Kelp DAO’s $292 million exploit has raised new questions about risk across liquid restaking and DeFi lending markets. 

The attack reportedly affected the protocol’s rsETH bridge and involved 116,500 rsETH, equal to about 18% of circulating supply.

The incident did not remain limited to Kelp DAO. Aave saw large withdrawals, while SparkLend and Fluid paused rsETH markets. Lido also paused earnETH, which had exposure to rsETH, even though its core stETH product was not affected.

A post by a DeFi-focused account, known as @whatexchange on X, compared the event to the 2008 financial crisis. The account wrote, “Stacking asset layers does not remove risk. It compresses and hides it.”

Layered yield products face scrutiny

The post argued that rsETH moved through several layers before the exploit. Users first staked ETH through Lido and received stETH. That stETH could then move into Kelp DAO and EigenLayer, where rsETH was minted.

The rsETH token was then used as collateral on lending platforms such as Aave, SparkLend, and Fluid. It was also bridged through LayerZero to other chains, creating wrapped versions that depended on the same underlying asset.

The analysis compared this structure to mortgage products before the 2008 crisis. It said both systems repackaged one base asset through several financial layers, while each layer relied on the previous one working as expected.

Market response shows hidden exposure

After the Kelp DAO exploit, several DeFi platforms moved to reduce risk. Aave froze rsETH markets for several hours, while SparkLend and Fluid paused similar markets. Ethena also paused LayerZero OFT bridges as a precaution, despite having no direct rsETH exposure.

According to the post, over $6.2 billion exited Aave within less than 36 hours. The account said the main issue was not only the exploit size but the difficulty of mapping indirect exposure across protocols.

The post stated, “No participant, including protocols themselves, can fully map their exposure network.” It added that when users cannot verify exposure in real time, they often react by withdrawing funds.

DeFi risk debate shifts to system design

The post also focused on bridge security. It claimed Kelp used a 1-of-1 verifier setup, meaning one node verified cross-chain messages before funds moved. The post argued that this design created a single point of failure inside a product marketed as decentralized.

The analysis also questioned yield stacking. It said each layer adds new risks, including validator slashing, restaking risks, bridge bugs, contract failures, and lending liquidations.

The post said users should not judge DeFi products only by APY. It argued that higher returns often reflect hidden risk across several connected systems, not simple passive income.

The Kelp DAO exploit has now become part of a wider debate on DeFi security, leverage, and transparency. The incident showed how one failure can affect users across several platforms, including users who did not directly interact with Kelp DAO.

Morgan Stanley has introduced a new portfolio designed to hold stablecoin reserves within its money market fund structure.

According to Morgan Stanley, the “Stablecoin Reserves Portfolio” allows issuers to place backing assets into its Institutional Liquidity Funds trust while earning yield without compromising liquidity or capital stability. The fund, listed as MSNXX, is structured to maintain a $1 net asset value alongside daily access to funds and regular income distribution.

Positioning the offering within ongoing regulatory developments, the bank said the portfolio has been built with compliance in mind under the Guiding and Establishing National Innovation for U.S. Stablecoins Act. The GENIUS Act, signed into law in July, has already drawn interest from traditional payment firms such as Western Union and Zelle, both of which have moved to explore stablecoin integrations.

“Developing innovative ways to work with stablecoin issuers is another step towards modernizing the financial infrastructure,” said Amy Oldenburg, head of digital asset strategy at Morgan Stanley.

Details shared by the bank show the fund invests in cash, short-dated U.S. Treasury securities with maturities of 93 days or less, and overnight repurchase agreements backed by Treasuries. Entry into the fund requires a minimum investment of $10 million, alongside a 0.15% management fee. While the structure is designed with stablecoin issuers in mind, access is not limited to them, with the bank confirming that other investors may also participate.

Momentum in Morgan Stanley’s digital asset push has picked up pace in recent months. Early April saw the launch of the Morgan Stanley Bitcoin Trust, an exchange-traded fund that has continued to gather inflows since its debut. Farside Investors’ data from mid April showed the fund crossing $103 million in net inflows within days of launch, overtaking the WisdomTree Bitcoin Fund, which has accumulated $86 million since early 2024.

The early traction came after a $19.3 million daily inflow pushed the product ahead of its rival. Competitive pricing has also played a role, with the fund’s 0.14% fee sitting just below the Grayscale Bitcoin Mini Trust.

Standing among a growing field of spot Bitcoin ETFs, the Morgan Stanley product still trails larger funds such as BlackRock’s iShares Bitcoin Trust and Fidelity’s Wise Origin Bitcoin Fund, which hold $64.3 billion and $10.9 billion in inflows, respectively. Mid-tier competitors, including Franklin, Valkyrie, and Invesco Galaxy, continue to hold higher cumulative inflows for now.

Alongside ETF activity, the bank has taken further steps to deepen its crypto capabilities. A filing with the Office of the Comptroller of the Currency in February outlined plans to secure a national trust banking charter, a move that would allow it to offer custody services and execute crypto transactions directly for clients. Additional filings with the U.S. securities regulator also point to plans for Ether and staked Solana exchange-traded funds.

Looking at the structure of the new stablecoin reserve product, the design aligns closely with traditional money market fund mechanics while adapting to blockchain-based liabilities, which places Morgan Stanley among a small but growing group of Wall Street firms seeking to bridge conventional finance and tokenized assets, especially as institutional demand continues to build.

U.S. authorities have frozen more than $701 million in cryptocurrency tied to investment scams targeting Americans as part of an ongoing crackdown.

The U.S. Department of Justice said Thursday that the funds were restrained through coordination with crypto exchanges and legal action, as part of efforts led by its Scam Center Strike Force. Law enforcement agencies working alongside the unit focused on networks operating scam centers aimed at U.S. victims.

“The Scam Center Strike Force continues its work to identify, seize, and forfeit funds involved in money laundering related to scams, so that funds can be returned to victims whenever possible,” the agency said.

A significant portion of the restrained assets comes as authorities expand the use of confiscated crypto. In March last year, U.S. President Donald Trump signed an executive order to establish a Strategic Bitcoin Reserve and a Digital Asset Stockpile, funded in part through seized digital assets.

Scam networks, recruitment channels dismantled

Across Southeast Asia, enforcement actions have begun to disrupt the infrastructure behind these schemes. Authorities confirmed the seizure of a Telegram channel used to recruit individuals into a scam center based in Cambodia, where job seekers were often lured under false pretenses.

Investigators also took down at least 503 fake investment websites. Those domains, which previously displayed fabricated dashboards and false returns to convince users to deposit funds, now show seizure notices informing visitors that law enforcement has taken control.

Earlier enforcement activity had already pointed to how these operations function. In December 2025, U.S. authorities seized domains tied to the Tai Chang compound in Burma, where platforms mimicked legitimate trading services and directed victims to download malicious apps before extracting funds.

Court filings unsealed alongside the latest action name two Chinese nationals, Huang Xingshan and Jiang Wen Jie, accused of running a crypto fraud operation from the Shunda compound in Burma. That site had been seized in November 2025 by the Karen National Liberation Army, exposing links between armed groups and scam networks.

Pressure has also extended to intelligence gathering. The U.S. Department of State has offered a $10 million reward for information that could disrupt the Tai Chang scam centers, which investigators have linked to organized crime activity in the region.

Global operations step up coordination

Outside the U.S., similar efforts have been underway to curb crypto-related fraud. Recently, the Singapore Police Force disclosed that a one-month operation between March 16 and April 15 prevented more than $2.86 million in potential losses.

Working with exchanges such as Coinbase, Gemini, Independent Reserve, and regional platform Coinhako, authorities were able to identify victims early and intervene. Blockchain analytics firms TRM Labs and Chainalysis supported the effort by tracing suspicious transactions.

“The operation’s success stemmed from the rapid exchange of information between the police and participating cryptocurrency exchanges, which enabled swift victim identification and immediate intervention,” Singapore police said.

“Officers conducted over 90 direct interventions, contacting scam victims both by telephone and in-person to prevent further financial losses,” they added.

Rising complaints continue to underline the scale of the issue. The Federal Bureau of Investigation reported in April that it received more than one million cybercrime complaints in 2025, with total losses reaching about $21 billion.

Southeast Asia remains central to many of these operations. Scam compounds across countries such as Myanmar, Cambodia, and Laos often rely on trafficked or coerced workers, with crypto investment fraud emerging as one of their most profitable activities.

TLDR:

• BitMine acquired 100,000 ETH, worth about $233.7M, signaling continued large-scale accumulation activity.
• Ethereum trades near its realized price of $2,340, a key level often acting as resistance or support.
• Price remains below the $2,360 resistance, with repeated rejections confirming short-term bearish pressure.
• RSI below 50 and bearish MACD crossover suggest weakening momentum and possible further downside.

---

Ethereum traded near a key on-chain level as fresh institutional activity entered the market. A large acquisition tied to BitMine added to ongoing price pressure, while technical indicators pointed to weakening short-term momentum around the $2,300 range.

BitMine Accumulates Ethereum Amid Market Weakness

Recent data pointed to a large Ethereum transfer involving BitMine, drawing attention across the market. The transaction was valued at roughly $233.7 million based on prevailing prices.

A post shared by Coin Bureau on X reported that BitMine acquired another 100,000 ETH. The update added that three newly created wallets received the funds from BitGo, with tracking data from LookOnChain linking the activity.

The move adds to a growing list of large Ethereum transactions tied to institutional players. Market participants often monitor such transfers to assess accumulation trends and liquidity shifts.

The involvement of Tom Lee further drew attention to the transaction. His association with BitMine has previously aligned with strategic digital asset allocations.

At the same time, Ethereum continued trading close to its realized price near $2,340. This level represents the average acquisition cost for all on-chain holders.

Historically, Ethereum tends to face resistance around this zone during recovery phases. Traders often sell near this level to exit at breakeven.

Still, sustained trading above the realized price has previously marked the start of broader expansion cycles. That context keeps attention fixed on current price behavior.

Ethereum Price Struggles Below Resistance Levels

At the time of observation, Ethereum traded near $2,313, reflecting a modest daily decline. Price action showed a series of lower highs and lower lows after peaking near $2,420.

A separate post by Ali Charts on X stated that Ethereum is testing its realized price near $2,340. The analyst described this level as a historical boundary between bearish phases and broader expansion cycles.

The $2,360 to $2,400 range acted as a clear resistance zone. Multiple attempts to reclaim this level faced rejection, reinforcing short-term selling pressure.

On the downside, support formed near $2,280, with a deeper level around $2,250. A break below this range could expose lower price areas.

Momentum indicators supported the cautious outlook. The Relative Strength Index remained below 50, signaling reduced buying strength.

At the same time, the MACD indicator showed a bearish crossover. The histogram continued printing negative values, reflecting growing downside momentum.

Earlier bullish momentum from April 21 to April 22 faded as sellers regained control. Price now hovered within a mid-range zone rather than near extremes.

This structure suggested either continued downward movement or a period of sideways trading. A recovery would require a firm move above $2,360.

For now, Ethereum remained in a consolidation phase with a slight bearish tilt. Market participants continued watching both price levels and on-chain activity for direction.

The combination of technical weakness and large-scale accumulation created a mixed backdrop. Traders remained attentive to how Ethereum reacts around its realized price level.

Trading firm Jane Street has asked a US court to toss a lawsuit brought by the administrator of the bankrupt Terraform Labs, accusing the company of insider trading that worsened the collapse of the Terra ecosystem.

In a motion to dismiss filed in a Manhattan federal court on Thursday, Jane Street argued Terraform’s suit was an attempt “to extract cash from Jane Street to foot the bill for a fraud that Terraform itself perpetrated on the market.”

“Terraform now claims it was victimized by Jane Street’s trading,” it added. “The problem with this theory is that Terraform’s fraud scheme — in which Jane Street had no involvement — has already been prosecuted, adjudicated, and punished.”

Terraform’s court-appointed administrator, Todd Snyder, sued Jane Street, co-founder Robert Granieri, and employees Bryce Pratt and Michael Huang in February, accusing them of trading Terra tokens after receiving nonpublic information from “Terraform insiders.”

A highlighted excerpt of Jane Street’s motion argues it traded Terra-linked tokens based on market signals, not insider information. Source: CourtListener

Terraform collapsed in May 2022 after its algorithmic stablecoin, TerraUSD, rapidly lost its peg to the US dollar, sending the price of the highly interconnected LUNA token tumbling and wiping out $40 billion in value.

Jane Street argued in its motion that investors “saw the public signs of that collapse,” and it moved to “sell a deteriorating investment as the market was visibly collapsing.”

The firm claimed that the reasons for Terraform’s collapse had already been decided by a court, noting that its founder, Do Kwon, pleaded guilty to conspiracy and wire fraud charges, for which he was sentenced to 15 years in prison.

Jane Street claimed that Terraform’s complaint was also “self-defeating,” as it had stated that Jane Street’s largest TerraUSD sale took place 10 minutes after “supposed material nonpublic information was visible to the market.”

Related: Sam Bankman-Fried withdraws motion for a new trial, asks for new judge

It said Terraform also didn’t identify any material, nonpublic information Jane Street received when it alleged the trading firm sold more tokens in early May 2022 as Terraform transitioned to a new liquidity pool.

“Plaintiff pleads ‘on information and belief’ that Jane Street learned the timing of Terraform’s transition to a new liquidity pool through ‘back-channel communications,’ yet cannot identify a single communication disclosing that timing — despite extensive pre-suit discovery,” the motion said.

Jane Street asked the court to dismiss the suit with prejudice, meaning Terraform cannot bring the same lawsuit against it again.

Magazine: How to fix suspected insider trading on Polymarket and Kalshi

Cointelegraph is committed to independent, transparent journalism. This news article is produced in accordance with Cointelegraph’s Editorial Policy and aims to provide accurate and timely information. Readers are encouraged to verify information independently.

More than 120 entities tied to the cryptocurrency and blockchain sector are urging U.S. lawmakers to advance a comprehensive digital asset market structure bill. In a letter to leaders of the Senate Banking Committee, the Crypto Council for Innovation (CCI) and the Blockchain Association called for moving toward a markup of the CLARITY Act, which would establish a federal framework for digital asset markets. The legislation, which passed the House in July 2025, has been stalled amid broader government funding battles and disputes over stablecoin yield and other topics.

According to the signatories, timely policy action is critical because other major jurisdictions have already enacted wide-ranging crypto regulation. The authors warned that without a comparable U.S. policy framework, the country could cede both economic advantages and strategic leadership to abroad, risking domestic investment, jobs, and technological development to offshore venues. The letter was signed by more than a hundred groups and prominent exchanges, highlighting broad industry support for a formal federal market structure.

Key takeaways

• Industry coalition presses lawmakers to move ahead with a markup of the CLARITY Act, seeking a federal market framework for digital assets.
• The CLARITY Act has bipartisan backing in the House but is awaiting action in the Senate, where scheduling remains uncertain.
• The debate over stablecoin yield remains a central sticking point in negotiations between crypto firms and lawmakers.
• Industry advocacy groups, including exchanges and trade associations, are intensifying their push as other jurisdictions implement their own frameworks.
• Regulatory timing is affected by additional governance requests, such as GENIUS-related comment periods, which could influence the pace of related rules.

Industry coalition pushes for a federal market framework

The central message of the letter is a direct appeal: lawmakers should “proceed towards a markup of the CLARITY Act to provide a comprehensive federal market structure framework for digital assets.” The signatories argue that a unified federal standard would reduce fragmentation, clarify asset classifications, and foster domestic innovation. In their view, a timely markup is essential to maintain U.S. competitiveness as other nations finalize their own regulatory regimes.

Among the signatories are traditional crypto exchanges and a broad set of industry groups. The coalition includes Coinbase and Kraken, as well as advocacy groups such as the Texas Blockchain Council and the Solana Policy Institute. Their collective stance underscores a broad spectrum of support for a formal federal framework that could shape custody, trading, custody, and issuer rules for digital assets.

The letter also emphasizes a key tradeoff: deferring action risks a lag in policy that could push companies to relocate development and jobs to jurisdictions with clearer rules. In the authors’ view, the United States risks losing strategic advantages if it does not keep pace with international policy developments that are already affecting the global crypto ecosystem.

Lawmakers’ timetable remains uncertain as talks continue

Despite the House’s earlier approval, the Senate Banking Committee, chaired by Tim Scott, has yet to set a new markup date for the CLARITY Act. The committee postponed a markup in January, hours after Coinbase CEO Brian Armstrong indicated that the bill as written did not garner his support. Since then, lawmakers have held discussions with industry participants to address sticking points, notably the treatment of stablecoins and the mechanics of yield on thosecoins used by issuers and custodians.

In the latest public comments, Senator Thom Tillis urged committee leadership to consider delaying markup until May to give participants more time to negotiate a compromise on stablecoin yield. The sense is that a productive resolution will require narrowing the points of disagreement between crypto firms, banks, and regulators, a process that may extend the timeline for formal consideration in the Senate. As of now, no new markup date has been announced by the committee.

The broader context includes parallel discussions from other industry bodies. The Digital Chamber, another crypto advocacy group, urged the banking committee to schedule markup “as soon as the calendar allows,” highlighting that the current congressional window is finite. A representative note from The Digital Chamber described the legislative pace as a factor in the sector’s planning horizon, signaling that industry groups view a timely process as essential to sustaining momentum in policy development.

Regulatory crosswinds: stablecoins, GENIUS and the policy race

Beyond the CLARITY Act, concurrent regulatory efforts add to the sensitivity of the timing. The American Bankers Association recently requested an extension from four U.S. agencies responsible for GENIUS regulations, seeking 60 additional days to submit comments after the Office of the Comptroller of the Currency released its related rules. A delay of that length would likely slow the full implementation of the GENIUS framework, another factor that could influence how quick a comprehensive market structure policy takes shape in Congress.

These dynamics sit alongside ongoing debates about stablecoin design and governance—issues that have repeatedly surfaced in discussions with lawmakers. The industry’s push to align federal policy with the realities of digital asset markets remains a persistent theme, with participants arguing that a robust framework would reduce uncertainty and enable responsible innovation while protecting users and the financial system.

In parallel, the letter from the Digital Chamber and other industry groups underscores a broader narrative: the United States cannot afford to fall behind in setting clear, predictable rules for digital assets. The stakes, according to proponents, go beyond immediate policy wins; they hinge on sustaining domestic investment, talent, and the ability to compete globally as the crypto sector continues to expand and evolve.

For investors and builders, the core question is what a finalized CLARITY Act would look like in practice. While the path to a markup remains uncertain, the convergence of industry support and regulatory pressure suggests that lawmakers may soon face renewed momentum to formalize a federal framework. How any compromise on stablecoin yield would be reconciled with existing financial-safety objectives could shape not only the bill’s fate but broader policy direction for the sector in the coming months.

As the process unfolds, market participants should monitor whether the Senate channels the momentum into a concrete markup timetable and whether negotiations yield a framework that balances innovation with consumer protections. The unfolding debate reflects a pivotal moment for U.S. crypto policy, with the potential to influence where and how digital asset activity unfolds over the next phase of the industry’s development.

Looking ahead, observers should watch for a clear signal on markup scheduling, as well as any breakthroughs on stablecoin governance that could unlock a path to broader regulatory consensus. The next weeks will reveal whether the CLARITY Act can navigate the remaining political and technical hurdles or if the fragmentation in the policy conversation will persist, delaying a federal settlement that many in the industry say is long overdue.

Cointelegraph remains committed to independent reporting on evolving policy and its implications for markets, users, and builders across the crypto ecosystem.

Investment banking giant Morgan Stanley has made a quiet by significant move into stablecoins, expanding its footprint in the digital assets industry.

The firm’s investment management arm, MSIM, has announced the launch of the Stablecoin Reserves Portfolio – a government money market fund designed for issuers of stablecoins who need a regulated, safe place to store the reserves backing their tokenized versions of fiat currencies.

Here is the simple version of what the fund is designed to do.

When a company issues a stablecoin – a digital token pegged to the U.S. dollar or other fiat currencies – it must hold real dollars in reserve to back every token created. Think of it like a guarantee: for every blockchain-based dollar issued, a real dollar must exist somewhere safe and accessible. Morgan Stanley’s new fund is that place.

The fund (MSNXX) invests only in the safest and most liquid instruments, such as the U.S. Treasury bills, which are short-term loans to the U.S. government. The yield on these is widely considered the closest thing to a risk-free return. It also invests in repurchase agreements, or repos, which are overnight loans backed by those same government securities. Both instruments are designed to preserve capital.

The fund targets a $1 net asset value, meaning every dollar put into the fund is worth exactly the same when taken out, helping bypass price fluctuations. That is different from routine funds, where the value of your investment rises and falls daily. Further, the fund offers daily liquidity, meaning investors can withdraw their money on any business day without a waiting period or penalty.

“We are pleased to deliver a new investment solution to the marketplace that seeks to address the needs of stablecoin issuers,” Fred McMullen, co-head of global liquidity, Morgan Stanley Investment Management, said in the press release.

“The significant increase in stablecoin issuers as well as the growing number of assets held in stablecoins represents an evolving portion of the marketplace that is ripe for future growth,” he added.

Stablecoins have seen their market capitalization grow multiple-fold in recent years, reaching $316 billion, with dollar-pegged tokens such as Tether and USDC making up the bulk of the total. While initially used primarily to facilitate crypto trading, stablecoins have gradually expanded into real-world use cases, including remittances and cross-border capital transfers.

The sector therefore stands out as perhaps the only one with a clear real-world use case, while the broader market remains largely speculative.

Why now?

Morgan Stanley’s new fund comes as the GENUIS ACT – the Guiding and Establishing National Innovation for U.S. Stablecoins Act – is currently moving through Congress. If passed, it would legally require stablecoin issuers to back their tokens with high-quality liquid assets such as Treasury bills and cash-like instruments. And these will have to be held in regulated vehicles.

The fund is therefore positioned to capture reserve management business before it becomes mandatory.

Part of a bigger push

Morgan Stanley Investment Management recently launched the Morgan Stanley Bitcoin Trust (MSBT), a cryptocurrency ETP designed to track bitcoin, with BNY Mellon providing custody and fund administration services.

It also introduced tokenized DAP Class shares of its Institutional Liquidity Funds Treasury Securities Portfolio in partnership with BNY, enabling blockchain-based mirrored records. At the same time, BNY retains the official books and records.

“We have actively engaged across the industry to develop the ability to offer digital asset related liquidity solutions,” said McMullen. “While still in the early stages, these recent product launches signify our commitment to develop relevant, timely solutions that may address evolving investor needs in an increasingly digital marketplace.”

Succinct Labs has launched ZCAM, an iPhone camera app built to verify photos and videos at the moment of capture. 

The app uses cryptography to create a record linked to the device that captured the media.

The company said ZCAM “signs photos and videos at the moment of capture, producing a tamper-proof record that links content to the device that captured it.” The record allows users to check whether a file came from a real device and whether it was later changed or generated by AI.

ZCAM targets AI fake photo and video risks

The launch comes as AI-generated images and videos continue to raise concerns around online fraud, identity abuse, and false media. Succinct said commercial AI detection tools can fail, so its system focuses on proving origin rather than only detecting fakes.

According to the company, ZCAM creates a cryptographic hash from the pixels captured by an iPhone camera. This hash works as a digital fingerprint for the photo or video and can support independent verification.

Succinct also cited Deloitte Center for Financial Services research that estimated generative AI could help push fraud losses in the United States to $40 billion by 2027. The figure compares with $12.3 billion in 2023.

Adoption remains key for media verification

The app could serve businesses, journalists, and users who need proof that photos and videos are real. Media verification has become more important as AI tools make it easier to create realistic fake content.

However, broad use may depend on whether people choose to capture content inside ZCAM instead of their default phone camera. The product works best when users sign media at the original capture point.

Other projects have also used blockchain and cryptography to address AI-related trust issues. World, backed by OpenAI CEO Sam Altman, uses a human verification model to help separate real people from AI-driven online accounts.

Paradigm-backed Succinct expands crypto tools

Succinct Labs raised $55 million in a 2024 financing round led by Paradigm. The round also included support from founders linked to Polygon and EigenLayer.

The company said its SP1 zero-knowledge virtual machine secures more than $4 billion in digital assets. In August, Succinct launched the mainnet for its Succinct Prover Network and activated the PROVE token.

The Succinct Prover Network runs as a decentralized marketplace on Ethereum. It lets applications submit zero-knowledge proof requests, while independent provers compete to verify them.