Strike has launched a Bitcoin-backed loan product built to remove margin calls and price-based liquidations.

Jack Mallers, Strike’s founder and chief executive, said the new product protects borrowers from forced selling when Bitcoin falls. He described the offer as a “volatility-proof” loan that lets users borrow dollars while keeping their BTC posted as collateral.

The launch follows Strike’s first Bitcoin-backed loan product, which arrived in May 2025. As previously reported, Strike issued more than $10 million in BTC-backed loans within two days of that launch.

No margin calls, but not risk-free

The new product removes price-triggered actions tied to loan-to-value levels. Mallers said, “No margin calls. No price liquidations. No matter how far bitcoin falls, your bitcoin doesn’t move.”

That structure differs from many crypto lending products, where a sharp price drop can force borrowers to add collateral or face liquidation. Strike says borrowers can keep their collateral untouched if they make payments on time.

The protection has limits. If a borrower misses an interest or maturity payment, Strike gives a 10-day window to pay or contact the company. If the borrower does not respond or settle the overdue amount, Strike may sell part of the Bitcoin collateral.

Mallers also warned users about the difference between price risk and payment risk. “That’s why we call it ‘volatility-proof,’ not ‘liquidation-proof,’” he said.

Higher cost funds the protection

The new loan carries a higher cost than Strike’s standard Bitcoin-backed loans. The annual percentage rate can reach 14.2%, based on a 2.95 percentage-point premium above Strike’s standard loan range.

Strike’s standard loan product has charged rates between 7.75% and 11.25%, depending on terms and payment choice. The “volatility-proof” version also uses a shorter six-month term and a maximum initial loan-to-value ratio of 45%.

In simple terms, a borrower who posts $100,000 in Bitcoin can borrow up to $45,000. The lower borrowing limit and higher rate give Strike more room to manage the risk of sharp BTC price moves.

Mallers said the added cost supports hedging. “The secret sauce is that we’re taking the extra charge that we’re giving you guys and we’re putting it on extra hedges in the market to protect all of us,” he said.

Bitcoin lending market searches for trust

The launch comes while crypto lenders keep testing ways to make Bitcoin-backed credit easier to use. A Ledn research report found that 88% of surveyed crypto holders would consider a crypto-backed loan, while only 14% currently use one.

Ledn and Protocol Theory called that gap a trust problem, not only a demand problem. Market volatility, fear of liquidation, and low confidence in lenders have limited wider use.

Other firms also continue to build crypto-backed lending products. As crypto.news previously reported, Coinbase launched crypto-backed loans in the U.K. through Morpho on Base, allowing users to borrow up to $5 million in USDC against Bitcoin, Ethereum, and cbETH.

Strike’s new product tries to address one of the main fears in Bitcoin lending: forced selling during market crashes. It does not remove repayment risk. Borrowers still need to pay on time, and the higher rate makes the product costly for users who need longer-term credit.

The U.S. Commodity Futures Trading Commission (CFTC) has filed a federal lawsuit against Trevor Vernon, a North Carolina man, and his company, Argent Capital Management, alleging they operated a crypto-involved commodity pool that defrauded investors of more than $14 million.

In its complaint filed Tuesday, the CFTC alleges Vernon solicited $14.8 million from at least 60 investors between March 2022 and February 2026 by presenting himself as a successful trader, while investors’ funds were allegedly used to generate “consistent and catastrophic losses.” The CFTC described the alleged misconduct as “akin to a Ponzi scheme,” and said it included trading in Bitcoin and Ether alongside equity index futures and related options.

Key takeaways

• The CFTC lawsuit alleges an investor-raising scheme tied to a commodity pool featuring both crypto and equity index derivatives.
• The agency claims investors were solicited with false performance messaging while losses were allegedly hidden, including through alleged misappropriation of funds.
• The complaint asserts Vernon violated federal commodities laws by failing to register the pool as required.
• The CFTC is seeking permanent restrictions on Vernon, along with potential disgorgement, penalties, and restitution.

A rare CFTC action in crypto underscores regulator focus

Crypto enforcement by the CFTC is comparatively infrequent, and the agency has faced ongoing scrutiny from some lawmakers about whether it has adequate resources to oversee a sector that has grown quickly and operates across multiple regulatory frameworks. This case stands out because it blends traditional commodities derivatives—such as equity index futures and options—together with cryptocurrency trading.

According to the CFTC’s lawsuit, the pool used a mix of instruments that the agency alleges were central to both returns claims and investor solicitation. The regulator’s emphasis on the commodity-pool structure is important: it signals that, where crypto is combined with derivatives and investor pooling, the CFTC may pursue conduct that fits within its commodities jurisdiction.

The allegations: hidden losses and misappropriated funds

Central to the CFTC’s claims is what it describes as Vernon’s pattern of misleading investors and obscuring the pool’s performance. The complaint alleges Vernon made false statements to both existing and prospective investors, including through quarterly account updates and monthly performance emails.

The CFTC alleges that trading across the pool—including crypto holdings such as Bitcoin and Ether, which the agency asserted were commodities—along with equity index futures and options resulted in losses exceeding $8.6 million. The regulator says Vernon did not disclose these losses to investors.

In addition, the CFTC claims Vernon misappropriated investor funds in a way it characterizes as similar to a Ponzi scheme—using money from investors, according to the agency, to pay earlier participants in order to conceal the underlying losses. The complaint states that at least $3 million was misappropriated for investor payments in that alleged manner.

The lawsuit also alleges personal misuse of funds: it claims Vernon misappropriated $136,000 for private air travel. The CFTC’s framing suggests it views the alleged conduct as not only misrepresentation but also improper diversion of pooled investor capital.

Registration failures and purported regulator misstatements

Beyond fraud-related allegations, the CFTC says Argent Capital Management failed to register with the agency as required under federal commodities law. Registration obligations are frequently a focal point in CFTC enforcement because they determine whether an operator is meeting baseline regulatory requirements for offering and running commodity-related investment products.

The complaint further alleges Vernon made false statements to the CFTC in January concerning issues the agency later raised in its lawsuit. The CFTC says Vernon’s conduct violated multiple legal requirements, not just investor communications and trading results.

Overall, the CFTC charged Vernon with seven counts relating to fraud, failure to register, and making false statements. Those counts reflect a broader enforcement approach that targets both how investors were recruited and how the pool was managed, including compliance steps that the regulator says were not followed.

What the CFTC is asking the court to do

In addition to seeking monetary remedies, the CFTC asked the court for injunctive relief aimed at preventing future misconduct. The regulator is requesting a permanent ban on Vernon from registration and trading, as well as disgorgement, penalties, and restitution.

These requests matter for investors and market participants because they signal the CFTC’s view that the alleged conduct warrants more than an order limited to the specific pool. A permanent prohibition and restitution-focused relief are typically designed to reduce the risk of repeat behavior and to address, to the extent possible, the financial harm described in the complaint.

More broadly, the case may also influence how firms and individuals structure “commodity pool” offerings that involve crypto trading or claim crypto-related performance. If the allegations reflect actual conduct proven in court, it would highlight how the CFTC may treat certain crypto activities as part of a broader commodities-and-derivatives framework—especially when an operator solicits outside capital and markets results while allegedly failing to disclose losses.

What to watch next

Readers should watch how the court responds to the CFTC’s requested remedies and whether the case proceeds on the specific theories of jurisdiction and alleged misappropriation outlined in the complaint. Until factual issues are resolved, the key uncertainty remains the extent to which Vernon and Argent Capital Management can rebut the CFTC’s claims regarding hidden losses, alleged investor misrepresentations, and compliance failures.

CFTC press release

The yen is trading near its weakest level in four decades, and Japanese companies are moving crypto onto their balance sheets to escape it.

SBI VC Trade on Tuesday said corporate demand for bitcoin and XRP is climbing as the currency’s slide pushes firms to diversify reserves beyond cash, with the exchange’s registered accounts passing 2 million, roughly double its 2025 count.

Hedge funds have turned the most bearish on the yen since 2007, boosting bets on further losses to nearly 138,000 contracts as of June 30, per CFTC data. The dollar buys around 162 yen as of Asian morning hours Wednesday.

The driver is the interest-rate gap between a hawkish U.S. Fed and a Bank of Japan still far behind it, the same gap that makes holding yen cash a losing position and sends firms looking for harder assets.

SBI, the crypto arm of Tokyo-based SBI Holdings, noted demand for its corporate service has grown alongside companies that hand out bitcoin or XRP through shareholder-perk programs.

The move fits a pattern the market has watched all month. A weak yen has fed the carry trade, where investors borrow cheaply in yen to buy higher-returning assets elsewhere, and some of that flow is now reaching crypto through regulated Japanese channels rather than offshore ones.

Bitcoin traded near $62,650 on Tuesday, up 6.1% on the week, per CoinDesk data.

Secret Network is seeking to move SCRT from Cosmos to Arbitrum, citing security risks, weaker liquidity, and older code.

In a July 7 governance post, the privacy-focused blockchain said the plan would create a new ERC-20 SCRT token on Arbitrum through a one-time snapshot on Sept. 1. The team said native and staked SCRT balances would count, while sSCRT, bridged SCRT, contract-held tokens, and IBC assets would not qualify.

The proposal has not passed yet. The team said the move needs a community vote, and the migration will not proceed if holders reject it.

AI exploit risk drives security concerns

The team said security sits at the center of the proposal. It pointed to the recent Axelar-Secret IBC bridge exploit, which crypto.news previously reported led Axelar to disable Secret Network bridge routes after about $4.7 million in bridged assets were taken.

Secret said the exploit did not touch native SCRT, its core privacy protocol, or its confidential compute model. Still, it said the event showed the risk of old bridge paths and under-maintained code in a smaller ecosystem.

“The security risk is the part we take most seriously,” the team said. It also warned that “with AI, the cost of attacking stale code is falling across the board,” as models get better at reading contracts and finding weak points.

Cosmos liquidity pressure adds to case

Secret Network said Cosmos was the right home in 2020 because appchains, IBC, wallets, and infrastructure had stronger momentum. It now says the market has changed, with lower liquidity and fewer builders staying in the ecosystem.

Moreover, Anoma co-founder Christopher Goes warned in January that Cosmos was facing deep stress as projects such as Penumbra, Osmosis, and Noble reduced work, explored exits, or shifted resources elsewhere.

DefiLlama data shows Secret has about $1.32 million in DeFi TVL, while Cosmos chains have about $2 billion. By comparison, L2Beat lists Arbitrum One as the largest Ethereum scaling network by total value secured, with about $17.4 billion.

SCRT holders face snapshot rules

If the proposal passes, SCRT Labs plans to end official support for the Cosmos-based Secret L1 on Sept. 1. The old chain could keep producing blocks if enough validators continue running it, but that would depend on third-party support.

The team also said it will release Secret’s source code under a permissive open-source license. It proposed reducing inflation to 5% from 9% after the move, while keeping SCRT as the governance token.

Users would need to move certain assets before the snapshot. The proposal asks holders to convert eligible balances back to native or staked SCRT and move IBC assets back to their home chains.

SCRT holders reacted poorly to the proposal. CoinGecko data showed the token trading near $0.041, down about 25% in 24 hours and more than 99% below its 2021 peak.

The CFTC has sued a North Carolina man and his company over an alleged commodity pool fraud tied to crypto and futures trading.

In a July 7 press release, the Commodity Futures Trading Commission said it filed a civil enforcement action against Trevor Vernon and Argent Capital Management LLC. The agency said the pool traded equity index futures, options on equity index futures, Bitcoin, Ether, and other crypto assets.