model, a serious vulnerability appears to have been introduced.

Starting with firmware version 4.0.1, released in March 2021, the device used MicroPython’s Yasmarang PRNG instead of properly using the STM32 hardware RNG.

Random number generation is an unsolvable problem in computer science, which is why the generation of secure, unguessable private keys always has to rely on external physical processes to a degree. 

The use of the Yasmarang PRNG was widely characterized by analysts in the space as a pre-programmed fallback. However, Coinkite has now disputed this characterization in a recent X post: 

Coinkite estimated that Mk2 and Mk3 devices generated seeds with 40 bits of entropy, while the Mk4, Mk5 and Q achieved around 70 bits. Both are well short of the 128 bits required for a secure 12-word seed phrase.

Ever since then, attackers have been successfully brute-forcing private keys, stealing over $100 million worth of BTC. How likely a wallet is to be found depends on whether or not additional dice entropy was added, or a BIP-39 passphrase and non-standard path were used. 

Related: Coldcard hackers transfer 64 BTC and 200 ETH to cryptocurrency mixers

Since then, James O’Beirne has set up a website with honeypot addresses, titled cktripwire,  in order to estimate which types of wallets attackers are effectively sweeping.

Honeypots tracked by cktripwire. Source: cktripwire.com

How physical entropy saved some wallets

The Coldcard exploit has once again painfully driven home one of the community’s core principles: Don’t trust, verify.

Those users who did not rely on an opaque piece of engineering to generate entropy for the most security critical part of the process, but used a sufficient number of dice throws, saved their coins from the exploit. 

Rolling dice is a simple, visibly transparent process an ordinary user can audit themselves and understand intuitively. Verifying the TRNG, on the other hand, would require detailed physical inspection of the electronics and examination of the firmware.   

While some have used recent events as a pretext to declare the end of self-custody, following this best practice leaves very few options for a remote attacker.

If the seedphrase is generated through physical entropy without relying on the security of the hardware wallet, the only true single point of failure in wallet generation is removed.

The xpub and receiving addresses derived from the seed can be cross-checked by importing it into other devices.

Nonce exfiltration through an airgap can also be caught by checking if two devices generate the same RFC 6979-compliant signature when given an identical unsigned transaction. 

Secure entropy generation is thus the absolute prerequisite for a secure wallet. Various methods and proposals for generating it have been making the rounds on X since the Coldcard exploit was made public. 

The most popular method is to cross-check the device’s ability to correctly convert die faces into a BIP-39 seedphrase by applying a SHA-265 hash. Using upwards of 100 dice throws then suffices to generate entropy for a 24-word seed. 

Simple paper methods, such as the table published by Bitbox, partition the space of BIP-39 seed words so that a combination of six dice rolls and a coinflip can directly be assigned a seed word without using electronics. 

More sophisticated templates such as the codex32 dice de-biasing worksheet use a van Neumann extractor that can be computed by hand to generate a secure seed phrase even with biased dice.

An alternative to throwing dice is to print out the BIP-39 seed words, cut them up into equally sized small pieces of paper, shuffle them thoroughly and then draw random 24 words. Products such as Seedsticks or Entropia make this more convenient and robust.

Magazine: Do the Coldcard attacks mean all hardware wallets are now insecure?

Ethereum researchers just wanted to reduce staking incentives. Instead, they sparked one of the biggest debates over the network’s economics since the Merge.

Ethereum Improvement Proposal EIP-8363, or “Tapered Issuance Burn,” would gradually reduce staking rewards as more and more Ether is locked up to secure the network — eventually cutting new protocol issuance to zero once 50% of ETH’s supply is staked.

Its authors, including Ethereum Foundation’s Justin Drake and Ethereum Community Conference (ETHCC) co-founder Jerome de Tychey, argue that Ethereum has reached the point where additional staking provides diminishing security returns, while diluting holders who choose not to stake.

In other words: Ethereum should stop paying for security it no longer needs.

There’s just one problem, a lot of people hate the idea.

From DeFi builders to staking providers and institutional investors, critics argue it could weaken decentralization, disrupt Ethereum’s lending markets and undermine confidence in the network’s monetary policy. As Ether.fi founder Mike Silagadze puts it:

“This is so disappointing on every level. […] This is bad for decentralization, this is bad for Ethereum adoption, and this is bad for the credibility of the network.”

Dr. Steve Berryman, Bitwise’s head of client partnerships for Ethereum, tells Magazine:

“Institutional adoption requires certainty and playing with the issuance at the margin would cause uncertainty and institutions hate uncertainty.”

So is Ethereum really paying too much for security, or is EIP-8368 a solution in search of a problem?

Is Ethereum over-staked?

Ethereum currently has around 41.5 million ETH staked, earning 2.67%, and representing 34.07% of the entire supply, according to the Ethereum Validator Queue.

EIP-8363, Tapered Issuance Burn. Source: Jerome de Tychey

While more ETH locked up generally makes the network harder to attack, EIP-8368’s authors argue those security gains become increasingly marginal while Ethereum continues issuing rewards to validators.

EIP-8363 would gradually remove that incentive, and the authors argue Ethereum should stop subsidizing additional staking once the network is sufficiently secure.

Yet not everyone agrees that the problem even exists in the first place. It’s certainly true that the amount staked has increased substantially in 2026, up 15% since the start of the year.

Berryman argues that market forces are already slowing participation without the need to change Ethereum’s issuance policy.

“We will come to a natural ceiling probably by the end of this year,” he says, arguing that yields falling to around 2% are unlikely to attract significantly more ETH to be locked up in staking. “People need a certain amount of liquidity,” he says.

Related: Ethereum Foundation adds SEAL 911 co-founder to board as privacy focus grows

Berryman says recent growth has largely been driven by institutional entrants such as Bitmine and BlackRock, but argues that once those players complete their staking allocations, participation is likely to plateau again.

Source: Validatorqueue.com

Ethereum commentator Leo Lanza, who also opposes the proposal, challenges the core assumption that issuance on Ethereum represents a meaningful “stealth tax” on non-stakers.

Ethereum’s annual inflation remains below 1%, he says, arguing that even gold, widely viewed as the world’s premier monetary asset, expands its supply by roughly 1% to 2% annually:

“The free market already solves this […] Let the market adjust.”

Could the cure be worse than the disease?

Supporters of EIP-8368 argue the change would curb unnecessary issuance and discourage staking from becoming overly concentrated among large custodians and liquid staking providers. But critics say the proposal risks creating bigger problems than it’s trying to solve.

Greg Koumoutsos, technical research lead at the Lido Labs Foundation, says today’s staking ratio of around one-third of ETH supply does not appear unhealthy, though he agrees it is reasonable to think proactively about excessive staking.

More importantly, he argues the proposal oversimplifies what Ethereum’s issuance is actually paying for:

“Ethereum is not only paying for slashable ETH; it is paying for decentralization, operator diversity, censorship resistance, and network resilience.”

Koumoutsos says lower issuance is not automatically a better security policy unless those broader trade-offs are also taken into account.

Another factor to consider is that liquid staking is now deeply integrated into Ethereum’s DeFi ecosystem, and staking derivatives are widely used as collateral and in lending and yield strategies.

“It will obviously kill a huge chunk of DeFi which is built around the staking ecosystem,” Silagadze argues.

Stani Kulechov, founder of Aave, Ethereum’s largest decentralized lending protocol, says that reducing staking rewards risks undermining that broader ecosystem.

“My concern is… those who are fine with ETH beta and yield might also sell ETH for other yielding assets […] Ethereum should not be punished for its growth.”

Related: Ethereum, Solana led crypto hack losses in H1 2026: Blockaid

Smaller validators will bear the cost

Another concern with the proposal is that lowering staking rewards could actually increase concentration among the largest participants.

“I stand firmly opposed to this EIP.” Source: Leo Lanza

That’s because independent validators do not benefit from the economies of scale that larger staking businesses, exchanges or institutional operators do. Lower protocol rewards could make solo staking uneconomical while larger organizations continue operating. Koumoutsos says:

“A solo validator has real costs: some ideological solo stakers may remain, but many marginal solo validators will not, and fewer new ones will enter, if any.”

He adds that centralized platforms also stake for reasons beyond yield, such as customer retention, regulatory positioning and product integration, which makes them less likely to reduce their participation.

Koumoutsos also warns that even within delegated staking, lower rewards could favor centralized custodial products over onchain staking protocols, which face higher maintenance, governance and upgrade costs.

A debate over more than staking

Supporters say lower issuance would strengthen Ether’s long-term monetary profile. But critics argue that continually adjusting Ethereum’s monetary policy undermines its claims to be predictable and reliable.

Berryman argues institutions value predictability more than marginally higher yields, and that changing the curve creates yield governance risk. “Institutional investors will price accordingly,” he says.

He also says institutions value staking not because the yield is especially high, but because it provides a predictable return while they hold ETH:

“It’s not broken, why try and fix it?”

Silagadze agrees, saying, “Any nation state or large institution looking at this will justifiably have a dramatic loss of confidence in the governance and stability of Ethereum.”

The proposal’s rollout also drew criticism for being published just two days before the Aug. 6 deadline for proposals to be considered for the next Ethereum network upgrade.

Silagadze says that a change with “far reaching implications for all of DeFi” should not have been published on such a short timeline.

The fierce backlash has shown how difficult it has become to change Ethereum’s economics, especially when every adjustment creates winners and losers across staking, DeFi and institutional markets.

Magazine: Ethereum’s much-hated staking ‘tax’ may already be obsolete

At first glance, this week’s biggest business stories could have come straight from Wall Street. BlackRock launched tokenized money market funds for stablecoin reserves. Tether generated another $1.5 billion in profit from its US Treasury holdings. Tokenized gold continued gaining traction, though its use in decentralized finance remains limited. Even Bitcoin (BTC) mining was defined by production costs, profitability and balance sheet management rather than the price of Bitcoin.

The digital asset industry’s business model is increasingly converging with traditional finance. Stablecoin reserves, tokenized money market funds and onchain collateral are emerging as some of the industry’s most important revenue drivers, signaling that blockchain’s next phase may be shaped as much by financial infrastructure as by digital assets themselves.

BlackRock launches tokenized reserve funds for stablecoin issuers

Asset manager BlackRock has introduced two tokenized money market products designed to help stablecoin issuers meet reserve requirements under the US GENIUS Act, expanding its push into blockchain-based financial infrastructure.

One fund tokenizes shares of BlackRock’s existing Treasury liquidity strategy on Ethereum, allowing approved investors to transfer ownership onchain while the underlying assets remain invested in cash and short-term US government securities. The second is a new institutional money market vehicle built for digital asset markets that supports multiple blockchains and automatically reinvests income, making it suitable for stablecoin reserve management.

The launch deepens BlackRock’s presence in the rapidly growing tokenized Treasury market, where the asset manager already operates BUIDL, the industry’s largest tokenized Treasury fund. The move also reflects a broader shift by Wall Street toward onchain financial products following the passage of the GENIUS Act, which established a federal framework for payment stablecoins. 

Tokenized gold’s DeFi footprint remains small despite record trading volumes

A RedStone report found tokenized bullion held up during gold’s sharp sell-off, but DeFi lending adoption remains limited despite surging market growth and trading volumes.

Spot trading volume reached $90.7 billion in Q1 as gold futures rallied above $5,600 per troy ounce, yet only about $63 million of Tether Gold and PAX Gold is used as collateral on Aave v3 and Morpho — just 1.5% of their combined $4.2 billion market cap, according to RedStone. On March 23, Aave processed its largest cluster of XAUT liquidations without disruption after gold fell 10% in a week, the worst weekly performance in more than four decades; JPMorgan’s Greg Shearer described it as an “extremely brutal flush.”

Gold futures have since declined more than 20% from January peaks on expectations of higher US interest rates, and RedStone’s findings suggested tokenized gold was resilient yet faces an infrastructure gap as tokenized real-world assets scale.

Liquidations of tokenized gold collateral spiked across Aave and Morpho during March’s market sell-off. Source: RedStone

Trump-linked American Bitcoin posts record output, narrower Q2 losses

The Trump family-linked Bitcoin miner reported record second-quarter production, generating 932 BTC and narrowing its net loss from the previous quarter.

Nasdaq-listed American Bitcoin, co-founded by Eric Trump and Donald Trump Jr., reported record quarterly production of 932 BTC, helping lift mining revenue 8% to $67 million from $62.1 million in the first quarter. The company posted a net loss of $57.2 million, improving from an $81.8 million loss in Q1. 

Last month, it completed a 1-for-15 reverse stock split to maintain its Nasdaq listing after its share price fell below the exchange’s minimum bid requirement. Majority-owned by Hut 8, the miner held roughly 8,002 BTC as of June 30 and had pledged about 3,090 BTC as collateral under equipment purchase agreements with Bitmain.

While production and revenue improved, American Bitcoin remains unprofitable. Its reverse stock split underscores the challenges facing its public listing, while its pledged Bitcoin holdings expose the company to additional risk if BTC prices decline.

Tether posts $1.5 billion Q2 profit as US Treasury income boosts reserves

Tether generated a $1.5 billion net operating profit in the second quarter, driven primarily by interest earned on its US Treasury holdings and repurchase agreements, according to its latest quarterly attestation.

The attestation reported a reserve buffer of $4.11 billion as of June 30, with assets exceeding liabilities by that amount. Despite a broader stablecoin market contraction, USDT circulating supply rose by $446 million to $184.6 billion, preserving Tether’s share of more than 60% of the global market, which DeFiLlama valued at roughly $307 billion. Tether remains one of the largest holders of US Treasury securities.

The company’s earnings continue to benefit from elevated short-term interest rates, which boost income from Treasury bills and cash equivalents. However, the stronger profit and reserve surplus come amid continued pressure across the crypto sector and a weaker stablecoin market, conditions that could temper future growth if rate environments shift or market contraction deepens.

USDT continues to dominate the stablecoin market by circulating supply. Source: DeFiLlama

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