Liquid Network Security Breach and White-Hat Claims
A sum of just under 4,000 Bitcoin, valued at approximately $319 million, was siphoned from the Liquid Network sidechain in what appears to be a significant security incident. An unverified OP_RETURN message appended to the transaction read: "we are whitehats. contact us on chain," suggesting the actors identified themselves as ethical hackers rather than malicious thieves.
The federation wallet balance on the Liquid explorer fell sharply from 4,200 BTC to a mere 207.275 BTC following the event. Blockstream, the company behind the sidechain, has suspended its bridge nodes and urged exchanges to halt LBTC deposits and withdrawals while the team works to reach the attackers and pinpoint the vulnerability.
In standard Liquid operations, LBTC is burned on the sidechain before native Bitcoin is withdrawn. The process requires authorization through an 11-of-15 multisig signature and routing to an approved whitelist. However, Liquid Network stated that the funds were moved via the SideSwap PAK (Peg-out Authorization Key), and stressed that neither that key nor any others had been compromised.
Crypto analyst DBCrypto observed that the stolen coins had not been mixed or moved further on the Bitcoin network, a pattern he said is more consistent with a white-hat extraction than a traditional theft. He nonetheless raised pointed questions about the sidechain's security posture, noting that either 11 of the 15 functionaries had approved the transaction or the whitelist safeguard had failed — either outcome reflected poorly on Liquid.
SideSwap itself confirmed its key had not been breached and added that Blockstream subsequently determined the L-BTC in the relevant order was generated through a bug in the Elements software. At the time of publication, neither Blockstream nor Adam Back had publicly addressed the incident on X. However, Jan3 CEO Samson Mow posted that the team was "actively working to resolve this" and urged patience, saying, "These are difficult times but we'll pull through."
Bitcoin ETF Inflows and Robinhood Tokenization Fallout
Although Bitcoin has yet to sustainably reclaim its 50-week moving average — a key signal for a confirmed bull market — other indicators point toward a recovery. US spot Bitcoin ETFs recorded their strongest three-week inflow stretch of 2026, with the asset trading just above the $80,000 mark.
Per SoSoValue data, the funds attracted $986.9 million in the week ending Friday, pushing three-week net inflows to $3.8 billion. Total net assets across the ETFs stood at $101.3 billion as of Friday, while cumulative net inflows reached $55.6 billion. Thursday alone saw $730.9 million in net inflows, the best single-day result since January 14.
On the altcoin front, Robinhood's blockchain has emerged as a standout performer, leading the chain in daily fees and overtaking Solana in 24-hour DEX volume. Its token launchpad, PONS, cracked the top 100 cryptocurrencies this week on the back of a 140% gain, fueled partly by the L2's pairing of memecoins with tokenized equities such as AMC.
That pairing has not gone over well with AMC CEO Adam Aron, who has threatened legal action over what he called an "outrageous" decision to tokenize AMC shares without his express consent. On X, Aron demanded that Robinhood "CEASE AND DECIST [sic]" and claimed the SEC could not possibly back what he described as a "sham ignoring of US securities laws." Robinhood co-founder Vlad Tenev responded with a pointed question — "What's the concern?" — which only intensified Aron's tirade about the company's "shocking and shameful" conduct.
Robinhood's chief legal officer Dan Gallagher, a former SEC commissioner, also weighed into the exchange.
Stablecoin Consortium, G20 Endorsement, and Prediction-Market Disputes
A consortium of 21 major financial institutions announced Tuesday that it will establish a new entity to develop and issue stablecoins. The group includes Bank of America, Goldman Sachs, Citi, Deutsche Bank, UBS, Santander, MUFG, and Fidelity Investments. The plan calls for a US dollar-denominated stablecoin to launch in the first half of 2027, contingent on the company's formation and other conditions. The consortium ultimately intends to expand into G7-currency stablecoins, with a euro product identified as the next priority.
In a separate development, G20 member nations issued a joint statement endorsing crypto as a transformative force for "broad-based economic growth." The communiqué committed member states to advancing regulatory and supervisory frameworks that preserve financial stability, support growth, and create clear pathways for digital-asset innovation.
Prediction-market platform Kalshi has issued a lifetime ban on former Republican congressman George Santos, alleging he used insider information in trading event contracts. The company said Santos had placed bets on markets tied to his own actions, specifically his attendance at the State of the Union address in February 2026. It marks one of the first lifetime bans Kalshi has imposed since its 2021 launch.
Meanwhile, New Jersey's Attorney General formally petitioned the US Supreme Court to take up a jurisdictional dispute over whether state authorities or federal agencies have primacy over prediction-market operators. Officials pointed to civil suits filed by gaming regulators in at least 20 states, arguing that Congress had not immunized the sports-betting industry from state law and urging the Court to resolve the conflict between state statutes and CFTC rules.
Weekly Market Recap and Sector Headlines
By the close of the week, Bitcoin was up 2.6% at $80,234, Ethereum gained 2.3% to $2,513, and XRP rose 3% to $1.42. The total crypto market capitalization sat at $2.72 trillion per CoinMarketCap.
Among the top 100 tokens, the leading altcoin gainers were PONS (+140%), Arbitrum (ARB) (+116%), and Dash (DASH) (+66%). On the downside, Pump.fun (PUMP) fell 13.2%, Canton (CC) dropped 6.9%, and Official Trump (TRUMP) slid 4.1%.
BitMEX co-founder Arthur Hayes told Cointelegraph that the deflation of the AI bubble, "massive" monetary easing, and the prospect of US yield-curve control are among the factors that could push Bitcoin to $1 million by 2030. The 41-year-old billionaire called the $58,000 level "probably the bottom" and predicted a sustained upward grind. On risk-reward, he said his preferred crypto bet right now was not Hyperliquid but Ethereum, where he has been building a sizeable position, citing a potential 3x-to-5x move versus a weaker case for Hyperliquid.
El Salvador's Bitcoin accumulation, according to reports this week, drew no public resources after the first review of its IMF financing program in June 2025. IMF documents reportedly confirmed the purchases came from private donations. The fund also noted that majority ownership and operational control of the Chivo wallet had been handed to a private operator, with the government retaining a minority stake and custodial duties. President Nayib Bukele, however, dismissed the report as "fake news" and declared the claim that El Salvador had transferred its Bitcoin returns to a private party "TOTALLY FALSE."
On the security front, cybersecurity firm Morphisec reported that a fake Claude desktop application is being used to distribute RevStealer, a Windows malware strain targeting crypto wallets, passwords, and browser data. The malware previously spread through GitHub repositories and game-cheat sites, but the latest vector is a fake "Claude Opus 5 Free Desktop" project impersonating Anthropic. Researchers noted it targets over 50 cryptocurrency wallets and searches browser databases, cookies, password-manager records, VPN settings, messaging data, screenshots, and selected documents while leaving minimal forensic traces.
Hyperscale Data announced it has shut down all Bitcoin mining operations at its Michigan facility to prepare the site for an AI data-center customer. The company said all miners were switched off and the associated hardware is slated for sale. The AI tenant has contracted 20 MW of computing capacity under a 10-year master services agreement with two optional five-year extensions, potentially generating over $1.2 billion across the maximum 20-year term. An additional 32 MW option could push potential revenue above $3 billion, with the site expected to support 340 MW. Hyperscale's own Bitcoin holdings have dropped from 1,006 BTC at the end of July to roughly 215 BTC as of this week, funds redirected toward the AI buildout.
Other items from the week include a Bitcoin OG who sent 20 BTC to a custodian, retrieved it, and then deliberately burned it; ongoing debate over whether hundreds of millions in token buybacks are creating lasting value or merely inflating prices; and crypto-recovery specialists explaining that lost wallets and seed phrases can sometimes be restored — but only if the funds were ever there in the first place.