Coinbase Financial Markets lost its bid for preliminary relief in Michigan on Aug. 6 after U.S. District Judge Shalina Kumar refused to block state officials from enforcing sports betting laws against the company’s event contracts. 

The order leaves Coinbase without the injunction it sought as its challenge continues.

Coinbase sued Michigan Attorney General Dana Nessel, arguing that event contracts offered through federally regulated prediction markets fall under the Commodity Exchange Act and the Commodity Futures Trading Commission’s exclusive jurisdiction. Coinbase wants Michigan customers to access contracts supplied through Kalshi.

Judge rejects Coinbase’s preemption case

Kumar concluded that Coinbase had not shown a likelihood of success on its federal preemption claims, a requirement for preliminary relief. The judge rejected Coinbase’s argument that sports event contracts necessarily qualify as swaps under the Commodity Exchange Act and therefore sit beyond Michigan’s gambling authority.

The court also rejected Coinbase’s claim that compliance with federal derivatives law and Michigan’s Lawful Sports Betting Act would be impossible. Kumar wrote that Coinbase’s assertions were “applesauce,” adding that higher costs or operational difficulty do not establish legal impossibility. The ruling addresses preliminary relief rather than a final judgment.

Coinbase has argued that state restrictions frustrate Congress’s attempt to build a federal derivatives regime. Chief Legal Officer Paul Grewal previously said state efforts to control prediction markets “stifle innovation and violate the law.” That remains Coinbase’s position, not a conclusion accepted by the Michigan court.

Federal courts remain divided over sports contracts

The Michigan ruling lands in a legal split. In April, the Third Circuit affirmed preliminary relief for Kalshi in New Jersey, holding that Kalshi had shown a reasonable chance of succeeding on its argument that sports event contracts are swaps and federal derivatives law preempts conflicting state restrictions.

Other courts have reached the opposite conclusion. Michigan federal judges have questioned whether Congress intended the Commodity Exchange Act to sweep sports wagering into the federal swaps framework. Earlier decisions in Ohio and elsewhere have rejected or limited the industry’s preemption theory, leaving the legal status unsettled.

As previously reported in New Jersey coverage, former SEC and CFTC Chair Gary Gensler argued that sports prediction contracts should remain outside the federal swap framework. In related coverage, gaming groups have urged Congress to preserve state authority over sports wagering rather than let federally registered platforms bypass state licensing systems.

CFTC is pressing its own federal authority

The CFTC has taken the opposite institutional position. Chairman Michael Selig has repeatedly said the agency has exclusive jurisdiction over federally regulated prediction markets. The commission sued Kentucky in June after the state pursued enforcement against designated contract markets and has initiated proceedings involving Minnesota, Illinois and Rhode Island.

The agency is also rewriting its event contract framework. A June proposal would create a structured process for determining whether contracts involve gaming, terrorism, assassination, war or conduct unlawful under federal or state law, and whether they are contrary to the public interest. The proposal includes a 90-day review period.

As crypto.news reported in prediction market coverage, the CFTC’s push has expanded beyond individual disputes into rulemaking. Another proposal addresses reporting requirements for certain collateralized event contracts, showing federal regulators are building a structure while courts continue debating state power.

What happens next in Coinbase’s Michigan case

The denial means Coinbase does not receive the preliminary shield it requested against Michigan enforcement. It does not resolve every issue in the underlying lawsuit. Coinbase can continue litigating its claims and may seek appellate review of the injunction decision, while Michigan officials can continue defending their authority under state gaming law.

The case also increases pressure on higher courts to reconcile conflicting interpretations. The Third Circuit has sided with Kalshi on the core swap and preemption questions, while several district courts have disagreed. Coinbase argues a conflicting appellate ruling elsewhere would deepen the split and increase the likelihood of potential Supreme Court review.

For Coinbase, the stakes extend beyond Michigan. Its prediction market service is offered through Coinbase Financial Markets, and the company has been expanding event contracts alongside stocks, crypto and derivatives. Coinbase argues state restrictions could force different availability rules across the country if federal preemption remains unsettled.

The next major developments will be any appeal, merits rulings in Michigan and appellate decisions in other prediction market cases. The CFTC’s rulemaking may shape the debate, but an agency rule cannot erase statutory questions courts are already interpreting. For now, Kumar’s ruling gives Michigan a procedural win while leaving the national jurisdiction fight unresolved.

The fallout from the Coldcard security breach is now surfacing on-chain.

According to Glassnode data, roughly 210,000 BTC have moved out of long-term holder (LTH) wallets over the past week, the largest decline since December 2024, when bitcoin approached $100,000 for the first time.

Glassnode classifies long-term holders, or LTHs, as entities whose coins have remained dormant for approximately 155 days, or just over five months. This cohort is often considered the market’s “smart money” because its members tend to hold through short-term volatility.
Long-term holder supply now stands at approximately 14.7 million BTC. Before the Coldcard incident, it was just under 15 million BTC, close to an all-time high.

Historically, heavy spending by long-term holders has coincided with periods of market strength or tops. Similar waves of distribution occurred around the market peaks of March 2021, March 2024 and December 2024, as experienced holders took profits into rising demand.

This time, however, the movement is occurring near the lows. Bitcoin is trading around $64,000, roughly 50% below its October all-time high.

Dunamu has secured a one-year contract to take custody of digital assets seized by South Korea’s National Police Agency after winning the agency’s public tender process.

According to a statement released by Dunamu on Aug. 7, the Upbit operator was named the final winner of the Korean National Police Agency’s project to store and manage confiscated digital assets following technical negotiations that concluded the procurement process.

The announcement completes a bidding process that began earlier this year, with the company moving from preferred bidder status to the final contractor after negotiations with the police agency. The one-year agreement will place seized cryptocurrencies from police investigations under Dunamu’s custody platform.

Upbit Custody will manage seized crypto assets

Procurement documents show the contract was awarded through an open competitive tender administered by South Korea’s Public Procurement Service. Dunamu said it received the highest technical evaluation score of 94.14 before being selected as the final contractor. The company had previously been designated as the preferred negotiating bidder on July 8.

Earlier procurement records valued the contract at 267 million won, or about $195,000, for one year of custody and management services covering digital assets confiscated during criminal investigations.

Under the agreement, seized cryptocurrencies will be stored and managed through Upbit Custody, Dunamu’s digital asset custody service. According to the company, the platform operates within a 24-hour, 365-day monitoring system that continues running during nights, weekends, and public holidays so custody operations remain uninterrupted.

The custody platform also uses a security environment built around 100% offline cold wallets that remain isolated from the public internet. According to Dunamu, its infrastructure incorporates Multi-Party Computation (MPC), Distributed Key Generation (DKG), multi-signature technology and wallet segregation, allowing assets to be separated according to their type and intended use while reducing the risks associated with a single compromised private key.

A Dunamu representative said the company would use its security technology and operational controls to support the stability of South Korea’s public safety and digital policing infrastructure.

Police custody contract followed competitive bidding

Before becoming the final contractor, Dunamu ranked first during the evaluation stage of the tender process.

Procurement records released in July showed the company received a combined score of 94.73, including full marks for its bid price and 84.73 points in the technical assessment. Korea Digital Asset Custody (K-DAC) finished second with 91.29 points, while Hecto Wallet One placed third with 87.27 points.

Industry participants questioned whether the tender requirements favored larger market operators. According to local media reports published at the time, bidders were required to accept immediate custody of seized cryptocurrencies, maintain a round-the-clock response system and guarantee full compensation if assets were lost through hacking.

Several custody industry officials told local media those requirements were easier for a large exchange operator with an established infrastructure to satisfy than for standalone custody providers. One industry official described competing under those conditions as difficult from the outset.

The National Police Agency, however, rejected suggestions that the outcome had been predetermined. According to local media, the agency said the contractor had been selected through a fair competitive process.

Previous Bitcoin losses increased focus on digital asset custody

The police custody project comes after multiple incidents involving missing cryptocurrencies held by South Korean authorities.

In February, South Korea’s Gangnam Police Station confirmed that 22 Bitcoin worth approximately 2.1 billion won, or about $1.6 million, had disappeared from police custody. Authorities said the coins had originally been surrendered during a 2021 investigation before investigators discovered during a nationwide review that they had been transferred from the storage wallet without authorization.

Police said the physical cold wallet remained in their possession, suggesting the private keys had been accessed even though the storage device itself had not been removed. The Gyeonggi Northern Provincial Police Agency subsequently opened an internal investigation examining access logs, key management procedures and blockchain transaction records.

Attention had already turned to law enforcement’s handling of digital assets after an earlier case involving the Gwangju District Prosecutors’ Office, where local reports said 320 Bitcoin seized in a criminal investigation was lost. Local media also reported another incident in 2022 in which police confirmed that seized Bitcoin had gone missing.

Against that backdrop, South Korean authorities moved to place custody responsibilities with an external institution capable of maintaining dedicated security controls for seized digital assets. The finalized agreement now places those assets under Upbit Custody for the next year while the National Police Agency oversees the arrangement under the terms of the awarded contract.

Crypto market maker Wintermute has secured broker-dealer status in the U.S., giving the firm a regulated route into Wall Street as crypto trading and traditional securities markets draw closer together.

New York-based Wintermute USA LLC registered with the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA). The unit will operate as a proprietary trading firm rather than a retail broker.

The registration lets Wintermute trade stocks and equity options, provide liquidity to exchanges and over-the-counter counterparties, and act as an authorized participant for exchange-traded funds (ETFs), including crypto-linked funds.

Authorized participants create and redeem large blocks of ETF shares, a process that helps keep an ETF’s market price close to the value of its holdings.

Wintermute described the unit as proprietary-only and did not announce retail brokerage services.

Authorized participants create and redeem blocks of ETF shares directly with fund issuers, helping keep fund prices aligned with their underlying assets.

The registration also lets Wintermute seek market-making roles on exchanges including the New York Stock Exchange and Nasdaq. The firm has already lined up ETF issuers to work with, the Wall Street Journal reported.