In a week marked by dramatic swings and notable industry developments, the Liquid Network suffered a major security breach involving nearly 4,000 Bitcoin, while US spot Bitcoin ETFs recorded their strongest three-week inflow streak of 2026. The news comes amid a broader recovery in cryptocurrency markets, with Bitcoin trading above $80,000 and several altcoins posting triple-digit gains.

‘All your Bitcoin are belong to us’: Liquid hacked

Just under 4,000 Bitcoin — worth approximately $319 million at the time — were extracted from the Liquid Network, a Bitcoin sidechain developed by Blockstream. Attackers, or possibly well-intentioned security researchers, left an unverified OP_RETURN message on the blockchain reading, “we are whitehats. contact us on chain.”

The incident has raised serious questions about the security of the Liquid sidechain’s federation model. Under normal operations, LBTC (Liquid Bitcoin) is burned on the sidechain before the equivalent Bitcoin is withdrawn from the federation’s multisig wallet. The process requires authorization from 11 of 15 functionaries, and the destination address must be on an approved whitelist. This system is designed to prevent exactly the kind of unauthorized exodus that occurred.

According to Liquid Network’s official statement, funds were withdrawn via the SideSwap PAK (Peg-out Authorization Key). However, the company insists that neither the PAK nor any other keys were compromised. Instead, it appears that a vulnerability in the underlying Elements software allowed the attackers to create L-BTC out of thin air, effectively tricking the peg-out mechanism into releasing real Bitcoin.

Blockstream moved quickly to pause bridge nodes, effectively halting new transactions on the sidechain. Exchanges were also advised to suspend deposits and withdrawals of LBTC. The Liquid explorer showed the federation wallet balance dropping from 4,200 BTC to just 207.275 BTC, confirming the scale of the unauthorized transfer.

Crypto analyst DBCrypto noted that the stolen Bitcoin had not been moved, mixed, or laundered, which is consistent with a whitehat extraction rather than a traditional theft. However, the analyst also pointed out that the incident reveals adeep flaw in the system, noting that “either 11 of 15 functionaries signed this off, or the whitelist built to prevent exactly this didn’t hold.” Both outcomes undermine confidence in the sidechain’s security architecture.

Sideswap, a platform used to trade LBTC, posted that its keys were not compromised and that Blockstream had concluded the L-BTC in question was created through a bug in the Elements software. At the time of writing, neither Blockstream nor its CEO Adam Back had publicly commented on the incident on X, but Jan3 CEO Samson Mow assured the community that “everyone is actively working to resolve this.”

The attack, whether performed by whitehats or malicious actors, represents one of the largest single losses in sidechain history. It remains to be seen how Blockstream will recover the funds, whether there will be a fork of the Liquid chain, or if any insurance policy will reimburse affected users. The event also reignites a long-running debate about the trade-off between multisig custody and trustless financial systems.

Bitcoin ETFs see best three-week inflows of 2026

While Bitcoin has yet to convincingly reclaim its 50-week moving average, a key technical level that many traders use to determine bull market status, spot Bitcoin ETFs in the United States are increasingly seeing money flow back into the asset class. In the week ending Friday, the funds attracted $986.9 million in net inflows, according to SoSoValue data. That brings the total net inflows over the past three weeks to $3.8 billion, marking the strongest three-week stretch of 2026.

Thursday’s session was particularly notable, with the Bitcoin ETFs recording $730.9 million in net inflows—the highest single-day total since Jan. 14. The cumulative success of these products has pushed total net assets across all funds to $101.3 billion, while cumulative net inflows now stand at $55.6 billion since their launch.

The inflows come as Bitcoin trades around $80,000, a level that has historically attracted institutional interest. Many analysts view the sustained demand for ETF products as a bullish signal, indicating that mainstream investors are accumulating Bitcoin despite the uncertainty in global markets. The strength of ETF inflows also suggests that investors are beginning to price in a possible end to the bear market or at least a more favorable regulatory environment.

However, professional traders remain cautious. The 50-week moving average is still overhead, and Bitcoin has yet to produce a decisive monthly close above it, which many technical analysts require for confirmation of a new bull run. The ETF data offers a counterpoint to those concerns, revealing that sophisticated investors are treating any price dip as an accumulation opportunity.

AMC boss slams Robinhood over tokenized stocks

Robinhood’s new Ethereum layer-2 network has taken the crypto world by storm, leading all chains in daily fees and flipping Solana’s 24-hour DEX volume within weeks of launch. Its token launchpad, PONS, broke into the top 100 coins this week with a stunning 140% gain. Part of the network’s appeal is its pairing of memecoins with tokenized versions of US equities, such as AMC.

But not everyone is thrilled. AMC CEO Adam Aron threatened to take legal action against Robinhood for what he called an “outrageous” decision to tokenize AMC stock without his company’s permission. In a series of posts on X, Aron wrote: “I find this practice to be contemptible, outrageous, disgusting, detestable, inexcusable, vile. How can it possibly be legal? We have no connection to this at all, and do not condone it in any way.”

Robinhood co-founder Vlad Tenev responded with an offhanded “What’s the concern?” which further enraged Aron. The AMC chief accused Robinhood of “shocking and shameful” conduct and demanded the company “CEASE AND DECIST.” He also claimed that the SEC could not support Robinhood’s “sham ignoring of US securities laws,” adding that he would be contacting the regulator.

Robinhood’s chief legal officer Dan Gallagher, a former SEC commissioner, fired back a pointed response: “We know a little something about the U.S. securities laws and will not ‘DECIST.’ Send your lawyers and we’ll educate them.”

The spat highlights the growing tension between traditional finance and crypto platforms that are increasingly blurring the lines between securities and digital assets. While tokenized equities are not new, their availability on retail-focused chains like Robinhood’s L2 has drawn renewed attention from corporate issuers who, like Aron, do not consent to their stocks being represented as blockchain tokens. The legal question of whether tokenized equities constitute a regulated securities offering remains unsettled, and this dispute could become a landmark case if Aron follows through on his threat to involve the SEC.

BofA, Citi, Goldman Sachs lead 21 institutions planning stablecoin

In a major sign of crypto acceptance among mainstream financial institutions, a group of 21 large banks and asset managers announced plans to form a new company dedicated to developing and issuing stablecoins. The consortium includes Bank of America, Goldman Sachs, Citi, Deutsche Bank, UBS, Santander, MUFG, and Fidelity Investments, among others.

The group intends to launch a US dollar-denominated stablecoin in the first half of 2027, subject to customary conditions such as regulatory approvals and finalization of the corporate structure. After that, the consortium plans to expand into stablecoins pegged to other G7 currencies, with a euro-denominated offering identified as the next priority.

The announcement is yet another signal that traditional finance no longer views stablecoins as a fringe innovation but rather as an integral part of the future financial infrastructure. By creating a jointly owned, regulated stablecoin issuer, these institutions aim to compete with existing private issuers like Tether and Circle while ensuring compliance with banking laws and anti-money laundering requirements.

The news follows a G20 communiqué that endorsed crypto assets as a transformative force for “broad-based economic growth.” Member nations committed to “advancing responsible and effective regulatory and supervisory frameworks that preserve financial stability, support economic growth, and establish clear pathways for sound digital financial and digital assets innovation.”

Kalshi bans Santos for life as states seek federal crackdown

Prediction market platform Kalshi has permanently banned George Santos, the ousted former Republican congressman from New York, for allegedly trading on event contracts using insider information. It is one of the first lifetime bans imposed by the platform since it launched in 2021. Kalshi said Santos wagered on markets that involved his own actions, including his attendance at the State of the Union address in February 2026. Santos responded by calling Kalshi an “unserious company.”

Meanwhile, regulators are stepping up efforts to assert control over the prediction market industry. New Jersey’s Attorney General has formally petitioned the US Supreme Court to hear a case that would determine whether state authorities or federal agencies have jurisdiction over platforms like Kalshi. Officials note that gaming authorities in at least 20 states have brought civil cases against such platforms, arguing that they effewn operate as sports books without a license.

“These companies have no right to offer their sports bets without following state law, which is why dozens of states across the ideological spectrum have opposed them,” the New Jersey filing stated. “We’re calling on the Supreme Court to resolve this issue and recognize that Congress did not silently make the sports-betting industry immune from state law.”

The outcome of these legal efforts could reshape the entire prediction market industry in the United States, determining whether these platforms must comply with state gambling rules or can operate under the exclusive purview of the Commodity Futures Trading Commission.

Winners and losers

At the end of the week, Bitcoin is up 2.6% over the previous seven days, trading at $80,234. Ethereum gained 2.3%, reaching $2,513, while XRP rose 3% to $1.42. The total cryptocurrency market cap now stands at $2.72 trillion, according to data from CoinMarketCap.

The biggest altcoin winner of the week was Pons (PONS), which experienced a staggering 140% rally, followed by Arbitrum (ARB) with a 116% gain and Dash (DASH) with a 66% increase. On the other side, Pump.fun (PUMP) suffered a 13.2% loss, Canton (CC) dropped 6.9%, and Official Trump (TRUMP) declined by 4.1%.

Arthur Hayes predicts Bitcoin at $1 million by 2030—but is buying Ethereum

BitMEX founder Arthur Hayes told Cointelegraph that Bitcoin could reach $1 million by 2030, pointing to the collapse of the AI bubble, massive money printing by central banks, and the potential for the US government to implement yield curve control. “We have the ingredients. The time is now. So I think the $58,000 was probably the bottom in Bitcoin, and now it’s going to grind higher in this hate fuck rally,” Hayes said.

Despite his bullish stance on Bitcoin, Hayes revealed that his best risk-adjusted bet in crypto right now is actually Ethereum, not Hyperliquid or other emerging platforms. He said he has built a sizable ETH position. “That doesn’t necessarily mean that Hyperliquid won’t rise in price. I just don’t think it’s poised for a 5x, whereas I think Ethereum could do a 3x to 5x pretty quickly,” he explained.

Hayes’ comments reflect a growing sentiment among sophisticated investors that Ethereum, which has underperformed relative to Bitcoin over the past year, may be due for a major catch-up rally, particularly if DeFi usage and institutional staking increase.

FUD of the week

El Salvador’s Bitcoin accumulation used no public funds, IMF confirms

El Salvador made no use of public resources to purchase Bitcoin after the first review of its International Monetary Fund (IMF) financing program in June 2025, according to new reports. The IMF said materials supplied by Salvadoran authorities confirmed that the additional Bitcoin in the country’s strategic reserve came from private donations. Therefore, the increase in holdings did not reflect additional purchases financed with government money.

The IMF also noted that majority ownership and operational control of the Chivo wallet, the state-backed crypto wallet, had been transferred to a private operator, with the government retaining only a minority stake and custodial role. President Nayib Bukele rejected the framing, calling the story “fake news” and insisting that only Chivo shares had been transferred, not the Bitcoin strategic reserve.

Fake Claude desktop app spreads crypto-stealing malware

Cybersecurity firm Morphisec reported that a fake Claude desktop application has been distributing a Windows malware strain known as RevStealer. The malware is designed to steal cryptocurrency wallet data, passwords, browser cookies, and other sensitive information. It has been spread through compromised GitHub repositories and game-cheat websites, but the most notable distribution vector is a fake “Claude Opus 5 Free Desktop” project that impersonates AI developer Anthropic.

RevStealer searches browser databases, VPN settings, messaging apps, and user documents, and specifically targets more than 50 cryptocurrency wallet extensions and applications. The malware leaves few traces on infected systems, making detection difficult.

Hyperscale Data ends Michigan Bitcoin mining operations

Hyperscale Data has shut down all Bitcoin mining operations at its Michigan facility as it moves to convert the site into an artificial intelligence data center. The company announced that all miners have been switched off and that it intends to sell the associated mining equipment.

The transition comes as part of a 10-year master services agreement with an unnamed AI customer. The deal involves 20 megawatts (MW) of computing capacity initially, with two optional five-year extensions, potentially generating over $1.2 billion across the full term. An additional 32 MW option could lift revenue above $3 billion, and the entire site is expected to support up to 340 MW of capacity in the future.

To fund this AI infrastructure buildout, Hyperscale has drastically reduced its Bitcoin holdings, which fell from 1,006 Bitcoin at the end of July to around 215 BTC today.

More stories from the magazine section

Beyond the breaking news, several feature stories this week delve deeper into the idiosyncrasies of the crypto ecosystem. One piece examines the mystery of an OG user who deliberately burned $1 million in Bitcoin after moving it to a custodian and back—a public act that spawned endless speculation. Another asks whether the recent Bitcoin rally validates the decade spent building crypto, considering how the industry’s biggest successes now differ from the original cypherpunk vision. There’s also an investigation into the growing trend of token buybacks, analyzing whether they genuinely create value or merely pump prices artificially. Finally, a fascinating account reveals how recovery specialists managed to crack a wallet containing over $1 billion in crypto, only to find a paltry $10 inside, proving that even the most sophisticated hacking techniques cannot recover funds that were never there.

Source:Cointelegraph News