Crypto World

The firm whose AI paper knocked the whole market is out with another big call

Published

4 weeks ago

25 March 2026

NewsAdmin

The firm whose AI paper knocked the whole market is out with another big call

A trader works on the floor at the New York Stock Exchange (NYSE) in New York City, U.S., March 23, 2026.

Brendan McDermid | Reuters

Citrini Research, the firm that rattled markets earlier this year with a provocative bearish call on artificial intelligence, is out with another warning — this time arguing an oil-driven slowdown could send equities lower.

Founder James van Geelen said persistently high energy prices risk weighing on consumers and corporate earnings, creating a backdrop where stocks struggle even as the Federal Reserve eventually pivots toward rate cuts.

“If the war doesn’t end, equities will go lower,” van Geelen wrote in a Substack post early Wednesday, pointing to geopolitical tensions as a key driver of sustained oil strength.

Stocks recouped some of the losses Wednesday following reports that the U.S. has given Iran a plan to bring the conflict to an end, sending crude prices tumbling. However, the two countries appear to be very far apart, with Tehran turning down the U.S.’s ceasefire offer and demanding sovereignty over the Strait of Hormuz.

The latest call builds on Citrini’s growing reputation for contrarian macro views. In February, the firm published a widely circulated note arguing that the AI boom itself could ultimately hurt the economy, pushing unemployment as high as 10% if white-collar jobs are replaced by machines.

Slowdown ahead?

The core of Citrini’s current thesis is that elevated oil prices act as a tax on growth, eroding purchasing power and tightening financial conditions without the Fed needing to take further action. With policy rates already near neutral, van Geelen argued that simply holding rates steady would be restrictive enough as the energy shock filters through the economy.

“We live in a different world now, rates are close to neutral,” he wrote. “If oil stays high, it would be restrictive enough simply to leave them where they are while oil prices filter through the rest of the economy and cause a slowdown.”

That dynamic leaves equities particularly vulnerable, he said. Even in a scenario where geopolitical tensions ease quickly, Citrini sees limited upside for stocks. Consumers would still emerge “slightly weaker” after absorbing higher fuel costs, dampening the strength of any rebound, he said.

The firm’s view also challenges a common bullish narrative that rate cuts would provide a backstop for equities. Instead, van Geelen suggests any eventual easing would likely come in response to deteriorating growth, a backdrop historically associated with further equity declines rather than sustained rallies.

“The Fed knows that raising rates isn’t going to magically make more oil supply,” he wrote, arguing policymakers are more likely to “look through” the shock before ultimately cutting rates as conditions worsen.

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Crypto World

LayerZero Says Kelp Setup Caused Exploit, as Aave Loss Questions Mount

Published

4 minutes ago

20 April 2026

NewsAdmin

LayerZero Says Kelp Setup Caused Exploit, as Aave Loss Questions Mount

Interoperability protocol LayerZero claims that an inadequate setup tied to Kelp’s decentralized verifier network (DVN) enabled malicious actors to steal $290 million from Kelp DAO, adding that preliminary signs point to North Korea-linked threat actors.

An attacker drained about 116,500 Restaked ETH (rsETH), worth as much as $293 million at the time, from Kelp DAO’s LayerZero-powered rsETH bridge on Saturday.

LayerZero said Monday that the exploit stemmed from a single point of failure in Kelp’s setup, which relied on a single LayerZero DVN as the only verified path, despite LayerZero previously advising them against this.

“LayerZero and other external parties previously communicated best practices around DVN diversification to KelpDAO. Despite these recommendations, KelpDAO chose to utilize a 1/1 DVN configuration.”

In practice, that meant Kelp relied on a single verification path for cross-chain messages rather than requiring multiple independent checks.

The exploit quickly shifted attention from the technical cause to the question of who should absorb the losses, while the fallout spread into Aave, where the attacker used rsETH as collateral to borrow real liquidity.

Aave’s total value locked (TVL) had fallen by about $8.9 billion to $17.5 billion at the time of writing after the exploiter used the stolen funds to borrow on Aave, leaving about $195 million in “bad debt,” triggering withdrawals on the lending protocol.

LayerZero said Kelp’s rsETH bridge relied solely on the LayerZero Labs DVN, and argued that the incident reflected an unsafe application configuration rather than a compromise of LayerZero itself. The company said it is now urging all applications using 1/1 DVN setups to migrate to multi-DVN configurations and will stop signing or attesting messages for apps that retain the single verifier design.

Losses spark blame fight after $290 million Kelp exploit

With no recovery or compensation plan yet announced, users and market observers spent Monday debating whether losses should sit with Kelp DAO, LayerZero, Aave or rsETH holders themselves.

Yishi Wang, founder and CEO of open-source hardware wallet OneKey, said that the best path forward was to negotiate with the hacker, offer a 10% to 15% bounty, and get the bulk of the funds back.

“If negotiations fail, LayerZero’s ecosystem fund should foot the bulk of the bill—it’s got the deepest pockets and the most long-term skin in the game,” wrote the founder in a Monday X post, adding that Kelp DAO is “broke” and could make it up with tokens and future revenue, or consider selling the project.

Analytics platform DeFiLlama’s pseudonymous founder, 0xngmi, outlined three solutions, including the option to “socialize” losses among all users, “rug rsETH holders on L2s,” or try to return holder balances to a pre-hack snapshot, which would be “very hard to do,” he wrote in a Monday X post.

Cointelegraph reached out to Aave for comment, but had not received a response by publication.

Exploit raises Aave liquidation risks

Investor concerns about the Kelp exploit have significantly reduced Ether (ETH) liquidity on Aave, the lending protocol’s core collateral asset.

This low liquidity presents a “critical safety risk where liquidations of ETH collateral cannot take place while markets are at 100% utilization,” said MoneySupply, the pseudonymous head of strategy at Aave competitor lending protocol Spark, in a Saturday X post.

“With current illiquidity conditions on Aave, a 15-20% ETHUSD price drop could cause significant bad debt accumulation (on top of any potential issues attributable to the direct rsETH exploit),” he said.