Security Breaches, Wall Street Deals and Tax Headaches Define a Turbulent Week in Crypto

Article by: Claudio
Business Stock Exchange Trading Concepts

The crypto industry spent the past week juggling three very different identities at once: a target for sophisticated hackers, an increasingly attractive partner for traditional finance, and a source of mounting frustration for ordinary taxpayers trying to make sense of new IRS rules. Together, the developments paint a picture of an industry that is scaling up fast while its security and compliance infrastructure struggles to keep pace.

The most dramatic story came from Bitget, which revised its estimate of losses from Thursday’s security breach upward to roughly $388 million, about $35 million more than the exchange first disclosed. In a Friday update, Bitget said the higher figure reflects a more complete accounting of transfers on the Zcash and TRON networks that were missed in its initial tally, not new unauthorized activity. The exchange said the incident, which touched Ethereum Virtual Machine networks, the XRP Ledger, Zcash and TRON, is now contained and that no further transfers are possible. Withdrawals remain paused, and Bitget has launched a bounty program aimed at incentivizing the freezing or recovery of stolen funds.

CEO Gracy Chen has pointed to a possible North Korean connection, telling users during a live Q&A that investigators had matched IP addresses to VPN services previously associated with a known DPRK-linked hacking group. Chen said she did not believe the breach was an inside job and that some funds had already been recovered, though she declined to give a specific figure. If confirmed, North Korean involvement would extend a grim pattern: state-linked hackers were tied to an estimated $2.02 billion in crypto theft in 2025 alone, including the roughly $1.5 billion Bybit hack that the FBI attributed to Pyongyang. Even with Bitget’s revised numbers, that Bybit breach remains the largest in the industry’s history.

Bitget wasn’t the only exchange dealing with the fallout of a bridge exploit this week. KelpDAO filed a lawsuit against cross-chain protocol LayerZero and its CEO, Bryan Pellegrino, over the roughly $292 million exploit of its rsETH bridge earlier this year. KelpDAO alleges LayerZero failed to disclose known risks in its technology and had signed off in writing on Kelp’s bridge configuration before the attack. Pellegrino has called the suit “meritless” and says he intends to fight it in Vancouver, setting up a legal fight that could clarify where responsibility lies when shared cross-chain infrastructure fails — with the bridge provider, the protocol built on top of it, or both.

Not every retreat this week involved hackers. French semiconductor firm Sequans Communications sold its last 314 Bitcoin, formally abandoning a corporate treasury strategy that once held more than 3,200 BTC. The company, which launched its Bitcoin bet in mid-2025 alongside a $384 million capital raise, began unwinding the position within months and is now refocusing entirely on its core cellular IoT business. Sequans joins at least nine other public companies — including Bitdeer, Genius Group and Prenetics — that analysts say have fully liquidated Bitcoin treasury strategies this year, a reminder that the corporate-treasury playbook popularized by Strategy has not worked for everyone.

Strategy itself, meanwhile, is pressing further into financial engineering rather than retreat. The company is asking shareholders to approve a shift of its four preferred stocks, including its flagship STRC, to daily dividend payments, without altering total payouts or dividend rates. The move follows Bitcoin treasury rival Strive, which adopted daily dividends on its SATA preferred stock earlier this year. Strategy CEO Phong Le recently acknowledged that STRC’s sharp June selloff — when it dropped to an intraday low of $71.25 — was driven by investors borrowing against Bitcoin to arbitrage the spread between cheap leverage and STRC’s yield, a trade that unwound painfully once Bitcoin’s price fell. STRC has since recovered to around $98, and Strategy says it wants to attract steadier, longer-term institutional holders going forward.

Beyond the drama of hacks and treasuries, crypto’s slow merger with traditional finance continued apace. Binance took a $100 million equity stake in stablecoin issuer Circle alongside a five-year commercial deal to expand USDC usage on its platform. Canada’s six largest banks began jointly testing tokenized Canadian-dollar deposits as a new payment rail, and the New York Stock Exchange struck a deal with Blockchain.com to bring tokenized US stocks and ETFs to crypto users. Chainalysis data underscored the shift toward real-world utility, showing cross-border stablecoin flows jumped nearly 78% to $220 billion even as overall crypto market capitalization shrank by more than a third — a sign that stablecoins are increasingly being used for trade and remittances rather than speculation.

That growing legitimacy hasn’t made life easier for individual investors, however. A survey by Awaken Tax found that a fifth of US crypto investors were still waiting on tax documents from exchanges as filing deadlines loomed, while another fifth said the new 1099-DA forms were incomplete or inaccurate. Under the IRS’s new digital-asset reporting rules, brokers must report gross proceeds from crypto sales but not the original cost basis, leaving many taxpayers to reconstruct their own trading history across multiple platforms and years just to figure out what they actually owe.

Taken together, the week’s headlines suggest an industry maturing on multiple fronts simultaneously but unevenly — courted by banks and exchanges, still vulnerable to state-sponsored hackers, and leaving retail investors to sort out the paperwork.