TLDR:

• 6.04 million BTC, or 30.2% of the issued Bitcoin supply, already has its public key visible on-chain.
• Operational exposure at 4.12M BTC exceeds structural exposure, driven largely by address reuse behavior.
• Exchange-related balances account for 1.66M BTC, nearly 40% of all operationally unsafe Bitcoin supply.
• Coinbase shows only a 5% of the balance is exposed, while Binance and Bitfinex show 85% and 100%, respectively.

Bitcoin’s quantum exposure has become a measurable on-chain reality, with new data revealing the scale of the risk.

According to blockchain analytics firm Glassnode, approximately 6.04 million BTC—30.2% of the issued supply—currently have their public keys visible on-chain.

The remaining 13.99 million BTC, or 69.8%, shows no public-key exposure at rest. This data offers a clearer picture of where Bitcoin’s cryptographic vulnerabilities actually stand today.

Structural and Operational Exposure Drive Bitcoin’s Quantum Risk

Glassnode separates Bitcoin’s quantum-exposed supply into two distinct categories. Structural exposure accounts for 1.92 million BTC, or 9.6% of issued supply. Operational exposure is the larger share, totaling 4.12 million BTC, equivalent to 20.6% of all issued Bitcoin.

Structural exposure comes from output types that reveal public keys by design. These include early Pay-to-Public-Key (P2PK) outputs from the Satoshi era, legacy bare multisig structures, and modern Taproot (P2TR) outputs.

Though different in era and purpose, all share one key property: the public key remains visible on-chain while the coin sits unspent.

Satoshi-era coins present a particular challenge within structural exposure. If those coins are lost or abandoned, they cannot be voluntarily migrated to safer address formats.

As Glassnode notes, Taproot itself is not inherently unsafe — it improves privacy and scripting flexibility. However, its output key remains visible, making it structurally exposed under this specific framework.

Operational exposure, meanwhile, is entirely behavior-driven. Output types such as P2PKH and P2WPKH can protect public keys through hashing.

However, once a key is revealed during a spend, any remaining balance tied to that address enters the exposed category. This is the address-reuse problem in practice.

Exchange Custody Practices Shape the Operational Exposure Landscape

Exchange-related balances make up a notable portion of operationally exposed Bitcoin. Within the 4.12 million BTC operationally unsafe bucket, 1.66 million BTC — roughly 8.3% of total supply — is exchange-related. That figure represents about 40% of all operationally unsafe Bitcoin.

Glassnode further noted that exposure varies widely across individual custodians. Coinbase shows only 5% exposed balance among its labeled holdings. Binance and Bitfinex, however, show 85% and 100% susceptible balances, respectively, under this methodology.

Sovereign treasuries present a different picture entirely. The US, UK, and El Salvador all show 0% quantum exposure among their labeled holdings. Governments have consistently maintained above 99% operationally safe balances over the years.

The data also shows exchanges have drifted from roughly 55% operationally safe in 2018 to around 45% today. Glassnode notes this trend is reversible through standard address-management practices, including avoiding address reuse and rotating change outputs. No immediate risk ranking should be read into these figures.

Ethereum price remained under pressure on Tuesday as worsening technical structure, aggressive ETF outflows, and accelerating whale distribution pushed traders to closely monitor whether the key $2,000 psychological support level could soon fail.

According to data from crypto.news, Ethereum (ETH) traded around $2,120 at press time on May 20 after slipping below the lower boundary of a bullish ascending channel visible on the daily chart. The asset has now erased much of its rebound from April lows after repeatedly failing to reclaim the $2,300 resistance region during recent recovery attempts.

The latest breakdown has strengthened bearish sentiment because ascending channels are generally viewed as bullish continuation formations. When price decisively loses the lower support trendline, it often signals weakening buyer momentum and the potential start of a deeper correction phase.

Ethereum’s broader trend structure also remains unfavorable. The daily chart shows ETH continuing to trade below the Supertrend resistance indicator near $2,338, indicating that sellers still maintain control over the dominant trend.

Momentum indicators have similarly deteriorated in recent sessions. The Relative Strength Index has dropped toward the mid-30 region, reflecting weakening bullish momentum without yet reaching deeply oversold conditions. That distinction remains important because crypto assets often experience stronger relief rallies only after signs of seller exhaustion become more visible.

At the same time, institutional demand for Ethereum exposure has continued to deteriorate.

U.S.-listed spot Ethereum ETFs recently recorded more than $148 million in net outflows so far this week, while cumulative withdrawals over the past several sessions crossed $255 million. The persistent outflow streak has significantly reduced immediate buy-side liquidity during a period of elevated macro uncertainty across financial markets.

Per data from SoSoValue, BlackRock’s ETHA and Fidelity’s FETH continued accounting for a large share of recent withdrawals as institutional investors reduced exposure to risk assets.

The sustained ETF weakness comes as several large financial firms have recently turned more cautious on crypto flows.

JPMorgan analysts recently noted that Ethereum ETF demand has remained weaker than many market participants initially expected following launch enthusiasm earlier this year. The bank reportedly pointed to lower institutional participation, limited staking integration, and growing competition from Bitcoin ETFs as factors constraining sustained inflows into Ethereum investment products.

The bank additionally suggested that macroeconomic uncertainty and elevated Treasury yields were contributing to a weaker appetite for high-beta digital assets.

Meanwhile, crypto market maker Wintermute recently noted that Ethereum ETF flows have remained considerably weaker than many institutional participants initially expected following launch enthusiasm earlier in the cycle.

The firm suggested that short-term institutional positioning had become increasingly defensive amid deteriorating macroeconomic conditions and reduced speculative appetite across crypto markets.

Broader de-risking trends have also intensified following persistent inflation concerns and rising bond yields. U.S. 10-year Treasury yields recently climbed toward multi-month highs, increasing the opportunity cost of holding non-yielding assets such as Ethereum.

Energy markets have additionally contributed to weaker sentiment across risk assets. Brent crude oil recently remained elevated amid ongoing geopolitical tensions involving the United States and Iran, further pressuring broader crypto market appetite.

At the same time, traders are becoming increasingly concerned about large-holder activity on the Ethereum network.

Why are Ethereum whales reducing exposure?

Recent on-chain data suggests that major Ethereum holders have been aggressively scaling back positions over the past several weeks.

Crypto analyst Ali Martinez recently highlighted a sharp decline in the number of large Ethereum whale addresses.

“Over the past two months, approximately 60 whale addresses holding 10,000 ETH or more have completely emptied or consolidated their balances,” Martinez wrote in a May 20 X post.

Martinez warned that such large-scale exits frequently signal institutional profit-taking and declining mid-term confidence among major market participants.

“When distinct entities with multi-million dollar positions exit the network in such a short window, it typically signals institutional profit-taking and asset relocation,” he said.

The analyst additionally noted that the reduction in whale participation coincided with heavy exchange inflows, often interpreted by traders as a sign that large holders may be preparing to sell.

The whale distribution trend has emerged alongside rising concerns about weakening market liquidity.

Several major wallets, including addresses associated with early Ethereum participants and treasury firms, have recently transferred significant amounts of ETH toward centralized exchanges. While exchange transfers do not always indicate immediate selling intent, traders frequently view such activity as a bearish signal during already fragile market conditions.

Ethereum’s market dominance has also continued slipping during recent weeks as capital rotates toward stablecoins and defensive positioning.

At the same time, broader participation across Ethereum derivatives markets has weakened substantially.

Open interest across Ethereum futures markets has declined following repeated failed breakout attempts above the $2,200 and $2,300 resistance zones. Reduced speculative participation often limits the strength of recovery rallies because fewer traders remain willing to aggressively increase bullish exposure.

The broader leverage structure has also become increasingly unstable.

More than $600 million in leveraged crypto long positions were recently liquidated after Ethereum faced another rejection near the $2,400 region. The liquidation cascade significantly weakened trader confidence and triggered further deleveraging across altcoin markets.

Polymarket prediction pools now assign roughly a 56% probability that Ethereum could fall below $2,000 before the end of May, reflecting increasingly bearish market expectations.

Could a liquidation cascade accelerate ETH’s drop below $2,000?

Ethereum’s current technical structure suggests the market may be approaching a highly sensitive volatility zone.

On the daily chart, ETH recently broke the lower boundary of its ascending channel after spending several weeks consolidating within the formation. Failed bullish continuation patterns often trap late long-position traders, increasing the risk of accelerated downside movement once support gives way.

The breakdown becomes especially important because Ethereum had already failed multiple times to reclaim the $2,300 resistance region before losing channel support.

That repeated rejection reinforced the broader lower-high structure that has dominated Ethereum’s trend throughout recent months.

CoinGlass liquidation heatmap data additionally shows dense leverage clusters sitting near both the $2,150 resistance area and the lower $2,050–$2,000 support region.

Those liquidity pockets remain important because heavily leveraged positions frequently attract short-term volatility due to concentrated stop-loss orders and forced liquidation triggers.

If Ethereum successfully reclaims the $2,150 region, short liquidations could potentially fuel a temporary relief rally toward higher liquidity zones.

However, the downside liquidity structure currently appears more vulnerable.

A decisive breakdown below $2,050 could trigger a fresh wave of forced long liquidations as overleveraged traders begin exiting positions simultaneously. That dynamic becomes particularly dangerous in crypto markets because perpetual futures traders often use significantly higher leverage compared to traditional financial markets.

If liquidation pressure accelerates below $2,000, Ethereum could rapidly revisit lower support zones near $1,850 or even the broader structural support region around $1,700.

The psychological significance of the $2,000 level further increases the probability of heightened volatility. Round-number support zones often attract concentrated trader positioning, automated stop-loss activity, and liquidation clusters.

Broader sentiment across altcoins has also weakened as investors continue rotating toward safer assets amid rising macroeconomic uncertainty.

Still, some longer-term Ethereum fundamentals remain relatively stable despite the current correction. Institutional experimentation involving tokenization, stablecoins, and Ethereum-based financial infrastructure continues expanding gradually even as short-term market sentiment deteriorates.

Bitwise Asset Management is spotlighting Hyperliquid as a standout, calling it “one of the most mispriced assets in crypto today” even as the project has begun to deliver strong performance this year. In a Tuesday note, Bitwise’s chief investment officer Matt Hougan argued that Hyperliquid’s native token, HYPE, has surged 77% year-to-date, suggesting investors are underestimating both its impact and its value.

The momentum comes as Bitwise and 21Shares rolled out exchange-traded funds tied to HYPE in the United States last week, signaling growing institutional interest in integrating innovative crypto exposures into traditional markets. Hougan contends the market has mispriced Hyperliquid by focusing on its role as a perpetual crypto futures exchange, rather than recognizing its broader potential as a “global super-app.”

Key takeaways

• Hyperliquid’s HYPE token has climbed about 77% year-to-date, according to Bitwise’s assessment, fueling a debate on its true economic value beyond futures trading.
• Bitwise launched a HYPE exchange-traded fund on the NYSE, joining a wave of traditional-finance players seeking to offer crypto-native strategies to conventional investors.
• 21Shares previously rolled out a HYPE ETF, which drew roughly $1.2 million in net inflows on debut—an uptake that was solid but modest against other altcoin ETF starts.
• Hyperliquid’s platform centers on perpetual futures but also spans stocks, prediction markets and other assets, with nearly half of its volume tied to non-crypto assets.
• The regulatory backdrop is evolving: SEC Chair Gary Gensler’s successor or contemporaries have signaled openness to “super-app” structures that custody and trade multiple asset types, including tokens tied to securities, on platforms beyond traditional oversight.

Hyperliquid’s multi-asset thesis versus market pricing

At the heart of the debate is how investors should value Hyperliquid. While the platform is best known for its crypto perpetual futures activities, Hougan argues the project is best understood as a multi-asset gateway—the kind of “global super-app” that could unify crypto trading with stocks, prediction markets and other asset classes. In his view, treating Hyperliquid primarily as a crypto futures exchange understates its strategic reach and growth potential.

Hyperliquid has positioned itself to capture a broader slice of activity by integrating non-crypto assets into its trading fabric. Hougan notes that nearly half of the platform’s volume is linked to assets outside the crypto space, a detail that underlines the case for a valuation that reflects cross-asset demand rather than pure crypto futures exposure. The argument mirrors a broader shift in crypto markets as platforms expand into asset tokenization, prediction markets and other revenue sources to diversify revenue streams.

ETF launches as a bridge to traditional investors

The listing of HYPE-linked ETFs marks a milestone in the ongoing effort to translate crypto exposure into familiar investment vehicles. Bitwise’s NYSE listing follows 21Shares’ earlier foray into the same space. While 21Shares’ debut drew about $1.2 million in net inflows, industry observers have cautioned that this level remains modest when stacked against other high-profile altcoin ETF launches. The performance of these products in their early weeks can influence how comfortably traditional investors tilt toward newer crypto-native strategies.

Beyond investor sentiment, the ETF path underscores a broader trend: traditional market participants seeking regulated access points to innovative crypto protocols. Hyperliquid’s blend of futures trading with cross-asset functionality may appeal to funds looking for diversified crypto exposures without venturing fully into unregulated, purely crypto-native markets.

Regulatory landscape and US access

The environment around multi-asset, crypto-forward platforms is evolving. SEC Chair Paul Atkins and other regulators have signaled interest in “super-app” concepts that can custody and trade multiple asset types under a single regulatory framework. In that context, Atkins has called for exploring how tokens tied to securities might trade on platforms that fall outside conventional regulatory confines, potentially paving the way for broader adoption of cross-asset crypto platforms like Hyperliquid.

Despite the regulatory enthusiasm for broader functionality, Hyperliquid remains outside the United States for now. Hougan stressed that while the platform has matured in several respects, it will need to engage with U.S. regulators and adapt to the country’s framework before it can officially operate there. The path to a U.S. launch will likely hinge on compliance with custody, trading, and securities-token provisions that have proven complex across the sector.

Industry observers note that the push to expand beyond crypto is not unique to Hyperliquid. Other major US crypto platforms—such as Coinbase, Kraken and Gemini—have explored prediction markets and tokenized equities to diversify revenue. The broader question is how regulators will balance investor protection with innovation as platforms seek to aggregate multiple asset classes under one roof.

Beyond the regulatory dialogue, market participants are watching for concrete signals about how Hyperliquid could reframe liquidity and trading choices. Arthur Hayes, co-founder of BitMEX, has also signaled bullish views in connection with HYPE, suggesting that continued volume growth and product expansion could sustain a rally in the token. His perspective complements the investor focus on expanding the platform’s cross-asset capabilities and on attracting users away from centralized exchanges.

For now, Hyperliquid’s true valuation may hinge as much on regulatory clarity as on product milestones. The interplay between expansion plans, cross-asset demand, and regulatory acceptance will shape how quickly HYPE-derived strategies influence the broader crypto market.

In parallel with these developments, industry outlets have highlighted regulatory pushes around Hyperliquid energy trading and related platforms, underscoring a wider debate about how much room regulators will grant for cross-asset crypto ecosystems to operate with fewer friction points. As markets digest these signals, investors and builders will be closely watching how the U.S. path unfolds and whether Hyperliquid can ultimately blend compliance with its multi-asset ambitions.

Looking ahead, observers will want to track regulatory milestones, potential U.S. access developments, and the degree to which Hyperliquid realigns pricing with its broader platform thesis rather than solely its futures-oriented roots.

Key Takeaways

• S&P Dow Jones officially confirmed Cerebras Systems for expedited index inclusion, set to take effect May 25, sparking immediate demand from index-tracking funds.
• Shares of CBRS debuted at $185, launched at $350 on opening day, and briefly touched $385 before settling near $280.
• Full-year 2025 financials showed $510 million in total revenue alongside $87.9 million in net income.
• The company’s proprietary wafer-scale chip spans the size of a dinner plate and reportedly removes latency issues typical of conventional GPU arrays.
• A significant 86% of total revenue derives from just two Abu Dhabi-connected clients, creating notable concentration exposure according to market analysts.

Cerebras Systems has engineered a semiconductor that defies industry convention. Rather than slicing a silicon wafer into hundreds of individual chips and linking them through traditional interconnects, the firm keeps the entire wafer intact. What emerges is a single processing unit approximately the size of a standard dinner plate.

Cerebras Systems Inc., CBRS

This unconventional design captured significant investor interest during its May 14 initial public offering. Shares were offered at $185 each, began trading at $350, and momentarily climbed to $385 during the debut session.

At its highest point, Cerebras‘ valuation approached $100 billion. That represents a remarkable multiple for an organization reporting $510 million in annual revenue and $87.9 million in net earnings for 2025.

The offering attracted demand exceeding supply by 20-fold. This overwhelming interest indicates investors were less focused on present-day metrics and more attracted to the technology’s long-term promise.

The stock retreated to approximately $280 by week’s end, though such profit-taking following a high-profile debut is entirely normal market behavior.

Index Inclusion Provides Additional Momentum

On May 19, Cerebras received additional positive news. S&P Dow Jones announced the firm’s eligibility for accelerated index inclusion, becoming effective May 25.

The expedited pathway bypasses the typical 12-month waiting period for companies meeting specific market capitalization thresholds. For Cerebras, this designation means trillions in passive investment capital will automatically acquire shares.

This requirement generates mandatory purchasing activity, which elevated share prices following the announcement.

Customer Concentration Concerns

Despite considerable excitement, a substantial vulnerability exists within the company’s revenue profile. Just two Abu Dhabi-affiliated entities account for 86% of Cerebras’ total sales.

This represents an extremely concentrated customer base for a company carrying an $80 billion-plus valuation. Any disruption to either relationship would prove difficult to offset quickly.

GuruFocus assigns the company a GF Score of 42 out of 100, with Financial Strength rated merely 3 out of 10. These metrics reflect a business still in development rather than one with established fundamental stability—investors are clearly wagering on future possibilities.

The critical business question moving forward centers on whether Cerebras can secure additional enterprise customers beyond its current primary accounts. News regarding fresh contracts or broader adoption of its CSoft software platform will likely influence stock movement more significantly than quarterly financial results in the immediate future.

As of the current reporting period, no executive transactions have been documented over the past three months, suggesting company leadership is adopting a cautious stance following both the IPO launch and index inclusion announcement.

For years, the cryptocurrency industry celebrated the idea of a multi-chain future. Every new blockchain promised faster transactions, cheaper fees, better scalability, or more innovative ecosystems. At first, this expansion looked healthy. More chains meant more experimentation, more competition, and more opportunities for builders.

But in 2026, the cracks are becoming impossible to ignore.

The average user is exhausted.

Managing multiple wallets, navigating bridges, understanding gas fees across ecosystems, and constantly switching networks has created a fragmented experience that feels increasingly unsustainable. What was once marketed as “freedom of choice” is now becoming operational chaos.

The industry may be approaching a turning point where users stop caring about chains altogether.

The Rise of Chain Fatigue

Early crypto users tolerated complexity because they were explorers. They enjoyed experimenting with protocols, wallets, and infrastructure. But mainstream adoption changes the equation.

Normal users do not want to:

• hold assets across 8 ecosystems
• memorize different wallet setups
• bridge funds every week
• manage multiple gas tokens
• track fragmented liquidity
• worry about bridge exploits

They simply want applications that work.

This growing exhaustion can be described as chain fatigue — the cognitive overload caused by excessive blockchain fragmentation.

What started as ecosystem diversity has evolved into an endless maze of disconnected environments competing for attention.

Ironically, crypto’s obsession with decentralization has often produced the exact opposite of simplicity.

UX Is Becoming the Real Battlefield

For years, blockchain discussions focused heavily on:

• TPS
• consensus mechanisms
• modularity
• rollups
• execution layers
• interoperability standards

But most users do not care about technical architecture.

They care about experience.

The uncomfortable reality is that crypto UX remains far behind traditional consumer technology. Even experienced users still encounter:

• failed bridges
• confusing approvals
• network mismatches
• stuck transactions
• fragmented identity systems
• duplicated liquidity pools

At some point, complexity stops being a feature and becomes a barrier.

This is where the concept of UX collapse enters the conversation.

A system can be technologically advanced yet practically unusable for mass adoption. Multi-chain ecosystems are increasingly at risk of collapsing under their own operational complexity.

The future winners may not be the chains with the best throughput.

They may be the platforms that hide complexity entirely.

Abstraction Layers Are Quietly Taking Over

The market is already responding to fragmentation through abstraction layers.

Instead of forcing users to manually interact with infrastructure, new systems aim to make chains invisible.

The goal is simple:

users interact with applications, not blockchains.

This shift is becoming visible through:

• chain abstraction wallets
• intent-based transactions
• gasless onboarding
• universal accounts
• cross-chain messaging protocols
• automatic routing systems

The user presses one button. The infrastructure handles the rest.

Under this model, the blockchain becomes a backend settlement layer rather than a visible product.

This mirrors how the internet evolved.

Most people today do not know or care which server hosts their favorite application. They care whether the app works smoothly.

Crypto may be heading toward the same destination

Unified Liquidity Will Matter More Than Chain Identity

Liquidity fragmentation has become one of the industry’s largest hidden inefficiencies.

Today, capital is spread across:

• multiple Layer 1s
• Layer 2 ecosystems
• appchains
• sidechains
• bridges
• wrapped assets

As fragmentation increases, liquidity becomes thinner and less efficient.

This creates several problems:

• higher slippage
• weaker markets
• duplicated infrastructure
• unstable yields
• reduced capital efficiency

The next evolution may prioritize unified liquidity instead of isolated ecosystems.

Protocols are increasingly competing to aggregate liquidity across chains into seamless execution environments. Users do not want to think about where liquidity exists — they want the best execution automatically.

The chain itself becomes secondary.

Liquidity access becomes primary.

This is a major philosophical shift from the earlier “my chain vs your chain” mentality.

The Emergence of App-Centric Ecosystems

Another major trend accelerating this transition is the rise of app-centric ecosystems.

Historically, users aligned themselves with chains:

• Ethereum users
• Solana users
• Avalanche users
• Cosmos users

But increasingly, users identify with applications instead:

• trading platforms
• gaming ecosystems
• social protocols
• AI agents
• payment apps

This changes incentives dramatically.

If users remain loyal to applications rather than infrastructure, then chains become interchangeable backend providers competing for app deployment.

In this environment:

• apps own the relationship
• infrastructure becomes commoditized
• Users stop caring about settlement layers

This could fundamentally weaken chain maximalism as a cultural force.

The average user may not even know which chain an application runs on in the future — and they may not need to know.

The industry often confuses infrastructure expansion with user progress.

More chains do not automatically create better experiences.

In many cases, they create:

• fragmented communities
• duplicated ecosystems
• liquidity silos
• security risks
• onboarding friction

Builders may love optionality.

Users usually prefer simplicity.

This tension is becoming increasingly visible as crypto attempts to transition from niche experimentation into global consumer adoption.

The infrastructure race is slowly colliding with human behavior.

And human behavior almost always favors convenience.

The Future May Be Chain-Agnostic

The next major phase of crypto could look very different from today’s ecosystem wars.

Instead of asking:

“Which chain are you on?”

Users may eventually ask:

“Which app are you using?”

Or they may stop asking about chains entirely.

Infrastructure may fade into the background the same way cloud servers disappeared from mainstream conversation.

The winning systems may not be the loudest blockchains.

They may be the ecosystems capable of:

• abstracting complexity
• aggregating liquidity
• simplifying onboarding
• minimizing friction
• creating seamless user experiences

In that future, chain maximalism may not die because one chain wins.

It may collapse because users stop caring altogether.

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A pair of Republican lawmakers is calling for a permanent ban on a US central bank digital currency (CBDC) to be enshrined in the 21st Century ROAD to Housing Act, as the measure is expected to come up for a vote in the US House this week. 

The bill released by the US Senate Committee on Banking, Housing and Urban Affairs in March mainly concerns revisions to federal housing programs but also includes a section banning the Federal Reserve System or any Federal Reserve bank from issuing a CBDC or similar instrument until Dec. 31, 2030.

The US House has created its own amended bill, which Congressman Mike Flood said reverses the “backdoor green light for a CBDC” and aims to make the ban permanent.

The amended legislation is expected to go to a vote in the House this week. If it passes, the bill will return to the Senate, where it could undergo further amendments. The legislation must pass both chambers before it can go to President Donald Trump’s desk to be signed into law.

Critics of CBDCs often cite their potential for misuse. The Human Rights Foundation said the benefits of CBDCs include the potential to expand financial inclusion for populations with limited access to the financial system. Drawbacks include the currency’s potential to infringe on privacy and open new avenues for government corruption, among other concerns.

Ban needs to be made permanent, representative says

US Representative Warren Davidson, a member of the House, also supported a permanent CBDC ban as the “2030 sunset works a pre-launch development period.”

“The US House of Representatives could deliver a unifying win this week with bipartisan housing affordability legislation. Instead, they currently plan to deliver a go-live date for Central Bank Digital Currency, using housing as the Trojan Horse,” he added.

Source: Warren Davidson

The American think tank The Atlantic Council’s tracker lists only three countries that have officially deployed a CBDC: Nigeria, Jamaica, and the Bahamas, while 41 others are in the pilot phase.

Alternate bills to ban a CBDC on the sidelines 

Meanwhile, Tom Emmer, the House majority whip, one of the top Republican leadership positions in Congress, is advocating for his Anti-CBDC Surveillance State Act. 

The bill passed the House on July 17 but has yet to receive full Senate approval. It aims to block the Federal Reserve from creating or issuing a CBDC.

Source: Tom Emmer

“The Chinese Communist Party uses a central bank digital currency (CBDC) to surveil and control its people. If the US adopted its own CBDC, privacy and economic freedom as we know it would cease to exist,” he said.

Related: Bank of Korea governor backs CBDCs, deposit tokens in first address

“My Anti-CBDC Surveillance State Act BANS our government from ever creating this Orwellian tool. The House passed it. Now, the Senate must act.”

Previously, Senator Mike Lee introduced the “No CBDC Act” as a standalone bill prohibiting the Fed or Treasury from issuing a CBDC. However, it stalled in Congress. 

Magazine: Bitcoin ETFs bleed $1B, Aave’s $71M ETH unfreeze bid delayed: Hodler’s Digest, May 10 – 16

The post-bankruptcy trust for Prime Trust has filed suit against Swan Bitcoin, alleging the Bitcoin services company exploited insider knowledge to pull nearly $1 billion in assets from the custodian days before its collapse.

The complaint, filed in Delaware bankruptcy court, accuses Electric Solidus, the corporate entity behind Swan, of receiving over $24.6 million in cash, 11,994 Bitcoin (BTC) currently worth around $923 million, roughly 5 million USDt (USDT) and smaller amounts of other digital assets before Prime Trust’s August 2023 bankruptcy.

At the center of the allegations is an unidentified Prime Trust senior executive who, while working at the company, was also a paid adviser to Swan through a side arrangement dating back to July 2019.

Four days before Prime Trust met with Nevada regulators on May 26, 2023, the executive allegedly opened an encrypted chat with Swan CEO Cory Klippsten and set messages to auto-delete every 24 hours. The feature was allegedly turned off the day after the meeting, when Swan withdrew more than 10,000 Bitcoin from Prime Trust.

Source: CourtListener

The lawsuit is part of a broader effort by Prime Trust’s post-bankruptcy litigation trust to recover assets transferred out of the custodian in the weeks leading up to its collapse. The trust alleges Swan used insider access to move funds ahead of other customers as Prime Trust’s financial condition deteriorated.

“Swan knew to transfer fiat and crypto from Prime immediately prior to Prime filing for bankruptcy to avoid catastrophic losses,” the complaint wrote.

A Swan representative told Cointelegraph that Prime Trust held customer assets in individually owned trust accounts.

“The bankruptcy estate is now trying to take assets it held in trust as custodian, from a party that never received them. Customer assets held by a trust company are not available to general unsecured creditors, and we expect the courts to say so,” the representative said.

Related: House Committee pushes Trump to fill CFTC seats as crypto regulation ramps up

Swan allegedly emptied Prime Trust accounts

The complaint further alleges that Swan abruptly expanded a partial asset transfer into a full evacuation of all funds, one day before the Nevada meeting.

Prime Trust staff scrambled to comply before the close of business that day, according to Slack communications cited in the filing.

The complaint alleges Prime created an internal ledger labeled “PT FBO Swan Customers” on May 25, an account that did not previously exist, to make it appear Swan’s funds had always been held in a separate trust, which would have made them harder to claw back in bankruptcy.

“In substance, however, those assets had not been and were not held in trust for the benefit of Swan’s customers,” the suit claims.

The plaintiff is seeking recovery under preferential transfer and actual fraudulent transfer provisions of the Bankruptcy Code, and is asking the court to disallow any future claims Swan might assert against the estate until restitution is made.

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