Strategy’s preferred stock tracker, STRC, ended July trading well below its $100 par value, but management signaled that the company’s next preferred dividend rate will not rise. Executive chairman Michael Saylor said the August dividend will remain at 12%, continuing a payout level that was set after a June performance dip.

In a Saturday post on X, Saylor confirmed the dividend will hold at 12% for August. He also noted the company will keep its semi-monthly payment cadence for the second straight month after shareholders approved that change in June, following the earlier decision to increase the dividend by 50 basis points to 12%.

Key takeaways

• Strategy’s executive chairman said the August STRC dividend will remain at a 12% rate, not increase.
• STRC has continued to trade below its $100 par value throughout July, despite a monthly price rebound that began after the June dividend hike.
• Management reiterated a longer-term objective for STRC to trade near $99–$100, without specifying a timeline.
• Strategy reported building a large cash reserve—cited as $3.75 billion—to support preferred stock payouts and related obligations.

Dividend holds at 12% as preferred shares stay below par

Although STRC shares did not reach par in July, the stock did gain momentum over the month. The shares closed at $89.46 on Friday, up 5.42% for the month that started with the dividend adjustment.

Earlier, management had lifted the dividend rate in response to weak performance in June—raising it by 50 basis points to 12%. After that change, Strategy’s preferred payout strategy moved toward semi-monthly distributions, a structure that takes effect for the second month in August after the June shareholder vote.

Trading activity on Friday was also notably lighter than typical: volume was about two-thirds of the Nasdaq-listed shares’ daily average, according to the figures referenced in the report. That detail matters because it suggests the month’s rebound did not coincide with a surge in participation, even as investors processed the dividend update.

Management’s $99–$100 target meets a lower-than-par reality

Even as the next dividend stays flat, Strategy’s leadership continues to frame STRC around a valuation target. On Friday, CEO Phong Le reiterated that management’s “corporate objective” is for STRC to trade at $99–$100 over time, without adding specifics on when that goal might be reached.

That position is important to read in context: shareholders were told the dividend rate would not increase in August, even after the company adjusted payouts earlier in the quarter. Investors looking for signals that STRC might close the gap toward par have therefore had to balance two competing inputs—management’s longer-term pricing objective and the near-term decision to keep the dividend at the same level.

Cash reserve and buybacks aimed at supporting payouts

While the dividend rate message was unchanged, Saylor’s social-media activity pointed to continued capital management efforts tied to Strategy’s Bitcoin treasury strategy. On Sunday, he posted “Bitcoin Drive engaged,” accompanied by a familiar chart of Strategy’s BTC buying activity as tracked by Saylortracker.com.

The emphasis on liquidity and coverage aligns with what Strategy disclosed in its latest reporting. The company recently reported an $8.22 billion second-quarter net loss, driven primarily by an $8.32 billion unrealized loss on its Bitcoin holdings as the cryptocurrency’s price declined during the quarter.

Against that backdrop, Strategy said it has built a $3.75 billion cash reserve intended to support preferred stock payouts following the launch of its BTC monetization program. In the same vein, the company described a $3.75 billion U.S. dollar reserve sufficient to cover more than two years of preferred dividend payments and related interest obligations.

Strategy also disclosed that it repurchased $25 million of its STRC preferred shares at a discount to par and said it intends to keep buying the securities while they trade below $100. For investors, the practical takeaway is straightforward: management is pairing a coverage plan with an active buyback strategy, presumably to reduce pressure on valuation while the preferred shares trade under par.

However, the gap between par value and the prevailing market price remains the key issue. Management’s stated intent to buy more when the shares trade below $100 suggests the company believes the market offers an entry point—but without a near-term dividend increase, investors will likely focus on whether buybacks and reserve policy can translate into sustained movement toward the $99–$100 trading range.

What to watch next for STRC holders

With the August dividend rate confirmed at 12% and STRC still trading below $100 par, the next signal for holders will likely come from any further updates on Strategy’s Bitcoin treasury actions and whether cash-reserve coverage and buybacks continue at a pace that supports improving market pricing. Investors should also watch whether management provides clearer timing around its $99–$100 objective, since it currently remains framed as a long-term goal rather than a defined schedule.

Trump Media & Technology Group’s Truth API became available to institutional customers on Aug. 1, giving trading firms rapid, machine-readable access to posts from influential Truth Social accounts, including U.S. President Donald Trump’s account.

The launch followed a July 16 Form 8-K in which Trump Media said it had already signed customers and was onboarding additional partners. The company has not publicly identified those customers or disclosed how many subscriptions it has sold.

BREAKING: Trump Media has officially launched its new paid data service, providing faster access to Truth Social posts from President Trump.

The new service is called “Truth API” which gives firms “a direct, licensed, real-time feed of the platform’s most market-moving Truths,”…

Advertisement

— The Kobeissi Letter (@KobeissiLetter) August 1, 2026

Truth API sells faster delivery of public posts

Trump Media describes Truth API as its first data-licensing product. The feed provides posts through a low-latency connection designed for high-frequency and algorithmic trading firms. It offers continuous coverage, delivery within milliseconds and a searchable archive dating to 2022.

Interim CEO Kevin McGurn said the service provides direct access to the platform’s “most market-moving Truths.” He also said Trump Media expects the product to become an ongoing, high-margin revenue source. Those revenue expectations remain forward-looking company claims rather than reported financial results.

The company has not published an official price list. Senators Adam Schiff and Elizabeth Warren cited reports placing subscriptions between $60,000 and $100,000 per month. Therefore, the widely repeated $100,000 price should be treated as a reported upper estimate, not a company-confirmed standard fee.

Trump Media says the underlying posts remain publicly available. However, automated customers can receive and process them faster than users who refresh the platform, rely on notifications or manually monitor accounts. That speed difference matters when algorithms can react to policy announcements within milliseconds.

Insider trading claims face an uncertain legal test

Writer James Surowiecki argued that the arrangement may involve government information being monetized for private benefit. Former SEC regional director Marc Fagel offered a more cautious assessment, calling insider-trading liability a “defensible argument” but “not slam-dunk.” Both comments are legal opinions, not findings by a regulator or court.

Federal insider-trading cases generally require more than an information advantage. Under the misappropriation theory recognized by the U.S. Supreme Court, prosecutors ordinarily must show that confidential information was taken for securities trading in breach of a duty owed to its source. SEC rules also focus on trading while aware of material nonpublic information.

That creates a key unresolved question. If a presidential post becomes publicly visible at the same time the API distributes it, Trump Media may argue that subscribers are paying for speed and formatting rather than nonpublic information. Many financial-data companies sell faster access to information that is technically public.

However, critics could examine whether paying customers ever receive a post before ordinary users can access it, whether unpublished policy information enters the feed or whether any subscriber knows information was obtained through a breach of duty. Purchasing a data subscription alone would not automatically establish insider trading.

Trump Media rejected the senators’ argument, saying they had created a new insider-trading theory based on publicly available information. That response states the company’s legal position. It does not prevent the SEC from reviewing the product’s design, timing records or customer communications.

Trump’s 41% stake sharpens the U.S. ethics dispute

Trump Media’s latest ownership disclosure says the Donald J. Trump Revocable Trust holds 114.75 million shares, equal to about 41% of the company. Donald Trump Jr. serves as sole trustee, while President Trump is the trust’s settlor and sole beneficiary.

The ownership structure means successful Truth API revenue could benefit the company and, indirectly, the value of the trust’s stake. It does not mean subscription payments go directly to the president. Share prices, operating costs, corporate decisions and other business results determine how product revenue affects shareholder wealth.

Schiff and Warren asked SEC Chair Paul Atkins to investigate whether the feed violates federal securities law or weakens market fairness. They argued that presidential posts may contain policy information capable of moving stocks, currencies and commodities while Trump retains a large financial interest in the platform distributing them.

The senators’ request also adds another political dispute to Trump Media’s expansion into financial and crypto-related services. As previously reported, the company posted a $405.9 million first-quarter loss after large unrealized markdowns on Bitcoin, Cronos and securities. Revenue for the quarter reached $871,200.

Meanwhile, Trump Media-linked wallets moved 2,650 BTC to Crypto.com in May. The company is also exploring wider financial products and a possible Truth Social corporate separation connected to its planned TAE Technologies transaction.

The SEC has not announced an investigation

The SEC acknowledged receiving the senators’ letter but had not publicly announced an investigation, subpoena, enforcement case or formal conclusion as of Aug. 2. SEC investigations are often confidential, meaning the absence of a public notice does not establish whether staff members are privately reviewing the matter.

The next verifiable developments could include an SEC response to Congress, a Trump Media filing describing customer numbers or revenue, or disclosures explaining whether API recipients receive posts simultaneously with ordinary Truth Social users.

Trump Media shares closed at $9.86 on July 31, down $0.52 from the previous close. That session occurred before the Saturday launch, so the move cannot be attributed to Truth API becoming available. U.S. markets were closed during the weekend criticism, leaving no verified post-launch stock reaction.

For now, the central dispute remains unresolved. Trump Media presents Truth API as a conventional paid data service that distributes public information more efficiently. Critics argue that the president’s ownership, government role and ability to move markets make the arrangement unlike an ordinary social-media feed.

Dogecoin community contributor Mishaboar urged Coldcard users on Aug. 1 to move their Bitcoin to wallets controlled by newly generated seed phrases. 

The warning followed Galaxy Research’s estimate that three suspected attack waves drained 1,367.05 BTC, worth about $88.6 million, from 4,585 addresses.

Mishaboar wrote, “If you have ever used a COLDCARD device of any kind, migrate your funds to a new wallet immediately.” He also warned users not to reuse their existing Coldcard seed phrase or enter recovery words into an internet-connected computer. However, his reference to every Coldcard device is broader than Coinkite’s official security advisory, which identifies specific firmware versions and several exceptions.

If you have ever used a COLDCARD device of any kind, migrate your funds to a new wallet immediately.

IMPORTANT: DO NOT reuse the COLDCARD seed phrase ever again – create a new one on the new wallet, and as I have been recommending for a while set also the 25th/13th password. https://t.co/NRnlV2eXkQ

— Mishaboar (@mishaboar) August 1, 2026

Coldcard losses rise as attackers target smaller wallets

Galaxy Research’s latest on-chain estimate identified 1,367.05 BTC across three suspected attack waves. The research firm described $88.6 million as its “estimated observed size,” meaning the total has not been confirmed by Coinkite, law enforcement or every affected user.

The first wave removed 1,082.65 BTC from 1,196 addresses in about 41 minutes on July 30. A later third wave drained roughly 208 BTC from 1,912 addresses, with the average balance falling to slightly more than 0.1 BTC per address. The changing pattern suggests attackers moved from larger holdings toward smaller wallets.

Galaxy said each wave appeared internally consistent with one operator. However, it could not determine whether one attacker controlled all three waves. The third group used separate destination addresses, batched several victims into individual transactions and checked only the default derivation path, making it different from the earlier sweeps.

The research firm also warned that its known transaction patterns cannot identify every theft. A different attacker could generate valid transactions without repeating the fees, destination formats or collection methods seen in the first three waves.

Official Coldcard warning covers specific firmware

Coinkite said the problem affects seeds generated on Mk2 and Mk3 devices running firmware versions 4.0.1 through 4.1.9. Seeds created on Mk4 and Mk5 devices before standard version 5.6.0 or Edge version 6.6.0X are also covered. For Coldcard Q, the fixed releases are standard version 1.5.0Q and Edge version 6.6.0QX.

Coldcard Mk1 devices are outside the firmware regression identified by Block’s researchers. Coinkite also said TAPSIGNER, OPENDIME and SATSCARD are unaffected because they use different codebases. Therefore, the available technical evidence does not establish that every product ever made by Coinkite is vulnerable.

Block’s Bitcoin engineering and security team traced the flaw to a firmware integration error. The affected software used a deterministic MicroPython fallback instead of the intended STM32 hardware random-number generator when creating wallet secrets. On Mk2 and Mk3 v4 firmware, the affected path added no cryptographic entropy. Later models received a limited secure-element reseed.

Block cautioned that its analysis represented its current technical view and did not include complete empirical testing of every device. Coinkite has also said its investigation remains open and promised a formal technical report.

Firmware updates cannot repair existing seeds

Coinkite has released fixed firmware for every affected model and release track. The patches correct the seed-generation process for new wallets, but they cannot add randomness to a seed phrase created earlier. Moving the same vulnerable phrase into another hardware or software wallet also carries the weakness into the new device.

Affected users should install the correct fixed firmware before generating a replacement seed. Coinkite advises recording and verifying the new backup, checking a receiving address on the device screen and sending a small test transaction. Users should move the remaining balance only after confirming that the test funds reached the new wallet.

The company advises users to keep the old backup until the entire migration is confirmed. Mishaboar separately warned users never to type a seed phrase into a computer and recommended keeping offline copies in separate secure locations. That advice can reduce exposure to phishing, malware and cloud synchronization during a rushed migration.

Coinkite identified a limited exception for users who added at least 50 fair, independent and private dice rolls before the final seed words were produced. The company said those rolls contributed at least 128 bits of independent entropy. Users who entered fewer than 50 rolls, cannot remember the number or exposed the roll sequence should migrate.

A strong, unique BIP-39 passphrase creates an additional barrier, but Coinkite said it does not repair an affected seed. Short, reused or predictable passphrases may be guessable. Even users with strong passphrases are advised to replace the underlying seed as soon as practical.

Coldcard incident renews the self-custody debate

Bitcoin investor Anthony Pompliano said the losses showed how technically demanding self-custody can be, even though individuals retain the right to control their assets directly. He also stressed that Bitcoin itself was not hacked because the failure occurred in third-party wallet firmware rather than the Bitcoin protocol.

A few thoughts on the Coldcard security incident (in no particular order):

1. This is devastating for a lot of people. They lost their hard-earned economic value in a way most didn’t realize was possible. Not everyone is a technical genius, but almost all are merely looking to…

— Anthony Pompliano 🌪 (@APompliano) August 2, 2026

That distinction matters because an attacker reportedly reproduced weak wallet keys offline. The incident did not require changing Bitcoin transactions, breaking its cryptography or compromising the network’s consensus rules. Once an attacker obtains a valid private key, the resulting transaction appears on-chain like one authorized by the legitimate owner.

As previously reported, the observed loss estimate rose from an early 594.48 BTC calculation to 1,367.05 BTC as researchers found additional address groups. In related coverage, crypto.news examined how the firmware build error weakened seed generation for more than five years.

The case has also entered the U.S. institutional-custody debate.As crypto.news reported, Bloomberg ETF analyst Eric Balchunas argued that the losses strengthen the case for spot Bitcoin ETFs among investors seeking price exposure without managing private keys. ETFs remove personal seed-management duties, although they replace those risks with institutional custody and counterparty exposure.

Coinkite’s promised technical review and further Galaxy address analysis are the next expected updates. Until then, $88.6 million remains the latest public on-chain estimate rather than a final confirmed loss. Users covered by the official advisory face the more immediate task of installing fixed firmware and moving funds to a completely new seed.

The stablecoin market is fragmenting, and onchain capital allocator Spark is betting it can capitalize on the split.

Fintechs, exchanges and banking groups are increasingly launching their own dollar-linked tokens. Each issuer wants to keep users, reserves and transaction activity inside its own network as competition ramps up.

The stablecoin landscape “is about to fragment more and more,” Sam MacPherson, CEO of Phoenix Labs, said in an interview with CoinDesk.

PayPal has PYUSD, Circle has USDC, and Tether has USDT. Robinhood has joined the Global Dollar (USDG) consortium and is building its own chain, while OpenUSD (OUSD) is another large consortium that includes Stripe and Coinbase.

Beyond these giants, there are hundreds of other stablecoins, including Ethena’s USDe, World Liberty Financial’s USD1 and Sky’s USDS.

The result is liquidity scattered across an expanding number of tokens and networks.

Spark is betting those networks will still need to connect. Its aim is to be the layer that moves money between them.

Spark is an affiliated lending and liquidity unit of Sky, the DeFi ecosystem formerly known as MakerDAO and the issuer of the USDS stablecoin. It is developed by Phoenix Labs and supported through Sky’s governance and capital.

Strategy CEO Michael Saylor told investors that the preferred dividend tied to Strategy’s STRC shares will stay at 12% for August, despite STRC trading well below its $100 par value through July.

In a Saturday post on X, Saylor framed STRC as an income-oriented vehicle that he says can help investors “stretch your income,” while indicating that the semi-monthly dividend schedule approved earlier this year will continue. Strategy’s chief then reiterated a longer-term target price range for the preferred shares, even as market pricing suggests investors are still demanding a discount.

Key takeaways

• Strategy’s STRC preferred dividend will remain at 12% for August, according to Michael Saylor.
• August will mark the second month in a row that STRC dividends are paid semi-monthly, following a June shareholder vote.
• STRC shares closed at $89.46 on Friday, trading below $100 par value throughout July.
• Management has continued to state a corporate objective for STRC to reach and hold around $99–$100 over time.
• Strategy says it has built a sizable cash reserve to fund preferred payouts as it monetizes Bitcoin.

Dividend guidance holds steady even as STRC trades at a discount

While Strategy’s STRC preferred shares ended July below their stated $100 par value, shareholders were told that the August dividend will not increase. Michael Saylor made that point in a Saturday X post, continuing the company’s pitch that STRC is designed to provide a steady income stream for investors.

The 12% dividend rate is not a one-off adjustment: it follows a dividend change earlier in the cycle. In June, Strategy shareholders approved changes that moved STRC to a semi-monthly payment cadence. As a result, August will be the second month that the dividend is paid on that more frequent schedule.

On the market side, STRC ended Friday at $89.46, up 5.42% for the month that began with a dividend increase. According to the article, the daily trading volume on Friday was about two-thirds of STRC’s usual daily average—suggesting participation was fairly active, but not at peak levels.

Management’s messaging has also stayed consistent with its longer-term plan. On Friday, Strategy CEO Phong Le reiterated that the company’s “corporate objective is for STRC to trade at $99-$100 over time,” without offering a specific timeline for when that target could be met.

Cash reserve strategy tied to Bitcoin treasury and preferred obligations

Beyond dividend arithmetic, the company’s stability message appears to be supported by its Bitcoin treasury and liquidity planning. Saylor posted on Sunday that “Bitcoin Drive engaged,” a phrase he used alongside a chart of Strategy’s BTC purchases from Saylortracker.com, signaling the company’s ongoing buying activity.

That matters because Strategy’s preferred dividend economics are linked to how it finances obligations while its Bitcoin holdings remain exposed to market volatility. Last week, Strategy reported an $8.22 billion second-quarter net loss, which the report attributed largely to an $8.32 billion unrealized loss tied to movements in the price of its Bitcoin holdings during the quarter.

Even with that drawdown, Strategy said it has built a cash reserve intended to help cover preferred stock payouts after the launch of its BTC monetization program. The figures cited in the article include a $3.75 billion U.S. dollar reserve. Strategy also stated that the reserve is enough to cover more than two years of preferred dividend payments and interest obligations.

In practical terms, that guidance is meant to reduce concerns that near-term Bitcoin price fluctuations could immediately disrupt the dividend. Traders may still price STRC based on expected returns and relative risk, but a defined liquidity buffer can influence how investors interpret the sustainability of the payout.

Discount-to-par repurchases and the $99–$100 over-time goal

Another point investors are watching is how Strategy manages the preferred share discount. The article says Strategy recently repurchased $25 million of its STRC preferred shares at a discount to par and intends to continue buying the securities while they trade below $100.

This approach aligns with management’s public objective for STRC to trade closer to par over time. However, the market continues to price the shares significantly lower: with Friday’s close at $89.46, the gap to $100 remains substantial. That spread reflects uncertainty about timing—how quickly any pathway to par could play out, and whether dividends alone are enough to close the valuation gap.

Le’s repeated comment that the objective is $99–$100 over time, without specifying when, highlights the central tension: Strategy is emphasizing financial buffers and ongoing BTC-driven support, while the preferred market is still setting prices around a discount that persists through July.

Investors therefore have two parallel items to track. First is the dividend rate itself—now confirmed to stay at 12% for August. Second is whether Strategy’s buybacks and any treasury policy changes translate into steady demand for STRC preferred shares that could narrow the discount.

What to watch next for STRC holders

Going forward, STRC investors should monitor the next dividend payment cycle for August and pay close attention to whether Strategy follows through on continued preferred repurchases while the shares remain below par. At the same time, any updates related to “BTC monetization” and treasury allocation could influence how markets assess the company’s ability to fund preferred obligations during periods of Bitcoin volatility.

Ripple Director of Engineering Vijay Khanna urged XRP Ledger node operators on Aug. 2 to install xrpld version 3.2.1 after developers observed a validator manifest flood on July 31. 

The hotfix limits how nodes process, store and share data received from unknown validator identities. 

The XRP Ledger continued closing ledgers normally during the event, according to XRP Ledger Operations. The available evidence therefore points to pressure on node resources and peer-to-peer communications rather than a confirmed loss of funds, altered transactions or failure of ledger consensus. Developers have not published a CVE identifier or financial-loss estimate connected to the incident.

XRPL 3.2.1 limits the manifest flood route

Validator manifests are cryptographically signed records that connect a validator’s stable master identity to the temporary key it uses for daily validation messages. When operators rotate those temporary keys, they publish a new manifest signed by the master key so other nodes can verify the change.

Before the hotfix, nodes could accept, cache and rebroadcast validly structured manifests associated with validator keys they did not recognize. An attacker could exploit that behavior by producing many unknown identities and forcing peers to spend memory, storage, bandwidth and processing capacity handling the data. The public code record describes the flaw as a problem with manifest propagation.

The official xrpld 3.2.1 release is dated July 31 and was published as the latest signed release early on Aug. 1. It contains six commits across 13 changed files, including four commits that directly restrict untrusted manifest handling.

Advertisement

Four safeguards reduce resource-exhaustion risk

The first safeguard rejects an oversized validator manifest before the node fully decodes it. That reduces the processing work an attacker can trigger by sending individual objects larger than the software expects.

The second limits the number of untrusted manifests carried in one network message. The cap applies when nodes receive the data and when they prepare manifest messages for peers. Oversized batches are dropped without automatically disconnecting an unpatched peer, which helps upgraded and older nodes remain connected during the rollout.

A third change limits the number of unknown validator identities held in a node’s manifest cache. The final code sets the maximum at 100. Once that capacity is reached, the software rejects manifests tied to new unlisted keys while continuing to process trusted or previously recognized validators.

The patch also changes how untrusted manifest information is retained and propagated. Trusted validator data remains available because the restrictions target unlisted peer gossip rather than manifests from configured or approved validators. This distinction allows normal validator key rotation to continue while blocking unchecked cache growth.

Advertisement

Node operators must complete a second restart

Khanna advised validators and other infrastructure operators to upgrade to version 3.2.1 “as soon as possible.” His instructions call for a normal software update, followed by a wait of one to two minutes and a check that xrpld is running. Operators should then restart the service again.

The second restart is important for nodes that may have retained unknown manifests before installing the fix. Updating changes future handling, while restarting the corrected server helps ensure old in-memory or previously retained data does not continue affecting operations.

Operators may also need to confirm that their systems trust Ripple’s current package-signing key. The release notes state that Ripple rotated the GPG key used to sign xrpld packages on Feb. 18. Existing installations that have not trusted the replacement key may not receive automatic upgrades successfully.

The update applies to infrastructure providers rather than ordinary XRP holders. Users do not need to move XRP, change wallet keys or create new accounts because of the manifest issue. Exchanges, custodians, wallet back ends, data providers and businesses that run their own XRPL servers should instead confirm their node versions and restart status.

Advertisement

The post-mortem will determine the incident’s scope

XRP Ledger Operations said a technical “post-mortem will follow soon.” As of Aug. 2, the project had not published that report, so the identity of the sender, the volume of manifests transmitted and the exact resource use across affected nodes remain undisclosed.

The report should also clarify when developers first detected the activity, whether any nodes became unavailable and how quickly operators adopted version 3.2.1. Although ledgers continued closing, slow patch adoption could leave individual servers exposed to renewed flooding even when the shared ledger remains operational.

The hotfix arrives shortly after XRPL’s larger version 3.2.0 rollout. That release, issued on June 15, renamed the reference server from rippled to xrpld and introduced infrastructure changes that required operators to update software and service configurations.

As previously reported, version 3.2.0 initially spread faster among validators than across the broader node network. The manifest flood adds a new reason for remaining operators to move beyond that release and install the hotfix.

Advertisement

Meanwhile, in related coverage, David Schwartz moved his XRPL infrastructure to version 3.2.0 as developers prepared the network for the new server naming and protocol features. Earlier, as crypto.news reported, node operators also faced a version 3.1.3 deadline tied to an amendment activation.

The next verified updates will be the promised post-mortem and fresh software-adoption data. Until then, the confirmed response remains limited to the 3.2.1 release, its four manifest controls and the request for operators to complete the upgrade and restart process.

Bloomberg Intelligence senior ETF analyst Eric Balchunas said on Aug. 2 that the Coldcard security failure strengthens the case for U.S. spot Bitcoin ETFs, especially for investors who want long-term price exposure without managing private keys. 

His comments followed Galaxy Research’s estimate that three suspected attack waves drained 1,367.05 BTC, worth about $88.6 million, from 4,585 addresses.

Balchunas wrote, “Yes, an ETF fixes this,” while noting that some self-custody advocates dismiss the funds as “paper bitcoin.” That is his view on custody, not evidence that investors have moved money into ETFs because of the incident. U.S. markets were closed when he posted the weekend comments, leaving no verified post-comment fund-flow reaction.

Yes, an ETF fixes this (and it is kinda ironic given some cold storage ppl label ETFs as ‘paper bitcoin’). That said this truly sucks. Feel for the victims and hope the thiefs get hard time. What losers. In order for the bitcoin ETFs to do well the underlying Bitcoin network… https://t.co/ps7hF5dJdc

— Eric Balchunas (@EricBalchunas) August 1, 2026

Coldcard drain renews the Bitcoin ETF argument

Block’s Bitcoin engineering team found that a firmware integration error routed random-number generation through a deterministic MicroPython fallback instead of the intended hardware source. Its report said Mk2 and Mk3 devices on vulnerable firmware added no cryptographic entropy through that path. Later models used a limited secure-element reseed.

Coinkite’s security advisory covers Mk2 and Mk3 firmware from version 4.0.1 through 4.1.9, plus seeds generated on Mk4, Mk5 and Q devices before their fixed releases. The company released corrected firmware, but warned that updating software does not repair seeds created earlier. Users must generate a new seed and move their funds.

Galaxy’s latest estimate covers three suspected draining waves. The third removed 207.7294 BTC from 1,912 addresses and followed a different transaction pattern. Galaxy called $88.6 million its “estimated observed size,” meaning the figure remains an on-chain estimate rather than a final total confirmed by Coinkite or law enforcement.

Balchunas also questioned whether a reportedly small hardware-wallet company should protect life-changing sums. He called the reported staffing level “a red flag.” Coinkite has not publicly confirmed the headcount cited in his post, and company size alone does not establish whether a security system is adequate.

This is where Coinbase and Ledger make more sense and worth the high transaction fees. But of course with an ETF you get *both* the safety of a massive not-effing-around professional regulated co as well dirt cheap fees.

— Eric Balchunas (@EricBalchunas) August 2, 2026

U.S. spot Bitcoin ETFs remove seed-management risk

A spot Bitcoin ETF removes the investor from seed creation, firmware updates, backups and wallet migration. The fund and its service providers manage those duties. BlackRock says its iShares Bitcoin Trust ETF, or IBIT, simplifies the operational and custody work involved in holding Bitcoin directly. IBIT reported $46.52 billion in net assets on July 31 and charges a 0.25% sponsor fee.

IBIT’s SEC filing says Coinbase Custody holds the trust’s private keys in segregated cold-storage wallets. It also names Anchorage Digital Bank as an additional custodian that BlackRock may use. The filing describes limited employee access, external control reviews and a process in which no single custodian employee has access to complete private keys.

Fidelity uses Fidelity Digital Assets to custody Bitcoin for its Wise Origin Bitcoin Fund. Such products let U.S. investors gain exposure through brokerage, trust and tax-advantaged accounts without operating a hardware wallet. That can matter to advisers and retirement investors who only seek price exposure.

However, the term “regulated ETF” needs context. IBIT is an SEC-reporting, Nasdaq-listed product, but BlackRock states that the trust is not registered under the Investment Company Act of 1940. It therefore does not receive every protection that applies to conventional registered mutual funds and ETFs.

Bitcoin ETFs transfer custody risk instead of erasing it

The ETF structure replaces individual seed risk with institutional custody, operational and counterparty risk. IBIT’s annual filing warns that hackers, employee misconduct, technical failures or unauthorized transfers could still cause losses. It also says Coinbase’s shared insurance may be insufficient for every possible event.

The filing states that shareholders cannot bring direct claims against the Bitcoin custodian under the custody agreement. No party guarantees all trust assets or service-provider obligations. These disclosures do not show that ETFs are less secure than personal wallets. They show that the risk moves to institutions and contractual arrangements.

ETF shareholders also own securities rather than spendable Bitcoin. IBIT shares trade on Nasdaq, and redemptions occur through authorized participants in baskets of 40,000 shares. Retail investors cannot withdraw ETF holdings to a personal address, make Bitcoin payments or transact whenever the network is open.

As previously reported in crypto.news’ Bitcoin ETF explainer, the wrapper offers easier access and professional custody but removes direct ownership and 24/7 use. In related coverage, a technical review of the Coldcard bug found that the failure involved seed generation rather than phishing or physical theft.

The $89M drain is not yet an ETF inflow catalyst

Balchunas’s argument may appeal to investors who only want Bitcoin’s price performance. The incident may also encourage holders to divide funds among personal wallets, multisignature setups and regulated custodians instead of relying on one device or provider. These remain possible responses rather than confirmed investor behavior.

Still, no verified data shows that the Coldcard drain has created new Bitcoin ETF demand. BlackRock’s latest official figures cover July 31, before Balchunas’s Aug. 2 comments. IBIT’s NAV fell 2.78% that day, but the move cannot be tied solely to the wallet incident.

The next U.S. trading session may show whether ETF flows change, although one day of activity would not prove a connection. Bitcoin prices, economic conditions and portfolio rebalancing also drive fund creations and redemptions.

While those applications have become increasingly visible, the infrastructure that enables deposits, withdrawals and settlement has largely remained behind the scenes.

Fun is one of the companies building that infrastructure. The firm said it powers 100% of deposits and withdrawals on Polymarket and deposit flows into Aave’s largest vaults, while processing more than $3 billion in monthly transaction volume.

The company has raised more than $75 million to date.

From payment rails to funding flows

Fine said today’s crypto payments ecosystem remains unnecessarily fragmented, with developers forced to stitch together different card processors, banking partners, crypto assets, blockchains and bridges to create funding experiences.

Instead of relying on individual payment rails, platforms should optimize around the end goal of getting users funded as quickly and seamlessly as possible, he says.

“In Web2, payments are highly fungible,” Fine said. “In Web3, they’re much more complex because every payment method behaves differently. Teams keep rebuilding the same infrastructure over and over again instead of building unified optimized funding flows.”

That shift means many existing crypto payment businesses risk becoming obsolete, according to Fine. Companies built around converting fiat into crypto or moving assets between blockchains are solving an intermediary step that users never cared about in the first place, he argued.

While Strategy’s preferred STRC shares ended July well below their $100 par value, investors were told that their August dividend will not increase, holding at 12%.

Executive chairman Michael Saylor delivered the news in a tweet on Saturday, continuing to pitch STRC as a way to “stretch your income.” August will be the second month that the dividend will be paid semi-monthly after shareholders approved that change in June.

STRC shares closed at $89.46 on Friday, clocking a 5.42% price increase for the month which began with a dividend hike — 50 basis points to 12% — after a poor stock performance in June. The volume on the Nasdaq-traded shares on Friday were about two-thirds of their daily average. 

STRC shares continued to trade significantly below their $100 par value in July.
Source: TradingView

On Friday, Strategy CEO Phong Le reiterated that management’s “corporate objective is for STRC to trade at $99-$100 over time,” without elaborating when investors might expect that to transpire. 

Related: Bitcoin ETFs end July in the green despite late-month selling

Building cash reserve to make preferred payouts

Saylor, however, did take to social media on Sunday to dangle the possibility that the company will be making an announcement of a change in its Bitcoin treasury holdings. “Bitcoin Drive engaged,” read his X post, following a familiar pattern of posting a chart of Strategy’s BTC buys from Saylortracker.com to start off the week.

Last week, Strategy reported an $8.22 billion second-quarter net loss, driven primarily by an $8.32 billion unrealized loss on its Bitcoin (BTC) holdings as the cryptocurrency’s price declined during the quarter.

The Bitcoin treasury company said it has built a $3.75 billion cash reserve to support preferred stock payouts following the launch of its BTC monetization program.

Strategy also said it has built a $3.75 billion U.S. dollar reserve, enough to cover more than two years of preferred dividend payments and interest obligations. The company recently repurchased $25 million of its STRC preferred shares at a discount to par and said it intends to continue buying the securities while they trade below $100.

Magazine: Here’s why the CLARITY Act’s ethics deal may be so hard to reach

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.

Minnesota’s prediction market ban remained blocked on Aug. 2, one day after the law was scheduled to take effect. 

U.S. District Judge Katherine Menendez granted a preliminary injunction on July 27 to the Commodity Futures Trading Commission, Kalshi and Polymarket US. The order prevents Minnesota from enforcing its new statute against CFTC-registered designated contract markets while three related cases continue.

The Minnesota law would make it a felony for businesses to create, operate or intentionally support covered prediction markets. It also reaches certain data providers, payment services and advertisements. Menendez found that the plaintiffs were likely to succeed on at least part of their federal preemption claim because many event contracts may qualify as swaps under the Commodity Exchange Act.

Court win protects federal markets, but only for now

The ruling does not settle the dispute. Menendez found that the CFTC’s exclusive jurisdiction probably covers a “considerable swath” of contracts offered by Kalshi and Polymarket. However, she also said the platforms had not shown that every listed event contract meets the federal definition of a swap. Any permanent injunction could therefore protect fewer products than the current order.

Minnesota Attorney General Keith Ellison said prediction markets are “gambling, plain and simple.” That remains the state’s legal position, not a final court finding. Kalshi responded that “States cannot ban things that they don’t have jurisdiction over.” The company’s statement likewise reflects its interpretation of federal law rather than the case’s final outcome.

The injunction only covers the new prediction market statute as applied to CFTC-registered markets. It does not decide whether Minnesota can apply older gambling laws to individual sports or entertainment contracts. The Department of Public Safety has not said whether it views the platforms as illegal under those existing provisions or whether another enforcement action is underway.

As previously reported, the current relief will remain in place until the district court reaches a final decision unless a later order or appeal changes it. The court could ultimately distinguish between contracts with financial or economic consequences and products that more closely resemble ordinary wagers.

Walz shifts Minnesota’s focus to insider trading

Governor Tim Walz responded one day after the ruling with Executive Order 26-09. It prohibits covered state employees, including the governor, lieutenant governor and agency commissioners, from using nonpublic or confidential government information to trade prediction-market contracts for private benefit.

The order does not cover the legislature, courts, independent elected officials or several boards and commissions. Walz encouraged those institutions to adopt similar policies. It becomes effective 15 days after publication in the State Register and filing with the secretary of state.

A new federal enforcement case also shows that CFTC oversight does not leave manipulation entirely unpoliced. On July 31, the agency ordered former U.S. Representative George Santos to disgorge $17,569.98, pay a $17,500 penalty and accept a three-year trading ban over manipulative activity in a State of the Union event contract.

The CFTC order said Santos traded on whether he would attend the speech while making misleading public statements about his plans. The agency said those statements moved contract prices in a direction that favored his positions.

Meanwhile, as crypto.news reported, Kalshi has introduced employer disclosures, risk scoring and expanded surveillance for higher-risk contracts. The company said it blocked more than 100 potential insider trades and made 20 law-enforcement referrals during the first quarter of 2026. Those remain company-reported figures.

U.S. politics could pull crypto lawmakers and PACs into the fight

The Minnesota ruling could give pro-crypto lawmakers another example for arguing that national financial markets need one federal framework. The CLARITY Act does not regulate prediction markets directly. However, its supporters are also seeking a larger CFTC role in U.S. digital asset oversight. Senate lawmakers released updated market-structure text on July 22 after the Banking Committee advanced the measure in May.

The court dispute also creates a counterargument for lawmakers wary of expanding the commission’s mandate. A July 21 Senate letter asked the Government Accountability Office to review a reported 25% reduction in CFTC staffing and weaker enforcement activity. Critics could argue that Congress should not widen the regulator’s duties without ensuring it has enough staff to oversee both digital assets and fast-growing event markets. This is a political inference based on the agency’s expanding workload and the staffing concerns raised in Congress.

The case does not involve Fairshake or another crypto PAC. Still, it could shape campaign arguments surrounding candidates supported by the industry. FEC records showed that Fairshake held approximately $126.97 million in cash at the end of June and had spent $74.25 million during the current two-year reporting period.

In related coverage, Protect Progress spent more than $2 million in Michigan’s 13th District race, where challenger Donavan McKinney tied crypto lobbying to President Donald Trump’s business interests. Similar campaign attacks could connect support for broader CFTC authority with the Trump family’s prediction-market relationships.

Kalshi named Donald Trump Jr. a strategic adviser in January 2025. Polymarket later added him to its advisory board when his investment firm, 1789 Capital, took a stake in the company. Those corporate relationships are confirmed, although they do not prove that the White House directed the CFTC’s Minnesota litigation.

Sports-law attorney Daniel Wallach described the change in federal policy as “classic regulatory capture.” That is his assessment, not a judicial or regulatory conclusion. However, the family relationships may give opponents of pro-crypto candidates a clearer campaign message about industry access, federal authority and possible conflicts.

“It’s a classic regulatory capture when you look at the timeline and how the CFTC has approached sports event contracts for 15 years, and it all changed on a dime,” said Daniel Wallach, an attorney and sports gambling expert.

via @lukitsbill @StarTribune https://t.co/fMrdCLKMTX

— Daniel Wallach (@WALLACHLEGAL) August 2, 2026

Conflicting state cases keep national rules unsettled

Minnesota is one part of a wider federal-state contest. The CFTC has filed cases against several states to defend what it calls exclusive jurisdiction over registered prediction markets. Yet courts have not produced one nationwide answer. Minnesota’s injunction favored the platforms, while rulings involving Wisconsin and Washington allowed state gambling challenges to advance.

New York added another case on July 31 by suing Kalshi and alleging that its platform operates as unlicensed gambling. The state seeks an injunction, restitution, penalties and forfeiture of alleged gains. Those claims remain allegations that Kalshi can contest in court.

The CFTC’s proposed prediction-market rule is another key track. The public comment period closed on July 27. The proposal would define “gaming,” establish factors for public-interest reviews and create a process lasting as long as 90 days for certain event contracts. The commission has not issued a final rule.