Acting Labor Secretary Sandlin’s push for earlier Fed cuts clashes with a cautious central bank, leaving crypto trading a “higher for longer” regime even as the political drumbeat for easing grows louder.

Nagel, who heads Germany’s Bundesbank and sits on the ECB’s Governing Council, told Bloomberg on Friday that the central bank is “highly vigilant” to rising inflation risks from the Iran war and “will act as needed to prevent higher energy costs spilling over into prices more broadly.” He warned that the conflict’s medium‑term impact on inflation is “still difficult to assess” but said policymakers are determined not to let an energy price shock morph into a new wave of persistent, second‑round effects.

ECB “highly vigilant” on Iran‑driven inflation

Those remarks echo what Nagel told Reuters in March. In emailed comments reported under the headline “ECB will react if Iran war pushes up inflation,” he said: “We must be very vigilant. If it becomes apparent that the current energy price increases will translate into broad consumer price inflation in the medium term, the Governing Council of the ECB will act decisively in a timely manner.” He added that debates about inflation undershooting the ECB’s 2% target “are likely to be over for the time being.”

The ECB is currently holding its deposit rate around 2%, a level Nagel has described as “well positioned” — neither clearly stimulative nor restrictive — to respond in either direction as the data evolve. But he and other officials, including Croatia’s Boris Vujčić and chief economist Philip Lane, have repeatedly stressed that the priority now is preventing a repeat of the 2022 Russia‑Ukraine energy shock, when the ECB was slow to react and inflation surged into double digits.

Oil shock pushes eurozone inflation back to 3%

The macro backdrop supports Nagel’s caution. Eurostat data reported by the Associated Press show that euro‑area inflation rose to 3% in April from 2.6% in March, driven by a 10.9% year‑on‑year jump in energy prices as the Iran war disrupted flows through the Strait of Hormuz. Barchart’s summary of the release notes that the 21‑country eurozone is now facing “higher inflation and weaker growth,” a classic stagflation mix that makes life harder for the ECB.

CryptoBriefing, citing prediction markets, recently observed that odds of a 50‑basis‑point ECB rate cut at the April 2026 meeting sat at just 0.3% “as the Iran energy shock keeps inflation pressure on Europe,” arguing that traders “see almost no chance of aggressive rate cuts while energy-driven inflation persists.” Yahoo Finance similarly quoted policymakers saying the ECB “must be very agile and vigilant” in the face of stagflation risks, with any easing path now likely to be slower and more conditional than markets had hoped at the start of the year.

Why this matters for bitcoin and the broader crypto market

That pattern lines up with research covered by crypto.news in a story on how bitcoin and ethereum now move with global risk sentiment: when central banks are on hold and equities grind higher, BTC and ETH tend to outperform; when inflation surprises force policymakers to lean hawkish, crypto usually gets hit alongside other long‑duration assets. Another crypto.news story on U.S. jobs data showed exactly that dynamic: as rate‑cut hopes faded, the total crypto market cap slid and bitcoin lost key support levels.

Nagel’s message underscores that the eurozone leg of that macro story is not about to flip dovish simply because growth looks soft. As long as the Iran war keeps oil and gas prices elevated and euro‑area inflation hovering around 3%, the ECB’s bias will remain toward vigilance rather than easing. For crypto traders, that means the European part of the liquidity puzzle is likely to stay tight — and that bitcoin’s role in portfolios will continue to be defined more by global risk appetite and real‑yield dynamics than by any simplistic “inflation hedge” narrative.

Crypto conferences filled venues and dominated social feeds in 2025, but fresh traffic data suggests the hype barely translated into meaningful audience growth for crypto media outlets.

Crypto conference season was noisy last year. The booths were full, the panels were stacked with premier speakers, and the side events and parties ran late. Social feeds made it look like the entire digital asset market took over conference halls and parts of major cities.

So we asked the obvious question: did any of that noise actually make it into the traffic charts?

To check, our latest Outset Data Pulse analysis tracked monthly visits across 274 crypto and Web3 media outlets in Asia and the United States from January 2025 through March 2026.

How the conference effect was measured

This report was not a basic surface-level comparison of total traffic during event months. Rather, every website was measured against its own normal pattern, not the rest of the market, because it doesn’t make sense for a small regional outlet to compare against a large global publisher.

At the same time, a 10% move at one outlet may be normal, but a 10% move at another would be highly unusual. That’s why we used the z-score approach: each outlet’s traffic was converted into a z-score, which shows how meaningfully different a given month was for that specific outlet. A score near zero means the month was normal, while a higher score means the month stood out from the outlet’s own baseline.

The charts comparing conference months with non-conference months make the contradiction easier to understand. Conference season looks intense from inside the industry, but on the traffic chart, the bars barely separate.

The U.S. saw almost nothing while Asia looked better, but not cleaner

The headline number is the most important metric that should make sponsorship buyers pause. During industry conference months, U.S. crypto media outlets saw a mere 0.2% traffic gain above their usual average.

Compared with non-conference months, the gap was still just 1.5%. That is nowhere close to a surge and sits well within the kind of movement these outlets already see month to month. In a media environment where traffic can swing sharply because of Bitcoin prices, regulatory news, exchange failures, token rallies, global politics, or even crashes in other asset classes, a 0.2% move shouldn’t be part of the conversation.

Asia looked stronger at first. Conference months ran about 1% above each outlet’s yearly average, and 4.5% above quieter months with no conference.

But even that 4.5% needs scale. In the original report, the median Asian outlet had around 69,700 monthly visits, so the conference-month lift worked out to roughly 3,100 extra visits. On a smaller 10,000-visit outlet, the same kind of bump is only about 700 visits.

However, much of the Asian lift came from a cluster of 27 Southeast Asian media outlets in October 2025, coinciding with TOKEN2049 in Singapore.

It was also the month Bitcoin hit its cycle high, followed by the market witnessing its largest single-day liquidation event just a week later. That makes the picture harder to read, as a traffic spike in a conference month does not by default mean the conference caused the spike.

Crypto readers flock to media outlets when something in the market demands attention, not just because an event is on the calendar. Fast price moves, broken leverage, new records, and sudden sell-offs can all create urgency that a conference alone cannot.

When we looked outside the conference calendar, Bitcoin kept showing up

January 2025 featured no Tier-1 conferences, yet it was the strongest readership month in the entire 15-month panel for both Asia and the U.S. In that month, 47.8% of Asian outlets and 55.7% of U.S. outlets cleared the “unusually strong” bar. By contrast, April 2025, which featured Paris Blockchain Week and TOKEN2049 Dubai, pushed only 14.5% of Asian outlets and 5.6% of U.S. outlets above that same line.

Bitcoin appears to explain this narrative. The world’s largest cryptocurrency by market cap averaged a 6.61% gain in the 30 days before Tier-1 conferences and rose before those events around 62% of the time.

Once the conference itself started, however, Bitcoin’s returns looked statistically similar to random windows of the same length. During actual conferences, BTC averaged about +0.63%, while random matching windows averaged +1.80%, which makes the event window hard to treat as special.

If Bitcoin rallies into an event, crypto media traffic may benefit from a boost. A sponsor could look at the month and assume the conference triggered a bump in total visits. But the data leaves open a simpler explanation: the price move may have created the attention, with a conference coincidentally happening in the background.

What we think sponsors should take from this

Conferences are still important because this is where founders interact with the community on a human level. Panels can provide valuable marketing opportunities and visibility, and side events can result in partnerships.

Those are real outcomes. Still, the data is less kind to the narrative that conference season reliably creates a broad media traffic gain. In the U.S., the impact was almost nonexistent, while in Asia, the lift was small and heavily shaped by one unusual month where a major conference, Bitcoin’s cycle top, and a historic liquidation event all collided.

Paying for the room, the meetings, and the stage still matters, especially for brand-building and relationship-driven outcomes. Just don’t assume the traffic will follow in the same way the narrative suggests.

Revolut users reported that the app briefly displayed Bitcoin prices plunging to around $39,900 on Friday, while some traders also received notifications suggesting extreme price moves, including that BTC had reached a 52-week low of 2 cents.

Users further reported on X apparent simultaneous price drops across multiple cryptocurrencies, including XRP and Solana (SOL), as well as stablecoins such as USDt (USDT) and USDC (USDC).

The anomalies, which quickly reversed, appear to have been confined to the Revolut app, with no matching price dislocation visible across aggregated multi-exchange data or derivatives markets during the same period.

External pricing sources such as CoinMarketCap and CoinGecko showed no corresponding movement in Bitcoin or other major assets, suggesting the incident was likely caused by a platform-specific pricing or data issue rather than a broader market event.

Revolut said BTC had dropped to 2 cents. Source: That Martini Guy B

Revolut said it was experiencing issues affecting some of the app’s functionalities and that its teams were working on a fix.

Experts point to data feed error or thin liquidity

Ranveer Arora, ex-PwC quantitative trading lead and co-founder of Altura.trade, told Cointelegraph two explanations are circulating for the roughly 50% intraday wick seen on Revolut’s BTC chart.

“The first is a data feed error,” he said. “It could be a corrupt tick pushed through Revolut’s pricing system, briefly anchoring the 1D chart at around $39,900 before correcting,” adding that, as Revolut is not an exchange and sources prices from external providers, a single bad data point could produce such a chart move.

Arora added that an alternative explanation is a transient liquidity gap in a thin order book environment. “Revolut operates with limited liquidity depth compared to a full exchange,” he said. In such a scenario, a large sell order could temporarily exhaust available bids and print a sharp downside wick before recovery.

However, he noted that the absence of matching prints across other venues makes a data error more likely, while any corresponding trades elsewhere would support the liquidity-gap hypothesis.

Related: Bitcoin can crash to $50K if ‘most critical’ bear market test fails: Analysis

Marc Tillement, director of blockchain price oracle Pyth Data Association, said the episode highlights how fragile price perception can be in fragmented data environments, where “a single bad print can distort the perception of price very quickly,” especially in retail-facing systems.

He added that as markets become increasingly continuous and data-driven, the reliability and provenance of pricing infrastructure become central to market trust, with participants depending on transparent, verifiable data layers to avoid distorted signals.

A Revolut support message said the company was “currently experiencing issues affecting some of the app’s functionalities” and that engineers were working on a fix, urging customers to monitor its status page for updates.

Revolut said it was working on the issue. Source: Revolut

A spokesperson for Revolut confirmed that the incident had been rectified, telling Cointelegraph it was caused by a “service disruption at a third-party provider,” resulting in inaccurate pricing on the platform. They said the company was now evaluating the details of the disruption.

Magazine: Bitcoin will not hit $1M by 2030, says veteran trader Peter Brandt

OpenAI has released GPT-5.5-Cyber to vetted cyber defenders, giving them reduced guardrails for specialized security workflows.

OpenAI released GPT-5.5-Cyber on May 7 in limited preview, targeting security professionals defending critical infrastructure. The company describes it as the most permissive model in its cybersecurity lineup, aimed at specialized authorized workflows for a smaller group of approved partners with stronger verification requirements and account-level controls.

The cyber-specific version makes it easier for vetted teams to use OpenAI’s latest model for vulnerability identification, patch validation, and malware analysis, workflows where the guardrails built into the generally available GPT-5.5 would have created friction.

OpenAI said: “GPT-5.5-Cyber lets a smaller set of partners study advanced workflows where specialized access behavior may matter.”

What defenders can and cannot do

Defenders approved for the highest tier of OpenAI’s Trusted Access for Cyber program receive a version of GPT-5.5 with fewer guardrails than the public model, enabling bug hunting, malware study, and reverse engineering of attacks. Credential theft and writing malware remain blocked regardless of access level.

During early testing, selected partners used GPT-5.5-Cyber to automate and expand red-teaming exercises on infrastructure systems and to validate high-severity vulnerabilities. OpenAI plans to document the findings in a future technical deep dive as part of a responsible disclosure process.

The UK AI Security Institute published an evaluation of GPT-5.5 across 95 narrow cyber tasks. The institute found that basic tasks have been fully saturated by leading models since at least February 2026, though it cautioned its testing does not reflect performance against well-defended real-world targets with active defenders and alert penalties.

Competitive pressure

The rollout comes a month after Anthropic released Claude Mythos Preview, a cyber-focused model that drew attention from investors and senior members of the Trump administration, even after Anthropic had been blacklisted by the Pentagon weeks earlier.

AI cybersecurity has become a formal competitive front, with both companies raising questions about who controls AI offense and defense tools and who bears responsibility when those capabilities are misused.

OpenAI noted it has also provided access to an earlier model, GPT-5.4-Cyber, to the US Center for AI Standards and Innovation and the UK AI Security Institute for independent evaluation. The standard GPT-5.5 remains its recommended entry point for most defenders.

Josh Shapiro has sued Character.AI after a chatbot falsely posed as a licensed Pennsylvania psychiatrist and offered medical advice to a state investigator.

Pennsylvania Governor Josh Shapiro sued Character.AI on May 6, targeting the company’s chatbots for allegedly practicing medicine without a license.

The state said an investigation found that chatbots presenting themselves as fictional characters had claimed to be licensed medical professionals, including psychiatrists, available to discuss mental health symptoms with users.

A Character.AI bot named “Emilie” told a state investigator that assessing whether medication could help was “within my remit as a Doctor.”

The bot also claimed a Pennsylvania medical license and supplied an invalid license number. As of April 17, 2026, Emilie had logged approximately 45,500 user interactions on the platform.

What the state is demanding

The Shapiro administration is seeking a preliminary injunction and a court order to stop AI companion bots from posing as licensed professionals and providing medical advice. The case marks the first enforcement action of its kind announced by a governor in the United States.

“Pennsylvania law is clear,” Al Schmidt, secretary of Pennsylvania’s Department of State, said in a statement. “You cannot hold yourself out as a licensed medical professional without proper credentials.”

Character.AI said its characters are fictional and intended for entertainment, with prominent disclaimers in every chat reminding users that a Character is not a real person. The company said it does not comment on pending litigation.

A pattern of harm allegations

Character.AI has faced a string of lawsuits over harms allegedly linked to its chatbots. Kentucky filed suit in 2026 alleging its bots preyed on children and led them into self-harm. A Florida family settled a case against Character.AI and Google after their teenage son died by suicide, with the lawsuit alleging abusive and sexual interactions with the teen.

Governor Shapiro’s 2026-27 proposed budget calls on Pennsylvania’s legislature to require age verification for AI companion bots, mandate detection of self-harm mentions by minors, force reminders that no human is on the other side of the screen, and prohibit sexually explicit or violent content involving children.

As crypto.news reported, AI companies face growing regulatory pressure across multiple fronts in 2026, from cybersecurity liability to consumer protection enforcement.

European Central Bank (ECB) President Christine Lagarde said stablecoins are not Europe’s best route to strengthening the euro’s international role, pushing back against calls to respond to US dollar-backed stablecoins with euro-denominated tokens.

Speaking on Friday at the Banco de España LatAm Economic Forum in Roda de Bará, Spain, Lagarde made several comments on the role of stablecoins in the European economy. “It is no longer about whether stablecoins should exist, but whether jurisdictions can afford to be without them,” she said, arguing that the case for promoting euro stablecoins becomes less clear once their two core functions are separated.

“The benefits attributed to them [stablecoins] rest on two distinct functions — a monetary function and a technological function — that are systematically conflated in the current debate,” Lagarde said.

The speech lays out one of Lagarde’s clearest arguments yet against treating euro stablecoins as Europe’s answer to US dollar-backed stablecoins, which currently dominate the market with a roughly 98% share. The US has been promoting dollar stablecoins as a way to support the US dollar as a global reserve currency. Instead, she said Europe should build tokenized financial infrastructure anchored by central bank money, including the Eurosystem’s Pontes project for wholesale settlement and the Appia roadmap for an interoperable European tokenized finance ecosystem.

Monetary function: Possible upside, but clear trade-offs

However, Lagarde said that euro-denominated stablecoins operating under the European Union’s Markets in Crypto-Assets Regulation (MiCA) “could generate additional global demand for euro-area safe assets.”

She stressed that this comes with significant trade-offs, including financial stability risks such as fund runs and reserve fragility, and weaker monetary policy transmission if deposits move out of banks.

Source: Christine Lagarde

Lagarde pointed to the 2023 collapse of Silicon Valley Bank, when Circle’s USDC stablecoin briefly fell below its peg after revealing exposure to the bank, as an example of how quickly confidence can weaken.

She said such episodes show how redemption pressures can spill into underlying asset markets and, as stablecoin use grows, create feedback loops between redemptions and prices, particularly where issuers are not banks.

Technology function: Stablecoins are not the only solution

On the technology side, Lagarde acknowledged the role of stablecoins in cross-jurisdictional financial market infrastructure that is accessible “without relying on a maze of legacy intermediaries.”

However, she said that this technological function is not unique to stablecoins. Other forms of tokenized money, including commercial bank deposits or central bank money, could perform the same role within distributed ledger systems, Lagarde said.

“The answer […] does not lie in rejecting technology or discouraging stablecoins altogether. Instead, we must build the public infrastructure that will enable alternative instruments, such as stablecoins and other forms of tokenised money, to operate within a framework anchored by central bank money.”

Lagarde said the EU response is to facilitate wholesale settlement in central bank money through its Pontes project, which links distributed ledger platforms to the Eurosystem’s existing settlement infrastructure, allowing DLT-based transactions to be settled directly in central bank money.

Related: Stablecoin adoption to scale on back of big tech firms: Bitwise

She added that the Appia roadmap, published in March, goes further and outlines a plan for a fully interoperable European tokenized financial ecosystem by 2028.

“Europe knows which port it is sailing to,” she said, adding: “Our task is not to replicate instruments developed elsewhere, but to build the foundations and the infrastructure that serve our own objectives, so that we can harness the benefits of innovation without importing the fragilities.”

Magazine: Guide to the top and emerging global crypto hubs: Mid-2026

Coinbase became the latest crypto company to cut its workforce on Tuesday, as a wave of layoffs sweeps through an industry navigating a down market and the pressure to embrace AI.

CEO Brian Armstrong said the company is using AI to flatten its organizational structure, with managers expected to act more like “player-coaches.”

“AI is bringing a profound shift in how companies operate, and we’re reshaping Coinbase to lead in this new era. This is a new way of working, and we need to leverage AI across every facet of our jobs,” Armstrong said in an email to employees, also shared on X on Tuesday.

Armstrong’s memo outlined three sweeping changes to how Coinbase will operate. Source: Brian Armstrong

Block and Crypto.com have made similar moves in recent months, citing AI-driven efficiency gains that allow leaner teams to handle what once required larger headcounts.

Coinbase and Crypto.com cut about 700 and 180 employees respectively. Jack Dorsey’s Block handed out 4,000 pink slips in February to reduce the company to under 6,000 employees.

Crypto has weathered several bear markets before, and layoffs have always followed. But this time, the companies doing the cutting are using the downturn to rebuild with AI at the center.

Coinbase misses Q1 expectation

Coinbase’s Tuesday filing with the Securities and Exchange Commission detailed that the exchange expects its restructuring plan to cost up to $60 million in expenses tied to severance and termination benefits.

Clear Street analyst Owen Lau told CNBC that Coinbase wants to “tell investors that management is actively managing the cost base to deliver positive adjusted EBITDA through the cycle.”

“The first quarter results are expected to be weak because of the crypto bear market,” added Lau.

On Thursday, Coinbase reported a weaker-than-expected first-quarter loss as falling crypto prices dragged down spot trading revenue. The exchange posted a net loss of $1.49 per share on $1.41 billion in revenue, missing analyst expectations while transaction revenue fell short amid weaker trading activity.

The underperformance isn’t specific to Coinbase, as Bitcoin lost 21% of its value in Q1. Across the tech industry, headcounts that ballooned during the bull run are now coming back down, with executives increasingly pointing to AI as the catalyst.

Bitcoin has been in the red for two consecutive quarters but showed signs of recovery in April. Source: Coinglass

Related: Reality of AI’s impact on employment clashes with C-suite optimism

Whether AI is the real driver or a convenient explanation depends on who you ask. Speaking at the recent Semafor World Economy conference, Scale AI CEO Jason Droege pushed back on the idea of AI presenting a “white-collar apocalypse,” arguing that many companies are using the technology as cover.

“A lot of the layoffs that are happening right now because of AI, if you really dig in, it’s sort of like washing the layoffs,” Droege said. “A lot of these companies are saying it’s because of AI, but a lot of it is just like rightsizing and they need an excuse.”

AI leads job cut reasoning for second consecutive month

According to jobs tracker Layoffs.fyi, the global tech industry in 2026 Q1 had the most layoffs since 2023 Q1, with more than 81,747 people losing their jobs. March was hit the hardest, with 45,800 layoffs in the month.

Tech layoffs surged in early 2026, marking the industry’s highest quarterly job cuts since 2023. Source: Layoffs.fyi

Related: How AI agents can reshape arbitrage in prediction markets

The slowdown has continued into the first month of this quarter. According to a Thursday report from outplacement firm Challenger, Gray & Christmas, US employers announced 83,387 job cuts in April, up 30% from the 60,620 cuts recorded in March. 

AI led all reasons for job cuts in April for the second consecutive month, though it is not the leading cause for the year so far. Market conditions led with 53,058 cuts, followed by closings at 52,187.

“Technology companies continue to announce large-scale cuts and are leading all industries in layoff announcements. They are also often citing AI spend and innovation. Regardless of whether individual jobs are being replaced by AI, the money for those roles is,” said Andy Challenger, chief revenue officer at Challenger, Gray & Christmas.

Crypto has always been cyclical, but the framing around this wave of cuts looks different from the last major downturn. During the 2022–2023 crypto crash, companies were largely reacting to collapsing token prices, the fallout from FTX and balance sheets strained by aggressive bull-market hiring.

This time, executives are increasingly presenting layoffs as proactive restructuring tied to AI adoption and operational efficiency. 

Both Dorsey and Armstrong signalled that their companies remain well-capitalized, framing the cuts as deliberate attempts to flatten corporate structures rather than emergency survival measures.

Same playbook, new reason

Crypto recoveries have come fast, and when they do, businesses often enter hiring sprees to expand during the bull market. Coinbase has been here before. It cut 18% in 2022, then hired aggressively when prices rebounded.

This time, Armstrong is betting the AI-native model means he won’t have to.

Kraken was making the same argument in October 2024, when it slashed 15% of its workforce.

In a blog post, co-CEOs Arjun Sethi and Dave Ripley said the exchange had “fallen into the trap of building organizational layers” and needed to become “leaner and faster” by giving power back to individual contributors over managers.

The language is similar to Armstrong’s and Dorsey’s memos. The difference is, Kraken didn’t mention AI.

Leaner teams, flatter structures, faster decisions. Crypto has been here before, but AI is the latest reason why.

Magazine: Guide to the top and emerging global crypto hubs: Mid-2026

Arbitrum delegates signaled support, in a non-binding sentiment check, for a plan to release $71 million in ether frozen after last month’s Lazarus-linked rsETH exploit, amid an active U.S. court fight over ownership of the funds.

The so-called phase one of the temperature check, which closed Friday afternoon Hong Kong time with more than 90% support, favors the release of 30,765 ETH frozen by Arbitrum’s Security Council after the April 18 exploit, when attackers used unbacked rsETH tokens as collateral on Aave to borrow roughly $230 million in ETH from the protocol.

The vote took place on an off-chain polling platform commonly used by crypto governance communities to gauge delegate sentiment before initiating formal steps. Under Arbitrum’s governance process, the result does not itself move funds or change protocol rules. Think of it as a referendum of the population before a piece of legislation is passed.

Any actual transfer would require a separate onchain Constitutional Arbitrum Improvement Protocol (AIP), a formal governance proposal that can execute binding actions if approved by tokenholders. The strong support shown in the sentiment check suggests delegates may favor advancing a formal AIP on the proposal.

The frozen ether are earmarked for a coordinated industry recovery effort led by Aave, KelpDAO, LayerZero, EtherFi, and Compound, aimed at making affected users whole.

But the same funds are also at the center of an escalating legal dispute in Manhattan federal court.

Last week, attorney Charles Gerstein, representing families holding roughly $877 million in unpaid terrorism judgments against North Korea, served a restraining notice on Arbitrum DAO claiming the frozen ETH constitutes North Korean property because the exploit has been widely attributed to Pyongyang’s Lazarus Group.

That triggered an emergency legal fight.

Aave moved earlier this week to vacate the restraining notice, arguing the assets belong to innocent users, not North Korea, and warning that continued delays risk “cascading liquidations” and broader instability across decentralized finance markets.

Gerstein fired back Tuesday, arguing the exploit was not theft but fraud, meaning the attackers obtained legal title to the ETH by deceiving Aave’s lending markets with worthless collateral.

Friday’s governance vote does not mean the funds move immediately.

Besides, even if later approved onchain, the proposed transfer would face Arbitrum’s standard roughly eight-day L2-to-L1 withdrawal delay before any ETH could move, potentially giving the Manhattan court time to intervene.

Arbitrum delegates were also not voting blindly on the legal risk. The draft snapshot proposal included indemnification protections for the Arbitrum Foundation, Offchain Labs, Security Council members, and governance delegates against certain claims arising from either freezing or releasing the ETH, though those protections would only take effect if later adopted through a successful onchain Constitutional AIP. Still, the inclusion of language underscored how unusual the stakes around the vote had already become.

Speaking at Consensus Miami this week, Aave Labs Chief Legal and Policy Officer Linda Jeng said the exploit had already forced the protocol to rethink its risk framework, expanding collateral standards beyond financial metrics to include cybersecurity, interoperability, and technical architecture reviews.

Jeng, who worked as a regulator during the 2008 financial crisis, drew a contrast with traditional finance’s taxpayer-backed rescues.

“In the financial crisis, we had to bail out the banks,” she said. “Here, we came together as an ecosystem to bail ourselves out.”

CORRECTION (May 9. 2026, 02:00 UTC): Corrects that the measure was a snapshot, not a binding Arbitrum Improvement Proposal