Crypto World
Crypto Used by Trafficking Networks Surged in 2025, Chainalysis Finds
Chainalysis has released a detailed assessment showing a notable uptick in crypto flows tied to suspected human trafficking networks, with an 85% rise in 2025 and transaction volumes reaching hundreds of millions of dollars across identified services. The report highlights networks largely rooted in Southeast Asia and intertwined with scam compounds, online casinos, and Chinese-language money-laundering rings that have gained momentum as crypto adoption broadens. Notably, the study emphasizes that the choice of asset varies by service, with some operators leaning on stablecoins for cross-border payments. While the numbers are concerning, Chainalysis argues that the transparency of blockchains also creates actionable choke points for enforcement.
Among the opaque channels identified are Telegram-based services that facilitate international escorts, labor-placement schemes that allegedly coerce victims into work at scam compounds, prostitution networks, and vendors distributing material related to child sexual abuse. The research underscores that, in practice, payment methods diverge across illicit networks: international escort services and prostitution networks have shown a pronounced reliance on stablecoins, while other segments employ a broader mix of on- and off-ramp techniques. The reportâs granular look at asset-type inflows and wallet behavior aims to give investigators and compliance teams new signals to pursue.
Chainalysis stresses that blockchainâs traceability can be a powerful tool for law enforcement. By identifying transaction patterns, monitoring compliance at exchanges, and pinpointing chokepoints in the ecosystem, authorities can disrupt bad actors in ways that cash or traditional remittance systems cannot. This is particularly relevant as illicit online marketplaces and money-laundering networks continue to adapt to shifting regulatory landscapes and evolving crypto offerings. The report also points readers to related work on the broader crypto-laundering landscape and how on-chain analytics are changing the enforcement playbook.
As a case in point, the firm notes several enforcement successes last year, including German authorities dismantling a child sexual exploitation platform, an operation that Chainalysis said was aided by blockchain analysis. The finding illustrates how coordinated usage of on-chain data can assist in tracing the flow of funds across multiple layers of a criminal network, from on-ramps to marketplaces to end-services. Chainalysis also emphasizes the need for ongoing vigilance by compliance teams and law enforcement to monitor for patterns such as high-frequency transfers to labor-placement entities, wallet clusters that operate across multiple illicit categories, and stablecoin conversion activity that appears routine rather than incidental.
Key takeaways
- 2025 crypto flows to suspected human trafficking networks surged by 85%, with total transaction volume reaching hundreds of millions of dollars across identified services.
- Southeast Asia emerges as a central hub for these networks, which are tied to scam compounds, online casinos, and Chinese-language money-laundering networks.
- Seemingly disparate servicesâTelegram-based international escorts, labor-placement agents, prostitution networks, and vendors supplying illicit contentârely on a mix of assets, with stablecoins favored for cross-border payments in several cases.
- Blockchainâs transparency is framed as a diagnostic and disruption tool: it can reveal transaction patterns, flag large or anomalous activity, and help block or slow illicit flows at exchanges and at online marketplaces.
- Law enforcement achievements, such as the German takedown of a child exploitation platform aided by blockchain forensics, demonstrate the practical leverage of on-chain analytics in complex investigations.
- The report calls for heightened monitoring by compliance teamsâwatching for regular, large-payments to labor-placement services, wallet clusters spanning illicit categories, and recurring stablecoin conversionsâas part of a broader AML framework.
Market context: The findings sit against a backdrop of growing regulatory interest in on-chain analytics, the expanding use of stablecoins, and ongoing scrutiny of cross-border crypto payments. As governments and financial institutions seek robust AML controls, analytics firms and exchanges are increasingly integrating sophisticated tracing tools to deter illicit finance while balancing user privacy and legitimate use cases. The evolving regulatory environment underscores the valueâand the limitsâof blockchain transparency in addressing criminal finance without stifling legitimate innovation.
Why it matters
The report illustrates a fundamental tension in the crypto economy: the same technologies that enable rapid, borderless financial activity can also facilitate harm if left unchecked. For users and investors, the message is clearâtransparency tools are becoming a standard part of risk assessment, and due diligence now increasingly hinges on on-chain behaviors and counterparties. For builders and product teams, the emphasis on compliance signals a growing demand for wallet- and exchange-level controls, better KYC/AML workflows, and clearer disclosures around illicit-risk indicators.
For policymakers, the analysis reinforces the need for clear guidelines on stablecoins and cross-border settlements, as these instruments appear in multiple illicit-use cases. The data also supports continued investment in cross-agency cooperation and international information sharing, given that many of these networks operate across different jurisdictions and platforms. At a technical level, the findings encourage further development of attribution methodologies that preserve user privacy while enabling lawful investigators to trace criminal flows. In short, the study adds to a growing body of evidence that on-chain data can augment traditional investigative methods, but it must be integrated within a broader, well-governed framework.
For the broader crypto ecosystem, the emphasis on chokepoints and wallet clusters highlights practical avenues for disruption: exchanges can improve real-time monitoring, on-chain analytics can be used to flag risky counterparties, and marketplaces can adopt stricter seller verification and payment-processing controls. The convergence of enforcement and technology is likely to shape how illicit activity is funded and how quickly it can be identified and neutralized, potentially reducing the latency between crime and detection in a space historically challenged by anonymity and speed.
What to watch next
- Follow-up updates from Chainalysis on 2026 data and trend analysis, including any revisions to the 2025 figures.
- Regulatory actions targeting stablecoins and cross-border crypto payments, particularly in Southeast Asia and Europe.
- Adoption of enhanced AML controls by exchanges and online marketplaces in response to on-chainâdriven findings.
- Investigations and public disclosures related to large wallet clusters that span multiple illicit services or jurisdictions.
- Further enforcement actions demonstrated or inspired by blockchain-forensic capabilities, such as high-profile takedowns and asset-tracing successes.
Sources & verification
- Chainalysis blog post: crypto-human-trafficking-2026
- Crypto-launderers turning away from centralized exchanges: Chainalysis coverage
- Blockchain forensics and asset tracking explainer
- Related investigative reporting on enforcement actions and policy context
Blockchain visibility and illicit finance: what the findings imply
Chainalysisâs report underscores how on-chain visibility can illuminate the pathways by which crypto assets are moved to support trafficking and exploitation. By charting flows into labor-placement operations, escort services, and adult services that rely on cross-border payments, investigators can identify recurring patterns that mark a networkâs lifecycleâfrom onboarding to monetization. The emphasis on stablecoins in particular reflects how certain assets are chosen to minimize friction across borders, optimize settlement times, and obscure the origin and destination of funds in less-regulated corridors.
Yet the study also warns against overreliance on any single signal. Illicit actors adapt, and the same tools that reveal patterns can be misapplied if not paired with traditional investigative methods and robust governance. The combination of blockchain analytics with proactive compliance, inter-agency collaboration, and targeted enforcement represents a pragmatic approach to mitigating on-chain risks without dampening legitimate innovation in the crypto economy.
- Bitcoin saw spot ETF outflows of over $410 million as prices struggled.
- Over $2.5 billion in Bitcoin options expired on Friday.
- Analysts say âworst of downturnâ likely over but market remains bearish.
Bitcoin ETFs experienced a net outflow of over $410 million on February 12, as investors withdrew capital from the exchange-traded funds amid growing fears of a broader crypto market downturn.
And on Friday morning, Feb. 13, BTC price fluctuated near $66,800 as the market recorded a massive $2.5 billion Bitcoin options expiry.
Crypto analysts have shared their thoughts on what this could mean for the Bitcoin price in the short term.
Bitcoin ETF outflows and $2.5 billion options expiry
Data showed that on US spot Bitcoin ETFs recorded net outflows of over $410 million yesterday, with none of the 12 spot ETFs notching net inflows.
BlackRockâs IBIT led with nearly $158 million, Fidelityâs FBTC had $104 million, and Grayscaleâs GBTC had over $59 million in exits.
This marked the second consecutive day of redemptions, following $276 million on February 11.
Institutional investors are pulling back amid Bitcoinâs struggles around the $67,500-$65,450 range.
The fresh ETF outflows coincide with a pivotal weekly options expiry at 08:00 UTC on Feb. 13.
Approximately 38,000 Bitcoin contracts worth $2.5 billion in notional value have expired, primarily on Deribit, with a put/call ratio of 0.72 and maximum pain near $74,000.
Ethereum also saw 215,000 ETH options worth $410 million expire, with a put/call ratio of 0.82 and a maximum pain point at $2,100.
These maximum pain points are at values well above spot BTC and ETH levels, and likely the driver of downward pressure as market makers look to hedge delta exposure on out-of-the-money calls.
February 13 Options Expiration Data
38,000 BTC options expired with a Put-Call Ratio of 0.71, maximum pain point at $74,000, and notional value of $2.5 billion.
215,000 ETH options expired with a Put-Call Ratio of 0.82, maximum pain point at $2,100, and notional value of $410⊠pic.twitter.com/07TKfJxmMiâ Greeks.live (@GreeksLive) February 13, 2026
Bitcoin price prediction
The ETF outflows and broader market weakness hinder bulls, and sentiment is skewed bearish, analysts say.
âToday saw the expiration of options accounting for 9% of total open interest, totaling nearly $2.9 billion. This week, implied volatility for Bitcoin and Ethereum has declined, with BTCâs main-term IV at 50% and ETHâs at 70%. While the downward price trend has moderated, market confidence remains weak,â analysts at Greeks.live noted via X.
Despite this outlook, the market may have âthe most violent leg of the downturnâ behind it. If sentiment improves, prices could pick up an upside trajectory.
In this case, a relief rally to above the critical $70,000 mark is likely.
However, ETF bleeding and macroeconomic headwinds could greatly cap upside momentum.
On Thursday, Standard Chartered forecast Bitcoin price could retest $50k before rising to $100k by the end of 2026. The bank cites ETF outflows, macro pressures and broader risk asset sentiment as negative catalysts.
$410M outflows in a single day.
US spot Bitcoin ETFs just logged their 4th straight week of bleeding.
AUM down from $170B (Oct â25 peak) to ~ $80B.
At the same time, Standard Chartered cuts 2026 BTC target from $150K â $100K and warns of a possible $50K flush first.
ETH ETFs⊠pic.twitter.com/H9W8lmAvRq
â Dear Bitcoiner âĄïž (@DearBitcoiner) February 13, 2026
Notably, BTC tested support at $60k this month, and the elevated implied volatility, coupled with ETF exits, signals aggressive downside protection.
If outflows continue amid other highlighted downside triggers, the $50k level could be the next target.
TLDR:
- AVAX completed Wave 1 between $8-$5, now entering Wave 2 recovery phase within descending channelÂ
- CryptoPatel targets $33, $58, $97, and $147 representing potential 2,489% expansion from bottomÂ
- Critical support at $5.50 must hold on weekly close to maintain bullish Elliott Wave structureÂ
- Analysis suggests multi-year setup through 2026-2027 suited for spot accumulation and patience
Â
AVAX traders are monitoring a technical analysis that suggests the token could target $147 in the coming years. Crypto analyst CryptoPatel has identified an Elliott Wave formation on the weekly chart, indicating a possible recovery phase after a 95% correction from the 2021 all-time high.
The analysis places AVAX at a critical inflection point, with the asset trading within a multi-year descending channel.
Price action currently hovers near $8.86, presenting what the analyst describes as a macro support accumulation zone.
Technical Structure Shows Wave Completion
The technical framework outlined by CryptoPatel centers on Elliott Wave theory applied to AVAXâs weekly timeframe. According to the analysis shared on X, Wave 1 completed between $8 and $5, marking a macro bottom for the current cycle.
The token now enters what the analyst labels as Wave 2, representing an early recovery phase from the previous correction.
The descending channel formation has contained price action since the 2021 peak. This pattern shows a bearish breakdown followed by a retest of the lower trendline, creating what technical analysts call a deviation setup.
Market structure at these levels suggests accumulation by institutional participants, though this remains speculative based on price behavior rather than confirmed data.
Support zones have formed between $8 and $7, coinciding with weekly demand areas. The liquidity sweep into these zones mirrors fractal patterns from previous market cycles.
Additionally, the compression phase resembles historical accumulation periods that preceded major rallies in past bull markets.
Price Targets Extend Beyond $100 Mark
CryptoPatelâs forecast includes four distinct targets as the Elliott Wave structure potentially unfolds through 2026 and 2027. The progression starts at $33, followed by $58, then $97, before reaching a final target of $147.
These levels correspond to the mid-channel resistance and eventual upper boundary of the descending formation. From the identified bottom to the highest target, the expansion measures approximately 2,489%.
The bullish scenario requires sustained weekly strength with expansion toward mid-channel resistance zones. Price must demonstrate momentum capable of breaking through overhead supply levels that accumulated during the extended correction. However, the analysis also establishes clear invalidation parameters to manage risk exposure.
The critical support level sits at $5.50, representing the Wave 1 low. A weekly close beneath this threshold would negate the Elliott Wave count and suggest further downside potential. This makes the $5.50 level essential for bulls to defend on higher timeframes.
The analyst characterizes this setup as appropriate for spot accumulation and long-term positioning rather than short-term trading.
The asymmetric risk-reward profile stems from proximity to identified support versus the distance to upside targets.
Patience remains necessary as weekly timeframe patterns develop over extended periods, typically spanning months or years rather than days or weeks.
Coinbase earnings just broke its streak, and not in a good way. After eight straight winning quarters, it posted a brutal $667 million net loss in Q4 2025. That is a punch to the face.
As crypto prices slid from their yearly highs, the exchange completely missed Wall Street revenue expectations.
Revenue came in at $1.78 billion. Sounds big, but it was below the $1.85 billion analysts expected. Transaction revenue was the real damage. Down 37% to $982.7 million.
That tells you everything about trader activity right now.
Key Takeaways
- Coinbase reported a $667 million net loss, its first profit miss since Q3 2023.
- Revenue fell 21.5% YoY to $1.78 billion, missing analyst expectations.
- Transaction fees plummeted 37% as retail traders exited the market.
- Shares (COIN) dipped 7.9% intraday but rebounded nearly 3% after hours.
Is the Bull Market Officially Over? How Coinbase Can Survive It
That $667 million loss is not just a bad quarter. It screams deeper cycle weakness. A big chunk of it came from unrealized losses on Coinbase own crypto holdings after prices collapsed from the October 2025 highs.
When Bitcoin falls from nearly $126,000 to the mid $60k range, nobody walks away clean. Not even the exchanges.
This kind of volatility feels similar to the uncertainty during the FTX fallout days. Brian Armstrong is still calling this downturn psychological.
An overview of our Q4 and full year 2025 financial results. — Coinbase
With something extra to keep you focused. pic.twitter.com/LehRsH1Yjn
(@coinbase) February 12, 2026
Retail traders are barely active. Transaction revenue, which is the core engine of the business, dried up as volume vanished.
Casual money is staying on the sidelines. And that is the last thing Coinbase needed.
Discover: The best crypto to diversify your portfolio
COIN Stock Resilience or Dead Cat Bounce?
Even after that ugly earnings report, COIN stock actually climbed 2.9% in after-hours, sitting near $145. Sounds crazy, right?
But the stock had already dropped 7.9% during the regular session. Traders probably priced in the disaster before the numbers even hit.
Still, the outlook is not exactly comforting. Subscription and services revenue was the only real bright spot, up 13% to $727.4 million.
That helped soften the blow. But management is already guiding lower for Q1 2026, expecting that figure to fall into the $550 to $630 million range. That is not small.
If even the so-called stable revenue starts shrinking, the safety cushion gets thin fast. And if that happens, a retest of the $139 zone, near the 52-week lows, would not be surprising at all.
Discover: What is the next crypto to explode?
The post Coinbase Reports $667M Q4 Loss as Crypto Market Downturn Hits Revenues appeared first on Cryptonews.
US spot Bitcoin exchange-traded funds (ETFs) saw heightened selling on Thursday, with outflows accelerating the same day Standard Chartered lowered its 2026 Bitcoin forecast.
Spot Bitcoin (BTC) ETFs recorded $410.4 million in outflows, extending weekly losses to $375.1 million, according to SoSoValue data.
Unless Friday brings substantial inflows, the funds are on track for a fourth consecutive week of losses, with assets under management (AUM) nearing $80 billion, down from a peak of almost $170 billion in October 2025.
The selling coincided with Standard Chartered lowering its 2026 Bitcoin target from $150,000 to $100,000, warning that prices could fall to $50,000 before recovering.
âWe expect further price capitulation over the next few months,â the bank said in a Thursday report shared with Cointelegraph, forecasting Bitcoin to drop to $50,000 and Ether (ETH) to $1,400.
âOnce those lows are reached, we expect a price recovery for the remainder of the year,â Standard Chartered added, projecting year-end prices for BTC and ETH at $100,000 and $4,000, respectively.
Solana ETFs the only winners amid heavy crypto ETF outflows
Negative sentiment persisted across all 11 Bitcoin ETF products, with BlackRockâs iShares Bitcoin Trust ETF (IBIT) and the Fidelity Wise Origin Bitcoin Fund suffering the largest outflows of $157.6 million and $104.1 million, respectively, according to Farside.
Ether ETFs faced similar pressure, with $113.1 million in daily outflows dragging weekly outflows to $171.4 million, marking a potential fourth consecutive week of losses.
XRP (XRP) ETFs saw their first outflows of $6.4 million since Feb. 3, while Solana (SOL) ETFs bucked the trend, recording a minor $2.7 million in inflows.
Extreme bear phase not yet here as analysts expect $55,000 bottom
Standard Charteredâs latest Bitcoin forecast follows previous analyst forecasts that Bitcoin could dip below $60,000 before testing a recovery.
Crypto analytics platform CryptoQuant reiterated that realized price support remains at around $55,000 and has not yet been tested.
âBitcoinâs ultimate bear market bottom is around $55,000 today,â CryptoQuant said in a weekly update shared with Cointelegraph.
âMarket cycle indicators remain in the bear phase, not extreme bear phase,â CryptoQuant noted, adding: âOur Bull-Bear Market Cycle Indicator has not entered the Extreme Bear regime that historically marks the start of bottoming processes, which typically persist for several months.â
Related: Bernstein calls Bitcoin sell-off âweakest bear caseâ on record, keeps $150K 2026 target
Bitcoin hovered around $66,000 on Thursday, briefly dipping to $65,250, according to CoinGecko data.
Despite ongoing selling pressure, long-term holder (LTH) behavior does not indicate capitulation, with holders currently selling around breakeven. âHistorical bear market bottoms formed when LTHs endured 30â40% losses, indicating further downside may be required for a full reset,â CryptoQuant added.
Magazine: Bitcoin difficulty plunges, Buterin sells off Ethereum: Hodlerâs Digest, Feb. 1 â 7
Aave Labs has asked tokenholders to approve a funding package worth about $50 million in exchange for redirecting all revenue from Aave-branded products to the Aave DAO treasury.
The proposal includes up to $42.5 million in stablecoins â $25 million as a primary grant and $17.5 million tied to product milestones. It also includes 75,000 Aave (AAVE) tokens, worth about $8 million at the time of writing. The stablecoin grants, if approved, will be streamed over time, and milestone payments will be released upon product launches.Â
In return, Aave Labs would route 100% of product-level revenue to the DAO. That includes fees generated by aave.com, the planned Aave App and Aave Card, Aave Pro, Aave Kit and Aave Horizon. The framework also asks tokenholders to ratify Aave V4 as the protocolâs long-term technical foundation and outlines plans to create a foundation to hold and steward the Aave brand.Â
The proposal would mark a shift in how Aave captures and distributes value. It would consolidate protocol and product revenue at the DAO level while shifting Aave Labs to a DAO-funded operating model after months of governance tension.Â
Governance concerns over voting power
The funding request drew scrutiny from some community members. Marc Zeller, founder of the Aave Chan Initiative, wrote that the $50 million package represents a significant portion of the DAO treasury.Â
He called for unbundling the vote into separate proposals covering revenue alignment, V4 ratification, foundation creation and funding.Â
Zeller also called for clearer definitions of ârevenueâ and independent verification of product income flowing to the DAO. He raised concerns over the 75,000 Aave token grant, noting that governance tokens carry voting power. He said entities receiving DAO tokens should disclose their wallet holdings.Â
Crypto commentator DefiIgnas described the proposal as a âbig compromiseâ that AAVE holders âshould like,â though he also said clearer disclosures around governance voting power tied to the 75,000 AAVE grant would be appropriate.
Aave Labs framed the proposal as a move toward a âtoken-centricâ model that aligns value accrual with the DAO. Aave founder Stani Kulechov said on X that directing product revenue to the DAO would expand its capacity to fund growth and other initiatives.Â
âThis would position the DAO to fund growth, increase buybacks, and pursue other opportunities as it sees fit,â Kulechov wrote.Â
Related: Vitalik draws line between âreal DeFiâ and centralized yield stablecoins
Proposal follows rejected IP vote
The proposal follows another contentious governance episode recently. On Dec. 26, Aave tokenholders rejected a proposal to transfer control of the protocolâs brand assets to an entity under the DAO, with a majority voting against the measure.Â
On Jan. 3, Kulechov outlined a broader strategy to expand beyond decentralized finance (DeFi) lending and revisit how non-protocol revenue flows to token holders.
The current proposal formalizes elements of that vision, combining revenue consolidation, V4 ratification and a new foundation structure in a single strategic pitch.Â
The Temp Check, an initial signal vote to measure community support, was launched ahead of any binding onchain vote. If it advances, the proposal would move through additional governance stages before any funds are distributed.
Magazine: Hong Kong stablecoins in Q1, BitConnect kidnapping arrests: Asia Express
The loss was uncovered during an audit launched after a separate 320 Bitcoin custody failure, raising fresh concerns over digital asset management by authorities.
South Korean authorities are investigating after 22 Bitcoin seized in a 2021 case disappeared from a cold wallet at a Seoul police station, according to local media reports.
The 22 Bitcoin (BTC), worth about $1.5 million at current prices, were held by the Gangnam Police Station and discovered missing during a nationwide audit of digital asset custody practices, the Seoul Economic Times reported Friday.
Authorities reportedly said the 22 Bitcoin had been transferred externally, though the cold wallet storing the tokens was not stolen.
The investigation follows a separate case at the Gwangju District Prosecutorsâ Office where 320 BTC, worth about $21.3 million at current prices, disappeared in August 2025. Prosecutors in that case blamed a leaked password as part of a phishing attack.
The cases are drawing scrutiny over the authoritiesâ ability to handle confiscated Bitcoin and the safekeeping practices of digital assets.
Related: South Korean crypto CEO stabbed in court during Haru Invest fraud trial
Audit uncovers broader custody failures
The National Police Agency reportedly initiated a review of seized cryptocurrency holdings across the country following the 320 Bitcoin case. During that review, officials discovered that the 22 Bitcoin previously submitted to the Gangnam station in November 2021 were no longer in custody.
The 22 Bitcoin were voluntarily submitted to authorities during an investigation in November 2021. The case is now suspended without a clear conclusion after the BTC disappeared.
The Gyeonggi Northern Provincial Police Agency is investigating the circumstances and potential individuals involved in the Bitcoin transfer.
Related: Google Cloud flags North Korea-linked crypto malware campaign
In January, South Koreaâs Supreme Court ruled that Bitcoin held in centralized exchanges can be seized by investigators.
Bitcoin is now an âobject of seizureâ under the Criminal Procedure Act because it is electronic information with independent manageability, tradability and economic value.Â
The ruling means Korean users keeping their Bitcoin on exchanges may have their holdings frozen if linked to alleged criminal proceedings.
Magazine: How crypto laws changed in 2025 â and how theyâll change in 2026
TLDR:
- Praetorian Group CEO Ramil Palafox received 20-year sentence for operating $200M Bitcoin Ponzi scheme from 2019 to 2021.Â
- Over 90,000 investors worldwide lost at least $62.7M in the fraudulent cryptocurrency operation.Â
- Palafox promised daily returns of 0.5% to 3% but paid investors with their own or othersâ money.Â
- CEO spent millions on 20 luxury cars, four homes, and designer goods from Rolex, Gucci, Ferrari.
Â
Ramil Ventura Palafox, CEO of Praetorian Group International, received a 20-year prison sentence for orchestrating a Bitcoin Ponzi scheme that defrauded over 90,000 investors worldwide.
The U.S. Department of Justice announced the sentencing following Palafoxâs conviction on wire fraud and money laundering charges.
The scheme collected more than $201 million between December 2019 and October 2021. Investors lost at least $62.7 million through the fraudulent operation.
Fraudulent Bitcoin Trading Operation
Palafox operated Praetorian Group International as a multi-level marketing and Bitcoin trading firm. The 61-year-old dual citizen of the United States and Philippines made false claims about the companyâs trading activities.
He promised investors daily returns ranging from 0.5 to 3 percent on their Bitcoin investments. However, the company was not trading Bitcoin at a scale capable of generating such returns.
The scheme followed a classic Ponzi structure where early investors received payments from new investor funds. Palafox used incoming investments to pay returns to existing participants rather than generating profits through legitimate trading.
This model created an illusion of profitability while the operation remained fundamentally unsustainable. The company attracted global participation through aggressive marketing and promises of consistent returns.
During the operationâs peak, investors deposited more than $30 million in fiat currency into the scheme. Additionally, participants transferred at least 8,198 Bitcoin worth approximately $171.5 million at the time.
The company maintained a website portal where investors could monitor their supposed investment performance. This online platform consistently displayed fraudulent data showing account growth and positive returns.
Between 2020 and 2021, Palafox deliberately misrepresented investment performance through the portal. The fake data convinced victims their investments remained secure and profitable.
This deception prevented early detection and allowed the scheme to continue expanding. Many investors reinvested their purported gains based on the false information displayed on the platform.
Lavish Spending and Asset Seizures
Palafox diverted investor funds for personal luxury purchases and promotional expenses. He spent approximately $3 million acquiring 20 high-end vehicles from manufacturers including Porsche, Lamborghini, McLaren, and Ferrari.
The collection also featured automobiles from BMW, Bentley, and other premium brands. These purchases served both personal enjoyment and created an image of success to attract new investors.
Real estate acquisitions formed another major category of expenditure. Palafox purchased four homes across Las Vegas and Los Angeles with a combined value exceeding $6 million.
He also spent around $329,000 on penthouse suites at luxury hotel chains. These properties provided venues for meetings and demonstrations of wealth to potential investors.
Luxury goods purchases totaled an additional $3 million from high-end retailers. Palafox bought clothing, watches, jewelry, and home furnishings from brands like Louboutin, Gucci, Versace, and Cartier.
His shopping list included items from Ferragamo, Valentino, Rolex, and Hermes stores. He transferred at least $800,000 in cash to a family member along with 100 Bitcoin valued at approximately $3.3 million.
The FBI Washington Field Office and IRS Criminal Investigation collaborated on the investigation. Assistant U.S. Attorneys Jack Morgan and Annie Zanobini prosecuted the case alongside former Assistant U.S. Attorney Zoe Bedell.
The U.S. Attorneyâs Office for the Eastern District of Virginia confirmed that victims may qualify for restitution payments. Affected investors can submit claims through the official channels established by the court.
Polygon price is showing fresh signs of recovery after weeks of steady selling. Since February 11, POL is up nearly 13%, and over the past 24 hours, it has gained around 5.4%, holding most of its rebound near $0.095.
At first glance, the structure looks similar to the setup that triggered Polygonâs 90% rally earlier this year. Price is stabilizing, momentum is improving, and buyers are active near support. But this time, one critical element is missing. The last rally began after sellers were fully flushed out. This time, that flush has not happened yet.
POL Price Repeats the Old Reversal Pattern, But Without a Clean Seller Flush
Before the January rally, Polygon formed a very clear bottom. Between December and early January, the POL price printed a sharp lower low in a single move. Sellers capitulated. Weak hands exited. That created a clean base for buyers to step in.
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This time, the structure is different.
Between January 31 and February 11, POL again made a lower low near $0.087, while the Relative Strength Index, or RSI, formed a higher low. RSI measures buying and selling strength, and this bullish divergence usually signals that selling pressure is weakening. But instead of one decisive breakdown candle, POL tested the same support area twice.
Want more token insights like this? Sign up for Editor Harsh Notariyaâs Daily Crypto Newsletter here.
Two separate candles touched the $0.087 zone. This creates a âlower-low zoneâ instead of a clean lower low.
That matters. When a market prints a single deep low, it usually means sellers have given up, hinting at exhaustion. When the price keeps revisiting the same level, it means sellers are still active. Supply has not been fully absorbed yet. So even though the technical pattern looks similar, the psychology is different.
The market has stabilized, but it has not been fully cleansed. That unfinished seller flush is the foundation of the entire twist.
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Muted Leverage and Rising Shorts Reflect Unfinished Selling Pressure
This incomplete flush is clearly visible in the derivatives data. During the January rally, leverage exploded early.
Open interest on Binance jumped from around $16.6 million to over $40 million, rising more than 140% in a few days. Traders rushed into long positions as soon as the price turned. This time, that has not happened. Since February 11, while POL gained nearly 13%, open interest has stayed near $18.80 million. There is no strong buildup of leverage yet. Possibly hinting at low conviction.
More importantly, funding rates are now negative, near -0.012. Funding rates show which side dominates futures markets. Negative rates mean short traders are paying longs. That signals growing bearish positioning.
In January, funding was positive. Traders were betting aggressively on upside. Now, shorts are building.
This fits perfectly with the price structure. Because sellers have not been flushed out, traders are still comfortable betting against the rally. They see unfinished downside risk. So instead of chasing longs, many are positioning for pullbacks. That lends a major hit to the supposed rallyâs conviction.
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This keeps leverage restrained and momentum controlled. The rally is moving forward, but under constant pressure.
Whale Accumulation Is Supporting Price, But Not Forcing Capitulation
While traders remain cautious, large holders are behaving differently. Since early February, whale holdings have risen from around 7.5 billion to nearly 8.75 billion POL, an increase of about 16%. This shows that long-term buyers are accumulating quietly.
Their buying is the main reason the price keeps rebounding from the $0.087 area.
But whale accumulation has another effect. It absorbs supply without triggering panic. Instead of forcing weak sellers out, whales are slowly taking their coins. That stabilizes the price but delays capitulation. It is worth noting that during the last early-2026 rally, these Polygon whales hardly increased their stash.
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So the market ends up in between:
- Sellers are still present (not flushed out)
- Buyers are active
- No one is fully in control of the Polygon price
This is why the price is rising gradually, not explosively. And that might limit the rally potential going forward.
Key Polygon Price Levels Will Decide Whether Sellers Finally Get Flushed
With unfinished selling pressure still in the system, price levels now matter more than patterns. On the upside, the key level is $0.11.
A clean break above $0.118 would signal that remaining sellers are being overwhelmed. From current levels, that would be another 24% move. It would likely attract leverage and weaken short positions, finally completing the flush. Above that, targets open toward $0.137 and $0.186.
On the downside, the critical support zone is $0.083-$0.087. If POL breaks below that, the lower-low setup fails, and a new one starts forming. That would confirm that sellers still have control and that the unfinished flush is playing out. In that case, the price could slide toward $0.072 and $0.061.
CZ denies Binance ever traded on BitMEX or booked 60,000 BTC in hedge profits during the March 2020 crash, calling the viral allegation âfake newsâ and technically impossible.
Summary
- CZ responds to a viral post alleging Binance hedged client flow on BitMEX for over 60,000 BTC in profit during the March 2020 âCovid crash,â dismissing it as fabricated âfake newsâ.
- He stresses that Binance ânever traded on BitMexâ and points to the exchangeâs onceâdaily withdrawal schedule at the time as a practical barrier to realâtime hedging of that size.
- Commentators and BitMEX itself say there are no records of such flows, framing the debate as another example of rumorâdriven FUD and how old anecdotes morph into conspiracy narratives.
Binance founder Changpeng âCZâ Zhao has moved to quash fresh allegations that the exchange secretly booked more than 60,000 BTC in profits by hedging client risk on BitMEX during the March 2020 crash, dismissing the claim as âfake newsâ and emblematic of the rumorâdriven warfare that still defines much of crypto trading culture.
CZ pushes back on BitMEX hedge narrative
Responding to a viral post from Flood, CEO of fullstack_trade on Hyperliquid, CZ said the allegation that Binance hedged flow on BitMEX for over 60,000 BTC in profit during the Covidâera liquidation cascade was entirely fabricated. â4. Fake news. They just making things up randomly now. Not sure what their goal is. I feel bad for the people believing this without seeing any proof,â he wrote, adding bluntly that âBinance never traded on BitMex.â Zhao tagged BitMEX coâfounder Arthur Hayes to underline a key operational constraint at the time, noting that âBitMex processes withdrawals only once a day,â a structure that would have made realâtime riskâhedging of that magnitude effectively impossible.
BitMEX and traders call claim âimpossibleâ
Market participants quickly weighed in to deconstruct the 60,000 BTC storyline. âExactly. BitMEXâs once-a-day withdrawal window back in 2020 made it impossible for an exchange to use it for a real-time hedge of that size,â commentator Murtuza J. Merchant argued, stressing that âno entity would trap 60,000 BTC in a manual multi-sig during a black swan crash.â He suggested the â60k figure is likely just a garbled memory of oldâ market anecdotes rather than a verifiable trade record. BitMEX itself has since confirmed that it has no records supporting the alleged flows and pointed to its upgrade from onceâdaily batched withdrawals to realâtime payouts as part of broader infrastructure changes since 2020.
FUD, Binanceâs legacy, and market context
Not everyone accepted the âfake newsâ framing. One critic, posting under the handle Broly, countered that âBinance has had a major role in every major downfall of crypto,â citing the exchangeâs role in the FTX collapse, its backing of LUNA before withdrawals were halted, and its influence around other major dislocations. The episode has been widely mocked as yet another round of competitive FUD, but it also underscores how opaque crossâexchange flows, historical grievances, and incomplete memories can quickly harden into conspiracy narratives in a market that still trades on screenshots and hearsay as often as audited disclosures.
Market prices and further reading
This parabolic move comes as digital assets continue to trade as the purest expression of macro risk appetite. Bitcoin (BTC) is hovering around $68,280, with a recent 24âhour range between roughly $64,760 and $71,450. Ethereum (ETH) is trading near the lowâ$2,000 band, with prediction markets clustering key levels between about $1,940 and $2,100 over the near term. Solana (SOL) changes hands around $78â81, roughly flat on the session after a modest pullback from recent highs.
The previous Consumer Price Index (CPI) report was published on 13 January and had a significant impact on Bitcoinâs price. As the BTC/USD chart shows:
â shortly after the release, the price surged aggressively to the 14 January peak;
â it then reversed sharply lower (a sign of a bull trap), creating a bearish outlook â which we highlighted on 21 January;
â subsequently, it broke through multi-month support and entered an accelerated decline towards the $60k area.
For this reason, todayâs US inflation report (16:30, GMT+3) is drawing close attention across multiple markets, as it may have a substantial effect on both the dollar and tradersâ appetite for risk assets, including Bitcoin.
Technical Analysis of the BTC/USD Chart
Bitcoinâs price swings have formed a descending channel, shown in red. Within this framework:
â the lower boundary (L) appears to be key support. When the price dipped below it on 6 February, aggressive buyers stepped in, resulting in a candle with a long lower shadow;
â the QL line, which divides the lower half of the channel into two sections, is acting as resistance â as reflected in price action on 9 February.
The ATR indicator is trending lower, signalling declining volatility, which suggests the market is awaiting important news. Higher inflation is generally seen as a factor that could delay interest rate cuts, strengthen the dollar and bond yields, and weigh on BTC/USD. Conversely, softer inflation would be supportive for cryptocurrencies.
If the CPI release does not produce major surprises, Bitcoin may continue to trade within the broad LâQL range.
FXOpen offers the world’s most popular cryptocurrency CFDs*, including Bitcoin and Ethereum. Floating spreads, 1:2 leverage â at your service (additional fees may apply). Open your trading account now or learn more about crypto CFD trading with FXOpen.
*Important: At FXOpen UK, Cryptocurrency trading via CFDs is only available to our Professional clients. They are not available for trading by Retail clients. To find out more information about how this may affect you, please get in touch with our team.
This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.
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