DeFi cryptocurrency Mutuum Finance has launched its V1 protocol on the Sepolia testnet, introducing the core mechanics of its lending and borrowing system. The team also stated that an additional feature is scheduled to be rolled out next week as development continues.

Mutuum Finance Protocol Upgrade

In a recent statement published on X, the team confirmed that it is working on several upcoming features while refining key components of the codebase, including optimizations to the Stability Factor. According to the update, a new protocol feature is expected to be released in the coming week.

The project has reported more than $20.6 million raised to date, with over 19,000 holders of its MUTM token, currently priced at $0.04. In the same update, the team noted that the Sepolia testnet version of its lending and borrowing protocol has surpassed $90 million in testnet total value locked (TVL), reflecting simulated liquidity activity during beta testing.

Lending and Borrowing with Mutuum Finance

In the current beta version, users can interact with the protocol’s core functionality. The interface displays a protocol overview including total liquidity, available liquidity, and total variable debt. Four assets are currently supported for minting and interaction on testnet: ETH, USDT, LINK, and WBTC. The portfolio section provides data on net worth, net APY, Stability Factor, and total supplied and borrowed balances, with mtTokens also integrated into the current version of the platform.

When users supply assets to the platform, they receive corresponding mtTokens as proof of deposit. For example, supplying WBTC results in the issuance of mtWBTC. These tokens accrue value over time based on the applicable APY, which is determined by pool utilization.

By depositing $10,000 worth of USDT into the protocol, users receive mtUSDT in return. If the average annual percentage yield (APY) is around 4–5% over a one-year period, the position could generate approximately $400 to $500 in passive income, depending on pool utilization and borrowing demand. In addition, users can stake their mtTokens within the safety module, where eligible participants receive dividends denominated in MUTM tokens.

On the borrowing side, collateral is required to secure loans and protect the protocol against default risk. Rather than selling assets, users can post them as collateral and borrow against their value. For example, an investor holding $1,000 worth of ETH who does not wish to liquidate the position can deposit that ETH as collateral and borrow USDT. The borrowed stablecoins can then be used for expenses or deployed into other investments, while the user retains exposure to potential upside in ETH. Once the borrowed amount and accrued interest are repaid, the full collateral can be withdrawn.

Audited Protocol

Mutuum Finance has undergone a security audit of its lending and borrowing protocol conducted by Halborn, a blockchain security firm that has also performed audits for major projects such as Solana. In addition, the MUTM token smart contract was reviewed by CertiK, receiving a Token Scan score of 90 out of 100.

In partnership with CertiK, Mutuum Finance has established a bug bounty program with a reward pool of up to $50,000, aimed at identifying potential vulnerabilities and strengthening protocol security.

The total supply of MUTM is capped at 4 billion tokens. A portion of this allocation is designated for incentives, including giveaways, leaderboard bonuses, and other community reward programs.

Mutuum Finance continues to advance development of its lending and borrowing protocol as testing progresses on the Sepolia network. With additional features scheduled for rollout and security reviews completed, the project remains focused on refining its infrastructure ahead of full deployment.

The U.S. Department of the Treasury has sanctioned a Russia-based cyber “exploit broker” and its affiliates in a high-profile national security action targeting the theft and sale of proprietary U.S. government cyber tools, officials announced Tuesday.

Operation Zero blacklisted by U.S.

The designation marks the first use of the Protecting American Intellectual Property Act (PAIPA) in a sanctions case aimed at combatting digital trade-secret theft.

The Treasury’s Office of Foreign Assets Control (OFAC) placed Russian national Sergey Sergeyevich Zelenyuk and his St. Petersburg-based company Matrix LLC, also known as Operation Zero, on the Specially Designated Nationals (SDN) list, along with five associated individuals and entities.

The sanctions target the acquisition and redistribution of “exploits,” specialized computer code that can be used to take advantage of vulnerabilities in widely used software.

According to the Treasury, at least eight U.S. government cyber tools developed for defense and intelligence use were stolen from a U.S. company and allegedly sold by Operation Zero to unauthorized actors.

In its announcement, the Treasury said that Zelenyuk and his network offered substantial bounties to obtain exploits and then monetized the tech with buyers in Russia and elsewhere. Federal officials have expressed concern that such tools could be used for criminal activity or espionage, including ransomware and other destabilizing cyber operations.

The sanctions also encompass individuals linked to the group’s operations, including an affiliate company based in the United Arab Emirates and suspected members of the Trickbot cybercrime gang, previously sanctioned in other actions.

Under U.S. sanctions law, the property and interests of SDN-designated persons within U.S. jurisdiction are blocked, and U.S. persons are generally prohibited from engaging in transactions with them.

The action works in tandem with an ongoing criminal investigation by the Department of Justice and FBI into a former U.S. defense contractor employee who pleaded guilty last year to stealing the cyber tools and selling them for cryptocurrency.

Treasury officials said the sanctions aim to deter future theft of American intellectual property that could threaten national security, underscoring Washington’s broader strategy to hold foreign cyber actors accountable through economic and financial tools.

A regulatory spotlight has intensified around prediction markets after Kalshi, a Commodity Futures Trading Commission-regulated platform, banned a high-profile political candidate for trading on his own candidacy. The case underscores how even modest bets on real-world outcomes can trigger fast discipline when they intersect with insider-trading rules, and it comes as lawmakers and agencies sharpen their focus on the speculative-use cases that have quietly grown alongside the crypto ecosystem.

Key takeaways

• Kalshi issued a five-year ban plus a $2,000 penalty after a former California gubernatorial candidate wagered on his own bid and publicized the action on social media, violating platform rules.
• The politician’s actions align with reports that the description matches Kyle Langford, who has shifted from a Republican to a Democrat run for California’s 26th Congressional District; Kalshi noted he is no longer seeking the governorship and is pursuing Congress instead.
• In a May 25, 2025 X post, Langford showed a Kalshi bet of $98.76 on the odds of his victory, a detail Kalshi disclosed as part of the enforcement case and the public record surrounding the incident.
• Separately, a YouTube editor—widely reported as Artem Kaptur of MrBeast notoriety—tolerated a roughly $4,000 accumulation on YouTube stream markets between August and September 2025, resulting in a two-year penalty and about $20,000 in fines for insider-trading violations.
• Kalshi has signaled a broader crackdown, stating it has investigated around 200 cases, frozen several flagged accounts, and now operates with a surveillance audit committee and a partnership with Solidus Labs to detect market abuse as prediction markets scale.

Market context: Kalshi’s enforcement actions occur as prediction markets move toward greater mainstream participation and face intensified regulatory scrutiny. The company has pointed to internal surveillance capabilities and industry collaboration to curb abuse, while lawmakers have floated bills to curb insider trading among government insiders on these venues. The evolving framework aims to balance innovation with investor protection in markets that resemble, in some respects, both traditional trading and decentralized crypto ecosystems.

Why it matters

For traders and ordinary users, the Kalshi cases emphasize a core truth of prediction markets: information asymmetry and improper access carry legal risk. When a participant leverages privileged information—whether real-time, non-public data or an enhanced awareness of an opponent’s strategy—the odds of a fair outcome are eroded. Kalshi’s enforcement actions demonstrate that even seemingly modest bets can become substantial violations if they breach platform rules or disclosures, and they highlight the tension between the novelty of prediction markets and established securities-like expectations of fairness and compliance.

The enforcement framework also signals to other platforms that regulators and market monitors will pursue insider-trading and market-manipulation cases with visible penalties. Kalshi’s public disclosures about the Langford case and the YouTube-creator episode reveal a broader ambition: to deter participants from exploiting private information or unusual access to information channels, whether through social media disclosures, behind-the-scenes connections, or content-driven data streams. The platform’s stance can be read as a commitment to strict governance as prediction markets integrate with mainstream media, political events, and high-profile personalities.

From a policy perspective, the incidents sit at an intersection of financial-market integrity and digital-age governance. The industry has long argued that prediction markets offer useful foresight on real-world events, yet skeptics warn about the potential for manipulation and the overhang of regulatory risk. The Kalshi actions echo broader conversations in Washington about how to supervise new betting formats that blend real-world outcomes with digital platforms, while ensuring that insiders do not gain unfair advantage or profit from information unavailable to the broader public.

Beyond Kalshi, the regulatory mood has grown louder. Congressional discussions and CFTC-led efforts point to a growing taxonomy of enforcement priorities—insider trading, information leakage, and market abuse—that now extend to online prediction platforms with real-money stakes. In parallel, related coverage around Polymarket and other venues has amplified calls for clear guardrails, while public officials outline steps to harmonize the rules with ongoing crypto-market developments. The tension between innovation and accountability remains central to the evolving narrative around prediction markets and crypto-linked financial ecosystems.

In this environment, enforcement actions that surface publicly—such as the Langford-related ban and the YouTube-creator incident—serve as high-profile reminders for participants to treat prediction-market markets with the seriousness they deserve. Kalshi’s leadership has framed these cases as part of a broader discipline strategy, noting that its surveillance apparatus, governance enhancements, and third-party partnerships are designed to identify, investigate, and address market abuse before it becomes systemic.

What to watch next

• Follow Kalshi’s ongoing enforcement docket for new cases and the status of active investigations, including any additional penalties or account suspensions.
• Monitor the CFTC’s predicted shift toward formal advisory collaboration with industry players on prediction-market integrity and insider-trading enforcement.
• Watch for any legislative developments in the United States that would constrain or guide insider trading in prediction markets, especially in relation to government insiders.
• Track updates on the Kalshi-surveillance partnership with Solidus Labs and how their joint framework shapes market abuse detection across listings and events.
• Observe related coverage around high-profile figures and content creators involved in prediction-market activities, including how platforms handle disclosures and potential MNPI issues.

Sources & verification

• Kalshi’s enforcement case page documenting the governance action and penalties tied to the California candidate case.
• Public X posts by Kyle Langford referencing his Kalshi bet and candidacy status.
• Reports surrounding Artem Kaptur and the YouTube-stream-market enforcement action, including Kalshi’s disclosures and penalties.
• Kalshi’s statements on expanding surveillance and partnering with Solidus Labs to address market abuse.
• CFTC leadership statements and the establishment of a prediction markets advisory to coordinate enforcement efforts.

Kalshi enforcement actions highlight insider-trading risk in prediction markets

A political candidacy became the focal point for a broader discussion about market integrity after Kalshi announced a five-year ban and a $2,000 penalty on a former California gubernatorial hopeful who bet on his own bid and publicized it on X. The company said the individual placed a wager of about $200 on his candidacy, and Kalshi emphasized that the account did not generate profits from the trade. The public references tied to this case align with a broader pattern in which prediction-market platforms maintain strict prohibitions against insider trading, and violations are met with tangible penalties and disqualification from the platform.

The athlete-candidate narrative quickly shifted to a widely discussed possible match to Kyle Langford, who has since pivoted to a bid for California’s 26th Congressional District. Kalshi confirmed that the description fits Langford, noting he is no longer pursuing the governorship and has turned his ambitions toward Congress. A May 25, 2025 post on X shows Langford sharing a video of himself placing the Kalshi bet—specifically $98.76 on the odds of victory. Kalshi stated that this account did not withdraw profits, and the case was reported to the CFTC for further review. The company’s decision to publicize the enforcement action underscores its commitment to transparency in maintaining a level playing field for all users.

In a separate enforcement action that drew public attention, Kalshi flagged a YouTube editor for insider-trading-like activity across YouTube stream markets during August and September 2025. The editor traded approximately $4,000 on Kalshi markets in ways that violated Kalshi’s internal rules, resulting in a two-year penalty and roughly $20,000 in fines. The platform described the trading as statistically anomalous, pointing to an unusually high success rate on markets with low odds. Kalshi’s investigators concluded that the individual likely had access to material non-public information, though the specific identity was not disclosed in the company’s public release. The coverage in mainstream media has widely identified the implicated party as Artem Kaptur, a member of MrBeast’s team, highlighting how public content creators can intersect with financial-market activity in novel ways.

Kalshi’s broader enforcement program is not limited to these cases; the platform has publicly disclosed investigations into around 200 cases and has frozen several flagged accounts. Earlier in the month, Kalshi announced the creation of a surveillance-audit committee and a collaboration with Solidus Labs to bolster its ability to detect market abuse and insider trading across its prediction markets. The aim is to raise the bar for governance, promote integrity, and deter would-be insiders from exploiting information asymmetries for personal gain as these markets continue to attract participation from a broader audience, including institutions and highly-visible public figures.

The intensified regulatory posture surrounding prediction markets is also reflected in political developments. US lawmakers introduced a bill aimed at curbing trading by government insiders after a Polymarket user earned more than $400,000 on bets tied to Venezuelan President Nicolás Maduro—trades executed hours before U.S. authorities captured Maduro in Caracas. In response, the CFTC chair signaled that the agency would not hesitate to pursue violators, stating that a new advisory group would work with industry participants to identify and address insider trading in prediction markets. The combined signal from Kalshi, policymakers, and regulators suggests a turning point for how these markets are policed as they move from niche experiments to potential mainstream financial instruments.

As this environment evolves, the line between innovation and enforcement becomes more pronounced. Kalshi’s actions, the high-profile cases, and the regulatory dialogue reflect a broader industry shift toward more robust surveillance, clearer governance, and stricter penalties for those who undermine market integrity. For users, developers, and participants in the growing ecosystem around event-based markets, these developments serve as a reminder to prioritize compliance, transparency, and responsible trading practices—an essential framework if prediction markets are to achieve scalable trust and sustainable growth.

The Blockchain Association has proposed a set of crypto tax reforms after meeting with House Ways and Means Committee offices on Capitol Hill.

“There is real bipartisan opportunity to modernize digital asset tax policy in 2026. We look forward to continued engagement with lawmakers to deliver clear, workable rules that support compliance and strengthen U.S. competitiveness,” the Blockchain Association wrote in a Tuesday X post.

In its Digital Asset Tax Principles, released the same day, the crypto advocacy group lobbied lawmakers for a “de minimis exemption for small digital asset transactions” and for treating stablecoins as cash for tax purposes, saying routine use should not create disproportionate tax reporting obligations.

The Blockchain Association also said that reporting rules should safeguard taxpayer privacy while still enabling effective enforcement against illicit activities. Further, it added that developers and non-custodial platforms should not be treated as brokers.

The group also contends that taxing staking rewards “upon creation” can create liquidity and valuation challenges, and proposed treating them as self-created property taxable only upon sale or disposition.

Other key proposals included extending wash sale rules to digital assets and introducing a statutory safe harbor for foreign persons trading on U.S. exchanges.

As previously reported by crypto.news, last year Senator Cynthia Lummis introduced a standalone bill that pushed for a de minimis exemption on crypto transactions under $300 alongside a $5,000 annual cap on total tax-free activity.

The senator’s bill also targeted the issue of double taxation that digital asset holders face during the staking and mining process, where rewards can be taxed at the time of receipt and again upon sale.

However, it was met with strong opposition from Democratic Senator Elizabeth Warren, who said at the time that the proposal would allow crypto investors to avoid reporting income on certain transactions and create what she described as a loophole in the tax code.

Decentralized finance protocol Aave has surpassed $1 trillion in cumulative lending volume, marking a historic first in the DeFi industry.

“A decade ago, DeFi and Aave didn’t exist. They were just ideas. Today, Aave stands as the backbone of onchain lending, powering a new financial system that is open, global, and unstoppable,” Aave Labs CEO Stani Kulechov said in an X post on Wednesday.

The feat marked another step toward Aave’s goal of becoming the “largest, most efficient liquidity network in the world,” Kulechov added. “One that builders, banks, and fintechs plug into by default, fundamentally improving liquidity and cost structures across global finance.”

In August, Aave Labs launched Aave Horizon, a new lending market on Ethereum, specifically for traditional finance firms and other institutional investors to borrow stablecoins against real-world assets.

VanEck, WisdomTree and Securitize were among the first participants to use Aave’s institutional offering.

On Feb. 15, Kulechov said DeFi lending could benefit from tokenizing “abundance assets,” like solar, batteries for energy storage and robotics for labor. He expects those assets to be worth a combined $50 trillion by 2050.

Kulechov originally launched Aave as ETHLend in November 2017 before rebranding to Aave in September 2018. It now secures over $27.2 billion in total value locked, enabling users to earn interest on deposits and borrow instantly using crypto as collateral.