Cardano founder Charles Hoskinson has defended recent AI content tests after users criticized an AI-generated post shared through Input Output’s X account. 

The discussion followed his June 20 post titled “AI Slop, IOG X, and the Future of Marketing,” where he addressed how the team is testing new tools for communication.

Hoskinson said the AI-generated influencer came from work around Midnight City and was shared in good faith. He said the goal was to show what new systems can do, not to replace people or mislead the community. The response showed that parts of the Cardano audience remain careful about synthetic media.

An attacker exploited an “infinite mint” vulnerability in a smart contract on the Secret Network, creating wrapped Axelar assets without proper backing. The incident resulted in a reported $4.67 million loss, according to blockchain research firm Common Prefix.

The breach occurred on June 10 but was identified a week later, on June 17, after a failed cross-chain transaction triggered an “insufficient funds” error tied to the drained account, Common Prefix said in a report released Friday. The funds were then routed to Ethereum and distributed across multiple wallets before being moved to exchanges, the firm added.

Key takeaways

• Common Prefix attributes the $4.67 million exploit to an infinite-mint flaw in a Secret Network contract that minted unbacked Axelar-wrapped tokens.
• The issue was traced to missing verification of the source of inbound transfers before minting, allowing forged deposits on an attacker-controlled channel.
• Wrapped assets affected included saUSDT, saUSDC, saDAI, saWETH, saWBTC, saWBNB and sawstETH.
• Secret Network said holders of Axelar-bridged saXXX tokens may face loss, while both Secret and Axelar emphasized that Secret’s token SCRT and Axelar’s infrastructure were not directly compromised.

How the exploit worked on Secret’s Axelar bridge

Secret Network is a privacy-focused layer-1 blockchain built on the Cosmos ecosystem. Axelar, meanwhile, is designed to enable interoperability between different blockchain networks. The exploit targeted a smart contract handling Axelar-wrapped assets on Secret, where wrapped “saTokens” are expected to represent collateral held in escrow.

Common Prefix reported that the contract failed to verify the provenance of inbound transfers before minting. As a result, the attacker could “forge” deposits over an attacker-controlled channel, triggering the minting of “genuine saTokens with no assets backing them,” the firm said.

After minting, the attacker redeemed the Axelar-wrapped assets back through legitimate channels. Common Prefix said the redemption drained the real Axelar-wrapped assets held in escrow, converting the unbacked representations into backed value.

Timeline and discovery: from June 10 to June 17

While the exploit itself took place on June 10, the crucial indicator of trouble appeared later. Common Prefix said the breach was discovered on June 17 after a cross-chain transaction failed due to an “insufficient funds” error connected to the account that had been drained.

This delay matters for users because it highlights how bridge or escrow-related systems can continue operating normally—or at least not immediately signal obvious failures—until specific downstream actions surface the shortfall. In practice, that can mean the window between minting and detection may be long enough for assets to be redistributed before investigators fully connect the dots.

Where the stolen funds went

Common Prefix reported that after exploiting the wrapped tokens, the attacker moved the assets to the Ethereum blockchain and converted them to Ether (ETH). The firm also said the attacker split the proceeds among roughly 30 wallets.

Those wallets were then used to move funds into exchanges, including KuCoin, ChangeNow, and HitBTC, according to the report. The multi-wallet approach is a common tactic in laundering activity, aimed at complicating tracing by breaking up transaction flows and distribution patterns.

Which tokens were affected—and what Secret said to users

The affected Axelar-wrapped assets minted without backing included saUSDT, saUSDC, saDAI, saWETH, saWBTC, saWBNB and sawstETH. Common Prefix emphasized that the backing of these tokens was compromised, meaning token holders may not be able to redeem them for their intended collateral.

On Saturday, Secret Network issued a security notice stating that holders of Axelar-bridged saXXX tokens on Secret should expect their backing to be affected and that their funds “may be lost.”

Secret’s own native token, Secret (SCRT), was not reported as impacted by the incident. However, the notice underscores that this was not a general compromise of the network itself, but a targeted weakness in the minting path for specific bridged assets.

Axelar’s response: not compromised, firewall contained impact

Axelar acknowledged the incident on Saturday after “some confusion” emerged around the breach. In its statement, Axelar said neither Axelar nor IBC (Inter-Blockchain Communication) was compromised.

Axelar added that the exploited token smart contract “was not developed, deployed, or maintained by Axelar,” and that Axelar’s firewalling prevented the impact from spreading to other chains.

For investors and builders, the distinction is significant: it narrows the likely source of failure to the contract logic on the Secret side rather than Axelar’s core interoperability infrastructure. Even so, cross-chain systems remain tightly coupled through assumptions about escrow, message integrity, and minting verification—exactly where this exploit appears to have broken those assumptions.

Part of a wider wave of protocol attacks

This breach arrives amid a broader pattern of cross-chain and protocol exploitation. Common Prefix noted it is among a series of hacks and exploits occurring this month, with at least 22 incidents reported by DeFiLlama’s ongoing hack tracking.

Within that same recent period, other reported bridge-related losses included Humanity Protocol and Syscoin Bridge, which earlier this month suffered reported losses of $32 million and $8 million respectively, according to coverage referenced in Common Prefix’s context.

While each event has its own root cause, the recurring theme is similar: many of the highest-value failures occur where bridging logic meets asset accounting—especially when systems mint representations based on messages or deposits that are not strongly authenticated end-to-end.

Going forward, users holding affected saTokens should watch for further announcements from Secret and for any guidance on whether and how remaining balances can be redeemed. The key open question is how quickly and completely the affected minting pathway can be audited and patched—because in cross-chain ecosystems, even small verification gaps can translate into real, backed-value drains once an attacker finds a redemption route.

An attacker has used an “infinite mint” bug in a vulnerable smart contract on the Secret Network to create unbacked, wrapped versions of Axelar-wrapped assets, resulting in a $4.67 million exploit. 

The exploit happened on June 10 but was discovered a week later on June 17, after a failed cross-chain transaction caused by an “insufficient funds” error in the drained account was detected, blockchain research firm Common Prefix reported on Friday.

The attacker redeemed the Axelar-wrapped assets (saTokens) back over legitimate channels to drain the real Axelar-wrapped assets held in escrow because the smart contract did not verify the source of the inbound transfer before minting, so “deposits forged over an attacker-controlled channel minted genuine saTokens with no assets backing them,” Common Prefix said.

It is the latest in a series of crypto protocol hacks and exploits this month, which now number at least 22, according to DeFiLlama. The Secret Network was one of the largest, behind the Humanity Protocol and Syscoin Bridge, which lost $32 million and $8 million, respectively, earlier this month.

The Secret Network is a privacy-focused, layer-1 blockchain built on the Cosmos ecosystem, and Axelar is a decentralized interoperability network that connects different blockchain ecosystems.

The Axelar-wrapped assets minted without backing in the exploit included saUSDT, saUSDC, saDAI, saWETH, saWBTC, saWBNB and sawstETH.

Related: Aztec Connect’s abandoned smart contract exploited for $2.1M

The attacker moved the exploited assets to the Ethereum blockchain and converted them to Ether (ETH). They then split the haul between around 30 wallets, eventually depositing the funds into exchanges including KuCoin, ChangeNow, and HitBTC, according to Common Prefix.

“If you hold Axelar-bridged saXXX tokens on Secret, please be aware their backing was affected, and your funds may be lost,” the Secret Network said on Saturday. 

Stolen funds split into multiple wallets for obfuscation. Source: Common Prefix

The Secret Network’s token, Secret (SCRT), was not impacted by the incident, but it remains down 99% from its 2021 all-time high, currently trading at $0.058. Axelar’s native token, Axelar (AXL), is in a similar state, trading at $0.045, down 98% from its 2024 peak. 

Axelar posted a confirmation on Saturday following “some confusion” around the incident.

“Neither Axelar nor IBC [Inter-Blockchain Communication] was compromised. The exploited token smart contract was not developed, deployed, or maintained by Axelar. Axelar’s firewalling prevented the impact from spreading to other chains,” it said. 

Magazine: Bitcoin decouples from tech stocks, Ether eyes ‘selling wave’: Market Moves

MicroStrategy’s flagship Bitcoin funding vehicle, Strategy’s Stretch (STRC), has traded at a persistent discount to its $100 liquidation preference since late July 2025, prompting renewed scrutiny of its capital-raising design. As STRC’s market price fell to new lows in the lead-up to mid-2026, critics framed the move as evidence that the structure may rely on continuous inflows to meet shareholder expectations.

At the same time, other analysts argue the steep drawdown reflects leverage dynamics rather than a fundamental deterioration in Strategy’s Bitcoin accumulation plan. For institutional stakeholders, the episode matters not only for how STRC functions economically, but also for how such instruments fit within broader oversight and investor-protection frameworks—particularly as leveraged exposures and yield-linked terms raise compliance and risk-management questions.

Key takeaways

• STRC was structured to trade near its $100 par (liquidation preference) via adjustable dividends tied to that benchmark.
• In mid-2026, STRC traded materially below $100, with reports indicating a late-day close below par after a record low intraday print.
• The widening discount has coincided with a slowdown in Strategy’s weekly Bitcoin additions, increasing attention on funding efficiency.
• Critics—including Peter Schiff—reiterated claims that the instrument resembles a “centralized Ponzi,” while analysts counter that leverage wipeouts better explain the move.
• STRC’s dividend mechanics are being debated in terms of how the liquidation preference converts into an effective yield for discounted entry prices.

Why STRC’s discount to $100 is drawing regulatory-style scrutiny

STRC was introduced in July 2025 as a preferred-equity style instrument designed to remain close to its $100 par value, supported by adjustable dividends. The practical objective, as described by market participants around the offering, is to create a predictable redemption/return framework while enabling Strategy to raise capital to purchase additional Bitcoin.

According to the reported trading updates, STRC fell to an intraday record low of $82.53 and closed around $88.59—still below the $100 liquidation preference. While a discount can occur for many reasons in credit-like and preferred structures, sustained divergence from par tends to intensify investor-protection concerns: it can indicate that the market assigns a higher probability of stress scenarios than the instrument’s contractual yield implies.

That dynamic is now fueling accusations that STRC depends on ongoing capital formation to sustain returns—an argument Peter Schiff has repeated, describing STRC as “a classic centralized Ponzi.” Critics’ central compliance-adjacent concern is not the existence of leverage per se, but the possibility that the structure’s economics may become self-reinforcing in a way that disadvantages later entrants if market prices cannot stabilize near par.

Strategy has not, in recent public statements cited in the reporting, directly engaged with the “Ponzi” characterization. Instead, it continues to position STRC as preferred equity supported by its Bitcoin treasury strategy. Nevertheless, the market’s focus has shifted to the contract terms that link dividends to the $100 benchmark and to the implications for investors who adopt leveraged positions.

From an institutional monitoring perspective, this is the kind of dispute that can evolve into formal regulatory or litigation scrutiny: when the price relationship to a stated benchmark deteriorates, supervisors and compliance teams typically ask whether disclosure and risk labeling adequately reflect the instrument’s downside behavior, including margin-call pathways for leveraged holders.

Dividend mechanics and the effective yield debate

Reportedly, STRC uses an adjustable dividend framework with a currently stated 11.5% annualized rate, with proceeds primarily directed toward acquiring Bitcoin. However, the instrument’s market price movement changes how discounted investors interpret return.

Analysts cited in the coverage argue that STRC dividends are calculated relative to the $100 liquidation preference rather than the current market price. Under that interpretation, a discounted entry can produce a higher effective yield than the headline rate. For example, one analyst noted that at $90, the effective yield would be approximately 12.8%, while at $85 it could be around 13.5%, assuming the dividend rate remains anchored to the $100 liquidation preference.

This distinction matters in practice because it highlights a structural tension: a vehicle can offer an attractive contractual yield while still trading far below par due to market-implied stress, forced deleveraging, or holder expectations about future dividend adjustments and redemption outcomes.

Strategy’s next dividend rate announcement has been reported as scheduled for June 30, with the company reportedly retaining alternative funding options such as issuing additional Strategy shares and using cash reserves—elements that, from a governance standpoint, influence whether the instrument is likely to remain within a stable pricing band or whether it will continue to trade at a deep discount.

Slower Bitcoin purchases and funding-efficiency questions

Alongside the price drawdown, reporting indicates that Strategy’s pace of Bitcoin accumulation moderated as STRC traded below par. The company added 1,550 BTC for $101 million in the week ending June 8 and 1,587 BTC for $100 million in the week ending June 15, taking total holdings to 846,842 BTC.

These additions were meaningful, but the weekly dollar amounts were reported to be much smaller than earlier in 2026. For comparison, Strategy was reported to have bought 34,164 BTC for $2.54 billion in a single week during April, and 24,869 BTC for roughly $2.01 billion in May—figures that underscore how the “cash-in-to-BTC” conversion can change when the funding vehicle trades at a discount.

In addition, a small Bitcoin sale was reported earlier in June—32 BTC, worth approximately $2.5 million—described as potentially linked to dividend obligations. While the sale was minimal relative to the size of Strategy’s overall treasury, it reflects a key operational reality for dividend-linked structures: even if the primary plan is to finance purchases via issuance proceeds, cash requirements can still require asset sales when market conditions weaken.

In institutional terms, this is where compliance and risk governance intersect with capital markets execution. A vehicle that depends on continuous issuance can face liquidity and market-impact constraints when its own price dislocates from its stated preference benchmark, potentially affecting obligations to income-seeking or leveraged investors.

Leverage wipeout vs. structural failure

Not all analysts interpret STRC’s decline as a sign of failing fundamentals. Jesse Myers, head of Bitcoin strategy at The Smarter Web Company, argued that the move resembles a leverage wipeout rather than an impairment in Strategy’s broader positioning. In the cited commentary, Myers suggested that STRC holders might assume stable trading near the $99–$100 band and that once the price fell, margin calls and forced selling amplified the downward momentum.

Other market commentators similarly focus on how leveraged investors can create nonlinear liquidation dynamics: a discount that begins as a repricing can become accelerated when position sizing is calibrated to assumptions that do not hold.

Still, the debate remains unresolved for compliance observers because both narratives—leverage-driven volatility and structural dependence—can coexist. The instrument may behave as expected under certain conditions while also exhibiting fragile performance when market participants reduce exposure or when funding terms become less favorable. That uncertainty is precisely what supervisors and institutional risk teams often seek to clarify through documented scenario analysis, stress testing, and disclosures around redemption, dividend adjustment triggers, and investor suitability.

Closing perspective

With STRC continuing to trade below its $100 liquidation preference and with dividend-rate decisions and capital-raising activity tied to that benchmark, the next dividend announcement and any further changes in issuance patterns will likely determine whether the discount stabilizes or deepens. For institutional compliance and legal teams, the episode highlights the importance of monitoring how leveraged investor behavior and contract-linked yield mechanics interact with pricing—especially for instruments positioned as central to a broader Bitcoin treasury strategy.