Crypto World
Infini Hacker Returns After Exploit, Buys Ether Dip Worth $13M
A wallet tied to Infini’s $50 million breach has re-emerged after nearly a year, showing activity as crypto markets wobbled and Ether was bought during a broad price dip. The exploiter’s address moved to accumulate Ether (CRYPTO: ETH) worth about $13.3 million as the asset traded around $2,109, then shifted the funds into Tornado Cash, a mixing protocol used to obscure transaction paths. Industry observers noted the pattern as a sign that the attacker remains engaged with the proceeds rather than exiting entirely into cash-like assets. The move comes months after the initial breach and subsequent legal actions, underscoring ongoing tensions between on‑chain theft, tracing efforts, and attempts to recover stolen funds.
The revelation comes as the market faced a broad downturn and a string of heavy liquidations. Data from Coinglass showed roughly $2.56 billion in leveraged positions wiped out during a single session, marking one of the largest forced liquidations on record. Ether slid to a multi-month low, briefly dipping to around $1,811—its lowest point since May 2025—before rebounding in the following sessions. The price action provides a unsettled backdrop for the attacker’s re-entry into the market, suggesting a strategy of leveraging recovered funds to pursue additional opportunities rather than an immediate exit into non-volatile assets.
Infini exploiter buys ETH dip after massive liquidations
The renewed on-chain activity has drawn renewed scrutiny from analysts monitoring the Infini case. Lookonchain captured a comment noting the attacker’s apparent skill at buying low and selling high, a paraphrase of the on-chain behavior that has characterized the flow of funds since the breach. The exchange of value aligns with a broader pattern where the attacker, after swapping stolen holdings into stablecoins, previously used market volatility to maximize returns on the remaining balance. The latest tranche—an ETH purchase in a period of heavy selling—illustrates the continuing dynamic between negative price pressure and opportunistic trading by the exploiter.
The Infini breach, disclosed earlier in 2025, involved the withdrawal of stablecoins from the project’s treasury and a disruption that led to tens of millions of dollars in losses. The stolen USDC (CRYPTO: USDC) was promptly swapped for Dai (CRYPTO: DAI), a step often seen in breach scenarios where attackers convert into assets perceived as less likely to be frozen. The latest transactions, observed on public blockchain data, indicate that the attacker still holds a substantial balance and remains active, using market conditions to optimize the remaining capital rather than fully unwinding the position.
The attacker’s path after the exploit has included legal action from Infini. In March, Infini filed a Hong Kong lawsuit against a developer and several unidentified individuals believed to have ties to wallets involved in the breach. An injunction was issued in conjunction with the case, illustrating a concerted legal effort to restrain further transfers and to pressure the attackers for restitution. The litigation underscores a broader trend of cross-border legal strategies in crypto hacks, where on-chain evidence is used to deter further misappropriation and to seek accountability from individuals and entities linked to the breach.
The case also reveals prior incentives offered by Infini. Early in the dispute, the protocol circulated a 20% bounty for the return of the stolen funds, arguing that it had gathered signals about the attackers’ identities and devices. While this approach has drawn mixed reception in the security community, it reflected a pragmatic attempt to recover assets without resorting to more aggressive measures. Commentators note that the on-chain trail remains complex, with multiple wallets and cross-chain moves complicating the path to recovery.
Alongside the legal push, the market backdrop continues to shape the risk environment for asset holders and developers. Ether’s weakness during the recent sell-off and its subsequent stabilization highlight how liquidity and macro sentiment can influence on-chain theft dynamics. The combination of a high-profile breach, ongoing legal proceedings, and a volatile price environment creates a difficult operating landscape for projects like Infini and for the broader ecosystem attempting to deter and resolve similar incidents.
Why it matters
The Infini case is a clarion call for the industry on several fronts. First, it illustrates how attack proceeds can remain active long after the initial breach, with stolen funds used to participate in ongoing trading activity rather than simply being moved to stable storage. This persistence complicates both asset tracing and potential recovery efforts. Second, the Hong Kong action demonstrates that cross-border litigation is increasingly a tool in crypto security, aiming to secure injunctions, identify defendants, and gather evidence that could inform civil remedies or facilitate asset recovery.
For users and developers, the episode underscores the importance of robust fund-flow controls and post-incident transparency. As exchanges and analytics providers document new on-chain moves, the industry benefits from improved visibility into attacker behavior, which can inform both security posture and policy discussions around prosecutorial reach and asset recovery mechanisms. In parallel, communities tracking on-chain activity must balance privacy considerations with the public interest in preventing and deterring theft, especially when attackers exploit high-volatility markets to maximize gains.
From a broader market perspective, the Infini developments come during a period of heightened liquidity risk and liquidity-driven price swings. The sensitivity of prices to large liquidations and the speed at which funds can be redistributed through mixing services highlight the ongoing tension between openness and resilience in the crypto economy. Regulators and industry participants alike are watching how enforcement actions, court interventions, and improved traceability capabilities will shape future breach responses and the recovery prospects for victims.
What to watch next
- Progress in Infini’s Hong Kong lawsuit: judicial rulings, expedited actions, and any further injunctions or writs related to the attackers’ wallets.
- On-chain developments: additional movements of the exploited funds, including any new transfers to or from mixing services and potential attempts to skirt tracing.
- Regulatory and enforcement updates: any statements or actions from authorities that could influence asset recovery or cross-border cooperation in similar cases.
- Updates from Arkham, Lookonchain, and other analytics firms on attacker behavior and new wallet activity tied to the event.
- Market implications: how ongoing investigations and legal actions interact with liquidity dynamics and risk sentiment in the wake of the recent large-scale liquidations.
Sources & verification
- Arkham data on the exploiter’s wallet activity linked to the Infini breach and its transfer route to Tornado Cash.
- Coinglass data detailing the 10th-largest liquidation event and the roughly $2.56 billion in leveraged position wipes.
- Historical reports on Infini’s $50 million hack, including the early swap from USDC to DAI and the subsequent legal actions.
- Infini’s Hong Kong lawsuit filing and the court injunction related to the attacker’s wallets.
- On-chain messages naming individuals connected to wallets involved in the breach and related court communications.
Infini exploit activity and legal action
The renewed on-chain activity around Infini’s breach illustrates how recovered proceeds continue to fuel trading activity, even as legal actions aim to hold attackers accountable. The ETH purchases executed during periods of downturn demonstrate that the attacker remains engaged with the funds, seeking upside in a choppy market rather than exiting entirely. The involvement of Tornado Cash as a mixer emphasizes the ongoing tension between privacy-focused tooling and the enforcement dimension of asset recovery. As Arkham’s traces and Lookonchain’s analyses show, such patterns can persist for months, complicating both tracing efforts and the prospect of fund recovery for the victim project.
Analysts caution that while the attacker’s continued activity may offer opportunities for investigators to piece together more of the provenance, it also poses ongoing risks to market integrity. The Infini case remains a touchstone for discussions about post-breach governance, the viability of bounty programs, and the role of regulatory frameworks in accelerating resolution. The absence of a definitive recovery creates a chilling effect for projects contemplating similar incidents, underscoring the need for robust incident response, transparent reporting, and effective collaboration with on-chain analytics providers.
Looking ahead, observers will be watching for any policy shifts that could affect cross-border litigation in crypto hacks, as well as the evolution of on-chain tracing technologies designed to unmask illicit fund flows even when mixers are deployed. The Infini case, while a single incident, captures a broader arc of risk in the crypto sector—where high-profile breaches test the interplay between market dynamics, legal instruments, and the evolving toolkit of investigators.
In sum, the Infini hack continues to cast a long shadow over the sector, serving as a live case study in asset tracing, legal recourse, and the resilience of decentralized finance ecosystems in the face of sophisticated exploitation.
Tickers mentioned: $ETH, $USDC, $DAI
Sentiment: Neutral
Price impact: Neutral. While Ether moved lower amid the market sell-off, the report indicates no immediate, identifiable price correction tied solely to the on-chain activity linked to the Infini exploit.
Market context: The incident unfolds amid a broader cycle of high volatility, record liquidations, and ongoing enforcement activity shaping liquidity, risk appetite, and asset-tracing capabilities across crypto markets.
From 2023 to 2026, from Hong Kong to a global stage, institutions from around the world convened once again. As the next decade of digital assets unfolds, LTP looks ahead alongside the industry.
What does it feel like to observe—at close range—the front-line pulse of digital assets and traditional finance (TradFi) amid market volatility?
On Feb. 9, 2026, Liquidity 2026, the annual flagship institutional digital asset summit hosted by LTP Hong Kong, concluded successfully in Hong Kong. Now in its fourth consecutive year, the event once again brought together senior representatives from hedge funds, market makers, high-frequency trading firms, family offices, asset managers, exchanges, custodians, banks, and technology service providers, marking another milestone in the accelerating convergence of digital assets and traditional financial markets.
Throughout the full-day agenda, the summit featured keynote addresses, fireside chats, and in-depth roundtable discussions. Speakers and participants engaged in rigorous exchanges around the evolution of the global financial system, the rise of tokenization, and the rapid integration of multi-asset ecosystems—exploring what new opportunities and new paradigms may emerge as institutional adoption deepens.
As the summit drew to a close, a clear consensus emerged across diverse perspectives: at a turning point in the reshaping of the global financial landscape, infrastructure development, regulatory dialogue, and cross-institutional collaboration will be the critical variables shaping the industry’s sustainable growth.This was not merely a forum for ideas, but a defining step in the digital asset industry’s progression toward standardization, institutionalization, and mainstream relevance.
Full Agenda Highlights and Key Takeaways
At Liquidity 2026, LTP convened global experts to examine the future of institutional digital asset markets through multiple lenses—including core infrastructure, liquidity connectivity, tokenization, and emerging market paradigms.
Multi-Asset Trading and Market Convergence: Compatibility and Resilience
Participants broadly agreed that crypto assets are increasingly being redefined as a core asset class that must be integrated into institutional portfolio management frameworks, rather than treated as a standalone alternative market. Stephan Lutz, CEO of BitMEX, noted that CIOs can no longer afford to ignore this asset class. As institutions formally incorporate digital assets into allocation frameworks, the design logic of trading systems is shifting—from pursuing peak performance to enabling seamless integration within existing governance structures, API architectures, and risk controls.
System resilience was repeatedly emphasized. Tom Higgins, Founder and CEO of Gold-i, remarked during a roundtable that system design must assume failure as inevitable, with redundancy and survivability achieved through multi-venue aggregation. At a macro level, regulatory fragmentation remains a key obstacle to global market interoperability; without cross-jurisdictional alignment, genuine multi-asset convergence will remain constrained.
The New Settlement Layer: Clearing, Custody, and Interoperability
Discussions around settlement and custody pointed to a clear direction: custodians are evolving from passive asset safekeeping toward becoming a core infrastructure layer supporting clearing, settlement, and risk management. As institutional participation grows, custody is no longer viewed solely as a compliance requirement, but as a critical nexus connecting regulatory certainty with operational scalability.
The definition of trust is also evolving. Ian Loh, CEO of Ceffu, emphasized that trust must be embedded in executable on-chain mechanisms, with assets generating tangible yield through collaboration between custodians and prime brokers. The importance of mature third-party technology has become increasingly evident. Amy Zhang, Head of APAC at Fireblocks, highlighted the industry’s growing reliance on established infrastructure providers, noting that Europe is emerging as a strategic hub for institutional digital assets due to its regulatory clarity and infrastructure maturity.
Technological redundancy was widely seen as essential to mitigating systemic disruptions. As Darren Jordan, Chief Commercial Officer at Komainu, observed, the future of custody lies in asset usability—shifting the core question from whether assets are safely stored to whether they can be securely and reliably mobilized.
Rebuilding Infrastructure and the Price of Data
Johann Kerbrat, SVP and GM of Robinhood Crypto, shared how Robinhood is evolving from a crypto trading platform into a general-purpose financial infrastructure provider, leveraging blockchain to re-architect payments, settlement, and traditional asset trading—while abstracting complexity away from the end user.
In his view, TradFi’s core bottleneck remains settlement efficiency, often operating at T+1 or longer, whereas crypto-native systems offer 24/7 availability, near-instant transfers, and composability that materially reduce capital costs and counterparty risk. Within regulatory frameworks, Robinhood is advancing equity tokenization on a fully collateralized, 1:1 basis, anticipating that tokenization will expand beyond stablecoins into equities, ETFs, and private markets. The central challenge, he argued, lies not in technology, but in regulatory implementation and collective adoption.
Cory Loo, Head of APAC at Pyth Network, described market data as a structurally underappreciated industry—generating over $50 billion in annual revenue, with data costs rising more than 15-fold over the past 25 years. The true cost, he noted, stems not from information asymmetry, but from data quality, which ultimately determines whether traders achieve best execution.
Pyth Network aims to reconstruct traditional data pipelines by bringing price inputs directly from trading firms and exchanges into a shared price layer, which is then redistributed to institutions at higher quality and lower cost with millisecond-level multi-asset updates. Loo disclosed that Pyth Pro attracted over 80 subscribers within two months of launch, achieving more than $1 million in ARR in its first month. The project also plans to implement a value-capture mechanism whereby subscription revenue flows into a DAO, which repurchases tokens and builds long-term reserves.
Institutional Capital Allocation: From Speculation to Systematic Exposure
A notable shift in capital allocation is underway. Institutional capital is rotating away from narrative-driven assets toward instruments with clear demand drivers and regulatory visibility. Fabian Dori, CIO of Sygnum, observed that as metaverse narratives faded, institutions have refocused on leveraging smart contracts for value-chain integration and process automation. Risk management has increasingly displaced return speculation as the primary screening criterion.
Tokenization is widely expected to drive structural, rather than incremental, change—but scale will depend on demonstrable client demand rather than technological capability alone. Interest in index-based and structured products is rising, and Giovanni Vicioso, Global Head of Cryptocurrency Products at CME Group, noted that the future market landscape will likely be defined by the coexistence of multiple technologies and market structures.
Trading Convergence: Bridging Liquidity, Pricing, and Risk
In discussions on liquidity and risk management, participants focused on system stability during extreme market conditions. Jeremi Long, CIO of Ludisia, highlighted how infrastructure upgrades have materially improved execution quality, while emphasizing that risk management must be designed for worst-case scenarios.
Improving cross-venue capital efficiency was identified as a key solution to fragmented capital deployment. Collaborative models between exchanges and custodians—enabling shared capital pools—are increasingly being explored. In this context, transparency has become paramount. Giuseppe Giuliani, Vice President of Kraken’s Institutional team, stressed that liquidity depends on risks being clearly priced, and that exchange transparency and operational stability directly influence market-maker participation.
Building Institutional Rails for the Digital Asset Economy
At the institutional and infrastructure level, multiple case studies suggest a shift from proof-of-concept to real-world deployment. Stablecoin pilots in insurance and payments demonstrate the tangible efficiency gains of on-chain settlement. Some institutions are now exploring migrating flagship products directly on-chain to access broader global liquidity.
System stability is increasingly viewed as a form of revenue protection. Zeng Xin, Senior Web3 Solutions Architect at AWS, noted that stability functions as “income insurance,” with cloud infrastructure providing the resilience and elasticity required for digital markets. Meanwhile, traditional regulatory frameworks continue to impose structural constraints on capital allocation.
Sherry Zhu, Global Head of Digital Assets at Futu Holdings Limited for Futu Group, emphasized that trust and convenience represent core opportunities for brokerage platforms, while acknowledging the capital constraints imposed by frameworks such as Basel. Balancing compliance, privacy, and custody remains a critical threshold for institutional participation in DeFi.
Everything as Collateral: RWA, Stablecoins, and Tokenized Credit
Debates around whether tokenized assets can serve as core collateral are moving from theory to practice. Compared with traditional structures, on-chain collateral—enabled by 24/7 settlement—is better suited to meet sudden margin requirements in derivatives markets. However, legal clarity remains the determining factor.
Chetan Karkhanis, SVP at Franklin Templeton, emphasized the importance of choosing natively on-chain asset structures rather than digital replicas, ensuring a single source of legal truth. Regulatory classification and its impact on capital requirements are equally critical. Institutions evaluating tokenized collateral tend to focus on four dimensions: legal ownership, operational risk, custody arrangements, and liquidity depth.
Beyond the Hype: Where the Industry Goes Next
As the summit concluded, participants converged on a shared view: tokenization alone does not constitute a competitive advantage. The true differentiator lies in whether it delivers measurable improvements across reserves, trading, or settlement.
Erkan Kaya, CEO of ABEX, suggested that tokenization has the potential to fully absorb traditional finance into crypto-native systems, with a tipping point likely to emerge over the next decade. As regulatory credentials, system stability, and user experience become decisive factors, the evolution of financial infrastructure appears irreversible. Digital assets are no longer a peripheral complement to TradFi, but a force increasingly capable of reshaping its operating logic and power structures.Moses Lee, Head of APAC at Anchorage Digital, summarized the sentiment succinctly: tokenization does not equal success—its value depends on delivering clear functional advantages in reserves, trading, or settlement.
Closing Thoughts
For LTP, the industry’s transition into a more mature phase—marked by the fading of hype—also represents the optimal moment for infrastructure, compliance, and sustainable innovation to take root. We remain firmly convinced that lasting value creation resides in the foundational systems that quietly support market operations.
From 2023 to 2026, from regional markets to a global perspective, LTP has remained committed to observing, documenting, and actively participating in the structural, institutional, and regulatory evolution of the digital asset industry. The successful conclusion of Liquidity 2026 marks another meaningful milestone in our long-term effort to advance the integration of digital assets and TradFi.
Looking ahead, LTP will continue to invest heavily in ecosystem development—championing more resilient infrastructure and more open collaboration—to help shape the next decade of digital assets.
With infrastructure build-out, regulatory engagement, and cross-institutional collaboration converging, a healthier, more professional, and increasingly mainstream digital asset era is taking shape.
While Liquidity 2026 has just concluded, the marathon toward deep digital asset–TradFi integration is only entering its second half. As a long-term participant and observer, LTP will continue to dedicate resources to ecosystem building and industry dialogue, helping to usher in the next decade of digital assets.
A full post-event report, including detailed roundtable highlights and key speaker insights, will be released shortly. Stay tuned.
About LTP
LTP is a global institutional prime broker, purpose-built to meet the evolving needs of digital asset market participants. By applying traditional financial standards to blockchain innovation, LTP provides end-to-end prime services spanning trade execution, clearing, settlement, custody, and financing. Its offerings further extend to institutional asset management, regulated OTC block trading, and compliant on/off-ramp solutions — delivering a secure and scalable foundation for institutions across the digital asset ecosystem.
LiquidityTech Limited is HK SFC licensed for Type 1, 2, 4, 5, and 9 regulated activities.
Liquidity Technology Limited is BVI FSC licensed to act as a Virtual Asset Service Provider and licensed under SIBA for Dealing in Investments activities.
Liquidity Technology S.L. is registered with Bank of Spain as a Virtual Asset Service Provider.
Liquidity Fintech Pty Ltd AUSTRAC registered for digital currency exchange, remittance, and foreign exchange service provider activities.
Liquidity Fintech Investment Limited is BVI FSC licensed to provide investment management services.
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Liquidity Fintech FZE, granted In-Principle Approval (IPA) by the Dubai VARA for a VASP licence (note: IPA does not permit regulated activities).
Disclaimer: All regulated activities are performed exclusively by the relevant entities that are duly licensed or registered, and strictly within the boundaries of their respective regulatory approvals and jurisdictions.
More details: https://www.liquiditytech.com
Backpack, a crypto exchange founded by former employees of FTX, says it will launch a 1-billion-supply token in the future, with its distribution schedule tied to its goal of going public in the US.
Backpack posted to X on Monday that its token launch will begin with 25% of the intended supply, or 250 million tokens, to become available on a yet-to-be-disclosed launch date.
Another 37.5% of the total supply, or 375 million pre-IPO tokens, will be made available “upon achievement of key milestones,” which Ferrante said would include opening in a new region or launching a new product.
The remaining 375 million post-IPO tokens would be locked until a year after the company goes public, with the tokens held strategically in a corporate treasury.
The IPO push comes as Axios reported on Monday that Backpack is in discussions to raise $50 million at a $1 billion pre-money valuation, potentially making it the crypto industry’s latest unicorn.
In a separate post, Backpack co-founder and CEO Armani Ferrante wrote on X on Monday that the “guiding principle” for its token unlocks was that “insiders ‘dumping on retail’ should be impossible.”
Ferrante, an early employee at the FTX-linked Alameda Research, added that none of the Backpack team or investors should gain wealth from the token “until the product hits escape velocity,” which he said would happen when the company launches an initial public offering.
“Going public might happen quickly, it might happen not so quickly, and in fact, it might not happen at all,” Ferrante said. “In any case, we’re going for it.”
Related: Backpack Exchange launches beta testing of prediction market platform
Ferrante said that “not a single founder, executive, team member, or venture investor has been given a direct token allocation,” and that the team instead owns equity in the company.
“It’s not until the company goes public (or has some other type of equity exit event), that the team can earn any wealth from the project,” he added.
“It’s not until the company has done all the hard work to earn access to those markets that the team can reap the rewards of the value created by the Backpack community from now until then.”
Backpack launched in 2022 and Ferrante co-founded the exchange alongside former FTX.US strategy lead Tristan Yver and former FTX general counsel Can Sun.
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Creator, Entrepreneur and Philanthropist Jimmy Donaldson, also known as MrBeast, speaks onstage during the 2025 New York Times Dealbook Summit at Jazz at Lincoln Center on December 03, 2025 in New York City.
Michael M. Santiago | Getty Images News | Getty Images
The world’s largest YouTuber by subscriber count, Jimmy Donaldson, better known as MrBeast, has acquired the financial services app Step, marking his company’s entry into fintech with a focus on serving younger users.
Step is advertised as an all-in-one money app for teens and young adults to manage money, build credit and access financial tools. The app will operate under the umbrella of Donalson’s company, Beast Industries.
“Nobody taught me about investing, building credit, or managing money when I was growing up. That’s exactly why we’re joining forces with Step,” MrBeast told his millions of fans on Monday. “I want to give millions of young people the financial foundation I never had. Lots to share soon.”
Beast Industries did not disclose how much it paid for Step. CNBC contacted the company for comment but did not receive a response by publication.
Beast Industries has been fundraising over the past year, including a recent $200 million investment from Bitmine Immersion Technologies, the largest corporate holder of the cryptocurrency Ether and chaired by Fundstrat’s Tom Lee.
Step is backed by fintech giant Stripe, as well as venture capital firms such as Coatue, Collaborative Fund, Crosslink Capital and General Catalyst.
The newly acquired Step was founded in 2018 by fintech veterans CJ MacDonald and Alexey Kalinichenko, with a mission of providing the next generation with tools for financial literacy.
While it is not a bank, Step partnered with Evolve Bank & Trust, a consumer banking company, for banking services in 2022. The platform also includes a Step Visa Card, an account for saving, spending, sending money and investing, with no monthly fees.
Beast Industries said in a press release Step’s over 7 million users, technology platform and in-house fintech team would complement its large digital audience and philanthropic initiatives.
“This acquisition positions us to meet our audiences where they are, with practical, technology-driven solutions that can transform their financial futures for the better,” Jeff Housenbold, CEO of Beast Industries, said in a statement.
Beast Industries’ other ventures include Feastables, a snack brand, Beast Philanthropy, its non-profit arm, and Beast Games, its reality competition series on Amazon Prime Video.
Those ventures leverage Donaldson’s YouTube brand, which had over 450 million subscribers and 5 billion monthly views across channels as of early 2026.
Bitcoin’s sharp rebound from last week’s plunge toward $60,000 has been accompanied by a subtle but important shift in one closely watched indicator of U.S. demand.
The Coinbase Bitcoin Premium Index — which tracks the price gap between bitcoin traded on Coinbase and the global market average — has climbed sharply from deeply negative territory, moving from around -0.22% at the height of the selloff to roughly -0.05% by Tuesday.
While the index remains below zero, the rebound suggests U.S.-based investors stepped in to buy the dip as forced selling pressure eased.
Coinbase is widely viewed as a proxy for institutional and dollar-based flows. A deeply negative premium typically signals U.S. investors are either selling aggressively or staying on the sidelines altogether. The move back toward neutral indicates that some buyers found value at lower levels, particularly as bitcoin stabilized after its fastest drawdown since the FTX collapse in 2022.
Still, the premium has not turned positive, a threshold that historically coincides with sustained accumulation and renewed risk appetite among U.S. funds. Instead, the current move points to selective buying rather than broader conviction.
Market structure data supports that cautious interpretation. Aggregate trading volumes across major exchanges remain well below late-2025 highs, according to Kaiko, with spot activity showing signs of gradual attrition rather than a decisive surge in demand.
Thin liquidity means prices can bounce sharply once selling exhausts itself, but also leaves the market vulnerable to renewed downside if buyers fail to follow through.
Bitcoin is currently trading just under $70,000 after recovering more than 15% from its intraday low, though it remains down over 10% on the week.
The Israeli Crypto Blockchain & Web 3.0 Companies Forum last week launched a lobbying effort to push regulatory reforms that research from KPMG says may add 120 billion shekels ($38.36 billion) to the country’s economy by 2035 and create 70,000 new jobs.
At a Feb. 3 event in Tel Aviv, Forum leader Nir Hirshman-Rub said there is broad public support for legislation that would relax rules on stablecoins and tokenization, along with simplifying tax compliance requirements.
In the wake of the US-brokered ceasefire of the Gaza war, 2026 is seen as a “defining year” for the local digital assets industry, Hirshman-Rub said.
“The Israeli public is already there and the politicians need to act,” Hirshman-Rub told Cointelegraph on the sidelines of the Tel Aviv event. “More than 25% of the public already has had crypto dealings in the last five years and more than 20% currently hold digital assets,” he said, citing the KPMG research.
Steady growth as digital asset landscape evolves
An October Chainalysis report showed that the G-20 country’s crypto economy has showed steady growth, with inflows topping $713 billion last year. Those levels reflect a sharp increase in crypto volumes in the aftermath of the October 2023 Hamas attacks, which were sustained by strong retail activity, the report said.
Israeli companies, such as Fireblocks and Starkware, have established leadership positions in the global digital assets landscape and are among the Forum’s sponsors. According to NGO Startup Nation Central, more than 160 locally founded companies have attracted more than 5% of the $30 billion invested worldwide in the sector, employing more than 2,500, primarily in the greater Tel Aviv area.
“The problem is that once a company here disclosed that it deals with digital assets, Israeli banks refuse to serve the company or require the company’s attorneys to make an impossible declaration that funds originating in a digital asset will not be deposited in an Israeli bank account,” said Hirshman-Rub. “It may not be outright refusal, but simply dragging their feet, adding demands in a never-ending due diligence process.”
Related: EU tokenization companies push for DLT pilot changes amid US momentum
Among other barriers that the group seeks to reform is an income tax ordinance that penalizes token distribution to employees as stock options. While traditional stock options provided to employees are taxed at a 25% rate, tokenized options will pay a 50% rate for similar value.
A national strategy
In July, the country’s National Crypto Strategy Committee presented an interim report to the Israeli Knesset for parliamentary review. The committee outlined a strategic framework underpinned by five pillars, including establishing a unified regulator, creating token issuance rules, and banking integration.
In August, the Israel Tax Authority published a new Voluntary Disclosure Procedure that would offer taxpayers a path to disclose previously unreported income and assets, including digital assets, and obtain immunity from criminal proceedings. It was the agency’s third attempt to implement a disclosure regime.
However, last month, the agency said taxpayer participation has so far fallen short of expectations, but committed to seeing the initiative through to the end of August 2026.
“The Israeli banking system is not willing to accept cryptocurrency, and it is also very difficult to bring in funds as a result of selling cryptocurrency,” Tax Authority director Shay Aharonovich said, according to local media reports. “There is no doubt that this also affects the willingness to make voluntary disclosure, because in the end people do not just want to pay the tax, but to use the money.”
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American billionaire and hedge fund manager Ray Dalio has warned that central bank digital currencies (CBDCs) are coming, which will offer benefits but also potentially allow governments to exert more control over people’s finances.
“I think it will be done,” said Dalio on CBDCs in a wide-ranging interview on the Tucker Carlson Show on Monday, which also included topics on the US debt crisis, gold prices, and even a potential civil war.
Raymond Dalio is a billionaire hedge fund manager who has been co-chief investment officer of Bridgewater Associates since 1985, after founding the firm in 1975.
During the interview, Dalio said CBDCs could be appealing due to the ease of transactions, comparing them to money market funds in functionality, but he also cautioned about their downsides.
He said there will be a debate, but CBDCs “probably won’t” offer interest, so they will not be “an effective vehicle to hold because you’ll have the depreciation [of the dollar].”
Dalio also cautioned that all CBDC transactions will be known to the government, which is good for controlling illegal activity, but also provides a great deal of control in other areas.
“There will be no privacy, and it’s a very effective controlling mechanism by the government.”
Taxation, forex controls and political debanking
A programmable digital currency will enable the government to tax directly, “they can take your money,” and establish foreign exchange controls, he said.
That will be an “increasing issue,” particularly for international holders of that currency, as the government can seize funds from nationals of sanctioned countries.
Dalio also said that you could be “shut off” from a CBDC if you were “politically disfavored.”
Related: China-led CBDC project mBridge tops $55B in cross-border payments
An American CBDC is not likely to be deployed in the near future, however, as US President Donald Trump has been vocally opposed to them.
Soon after taking office in January 2025, Trump signed an executive order prohibiting “the establishment, issuance, circulation, and use” of a US CBDC.
Only three countries have launched a CBDC
According to the Atlantic Council’s CBDC tracker, only three countries have officially launched one: Nigeria, Jamaica, and The Bahamas.
49 countries are in the pilot testing phase, including China, Russia, India, and Brazil. 20 nations have a CBDC in development, and 36 are still researching central bank digital currencies.
India’s central bank reportedly proposed an initiative in January linking BRICS CBDCs to facilitate cross-border trade and tourism payments.
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Coinbase’s Base App, pitched as a central piece of Coinbase’s “Everything App” strategy, is winding down its Creator Rewards program and its Farcaster-powered social feed. The move signals a shift away from social incentives toward a trading-first experience that prioritizes tradable assets. The Creator Rewards program, launched in July to foster a more social Base ecosystem, distributed roughly $450,000 to about 17,000 creators over seven months, according to an official Base App X update. That translates to an average payout of around $26 per creator. As the project evolves, the team underlined that the app’s core mission is changing, with trading taking center stage.
Base App’s creator-focused initiative will culminate with final payouts on February 18, and the program will wrap on the preceding Sunday. The decision comes alongside a broader reorientation of Base App’s social features. Founder Jesse Pollak framed the pivot by stressing simplicity and focus: “As we’ve rolled the app out, we’ve realized we need to do less, better. And by focusing on tradable assets, that’s exactly what we can do.” He added, “The app needs to have one primary focus, and that thing is trading.” The message reflects Coinbase’s intent to consolidate Base App as the trading hub for a suite of crypto primitives rather than a multi-faceted social platform.
With the Creator Rewards sunset, Base App’s social feed powered by Farcaster is unlikely to remain a central pillar of the user experience. Pollak acknowledged the talk feed’s misalignment with Base App’s core capabilities and said the team plans to continue supporting the decentralized social network and its developer ecosystem, even as the product emphasis shifts. “…candidly, I think the truth is that the base app was always an imperfect farcaster client,” he noted. “With this change, I expect those users to flow back to the farcaster app (myself included) and inject more energy into the economy there, with a best in class interface.”
Base App is at the center of Coinbase’s future
The refocus aligns with Coinbase’s broader ambition to become an Everything App spanning spot trading, derivatives, stablecoins, tokenization of real-world assets, prediction markets, and more. The company has signaled ongoing exploration of Base’s tokenization potential, though public commentary from CEO Brian Armstrong and Pollak on a Base token has been relatively quiet in recent months. The move also preserves Base App’s Creator Coins program, which enables users to mint ERC-20 tokens linked to their Base profile and the Zora ecosystem, even as the social feed portion is deprioritized. The platform’s December launch, following a longer beta period, established Base App as a self-custody wallet and all-in-one trading companion for a growing trading experience.
The broader strategy, including a renewed emphasis on tradable assets, occurs in a context where retail liquidity and investor appetite for accessible tokenized products remain central to crypto markets. The enterprise behind Base App continues to weave its product narrative around asset ownership, on-chain tokenization, and user-controlled liquidity, rather than social hooks alone. The project’s trajectory has also intersected with conversations about a Base token, a notion that has drawn attention even as the leadership has offered few recent public updates. Meanwhile, Base App’s Creator Coins program remains active, offering a way for users to deploy ERC-20 tokens tied to their Base activity and to participate in broader ecosystems such as Zora.
Beyond its internal pivots, the initiative sits within a wider industry discourse about how social tooling, creator monetization, and trading workflows intersect on-chain. In related coverage, the industry has noted the growing interest in open, interoperable tools for prediction markets and open-source data feeds, underscoring a trend toward more modular, developer-friendly ecosystems.
Base App’s evolution also points to a continued emphasis on practical utility for users who want to manage custody, trading, and tokenization in a single interface. The product’s December launch, together with the sunset of Creator Rewards, reflects a clear prioritization of liquidity and tradable assets over experimental social features, even as the company remains committed to supporting its broader developer network and ecosystem partners.
Related discussions around Base and its ecosystem continue to surface in strategy discussions about decentralized social networks, on-chain governance, and the role of creator-driven tokens in digital economies. The product’s remaining integration points, including its links to broader Coinbase services, will likely shape how users navigate the interface as it moves deeper into the trading-centric phase of its development.
Why it matters
The decision to sunset Creator Rewards and narrow the Base App’s focus to tradable assets marks a significant strategic refinement for Coinbase’s technology roadmap. By concentrating on a trading-first experience, Base App aims to streamline user flows, reduce feature complexity, and enhance liquidity within its ecosystem. The change also signals how Coinbase views social features as a potential risk to a clean, asset-centered user journey, especially in an environment where on-chain trading and asset tokenization are increasingly central to platform differentiation.
For developers and creators, the move redraws incentives. While Creator Rewards offered a tangible earnings stream, the shift reallocates attention and resources toward building robust trading experiences, improved interfaces, and more reliable asset integrations. The ongoing support for Farcaster suggests a recognition that decentralized social ecosystems remain valuable to certain user segments, even if they no longer sit at the core of Base App’s product strategy. In practice, users who valued social signals and creator-driven tokens may migrate toward stand-alone social clients or alternative on-chain ecosystems, while trading-centric features gain momentum on Base App.
From a market perspective, the development underscores how major crypto players balance social experimentation with the economics of liquidity and tradable assets. It also reinforces Coinbase’s narrative around the Everything App, positioning Base App as a strategic hub for on-chain activity, rather than a standalone social portal. The outcome will hinge on how effectively Base App can scale its trading features, attract liquidity, and maintain a coherent user experience as more functions are integrated into the ecosystem. In short, the Pivot foregrounds trading utility as the backbone of a user-centric on-chain toolset, while social experiments take a back seat until or unless they prove to materially enhance liquidity and engagement.
What to watch next
- Final Creator Rewards payouts on February 18 — confirm user receipts and overall distribution metrics.
- Any updates regarding Base Token discussions and public messaging from Coinbase/Base leadership.
- Progress on Farcaster integration strategy and how users engage with decentralized social features outside Base App.
- Updates to the Creator Coins program and its interaction with Zora and other on-chain ecosystems.
- Shifts in Base App’s feature set and new liquidity- or asset-focused updates as part of the Everything App roadmap.
Sources & verification
- Base App X post detailing roughly $450,000 distributed to about 17,000 creators over seven months.
- Announcement that Creator Rewards will end with final payouts on February 18.
- Jesse Pollak’s comments on focusing on trading and the imperfect fit of Farcaster for Base App.
- Base App’s December launch and its role as a self-custody wallet within the trading experience.
- Creator Coins program page and its ERC-20 token mechanics tied to Base App profiles and Zora.
Base App pivots toward trading-first design
Coinbase’s Base App is pruning its social-oriented features to emphasize tradable assets, a move underscored by public remarks from Base’s leadership and corroborated by the platform’s payout data. By winding down the Creator Rewards program and tightening feature focus, Base App aims to deliver a cleaner, more efficient trading experience that aligns with the broader mission of Coinbase’s Everything App. The decision to sunset social incentives comes alongside ongoing conversations about Base’s strategic direction and the potential paths for tokenization and open-access financial tooling within the Coinbase ecosystem.
Ethereum (CRYPTO: ETH) remains a reference point in these discussions, as Base App seeks to harness its layer-2 capabilities and on-chain liquidity to support a more robust trading flow. The emphasis on tradable assets is intended to create a more compelling value proposition for users who want direct asset ownership, faster settlement, and accessible DeFi-native workflows within a single interface. As Base App navigates these changes, observers will be watching not only for concrete product updates but also for how the ecosystem adapts to maintain creator engagement and developer participation without relying primarily on social reward mechanics.
In the evolving crypto landscape, open-source tooling, tokenized assets, and streamlined custody play increasingly central roles. The Base App pivot illustrates how major platforms are recalibrating to align product-market fit with liquidity pressures and regulatory expectations, while still preserving avenues for creator-led innovation through tokens and decentralized ecosystems. The ongoing dialogue around Base’s roadmap, tokenization ambitions, and the role of social features will shape how users engage with Coinbase’s broader platform — and how new entrants attempt to replicate or improve upon this integrated, trading-focused approach.
One of the most misunderstood dynamics in DeFi is the difference between capital rotation and capital exit. When prices stall or certain narratives cool off, the default reaction on Crypto Twitter is to declare that “liquidity is leaving.”
Most of the time, that’s just… wrong.
What’s usually happening is not an exodus — it’s a rotation.
Understanding this distinction is critical for builders, investors, and traders who want to survive beyond the hype cycle and actually position themselves where liquidity is going, not where it’s already been.
What Capital Exit Really Looks Like
Capital exit occurs when funds leave the DeFi ecosystem entirely. This typically shows up as:
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Stablecoins moving off-chain to CEXs and then into fiat
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Sustained drops in Total Value Locked (TVL) across multiple chains
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Reduced on-chain activity, fewer transactions, and declining fee revenue
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Liquidity providers fully unwinding positions instead of reallocating them
We saw clear capital exit during events like:
During true exits, nothing is spared. Blue chips bleed alongside long-tail protocols. Infrastructure starves. Innovation slows.
That is not what most “bearish” DeFi phases actually look like today.
Capital Rotation: The Default State of DeFi
Capital rotation happens when liquidity stays on-chain but moves between:
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Sectors (DEXs → LSDs → Perps → RWAs → InfoFi)
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Chains (Ethereum → Arbitrum → Base → Solana → back again)
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Risk profiles (high-yield farming → stable yield → delta-neutral strategies)
In rotation phases:
-
TVL might look flat or even decline in specific protocols
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But stablecoin supply stays elevated
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Transaction volume remains healthy
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New protocols capture liquidity quickly
This is DeFi behaving like a living market, not a dying one.
Real Examples of Capital Rotation in Action
1. DEX Liquidity → Liquid Staking
After the initial AMM boom, liquidity rotated from DEX LPs into liquid staking protocols as users sought yield with less impermanent loss.
Key projects:
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Lido
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Rocket Pool
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Frax Ether (frxETH)
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StakeWise
ETH never left the ecosystem — it just stopped farming Uniswap pools and started earning validator yield instead.
2. Yield Farming → Perpetuals & Derivatives
As passive yields compressed, capital rotated toward protocols offering leverage, speculation, and fee-based rewards.
Notable projects:
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dYdX
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GMX
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Gains Network
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Vertex
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Aevo
Liquidity didn’t vanish — it moved from LP tokens into trading collateral.
3. Layer 1 to Layer 2 Rotation
Ethereum mainnet capital rotated heavily into rollups once users demanded lower fees and faster execution.
Examples:
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Arbitrum
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Optimism
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Base
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zkSync
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Starknet
This rotation pulled liquidity away from some Ethereum-native DeFi apps — but it stayed within the Ethereum security umbrella.
4. DeFi → Real World Assets (RWA)
As yields normalized, capital rotated into protocols offering exposure to off-chain yield sources.
Key RWA players:
Instead of leaving crypto for TradFi, liquidity brought TradFi on-chain. That’s rotation, not exit.
5. Passive Yield → Strategy & Automation Protocols
Users increasingly prefer optimized strategies over manual farming.
Capital flowed into:
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Yearn Finance
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Enzyme
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Sommelier
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Pendle
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Gearbox
Yield didn’t disappear — it got abstracted, packaged, and automated.
6. Narrative Rotation: Privacy, MEV, and InfoFi
Narratives themselves attract liquidity. As attention shifts, capital follows.
Examples:
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Privacy & MEV protection: Flashbots, Eden, CoW Protocol
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InfoFi & on-chain intelligence: Arkham, Dune, Nansen
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Automation & execution layers: Gelato, Keep3r, Autonolas
Liquidity often moves before the narrative fully forms on social media.
Why Rotation Is Healthy (and Necessary)
Capital rotation is a sign of:
If capital never rotated, DeFi would stagnate. Rotation is how weak designs get drained, and stronger primitives get funded.
Exit kills ecosystems.
Rotation refines them.
How to Tell Rotation from Exit (On-Chain Signals)
Look beyond price charts:
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Stablecoin supply on-chain
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Bridge inflows/outflows
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Fee generation across protocols
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Gas usage and transaction counts
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Where TVL is moving, not just shrinking
If money leaves one protocol and shows up in three others, that’s rotation.
If it leaves the chain entirely, that’s exit.
Final Thoughts
DeFi doesn’t die in dramatic explosions. It mutates.
Capital rotation is the market’s way of voting — quietly, continuously, and ruthlessly — on which ideas deserve liquidity next.
The mistake isn’t missing the top.
It’s assuming the money left when it simply changed seats.
If you’re watching carefully, rotation isn’t bearish.
It’s a roadmap.
REQUEST AN ARTICLE
Bitcoin’s rebound from last week’s selloff is already running into a wall.
After briefly sliding into the low-$60,000s in a capitulation-style move last week, the largest cryptocurrency snapped back toward the $70,000 level over the weekend but momentum has since faded.
That stall has traders re-framing the bounce as a classic bear-market pattern a sharp relief rally that draws in dip buyers, only to meet a wave of supply from investors looking to exit at better prices.
“There is still a huge supply in the markets from those who want to exit the first cryptocurrency on the rebound,” FxPro chief market analyst Alex Kuptsikevich said in an email. “In such conditions, it is worth being prepared for a new test of the 200-week moving average soon.”
“We remain very sceptical about the near future, as the recovery momentum lost steam over the weekend, encountering a sell-off near the $2.4T level. Perhaps we have only seen a bounce on the way down, which is not yet complete,” he added.
Sentiment data paints a similarly fragile picture. The Crypto Fear and Greed Index sank to 6 over the weekend to reach the same levels as an FTX-led 2022 downturn, before recovering to 14 by late Monday.
Kuptsikevich said those readings remain “too low levels for confident purchases,” arguing the shift reflects more than temporary nerves.
Liquidity conditions are adding to the unease. With thinner order books, modest sell pressure can produce outsized moves, which then triggers additional stop-outs and liquidations a feedback loop that makes price action feel disorderly.
That dynamic, rather than a single headline, can explain why bitcoin can swing thousands of dollars in a session while still failing to break through key resistance.
A Kaiko note on Monday described the backdrop as a broader risk-off unwind. It said aggregate trading volumes across major centralized exchanges have declined by roughly 30% since October and November, with monthly spot volumes dropping from around $1 trillion to the $700 billion range.
The firm said that although last week saw a few sharp bursts of trading, the broader trend has been a steady drop in participation. That points to traders, particularly retail investors, gradually leaving the market rather than being forced out all at once.
When liquidity thins like this, prices can slide quickly on relatively modest selling pressure, without the kind of heavy, panic-driven volume that usually signals a clear capitulation and a durable bottom.
Kaiko also framed the move within the familiar four-year halving cycle logic. Bitcoin peaked around $126,000 in late 2025/early 2026 and has since retraced sharply, with the pullback into the $60,000-$70,000 zone representing a roughly 50%-plus drawdown from the highs.
Historically, those bottoms can take months to develop and often feature multiple failed rallies.
For now, bitcoin’s ability to hold the $60,000 area is the key tell. If buyers continue to defend it, the market may settle into a choppy consolidation. If not, the same thin-liquidity dynamics that fueled the washout could return quickly, especially if broader macro conditions stay risk-off.
Polymarket has filed a federal lawsuit against the state of Massachusetts, arguing that Congress granted the Commodity Futures Trading Commission (CFTC) exclusive authority over event contracts, preventing states from independently shutting down federally regulated prediction markets.
Neal Kumar, Polymarket’s chief legal officer, confirmed the lawsuit on Monday, saying the dispute involves national markets and unresolved legal questions that must be addressed at the federal, not state, level.
“Racing to state court to try to shut down Polymarket US and other prediction markets doesn’t change federal law — and states like MA and NV that have done so will miss an amazing opportunity to help build markets for tomorrow,” Kumar said, referring to Massachusetts and Nevada.
As reported by Bloomberg Law, the lawsuit was filed preemptively to block potential enforcement action by Massachusetts Attorney General Andrea Campbell, which Polymarket argues would unlawfully interfere with federally regulated derivatives markets.
The legal challenge follows a recent state court ruling in Massachusetts that granted a preliminary injunction barring Kalshi, another prediction market, from offering contracts on sports-related events in the state.
The move also comes one week after a Nevada judge blocked Polymarket from offering sports contracts to users in the state, citing “irreparable” harm to Nevada’s ability to maintain the integrity of its sports betting regulatory framework, according to Cointelegraph.
Related: Jump Trading eyes Kalshi, Polymarket stakes as institutional interest grows: Report
Prediction markets face growing state scrutiny as volumes surge
As Cointelegraph has reported, Massachusetts and Nevada are not the only states pushing back against prediction markets. At least eight others, including New York, Illinois and Ohio, have taken steps to restrict or challenge sports-related prediction markets, according to Kalshi.
The regulatory pushback comes even as prediction markets have seen rapid growth in recent months. Data from Dune shows that prediction markets recorded $3.7 billion in trading volume during a single week in January, marking a new high.
Separate data from Messari indicates that Polymarket and Kalshi are currently neck and neck in trading volume, despite operating under different models, with Polymarket running on decentralized infrastructure.
Both companies have secured significant venture financing, with Polymarket valued at $9 billion and Kalshi at $11 billion following their most recent funding rounds.
Related: DraftKings eyes crypto offerings as it expands into prediction markets
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