This week saw several major developments in the crypto world. LayerZero acknowledged a vulnerability that contributed to the $292 million KelpDAO hack. Bitcoin ETF prices have been falling after a key piece of legislation, the CLARITY Act, was passed. Multiple cross-chain bridges were also targeted in hacks, resulting in losses of over $25 million. Finally, Indian lawmakers have expressed concern about billions of rupees leaving the country through cryptocurrency transactions.
Here’s your cryptocurrency market update for this week. Last week brought news of the CLARITY Act moving forward and a $10.8 million security issue for THORChain that paused activity in cross-chain DeFi. This week, those problems have continued to cause further issues.
LayerZero confirmed a vulnerability in its setup caused the recent $292 million KelpDAO hack. Before a deal was reached, the Verus bridge lost $11.58 million, with $8.5 million later recovered. Meanwhile, Bitcoin ETFs have experienced continued outflows of money over several weeks, and Strategy now holds over 843,000 BTC.
This week, India was at the center of crypto regulation news. Parliament reported significant amounts of cryptocurrency leaving the country, Binance is questioning the legality of limits on withdrawals, and officials in Gujarat discovered a hidden crypto network potentially funding terrorism. Here’s a closer look.
Top headlines for this week
Below are the major headlines, giving an overview of what happened in the crypto market this week.
LayerZero admits single-verifier flaw behind $292M KelpDAO exploit
LayerZero released a report explaining how a technical mistake – a problem with how they verified transactions – allowed hackers to steal $292 million worth of cryptocurrency through the KelpDAO rsETH bridge. This is considered the most important analysis of a recent DeFi hack.
The recent attack happened because a part of the system that checks messages was hacked, and the system was set up in a way that only needed one check instead of multiple. This single point of failure allowed the attacker to succeed.
As a crypto investor, this hack is a big wake-up call. It’s not just the $292 million lost, but what it shows about how secure cross-chain tech really is right now. Apparently, projects using LayerZero could have added extra security checks, but KelpDAO chose not to. That meant when one part of their system was hacked, it opened the door to this massive loss. It really highlights the risks involved and how important it is to use all available security features.
This event has sparked a wider discussion about the basic security of cross-chain bridges, especially considering how much money they handle.
Cross-chain bridge exploits pile up: Verus, Echo, and THORChain recovery
Bridge security was the biggest concern this week, and the issue wasn’t limited to just LayerZero. The Verus Ethereum bridge suffered a $11.58 million hack due to a weakness in how it verified transactions between blockchains. This incident, happening shortly after a $10.8 million hack of THORChain, has renewed worries about the inherent risks of systems that connect different blockchains.
Following negotiations, the hacker who targeted Verus returned $8.5 million worth of Ethereum, but around $3 million remains missing. In a separate incident, an exploit affecting Echo resulted in $821,000 being laundered through Tornado Cash after some eBTC was created, adding to the growing list of hacks this week.
THORChain is working to recover after a recent hack that caused around $10 million in losses. They’ve started a community vote to decide how to cover those losses while also preparing a software update to get the network running again. Similarly, RetoSwap, a Monero decentralized exchange, paused trading after a security issue in the Haveno protocol resulted in $2.7 million being stolen.
As an analyst, I’m seeing a concerning trend: five separate hacks or fund thefts in just one week is a remarkably high number. It’s become clear to me that cross-chain technology is the biggest target for attacks going into 2026.
Bitcoin ETF exodus deepens after CLARITY Act “sell the news” moment
Bitcoin ETFs experienced significant selling pressure, with outflows increasing from the previous week. On May 18th alone, they saw $649 million leave, following $1 billion in outflows the week before. This happened after the CLARITY Act passed through the Senate Banking Committee, leading many institutional investors to sell their holdings – a common reaction known as ‘selling the news’. As a result, the price of Bitcoin fell by $6,000.
We’re now seeing the longest stretch of institutional selling since the initial excitement around the ETFs died down. The CLARITY Act, which many expected to boost prices, actually led to investors cashing in their profits after anticipating the positive outcome.
It’s still unclear if the recent selling of Bitcoin is just a short-term dip or a bigger change in how institutions view the cryptocurrency. Watching how Bitcoin performs around its key support levels in the coming days will give us a better idea.
Strategy adds 24,869 BTC, now holds 843,738 Bitcoin
As a researcher following Bitcoin adoption, I’ve been tracking Michael Saylor’s strategy closely. This past week, they made their largest purchase yet – 24,869 Bitcoin, bringing their total holdings up to 843,738. Interestingly, this buying activity coincided with outflows from ETFs, suggesting they stepped in to purchase Bitcoin as institutions were selling.
Strategy’s preferred stock, STRC, reached a market value of $10.5 billion this week, making it the leading preferred stock globally. This success supports the idea of companies holding Bitcoin as a treasury asset, even when Bitcoin’s price is falling. In other news, Strive increased its Bitcoin holdings by 382 BTC, and a small self-storage company, West Main, purchased around 0.129 BTC (about 13 million satoshis), showing that more and more businesses, even small ones, are starting to invest in Bitcoin.
SpaceX IPO filing reveals 18,712 BTC treasury worth $1.45B
SpaceX, Elon Musk’s space exploration company, recently filed paperwork for a potential public offering, and it showed they’re holding onto a significant amount of Bitcoin. They currently have 18,712 BTC, worth about $1.45 billion, and have held that same amount since 2024. This makes SpaceX one of the biggest companies to publicly invest in Bitcoin, but it suggests they plan to simply hold onto their existing Bitcoin rather than buy more.
This is significant because it’s the first official record of SpaceX holding Bitcoin, confirming what was previously just speculation. It also means another of Elon Musk’s companies, in addition to Tesla, now has Bitcoin as part of its assets.
Goldman Sachs exits Ethereum, XRP, and Solana ETF positions
Goldman Sachs significantly reduced its investments in Ethereum ETFs, selling off 70% of its holdings, and completely divested from XRP and Solana ETFs. This change signals a shift away from the bank’s previous positive outlook on alternative cryptocurrency ETFs, indicating that traditional financial institutions may be losing interest in crypto assets beyond Bitcoin ETFs.
Goldman Sachs selling off its Solana and XRP holdings is noteworthy because many predicted institutions would invest in cryptocurrencies beyond just Bitcoin. The fact that a major bank like Goldman Sachs doesn’t see value in holding these assets suggests there might not be strong institutional interest in cryptocurrencies other than Bitcoin in the near future.
India regulatory spotlight: Parliament hearing, Binance response, and terror-linked crypto network
This week, India’s government focused heavily on crypto regulation. A parliamentary meeting showed that a significant amount of money – potentially billions of rupees – is flowing out of the country through cryptocurrency. Officials are now presenting this as a matter of national security, not simply a tax issue.
Binance argues that Indian law doesn’t prevent people from withdrawing cryptocurrency, countering suggestions that exchanges are helping money leave the country illegally. This is an important legal position for Binance, as it directly disputes the claims made by an Indian parliamentary committee.
India’s crypto policy is facing a critical moment. This week, authorities in Gujarat revealed a hidden crypto network potentially funding terrorism, raising serious national security concerns. This discovery comes alongside concerns from Parliament about money leaving the country and legal challenges from Binance, putting India at a turning point for crypto regulation.
CoinSwitch launched a major new marketing campaign this week, aiming to reach a wider audience with a primetime television ad. This could significantly change how cryptocurrency companies advertise in India.
Regulation and policy moves: CFTC, Japan, Congress, and Crypto PAC
Things were also busy with regulations outside of India. The CFTC sued the state of Minnesota over its ban on prediction markets, continuing the agency’s efforts to challenge state-level restrictions. This lawsuit will determine if states have the power to limit federally overseen prediction markets such as Kalshi and Polymarket.
Japan’s financial regulator, the FSA, has started allowing certain foreign stablecoins to operate legally within the country. This move provides a clear regulatory framework for approved stablecoins and is considered a significant step forward for stablecoin regulation among major economies this year.
As an analyst, I’m watching closely as prediction markets like Kalshi and Polymarket face a Congressional investigation into potential insider trading. This federal scrutiny comes at a critical time, coinciding with the CFTC’s ongoing battle against state-level attempts to ban these platforms. Separately, we’re also seeing movement in the political landscape – the Crypto PAC has begun its campaign for the 2026 midterm elections, and Hester Peirce, a well-known advocate for crypto within the SEC, has stepped down, marking the end of an era of internal dissent on crypto regulation.
BitGo’s CEO responded to Senator Warren’s description of the company as a “crypto bank,” disagreeing with the term and its potential regulatory consequences.
ZachXBT investigations: BlockDAG presale diversion and $RIVER bounty
This week, on-chain detective ZachXBT revealed that BlockDAG and ZKP may have misused $25 million raised from early investors. He alleges the funds weren’t used for the originally promised project, but were instead diverted to another venture called Spartans.
ZachXBT offered a $10,000 reward for information leading to the identity and location of Heisenberg Guru, a person connected to the $RIVER fraud. This continues a pattern of ZachXBT acting as a key source of accountability in the crypto world, often stepping in where official regulations are slow to respond to scams.
Institutional and exchange moves
Blockchain.com is taking steps towards becoming a publicly traded company, having confidentially filed with the SEC. This adds to the increasing number of cryptocurrency firms preparing to offer shares to the public in 2026. Meanwhile, the price of Venice Token (VVV) jumped 24% after it began trading on Robinhood, showing that getting listed on an exchange can quickly boost a token’s value.
Bybit introduced a new program where users can earn rewards (worth $45 million in WLFI) by holding USD. This move increases the visibility of WLFI, a stablecoin with ties to Donald Trump, within the cryptocurrency exchange world. Meanwhile, Gemini now supports USDT0 on Ethereum, Solana, and Tron, making it easier to use this stablecoin across different blockchains. In other news, Polymarket experienced a security breach where $700,000 was stolen from an operational wallet, but user funds remained safe.
Legal battles and fraud
Swan Bitcoin is facing a $970 million lawsuit claiming they were tipped off about problems with Prime Trust, making it one of the biggest legal cases of its kind in the crypto world this year. Newly released court documents also show traders at Jane Street made light of having an advantage before selling off $192 million worth of UST, highlighting a troubling aspect of the collapse of Terra.
A user of both Kraken and Coinbase lost $6.7 million in cryptocurrency due to a sophisticated attack involving manipulation of on-chain transactions. This incident, combined with a growing number of physical crypto thefts, highlights the increasing security challenges for individuals who manage their own digital assets.
News you might have missed
- CJP Token rockets 400% on Pump.fun: The “Cockroach Janta Party” meme token surged 400% as its viral political satire captured Gen-Z attention on social media, another reminder that meme coin markets trade on attention cycles, not fundamentals.
- Crypto PAC launches 2026 midterm push: With Hester Peirce exiting the SEC, the crypto industry’s political action committee is gearing up for midterm elections with a focus on electing pro-crypto candidates to Congress.
- Monero DEX RetoSwap suspends trading: The Haveno-based decentralized exchange halted all trading after a $2.7 million exploit, highlighting that privacy-focused DEXs face the same security challenges as their transparent counterparts.
- Polymarket ops wallet drained $700K: An operational wallet compromise drained $700K from Polymarket, though the prediction market confirmed user funds were not affected.
- West Main Self Storage buys 0.129 BTC: The smallest Bitcoin treasury purchase to make headlines this year, proving that the corporate Bitcoin treasury playbook is being adopted at every scale.
Buzz of the Week
This week has been dominated by a series of security problems affecting different blockchains. Over seven days, there were five separate incidents involving exploits or unusual fund transfers on platforms like Verus, Echo, THORChain, RetoSwap, and LayerZero’s KelpDAO. This isn’t just bad luck; it suggests a deliberate and coordinated attack pattern.
LayerZero recently confirmed that a weakness in how they verified transactions allowed the $292 million KelpDAO hack to happen. While this wasn’t entirely unexpected – the DeFi community had been raising concerns about this type of vulnerability for years – it’s significant because LayerZero has now officially acknowledged the issue.
Cross-chain bridges, which allow assets to move between different blockchains, are particularly vulnerable and hold a lot of value, making them prime targets for attacks. The recent $292 million exploit on LayerZero highlights a critical flaw: its standard security settings weren’t strong enough to protect the amount of money flowing through it. While projects using LayerZero could have added extra security layers, KelpDAO chose not to, and ultimately lost $292 million as a result.
The recent Verus hack and subsequent partial recovery highlights a new trend. After negotiating with the Verus team, the attacker returned $8.5 million of the $11.58 million they stole. This kind of ‘white hat recovery’ – where hackers exploit vulnerabilities, negotiate a deal, keep some funds, and return the rest – is becoming increasingly common in 2026. While it limits the damage, it’s not true justice or law enforcement; it’s simply a way to mitigate the fallout.
Bitcoin ETFs continued to experience outflows, with investors selling after the CLARITY Act advanced in committee. This confirms a year-long trend: regulatory approvals don’t necessarily cause prices to rise. Instead, they often trigger selling as traders close out positions they took in anticipation of the news.
The approval of the CLARITY Act by the committee was expected to encourage new investment from institutions. However, it actually prompted existing investors to sell and realize their gains. This difference is important because it will likely influence how the market reacts to future legislative developments.
MicroStrategy’s recent purchase of 24,869 Bitcoin, happening at the same time that Bitcoin ETFs experienced significant outflows, is acting as a stabilizing force. Michael Saylor’s continued buying of Bitcoin, along with MicroStrategy’s preferred stock reaching a $10.5 billion market capitalization, indicates that investors are recognizing the value of this strategy even with Bitcoin’s price fluctuations. Furthermore, SpaceX’s IPO filing revealed that it holds 18,712 Bitcoin, adding another major corporate Bitcoin holder to the public record.
It was a particularly eventful week for cryptocurrency in India, marked by increased scrutiny and potential new regulations. Parliament disclosed significant amounts of money leaving the country through crypto, Binance clarified that current Indian laws don’t prevent withdrawals, and authorities in Gujarat discovered a crypto network linked to terrorism operating on the dark web. These events combined create a strong case for the government to implement stricter rules around cryptocurrency.
CoinSwitch launching a major marketing campaign right now, while India’s crypto regulations are still unclear, is either a bold move or a sign they believe the worst of the regulatory issues are over.
What to expect for next week?
Next week has several clear watch points.
The biggest thing to watch in the crypto world in 2026 is the progress of the CLARITY Act. Keep an eye on the Senate Majority Leader for clues about when the bill might be debated and voted on, and whether it can be signed into law by July 4th. Any setbacks or delays in the process will likely cause changes in how the market behaves.
As a researcher, I’m continuing to monitor the repercussions of recent cross-chain security issues. The detailed analysis of what happened with LayerZero is going to prompt other projects that rely on its technology to double-check their own security settings, and if more of those checks reveal vulnerabilities, we could see further price drops in those tokens. Also, THORChain is about to vote on how to handle losses from a recent incident, and the outcome of that vote could really shape how decentralized projects handle security breaches in the future.
Following the recent parliamentary discussions and revelations about a terrorism-linked network, India’s future regulations are uncertain – it could choose to increase control or establish clearer rules. Binance’s legal response introduces a new element to this debate, which has previously been led by government officials and law enforcement.
Pay attention to how money is flowing into and out of Bitcoin ETFs. If we see three weeks of people pulling money *out*, it could signal a bigger, more lasting problem than just an initial reaction to recent news. But if money starts flowing *in* again, it would support the idea that the CLARITY Act could still become a reality. The ETF data itself will tell us what’s happening.
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2026-05-24 21:14