RedStone has said Tectonic’s estimated $75 million exploit resulted from weak collateral controls rather than an inaccurate oracle after TONIC’s reported price rose about 100-fold in 20 minutes.

RedStone co-founder Marcin Kazmierczak told crypto.news that the oracle accurately reported TONIC’s price in the pool it monitored, but Tectonic allegedly accepted the reading without checking whether the token could be sold at that valuation in meaningful size.

Cronos validators halted block production on Aug. 30 after Tectonic disclosed an incident involving the decentralized lending protocol. Independent researcher Weilin Li estimated that approximately $75 million was affected, although neither Tectonic nor Cronos has confirmed the final loss.

According to Li’s initial analysis, the attacker pushed TONIC’s price about 100 times higher within roughly 20 minutes. The inflated tokens were then supplied to Tectonic as collateral, allowing the attacker to borrow assets with more established liquidity.

TONIC reportedly had a collateral factor of 20%, meaning the protocol allowed users to borrow assets worth up to one-fifth of the collateral’s reported value. Li identified about 364.6 trillion TONIC in the position, which would have needed a reported value of around $375 million to support approximately $75 million in borrowing.

Tectonic oracle reported a manipulated market price

Kazmierczak rejected the idea that the oracle itself necessarily produced incorrect data, drawing a distinction between observing the available market price and deciding whether that price is safe for a lending protocol.

“The oracle wasn’t wrong. It accurately reported the price of TONIC on the pool it was reading from at that moment,” he said.

A thinly traded token can register a high spot price after a limited number of trades, even when the market lacks enough buyers to support large sales at the same level. According to Kazmierczak, Tectonic’s alleged failure was accepting the manipulated price as collateral without testing how much TONIC could actually be sold before its value collapsed.

“Reporting a price and validating that a price is safe to lend against are two different jobs, and Tectonic’s design conflated them.”

The initial Tectonic incident left most of the identified assets on Cronos when validators stopped the chain. Li estimated that about $6 million had reached Ethereum, while roughly $60 million remained at one Cronos address. A second address holding close to $8 million raised his combined estimate to about $75 million.

Funds remaining at identified addresses should not be treated as recovered unless the network, protocol or affected users regain control of them. Cronos and Tectonic had not confirmed Li’s address attribution or asset estimates when the preliminary analysis was published.

Borrow caps could have limited the Tectonic loss

Among the safeguards available to lending protocols, Kazmierczak said borrow caps linked to executable liquidity would have provided the strongest protection. Such a cap limits the total amount users can borrow against an asset based on how much of the collateral could realistically be sold without causing a steep price decline.

“Even if TONIC’s reported price moves 100x, a borrow cap sized to what could realistically be exited without collapsing the market limits the damage regardless of what the price feed says,” he said.

Dynamic collateral factors, price-impact limits and minimum market-depth requirements could also have reduced Tectonic’s exposure, according to Kazmierczak. However, he argued that a properly set borrow cap can contain losses even when another risk parameter fails.

Tectonic apparently lacked those protections, he said, allowing a token with limited liquidity to support borrowing on the basis of a temporarily inflated valuation. Neither Tectonic nor Cronos has released a technical postmortem confirming which controls were active when the incident occurred.

Kazmierczak also cautioned against treating a longer time-weighted average price window as a complete solution. A TWAP calculates an average price across a set period, making brief market moves less influential than they would be under a spot-price feed.

Although longer windows can filter out short-lived price changes, Kazmierczak said protocols must set them according to each asset’s liquidity and trading history. In his assessment, a 100-fold increase in 20 minutes should have raised questions about TONIC’s eligibility as collateral rather than prompting a debate over the ideal averaging period.

“A move like TONIC’s, 100x in 20 minutes, isn’t a volatility event a wider TWAP window would smooth over. It’s a signal the asset shouldn’t have been usable as collateral at any meaningful size in the first place.”

Thin collateral has caused similar DeFi attacks

Tectonic’s reported attack followed an $8.7 million Moonwell exploit on Base on Aug. 27. Security firms said the Moonwell attacker manipulated the collateral value of the relatively illiquid MAMO token before borrowing cbBTC from the protocol’s mBTC market.

Following the incident, Moonwell lowered borrow caps across its Base Core Markets to 1 wei, effectively preventing new loans. It also reduced the supply caps for MAMO and WELL to 1 wei while investigating the transactions.

Kazmierczak compared Tectonic with Mango Markets and Moola Market, two protocols targeted through variations of inflated collateral pricing in October 2022. Mango Markets lost more than $100 million after Avraham Eisenberg increased the value of positions linked to the thinly traded MNGO token and borrowed other assets against them.

The Mango case also provides a U.S. legal example of how difficult it can be to apply existing fraud and commodities laws to automated lending systems. A Manhattan jury convicted Eisenberg in 2024 of commodities fraud, commodities manipulation and wire fraud, but a federal judge vacated the convictions in May 2025 over venue problems and insufficient evidence supporting the wire fraud count.

According to Kazmierczak, protocols repeatedly expose themselves to such attacks because listing a native governance token as collateral can increase its use and help attract deposits. The cost of weak settings may remain hidden until someone tests how the lending market responds to a manipulated token price.

He placed primary responsibility on risk curators and other service providers tasked with setting and maintaining collateral parameters, working alongside protocol developers and oracle providers. Governance participants may approve an asset listing, Kazmierczak said, but many voters lack the market-structure knowledge needed to judge liquidity and price-impact risks.

Cronos restored the chain to its pre-exploit state

Cronos has since restarted network operations after validators restored the blockchain to a point before the Tectonic incident. The network described the halt as an emergency action agreed through validator consensus to protect users.

Restoring the earlier chain state removed transactions recorded after the chosen rollback point from the restarted version of Cronos. Crypto.com CEO Kris Marszalek said the company’s centralized app and exchange continued to operate during the halt and that funds held through those services were unaffected.

Tectonic had asked users not to interact with the lending protocol while its team investigated the incident. Cronos has not published the technical process validators used to select and approve the restored state, while the promised postmortem is expected to address the attack, the emergency halt, and the subsequent restart.

A consortium of 21 major financial institutions says it plans to form a new company dedicated to developing and issuing stablecoins, signaling a renewed effort from traditional banks to build digital-dollar rails that fit emerging regulations. The group announced Tuesday that it aims to launch a US dollar-denominated stablecoin in the first half of 2027, once the company is formed and other conditions are met.

Beyond a first US dollar product, the consortium says it intends to expand to stablecoins denominated in other G7 currencies, with a euro offering identified as its next priority. The planned tokens are intended to serve wholesale, institutional, and retail users, including applications such as cross-border payments and digital asset settlement.

Key takeaways

• 21 large financial institutions plan to create a company to develop and issue stablecoins.
• The initial product is expected to be a US dollar-denominated stablecoin in the first half of 2027.
• Officials say the stablecoin framework will aim to comply with the US GENIUS Act and, where applicable, the EU’s MiCA.
• After the dollar launch, the consortium’s stated next step is a euro-denominated stablecoin.
• The consortium more than doubled compared with an earlier October effort involving 10 banks exploring reserve-backed stablecoins.

From bank pilots to a coordinated stablecoin company

The Tuesday announcement frames the initiative as a step toward a more formal, multi-institution approach to stablecoins. The consortium names Bank of America, Goldman Sachs, Citi, Deutsche Bank, UBS, Santander, MUFG, and Fidelity Investments, among others.

While stablecoins have already gained traction across parts of the financial ecosystem, this move stands out for its scale and for the breadth of the participating institutions across regions including North America, Europe, East Asia, and parts of the Middle East and Africa. The group’s expansion from the earlier, smaller effort suggests momentum is building toward shared infrastructure rather than isolated, institution-by-institution experiments.

In October 2025, Reuters reported that an initial group of 10 banks was exploring a 1:1 reserve-backed model of digital money available on public blockchains. The new consortium effectively builds on that earlier exploration, with the stated plan now moving closer to an eventual issuance roadmap, albeit still contingent on forming the company and meeting other unspecified conditions.

Regulatory alignment is central to the plan

Stablecoin projects increasingly rise or fall on regulatory fit, and the consortium is explicitly tying its design goals to compliance pathways. According to the announcement, the planned stablecoin will aim to comply with the US GENIUS Act and the EU’s Markets in Crypto-Assets Regulation (MiCA), where applicable.

This matters for more than public messaging. Stablecoin issuers and distributors typically need legal clarity around reserve management, redemption, consumer protections, and supervisory oversight. By explicitly referencing both US and EU frameworks, the consortium is signaling that it wants the token to operate not just as a blockchain-native instrument, but as an asset that can be integrated into regulated distribution channels.

That regulatory emphasis also aligns with broader shifts in the sector. Stablecoins have seen growing adoption in recent years, and the passage of GENIUS and MiCA has helped clarify routes that were previously more uncertain for mainstream institutions.

Where the consortium says it wants to use the token

The announcement says the stablecoin is designed for wholesale and institutional use as well as retail access. Use cases highlighted include cross-border payments and digital asset settlement—applications where speed, programmability, and transfer finality are often treated as advantages compared with traditional correspondent banking flows.

For investors and market participants, the inclusion of multiple target segments suggests the consortium wants the stablecoin to function across different integration levels: internal settlement for financial firms, cross-border transfer for payment corridors, and easier access for retail users through downstream partners.

The planned multi-currency expansion further indicates the project is not intended to be a one-off US dollar product. The consortium’s stated next priority is a euro-denominated stablecoin, which could matter for liquidity planning and for cross-border use cases within Europe and between regions.

Broader industry momentum: Asia policy, bank issuance, and institutional surveys

This consortium’s announcement comes amid other signs of institutional progress. In Singapore, for example, the country’s authorities are said to be considering allowing jointly issued cross-border stablecoins into its regulatory regime. The Tuesday announcement reportedly revisits an earlier position that limited the framework to domestic issuance.

Separately, institutional interest has been building through both surveys and product launches. Earlier in 2025, a Fireblocks survey of 295 executives found that 90% of respondents were using or planning to use stablecoins, underscoring that demand is not limited to crypto-native companies.

There have also been concrete issuance steps by major firms. According to coverage referenced by the article, Societe Generale’s crypto subsidiary has issued euro- and dollar-denominated stablecoins, and Fidelity has launched a US dollar-pegged FIDD stablecoin. The article also notes Standard Chartered’s backing of a Hong Kong dollar stablecoin venture.

Taken together, these developments suggest a shift from isolated experiments toward products that can be distributed, regulated, and operationalized at institutional scale. The consortium’s planned US-dollar launch in 2027 can be read as part of that same arc—moving from “can it work?” to “how does it fit within the rules and distribution networks?”

For market watchers, the key question is whether the consortium’s approach—reserve-backed stablecoins with compliance targets aimed at GENIUS and MiCA—will translate into a deployable issuance plan that other institutions can readily integrate with. Investors should watch for updates on the company’s formation, the exact token structure and reserve arrangements, and how the group coordinates cross-border deployment as regulators continue to clarify stablecoin treatment.

Sentiment in crypto has dived lower than a snailfish in the Mariana Trench in recent months.

Miners are capitulating to AI, cold wallets are getting exploited, and you can hardly fire up LinkedIn without reading another message from a newly unemployed crypto journalist searching for new opportunities. Even for an industry that’s endured nation-state bans, exchange blowups, and years of regulatory pressure, morale has rarely felt this low.

With business models failing and public interest dropping, many long-term crypto fans have begun to question whether we’ve all wasted a decade of our lives on a pipe dream.

Source: Ash Crypto

Until the price went up, that is.

Bitcoin has just seen its best August in years with a 26% return, while Ethereum gained 34%. President Trump even sang the praises of a decentralized offshore perpetual futures venue at the White House. Crypto’s finally getting interesting again.

But a short-term price rise doesn’t mean all our dreams have come true. For anyone who spent years advocating for sovereign F-you money outside the control of the state and centralized entities, a custodial ETF is not exactly a version of BTC that sticks it to the man.

And there’s another problem with calling this a victory lap: many of the companies that helped build crypto’s foundations are no longer around to enjoy the latest pump.

Take BitMEX, one of the industry’s first Bitcoin futures exchanges that pioneered the perpetual swap and 100x leverage for degens. It’s shutting down operations in September after 11 years.

Former chief executive Stephan Lutz tells Magazine that BitMEX was a victim of its own success.

“Every legitimate crypto exchange is using the perpetual swap… every legitimate crypto exchange uses the funding mechanism to bring longs and shorts together that the founders invented originally… That isn’t going away… It’s just not a differentiating factor anymore.”

So what if crypto won — just not in the way we thought it would?

Crypto’s impact means it wasn’t a waste of time

Lutz doesn’t think crypto can simply disappear anymore because the technology has become too deeply embedded in traditional finance to be unwound.

“From my point of view, we passed the point of no return,” he says.

Utkarsh Ahuja, founder of Moon Pursuit Capital, agrees that crypto proponents have not wasted their lives, and points to the industry’s impact on payment rails, settlement and tokenization.

Stablecoins, he says, can have a “very, very lasting impact” as they become integrated into financial payment infrastructure, and “you can literally tokenize anything.”

Related: 10 weirdest things ever tokenized… including farts

He points to crypto’s spillover into energy, healthcare and AI, arguing that the technology is being widely used beyond the industry that created it.

Decentralized finance has also made a meaningful impact on the world and is now closer to infrastructure, than an experiment. Wanja Oberhof, chief executive of Subsquid Labs, tells Magazine:

“DeFi built the first financial system where you don’t have to trust the operator’s word: you can verify the ledger yourself, in real time, down to every transaction.”

Settlement happens in minutes rather than days, he says, while markets run 24/7 and lending protocols can clear billions transparently:

“No bank consortium ever shipped anything like it. DeFi removed the intermediary and kept the market.”

But while DeFi’s infrastructure has greatly improved, Oberhof concedes the industry “over-promised on timelines and under-delivered on user experience.”

He says the real win will come when the technology “disappears into products people use without thinking about it.”

Institutions are adopting blockchain technology like crazy, and tokenized funds, stablecoins and blockchain-based settlement are no longer ideas confined to the hallways of crypto conferences.

But crypto isn’t so much replacing the financial system as being absorbed by it.

The crypto industry’s success is a key reason it no longer feels as exciting or impactful. The more TradFi becomes involved, the more boring crypto seems, especially when compared to the days when the Long Island Iced Tea Corp changed its name to Long Blockchain Corp back in December 2017 and the stock price surged 500%. (It was delisted two months later for misleading the market).

Ether printed a God candle on Aug. 22. Source: Lark Davis

Regulation has also made crypto much more legitimate but duller at the same time.

The EU has implemented its Markets in Crypto Assets (MiCA). The US has gone from treating crypto largely as a regulatory headache to building a framework around it. Senators may even pass the CLARITY act one day.

What did we lose along the way?

Despite increasing legitimacy, the crypto industry has failed to deliver on many things it promised. Dentacoin failed to revolutionize the dental industry. Bitcoin did not stop all wars. Ethereum is not the default home for global finance (at least, not yet.) Ahuja says:

“Has it delivered enough? Not yet, in my opinion. But has it changed our perception completely? Yes, it has.”

The audience has changed too.

Crypto is no longer some fringe hobby for a tiny band of libertarian cypherpunks and meme-weilding frog armies on Crypto Twitter.

Around one in five American adults, or 19%, now says they have invested in, traded or used cryptocurrency, according to Pew Research Center.

Broader ownership hasn’t made crypto easier to use. In fact, the explosion of assets and platforms has made the market harder to navigate. Users have to contemplate multiple networks, wallets, exchanges, bridges and onramps, creating the extra layers of friction that crypto was supposed to eliminate.

One in five Americans has used crypto. Source: Pew Research Center

Ahuja points to another irony: an asset class designed to be borderless is increasingly being shaped by national regulatory regimes, making it harder to move seamlessly across jurisdictions.

One Dubai-based crypto user Magazine spoke with receives their salary every month into a large centralized crypto exchange. They say they lose money when converting USDT into local currency, and then have to pay a flat 75 AED fee (roughly 20 USD) just to withdraw. They say:

“I wish I could receive a bank transfer instead.”

And then there’s the most basic promise of all: self-custody, arguably the biggest paradox the industry faces because the more valuable Bitcoin becomes, the more dangerous it is to hold your own private keys — whether for fear of being bludgeoned to death by a wrench or having your cold wallet exploited by an AI agent.

Arguably it’s this failure to deliver the future crypto once promised, that has made the bear market shutdowns and closures hit even harder.

Related: MiCA is coming for DeFi vaults, but regulation will be difficult

Layoffs are rampant throughout the industry. Projects that survived even the grizzly 2022 bear market have been shutting down this year, or being forced to reinvent themselves as the money and users pivot to AI — which is newer but has seen adoption crypto can only dream of so far.

Lutz doesn’t see BitMEX’s fate as evidence that the technology failed; quite the opposite: the technology worked so well that everyone copied it, and the industry has moved from a race to invent the infrastructure to a brutal fight over market share. He says:

“Now the differentiating factor is your aggressiveness in the competition, which is a completely different game. Some play that very well, others don’t.”

Perhaps the companies and projects that built crypto were never going to be the ones that ultimately benefited most from its adoption.

So have we wasted our lives?

Well, the purists may not have gotten their sovereign money, the early companies may not have survived, and the average user may still be waiting to catch a break.

But the technology is here, the infrastructure is becoming the rails, and the 20% daily candles sure are fun to watch.

And one thing that’s always been true, when the price starts going up, the narratives change quickly to explain why it may keep going up forever.

Magazine: Do the Coldcard attacks mean all hardware wallets are now insecure?