TLDR

• Paradigm and Hyperliquid Policy Center urged the U.S. Treasury to revise the proposed AML rule for stablecoin issuers.
• The groups argued that secondary market liability would impose obligations issuers cannot control.
• They supported FinCEN’s focus on primary market compliance where issuers know their customers.
• The letter asked regulators to narrow the definition of stablecoin payment-related activity.
• Hyperliquid Foundation funded the advocacy group with about $29 million worth of HYPE tokens.

Paradigm and Hyperliquid Policy Center urged the U.S. Treasury to revise a proposed anti-money laundering rule. The groups said the draft would impose strict liability on stablecoin issuers for transactions they cannot control. They asked regulators to narrow certain provisions before finalizing implementation under the GENIUS Act.

Hyperliquid and Paradigm Outline Concerns Over Secondary Market Liability

Paradigm and Hyperliquid Policy Center submitted a joint letter to the Treasury on Tuesday. The letter addressed a proposal issued in April by FinCEN and OFAC. The agencies seek to implement GENIUS Act provisions under the Bank Secrecy Act.

The proposal would treat stablecoin issuers as financial institutions for compliance purposes. However, the groups said some obligations extend beyond primary market activity. They argued that secondary market rules would create strict liability for actions issuers cannot police.

The letter stated, “We broadly support the proposed rule,” and endorsed FinCEN’s focus on primary market compliance. The groups supported tailoring obligations where issuers know their customers. They urged agencies to clarify or narrow secondary market requirements.

They said issuers only see wallet addresses and transaction amounts in public blockchain environments. Therefore, they argued that agencies should align AML and sanctions requirements with that reality. They warned that smart contract liability would exceed issuer control.

They wrote, “An issuer facing obligations it cannot meet on the secondary market has a strong incentive to deploy only to permissioned environments.”

They added that such an outcome would remove U.S.-regulated stablecoins from DeFi platforms. They stated that offshore alternatives could fill any resulting gap.

Groups Propose Specific Revisions Under GENIUS Act Framework

The joint letter recommended narrowing the definition of “payment stablecoin-related activity.” The groups also asked regulators to reconsider OFAC’s treatment of smart contract interactions. They said the current draft extends liability beyond issuer capacity.

The GENIUS Act passed last year with support from President Donald Trump’s administration. Lawmakers advanced the legislation to provide clearer rules for digital assets. Regulators now work through the rulemaking phase before full implementation.

Hyperliquid Foundation established the Hyperliquid Policy Center in February. The foundation funded the group with roughly $29 million worth of HYPE tokens. Jake Chervinsky serves as the center’s chief executive officer.

Paradigm backed Hyperliquid and supported the center’s advocacy efforts. The venture firm co-signed the letter addressed to Treasury officials. The document forms part of the public comment process.

FinCEN and OFAC will review submitted comments before issuing a final rule. The agencies proposed the draft in April under existing statutory authority. The implementation phase continues as regulators evaluate industry feedback.

Michael Saylor has pushed back against dilution concerns after Strategy sold approximately $181 million worth of MSTR shares and used part of the proceeds to expand both its Bitcoin holdings and cash reserves.

According to comments posted by Strategy Executive Chairman Michael Saylor on X, criticism surrounding the company’s latest capital raise misunderstands how shareholder value should be measured.

Saylor’s response came after Bitcoin analyst Matthew R. Kratter argued that recent share issuance diluted existing shareholders and pointed to a decline in Strategy’s BTC Yield metric between June 1 and June 8.

Data published by Strategy showed the company held 843,706 BTC while its assumed diluted shares outstanding increased to 384,180 during the period. Referring to those figures, Kratter said on X that the increase in shares outweighed the short-term benefit of additional Bitcoin per share.

Fresh scrutiny followed Strategy’s June 8 filing, which disclosed the sale of more than 1.4 million MSTR shares for roughly $181 million. Market participants also noted that company executives sold around $15 million worth of MSTR stock for tax-related purposes, while sentiment had already been pressured by Strategy’s disclosure of its first Bitcoin sale in more than four years at the end of May.

Saylor disputed the dilution argument by stating that BTC Yield measures growth in Bitcoin per share rather than total shareholder accretion. In his response, he said Strategy added both Bitcoin and cash during the transaction, making the outcome positive for shareholders when both assets are considered.

“Last week Strategy added ₿1,550 of BTC and $100 million of USD Reserve. When both assets are included, the transaction was accretive to MSTR shareholders.”

Strategy points to cash reserves alongside Bitcoin growth

Figures released by the company show Strategy acquired 1,550 BTC for approximately $101.3 million between June 1 and June 7. The purchase was completed at an average price of $65,332 per Bitcoin during a period of heavy market volatility.

Company disclosures indicate Strategy now holds 845,256 BTC, which Saylor said are valued at roughly $51.9 billion based on current market prices. The company also reported a year-to-date BTC Yield of 12.8% and a BTC Gain of 86,328 BTC.

At the same time, the latest fundraising increased Strategy’s dollar reserves by $100 million, lifting total cash reserves to about $1 billion. Those reserves have attracted additional attention following shareholder approval of a proposal to change STRC preferred stock dividend payments from a monthly schedule to semi-monthly distributions beginning this month.

Rising obligations remain a focus for analysts

A separate analysis published by Fortune has highlighted concerns about Strategy’s growing use of preferred stock and Bitcoin-backed financing. According to the publication, the company’s combined debt and preferred stock obligations have increased from approximately $6.9 billion in early 2025 to around $21.8 billion, with preferred stock issuances accounting for much of the increase.

Fortune also estimated that Strategy’s stock continues to trade roughly 31% above its net asset value and warned that the premium could come under pressure if Bitcoin prices fall or investor concerns about the company’s capital structure intensify.

Under a scenario modeled by Fortune in which Bitcoin (BTC) declines to $50,000, the company’s net asset value could fall to about $23 billion while liabilities remain unchanged.

Attention has also remained on Strategy’s funding flexibility after the company disclosed the sale of 32 BTC for about $2.5 million in late May, its first reported Bitcoin sale since December 2022.

In a previous research covered by crypto.news, JPMorgan described the transaction as largely symbolic and said it appeared intended to demonstrate flexibility toward preferred shareholders, while cautioning that future dividend commitments could raise questions if cash reserves are eventually depleted.

TLDR

• Senator Elizabeth Warren questioned whether the CFTC can handle expanded crypto oversight.
• Warren said staffing cuts and reduced enforcement weaken the agency’s capacity.
• The CFTC workforce has reportedly declined by about 25% in recent years.
• Warren criticized the agency’s decision to back vacating the 2022 Gemini judgment.
• The CFTC concluded the Gemini complaint would not meet current enforcement standards.

Senator Elizabeth Warren has challenged the readiness of the Commodity Futures Trading Commission as Congress weighs broader crypto oversight. She warned that staffing cuts and reduced enforcement could strain the agency. Her letter to Chair Michael Selig described the situation as a “recipe for disaster.”

CFTC Staffing and Enforcement Under Scrutiny

Warren sent the letter on Friday as lawmakers advanced legislation expanding CFTC authority over crypto and prediction markets. She argued the agency lacks the capacity to manage wider responsibilities under current conditions.

She wrote that a smaller workforce and fewer enforcement actions weaken oversight. Warren cited reports that staff levels have fallen by about 25%.

Warren also pointed to a decline in enforcement since President Donald Trump took office. She said the trend raises concerns about the agency’s ability to police complex crypto firms.

In her letter, Warren stated, “A CFTC with fewer staff members, reduced enforcement activity, and expanded responsibilities is a recipe for disaster.” She asked Selig to explain how the agency would handle expanded duties.

Warren further questioned internal decisions affecting oversight priorities. She requested records on staff reassignments and communications with industry participants.

She also asked for documents covering contacts between the CFTC and crypto firms regarding the Clarity Act. The request included communications with prediction market platforms.

Disputes Over Crypto and Prediction Markets

Warren referenced the agency’s recent handling of cases involving Gemini. She highlighted the CFTC’s decision to support vacating a 2022 judgment.

That case alleged Gemini made “false or misleading statements” in 2017 about bitcoin futures manipulation risks. The agency later concluded the complaint “should not have been filed.”

The CFTC said the case would not meet enforcement standards today. Warren questioned the reasoning behind that conclusion.

She also cited reports that officials who raised concerns about firms like Polymarket and Crypto.com left the agency. Warren asked whether internal pressure influenced those departures.

Selig has maintained that prediction markets fall under the CFTC’s “exclusive jurisdiction.” However, several states argue that such platforms violate local gambling laws.

Those disputes have led the CFTC to sue states that attempted to block prediction market operations. Warren referenced those legal actions in her letter.

She requested details on communications between agency officials and prediction market companies. She also asked for records related to enforcement strategy shifts.

Congress continues to debate legislation that would expand CFTC oversight of crypto markets. Warren’s letter seeks further clarity on staffing, enforcement, and internal decision-making as those discussions proceed.

Token of Power suffered an exploit on Tuesday that drained more than $1.5 million from its liquidity pool. On-chain firms Blockaid, PeckShield, and Cyvers flagged the incident in posts on X.

• Token of Power lost 944.2 WETH, worth about $1.58 million, from its TOP/WETH Balancer V1 pool.
• Blockaid described the incident as a governance-takeover attack, while Cyvers traced the drain to the Balancer pool.
• PeckShield data showed the attacker later moved stolen funds into the Tornado Cash crypto mixer.

The attack targeted the TOP/WETH Balancer V1 Pool and drained 944.2 WETH.

TOP token exploit hits Balancer pool

Token of Power, also known as TOP, is an Ethereum-based ERC-20 token. The project operates under a DAO called The Mask of Power. The project built TOP around collective ownership of a specific MetaMask NFT. Its token also supported liquidity for the project’s market activity. 

Cyvers said the attacker drained funds from the TOP/WETH Balancer V1 Pool. The pool held TOP tokens and Wrapped Ethereum under a 50-50 structure. Wrapped Ethereum, or WETH, represents ETH in a token format used across DeFi. 

The Balancer V1 pool functioned as an automated trading vault for both assets. Blockaid described the incident as a “governance-takeover attack” in its X post. PeckShield and Cyvers also published alerts as the transaction activity became visible on-chain.

On-chain firms report 944.2 WETH loss

On-chain intelligence firms said the attacker added a large number of TOP tokens into the pool. The attacker then swapped those tokens against the pool’s real WETH reserves. The exploit drained 944.2 WETH, worth about $1.58 million at the time.