StarkWare researchers propose smart contracts for Bitcoin with ColliderVM
Sidechain developer StarkWare and Weizmann Institute of Science researchers claim to have created a workaround for multiple Bitcoin script limitations.According to a recent research paper, the new design claims to allow the deployment of complex smart contracts on Bitcoin in a more capital-efficient manner. The new system may also be vastly more efficient from a computing standpoint.ColliderVM is a protocol designed to enable stateful computation on Bitcoin, allowing multi-step processes to be securely executed over multiple transactions. Traditionally, Bitcoin script output is not accessible to other scripts, making complex calculations nearly impossible.The researchers argue that ColliderVM could allow the use of Scalable Transparent Arguments of Knowledge (STARKs) — a type of zero-knowledge proof — on Bitcoin without requiring consensus-level changes to the network. The architecture would let Bitcoin verify complex offchain computations with minimal onchain data.ColliderVM targets Bitcoin limitationsEach Bitcoin block can contain up to 4 million OPCodes (commands) across all transactions, and a single Bitcoin script can contain up to 1,000 stack elements (data entries). Furthermore, stateless execution means that each script executes without memory of previous state or intermediate computations from earlier transactions, making complex computations impractical.The BitVM implementation from a 2023 paper by Robin Linus from Bitcoin research firm ZeroSync allowed for complex smart contracts on Bitcoin but required fraud proofs. Fraud proofs are cryptographic proofs that prove a particular transaction or computation was performed incorrectly, possibly triggering corrective actions.Fraud-proof implementation typically requires operators to front capital for potential corrective actions. In BitVM, operators pay an advance to cover potentially fraudulent transactions, recovering the capital after the fraud-proof window closes.The new system is also more efficient from a computing point of view, compared with previous implementations, but still expensive. Previous implementations used cryptographic one-time signatures (Lamport and Winternitz) that were notably computationally heavy.ColliderVM draws from the November 2024 ColliderScript paper by researchers from StarkWare, web services firm Cloudflare and Bitcoin sidechain developer Blockstream. This system relies on a hash collision-based commitment setting a challenge to produce an input that, when run through a hash function, produces an output with pre-determined features.Related: A beginner’s guide to the Bitcoin Taproot upgradeThis setup requires significantly fewer computing resources from honest operators than from malicious actors.Computational resources needed by honest and malicious actors depending on collision difficulty. Source: ColliderVM paperHash, but no food or weedA hash is a non-reversible mathematical function that can be run on arbitrary data, producing a fixed-length alphanumeric string. Non-reversible means that it is impossible to run the computation in reverse to obtain the original data from a hash.This results in a sort of data ID identifying data to the bit, without containing any underlying data.Hash function examples. Source: WikimediaThis system — somewhat resembling Bitcoin (BTC) mining — requires significantly fewer hash operations compared to BitVM, reducing both script size and processing time. ColliderVM researchers claim to have reduced the number of those operations even further, by at least a factor of 10,000.The researchers seemingly suggest that this implementation is nearly making a STARKs-based Bitcoin sidechain practical. The paper reads:“We estimate that the Bitcoin script length for STARK proof verification becomes nearly practical, allowing it to be used alongside other, pairing-based proof systems common today in applications.”STARKs are a ZK-proof system recognized for their scalability and trustless nature (no trusted setup is needed). ZK-proofs are a cryptographic system that allows users to prove a particular feature of a piece of data without revealing the underlying data.Many early ZK-proof systems necessitated a one-time secure setup that relied on “toxic waste” data. If a party were to keep hold of the toxic waste, it would allow them to forge signatures and generate fraudulent proofs. STARKs do not rely on such a setup, making them trustless.Traditional implementation of STARK verifiers would require scripts that exceed Bitcoin’s limits. Now, researchers behind ColliderVM argue that their more efficient system approaches make an onchain verification script for STARK-proofs “nearly practical.”Related: Bitcoin sidechains will drive BTCfi growthBitcoin-based trustless sidechains?Bitcoin is widely considered the most secure and reliable blockchain, but its critics raise issues with its feature set being significantly more limited when compared to many altcoins. Sidechains such as Blockstream’s Liquid exist, but are not trustless.Director of research at blockchain firm Blockstream and mathematician Andrew Poelstra told Cointelegraph as far back as 2020 that ZK-proof-based systems are “one of the most exciting areas of development” in the cryptography space. Cypherpunk, a developer cited in the Bitcoin white paper and Blockstream founder, explained in a 2014 paper that more work was needed to implement trustless ZK-proof-based sidechains on Bitcoin.Still, even 10 years later, a system based on ColliderVM would be trust-minimized rather than trustless. This is because users would still need to trust that at least a minimal subset of network participants will act honestly to ensure the correct functioning of the system.The study’s lead authors include Eli Ben-Sasson, co-founder of StarkWare, along with researchers Lior Goldberg and Ben Fisch. Ben-Sasson is one of the original developers of STARKs and has long advocated for the use of zero-knowledge proofs to improve blockchain scalability.In a recent interview with Cointelegraph, StarkWare co-founder Ben-Sasson noted that a real Bitcoin layer-2 solution would need to have “the security of Bitcoin itself.” Instead, current solutions rely on trust in signers or fraud-proof-based economic incentives. Still, he recognized the Lightning Network:“We should also acknowledge there’s, of course, today, lightning networks, which have the security of Bitcoin.“Magazine: ‘Bitcoin layer 2s’ aren’t really L2s at all: Here’s why that matters
New York bill proposes legalizing Bitcoin, crypto for state payments
A New York lawmaker has introduced legislation that would allow state agencies to accept cryptocurrency payments, signaling growing political momentum for digital asset integration in public services.Assembly Bill A7788, introduced by Assemblyman Clyde Vanel, seeks to amend state financial law to allow New York state agencies to accept cryptocurrencies as a form of payment.It would permit state agencies to accept payments in Bitcoin (BTC), Ether (ETH), Litecoin (LTC) and Bitcoin Cash (BCH), according to the bill’s text.Source: Nysenate.govAccording to the bill, state offices could authorize crypto payments for “fines, civil penalties, rent, rates, taxes, fees, charges, revenue, financial obligations or other amounts,” as well as penalties, special assessments and interest.Related: Trump’s tariff escalation exposes ‘deeper fractures’ in global financial systemCryptocurrency legislation is becoming a focal point in New York, with Bill A7788 marking the state’s second crypto-focused legislation in a little over a month.In March, New York introduced Bill A06515, aiming to establish criminal penalties to prevent cryptocurrency fraud and protect investors from rug pulls.Crypto-focused legislation has gathered momentum since President Donald Trump took office on Jan. 20, with Trump signaling during his campaign that his administration intends to make crypto policy a national priority, as well as making the US a global hub for blockchain innovation.Related: Illinois Senate passes crypto bill to fight fraud and rug pullsNew York may mandate state “service fee” on crypto paymentsIf passed, the bill would mark a significant shift in how New York handles digital assets. It would allow state entities to integrate cryptocurrency into the payment infrastructure used for collecting public funds.The proposal also includes a clause allowing the state to impose a service fee on those choosing to pay with crypto. According to the text, the state may require “a service fee not exceeding costs incurred by the state in connection with the cryptocurrency payment transaction.” This could include transaction costs or fees owed to crypto issuers.Assembly Bill A7788 has been referred to the Assembly Committee for review and may advance to the state Senate as the next step.New York’s legislation comes shortly after the state of Illinois passed a crypto bill to fight fraud and rug pulls after the recent wave of insider schemes related to memecoins, Cointelegraph reported on April 11.Magazine: XRP win leaves Ripple and industry with no crypto legal precedent set
BlackRock reports $3B in digital asset inflows during Q1
BlackRock, the world’s largest asset manager with $11.6 trillion in assets under management, reported $84 billion in total net inflows in the first quarter of 2025, marking a 3% annualized growth in assets under management.The firm’s strong performance was led by a record first quarter for iShares exchange-traded funds (ETFs) alongside continued strength in private markets and net inflows, according to BlackRock’s Q1 earnings released on April 11.Of the $107 billion in net inflows to iShares ETFs, $3 billion, or 2.8% of the total ETF inflows, was directed to digital asset products in Q1, BlackRock said.BlackRock’s net flow data in Q1 2025 (in billions of US dollars). Source: BlackRockAlternative investments also played a significant role in Q1, with private market inflows totaling $9.3 billion.Digital assets remain small segmentAs of March 31, digital assets accounted for $34 million in base fees or less than 1% of BlackRock’s long-term revenue.By the end of the first quarter, BlackRock’s total digital assets under management amounted to $50.3 billion, which represents about 0.5% of the firm’s $11.6 trillion in total assets under management.BlackRock’s business results in Q1 2025 (in millions of US dollars). Source: BlackRockBlackRock’s financial results suggest that digital assets still make up a modest share of the company’s business.Despite that, BlackRock’s $3 billion in digital asset inflows is notable given widespread liquidations in the Bitcoin ETF market earlier this year. The company’s figures suggest that investor interest in crypto-backed ETFs remains steady.Base fee growth shows “best start to a year since 2021,” CEO saysDespite BlackRock recording a 70% drop in net inflows in the first quarter of 2025 compared to the previous quarter, with inflows falling from $281 billion in Q4 2024 to $84 billion, BlackRock CEO Larry Fink pointed to the company’s solid fee growth as a major indicator of success.“We delivered 6% organic base fee growth in the first quarter, representing our best start to a year since 2021 and secular strength against a complex market backdrop,” Fink said in the report.Related: Bitcoin could reduce dominance of US dollar — BlackRockFink also mentioned that the company is focused on helping clients navigate market and policy changes while also providing insights on “long-term structural growth opportunities,” adding:“The goal for us is to keep our clients focused on the long-term, and help them achieve any near-term allocation or liquidity changes they need within the BlackRock platform.”While BlackRock saw $3 billion in crypto asset inflows in Q1 2025, some other Bitcoin ETF issuers have suffered massive outflows.Flows by issuer (in millions of US dollars). Source: CoinSharesAccording to CoinShares data, Grayscale saw roughly $1.4 billion in outflows from its crypto ETFs year-to-date as of April 4.Magazine: Bitcoin heading to $70K soon? Crypto baller funds SpaceX flight: Hodler’s Digest, March 30 – April 5
The whale, the hack and the psychological earthquake that hit HEX
An elderly crypto whale known as “HEX 19” lost nearly $4.5 million in a slow-moving hack that drained his staked HEX (HEX) over multiple years. At first, it looked like a HEX whale was cashing out. But it wasn’t long before the community realized he didn’t voluntarily unstake his tokens — he had become a victim of a major exploit.The cyberattack started in November 2021, touched multiple phishing wallets, and was traced back to an online entity known as “Konpyl,” a threat actor familiar to crypto investigators.The breach not only shook the token’s price but also exposed a web of fraudulent operations tied to Inferno Drainer and the $1.6-million fake Rabby wallet scam of February 2024.HEX token price sinks following the HEX19 hack. Source: CoinGeckoHEX hackers and the web of connectionsA blockchain investigator who spoke to Cointelegraph on condition of anonymity said, “There’s direct counterparty exposure with wallets used in the fake Rabby app scam as well as the HEX19 victim’s funds flowing directly into wallets used to launder illicit Inferno Drainer phishing scam proceeds.”The first major batch of outflows from the victim’s wallet occurred in November 2021 and has continued over the years as assets locked away in decade-long stakes continued to unlock, some prematurely closed by the hacker with penalties. HEX19 wallet loses almost $4 million on Nov. 21. Source: Arkham IntelligenceRelated: THORChain at crossroads: Decentralization clashes with illicit activityThe deeper investigators dug into the wallets tied to the HEX19 hack, the more it became clear that this wasn’t a one-off for the hacker. The same addresses appeared again and again across phishing campaigns, wallet drainers and laundering trails.Wallets used by the HEX19 hacker, the fake Rabby wallet scam and several schemes related to Inferno Drainer share a common address: Konpyl.In an October 2024 investigation, Cointelegraph’s Magazine analyzed on- and offchain evidence gathered by an investigator and a US government agency that links Konpyl to Konstantin Pylinskiy, an executive of a Dubai-based investment firm who uses the nickname in his online activities. Pylinskiy has denied any involvement with scams.The investigator said the attack on HEX19 was possible because the victim had stored his seed phrases in the cloud. Transaction records show that the hackers use victim funds for initial transfers to their illicit accounts, a common trait of Konpyl-linked schemes. “The HEX19 hacker follows similar patterns from other scams by ‘Konpyl,’” they said.In a November 2024 report, Cointelegraph learned that Konpyl-linked wallets had a high number of interactions with scams connected to Inferno Drainer, a scam-as-a-service threat actor. Fantasy, a forensics specialist and investigations lead at crypto insurance firm Fairside Network, told Cointelegraph that Konpyl may possibly function less as a direct attacker and more as a laundering proxy.Inside the HEX hackThe first batch of funds started moving out from the wallet on Nov. 21, 2021, but blockchain records show that the wallet may have been compromised as early as Nov. 3, as the victim wallet (0x97E…7a7df) had an outflow to one of the hacker’s wallets.On Nov. 21, HEX19 was drained of nearly $4 million across nine separate transactions. The majority of the losses were in HEX tokens. The primary destination was address 0xcfe…8A11D, which we will call HEX Hacker 1 (HH1).That same day, HH1 began splitting the stolen funds. They sent $2.64 million (12.33 million HEX) to a second wallet, 0xA30…2EA17, or HEX Hacker 2 (HH2).A follow-up transaction on Dec. 10, 2021, sent another 616,700 HEX (worth around $86,700 at the time) from HH1 to HH2.On Feb. 18, 2022, HH1 transferred 5.2 million HEX (worth about $1 million at the time) and some Ether (ETH) to yet another address, 0x719a...4Bd0c, where the funds remain parked to this day.The HH2 wallet appears central to laundering efforts.From December 2021 to March 2022, HH2 sent over $1 million to Tornado Cash, Ethereum’s best-known anonymizing protocol.HH2 also transferred $106,758 in Dai (DAI) to an intermediary wallet, 0x837…2Ba9B, which was used to interact with decentralized finance (DeFi) platforms like 1inch to further obscure or swap funds.The intermediary interacted with 0x7BF…C4eAa, a wallet that received direct inflows from Konpyl (an online persona that has appeared in numerous phishing and draining operations).HH2’s laundering chain also intersects with a high-risk wallet — 0x909…e4371 — flagged for over 70 suspicious transactions.On May 16, 2024, a third wallet, Hex Hacker (HH3) — 0xdCe…4f0d8 — began withdrawing funds from the compromised HEX19 address.HH3 has received around $108,000 in HEX from the victim’s account. HH3 connected to 0x87B…53d92, an address Cointelegraph previously identified in a November investigation as part of an Inferno Drainer-linked scam. That same wallet shares a commingling address (0xF2F...6a608) with Konpyl, which connects a March 2024 Inferno-linked scam and the Rabby wallet phishing incident.Finally, a fourth wallet, 0x7cc…59ee2 — HEX Hacker 4 (HH4) — entered the picture. Beginning on Jan. 12, 2024, HH4 began siphoning funds from the HEX19 wallet through March.Related: From Sony to Bybit: How Lazarus Group became crypto’s supervillainThis wallet interacted with 0x4E9…c71C2, which is a known address used by the fake Rabby wallet scammer.Lessons from the HEX19 HackHEX19, the retired tech veteran, has been through booms and busts before — just not ones that emptied millions of dollars from his digital wallet in a single day.He filed police reports, and exchanges couldn’t do much to help, he said. The remaining staked funds, including 10-year HEX locks, became ticking time bombs. He knew the hackers had access and were just waiting to extract more.Cointelegraph has found at least 180 suspicious transactions from November 2021 to October 2024, totaling over $4.5 million. The victim’s wallet still has nine active stakes remaining, though their values aren’t as significant as those prematurely closed and withdrawn by the thieves.The active stakes are not as valuable as those closed by hackers. Source: HEXscout“You have this feeling in the pit of your stomach and you say, ‘Oh my God.’ And then you say, ‘Oh, geez, I gotta tell my family that I’ve screwed up again,’” HEX19, purportedly a retiree in his 80s, said in an interview with HEX community member Mati Allin soon after the exploit. Cointelegraph attempted to get in touch with HEX19 but did not receive a response.Despite the loss, HEX19 maintains a surprising sense of calm: “We’re retired. We live without debt. We live very simply. We have a great family, awesome daughters, granddaughters,” he said in the 2021 community interview. “There’s more to life than money.”While he doesn’t expect to recover the funds, he does hope his experience helps others think twice before storing their seed phrases online.Magazine: Financial nihilism in crypto is over — It’s time to dream big again
Swedish MP proposes Bitcoin reserve to finance minister
A member of Sweden’s parliament proposed adding Bitcoin to the country’s foreign exchange reserves, suggesting increased openness to cryptocurrency adoption in Europe following recent moves by the United States.Swedish MP Rickard Nordin issued an open letter urging Finance Minister Elisabeth Svantesson to consider adopting Bitcoin (BTC) as a national reserve asset.“Sweden has a tradition of a conservative and carefully managed foreign exchange reserve, mainly consisting of foreign currencies and gold,” Nordin wrote in a letter registered on April 8, adding:“At the same time, there is a rapid development in digital assets, and several international players regard bitcoin as a custodian and a hedge against inflation. In many parts of the world, bitcoin is used as a means of payment and as security against rising inflation.”“It is also an important way for freedom fighters to handle payments when under the oppression of authoritarian regimes,” he added.Open letter from MP Rickard Nordin. Source: Riksdagen.seRelated: US Bitcoin reserve marks’ real step’ toward global financial integrationThe Swedish proposal echoes a recent move by the United States. In March, President Donald Trump signed an executive order to create a national Bitcoin reserve funded by cryptocurrency seized in criminal investigations rather than purchased through market channels.The order authorized the Treasury and Commerce secretaries to develop “budget-neutral strategies” to buy more Bitcoin for the reserve, provided there were no additional costs to taxpayers.The governor of the Czech National Bank has also considered Bitcoin as part of a potential diversification strategy for the country’s foreign reserves, Cointelegraph reported on Jan. 7.Related: Bitcoin reserve backlash signals unrealistic industry expectationsEuropean lawmakers silent on Bitcoin legislation amid CBDC pushEuropean lawmakers have remained mostly silent on Bitcoin legislation despite Trump’s historic executive order and Bitcoin’s economic model favoring the early adopters.The lack of Bitcoin-related statements may stem from Europe’s focus on the launch of the digital euro, a central bank digital currency (CBDC), James Wo, the founder and CEO of venture capital firm DFG, told Cointelegraph, adding:“This highlights the EU’s greater emphasis on the digital euro, though the recent outage in the ECB’s Target 2 (T2) payment system, which caused significant transaction delays, raised concerns about its ability to oversee a digital currency when it struggles with daily operations.”ECB President Christine Lagarde is pushing ahead with the digital euro’s rollout, expected in October. Lagarde has emphasized that the CBDC will coexist with cash and offer privacy protections to address concerns about government overreach.“The European Union is looking to launch the digital euro, our central bank digital currency, by October this year,” Lagarde said during a news conference, adding:“We are working to ensure that the digital euro coexists with cash, addressing privacy concerns by making it pseudonymous and cash-like in nature.”Source: CointelegraphThis is in stark contrast to the approach of the US, where Trump has taken a firm stance against CBDCs, prohibiting “the establishment, issuance, circulation, and use” of a US dollar-based CBDC.Magazine: SCB tips $500K BTC, SEC delays Ether ETF options, and more: Hodler’s Digest, Feb. 23 –March. 1
What is a bear raid, and how do whales use them in crypto trading?
Key takeawaysBear raids involve deliberate efforts by whales to drive down crypto prices using short-selling, FUD and large-scale sell-offs to trigger panic and profit from the dip.These raids create volatility, trigger liquidations and damage retail confidence. However, they can also expose weak or fraudulent projects.Signs include sudden price drops, high trading volume, absence of news and quick recoveries, indicating price manipulation rather than natural market trends.Traders can guard against bear raids by using stop-loss orders, diversifying portfolios, monitoring whale activity and trading on reputable, regulated platforms.Not all market moves are organic in the dynamic world of crypto trading; some are engineered to make quick profits. One such tactic is the bear raid, often driven by powerful market players known as whales. These traders strategically use short-selling, where they borrow and sell assets at current prices, aiming to repurchase them cheaper once the price drops. So, how exactly does this tactic play out? This article dives into what a bear raid is and how it functions. It also covers how bear raids impact the crypto market, what the signs are and how retail investors can protect their interests. What is a bear raid?A bear raid is a deliberate strategy to drive down the price of an asset, typically through aggressive selling and the spread of fear, uncertainty and doubt (FUD). The tactic dates back to the early days of traditional stock markets, where influential traders would collaborate to manipulate prices for profit.Execution of a bear raid involves selling large volumes of a targeted asset to flood the market. The sharp increase in supply creates downward pressure on the price. At the same time, the perpetrators circulate negative rumors or sentiments, often through media, to amplify fear and uncertainty. As panic sets in, smaller or retail investors often sell off their holdings, further accelerating the price drop.Bear raids differ from natural market downturns. While both lead to falling prices, a bear raid is orchestrated and intentional, meant to benefit those holding short positions. Natural downturns are driven by broader economic trends, market corrections or legitimate changes in investor sentiment.Bear raids are generally considered a form of market manipulation. Regulatory agencies monitor trading activities, investigate suspicious patterns and penalize fraudulent practices such as pump-and-dump schemes or wash trading. To enhance transparency, they require exchanges to implement compliance measures, including KYC (Know Your Customer) and AML (Anti-Money Laundering) protocols. By imposing fines, bans, or legal action, regulators work to maintain fair markets and protect investors. Regulators attempt to deter cryptocurrency market manipulation by enforcing strict rules and oversight. In the US, the Securities and Exchange Commission (SEC) focuses on crypto assets that qualify as securities, while the Commodity Futures Trading Commission (CFTC) regulates commodities and their derivatives. Under the Markets in Crypto-Assets Regulation (MiCA) law, enforcement in the EU is the responsibility of financial regulators in the member states. Did you know? In 2022, over 50% of Bitcoin’s daily trading volume was influenced by just 1,000 addresses — commonly called whales — highlighting their market-shaking power.Who executes bear raids?In the crypto world, “whales” are big investors capable of executing bear raids. Because of their substantial holdings of cryptocurrencies, whales can influence market trends and price movements in ways smaller retail traders cannot.Compared to other traders, whales operate on a different scale, thanks to their access to more capital and advanced tools. While you might be looking for short-term gains or simply following trends, whales often use strategic buying or selling to create price shifts that benefit their long-term positions. Their moves are carefully planned and can affect the market without you even realizing it.If you are a regular crypto trader, you might be aware of the massive crypto movement between wallets. Such large-scale transfer of crypto causes panic or excitement in the cryptocurrency community. For example, when a whale transfers a large amount of Bitcoin (BTC) to an exchange, it may signal a potential sell-off, causing prices to dip. Conversely, removing coins from exchanges to self-custodial wallets might suggest long-term holding, which can lead to a price upswing.The relatively low liquidity of crypto markets gives whales such influence over crypto trading. With fewer buyers and sellers compared to traditional financial markets, a single large trade can dramatically swing prices. This means whales can manipulate market conditions, intentionally or not, often leaving retail traders struggling to keep up.Did you know? Bear raids often trigger automated liquidations in leveraged positions, sometimes causing crypto prices to nosedive by over 20% in minutes.Real-world examples of whales profiting from falling pricesIn crypto, cases of bear raids are generally hard to confirm due to anonymity. Nevertheless, these examples of incidents when whales made profits from falling cryptocurrency prices will help you understand how such scenarios work:Terra Luna collapse (May 2022)A Bank for International Settlements (BIS) report disclosed that during the 2022 crypto market crash, triggered by the collapse of Terra (LUNA), whales made a profit at the expense of retail investors. Smaller retail investors predominantly purchased cryptocurrencies at lower prices, whereas whales primarily sold off their holdings, profiting from the downturn.In May 2022, the Terra blockchain was briefly suspended following the failure of its algorithmic stablecoin TerraUSD (UST) and the associated cryptocurrency LUNA, resulting in a loss of nearly $45 billion in market value in one week. The company behind Terra filed for bankruptcy on Jan. 21, 2024. FTX collapse (November 2022)In November 2022, close financial ties between FTX and Alameda Research set off a chain reaction: a bank run, failed acquisition deals, FTX's bankruptcy and criminal charges for founder Sam Bankman-Fried.Yet again, as FTX collapsed, retail investors rushed to buy the dip. Whales, however, sold crypto in bulk right before the steep price decline, according to the same BIS report that discussed the fall of Terra Luna.Graph 1.B illustrates a transfer of wealth, where larger investors liquidated their holdings, disadvantaging smaller investors. Furthermore, Graph 1.C reveals that following market shocks, large Bitcoin holders (whales) reduced their positions, while smaller holders (referred to as krill in the report) increased theirs. The price trends indicate that whales sold their Bitcoin to krill before significant price drops, securing profits at the krill's expense.Bitconnect (BCC) shutdown (January 2018)Bitconnect, a cryptocurrency promising unusually high returns via an alleged trading bot, experienced a dramatic collapse in early 2018. Despite reaching a peak valuation of over $2.6 billion, the platform was widely suspected of operating as a Ponzi scheme. The token suffered a steep fall of over 90% in value within hours. While this was not a classic bear raid, the sudden exit of insiders and whale sell-offs, combined with negative publicity, created a cascading effect that devastated retail investors.Did you know? Whale wallets are tracked so closely that some platforms offer real-time alerts for their trades, helping retail traders anticipate possible bear raids.How whales execute bear raids in crypto, key stepsIn the crypto space, whales can execute bear raids by leveraging their massive holdings to trigger sharp price drops and profit from the following panic. These tactics typically unfold in a few steps:Step 1: Accumulating a position: Whales begin by taking positions that will benefit from falling prices, such as shorting a cryptocurrency or preparing to buy large quantities once the price drops. Step 2: Initiating the raid: Next, the whale triggers the sell-off by dumping large volumes of the targeted crypto asset. This sudden surge in supply causes the price to drop sharply, shaking market confidence.Step 3: Spreading FUD: To maximize the impact, whales may spread FUD using coordinated social media campaigns or fake news. Rumors like adverse regulatory action or insolvency can spread quickly, prompting retail traders to sell in panic.Step 4: Triggering sell-offs: The combination of visible large sell orders and negative sentiment induces other investors to sell their holdings, amplifying the downward pressure on the asset's price.Step 5: Profiting from the dip: Once the price plunges, the whale steps in to either buy back the asset at a lower price or close their short positions for a profit.The whales’ playbook: How do they manipulate the market? Crypto whales use sophisticated tactics to carry out bear raids and manipulate the market to their advantage. These tactics give whales an edge over retail traders, enabling them to manipulate prices and profit while the latter are left to deal with the chaos:Trading bots and algorithms: Advanced bots allow whales to execute large sell orders in milliseconds, triggering sharp price drops. Before the market can react, the whales turn the situation in their favor.Leverage and margin trading: Whales rely (to a large extent) on leverage and margin trading to make profits. Borrowing funds enables them to increase their position size and amplify the sales pressure. It triggers stronger market reactions than would be possible with their holdings.Low liquidity on certain exchanges: Whales can place large sell orders in illiquid markets with fewer participants and a low volume of trades, causing disproportionate price drops. They may even manipulate order books by placing and canceling large fake orders, known as spoofing, to trick other traders.Collaborate with other whales: Whales may collaborate with other large holders or trading groups to coordinate attacks, making the bear raid more effective and harder to trace.Impact of bear raids on the crypto market Bear raids can significantly disrupt the crypto market. Here is how they impact different players and the broader ecosystem: Effects on retail traders: Retail investors tend to react overwhelmingly during a bear raid. The sudden price drop and spread of fear often lead to panic selling, resulting in heavy losses for the investors who exit at the bottom. Most retail traders sell emotionally, not realizing they are playing into the whale’s strategy. Broader market consequences: Bear raids increase market volatility, making it riskier for new and existing investors. These events can shake overall confidence in the crypto space, leading to reduced trading activity and investor hesitation. In extreme cases, they can even trigger liquidations across multiple platforms. Potential positive outcomes: Bear raids can sometimes have cleansing effects on the crypto market. Market corrections induced by such raids remove overvalued assets from unsustainable highs. In some cases, these raids may expose weak or fraudulent projects, forcing investors to reassess their choices.Signs of crypto bear raidsBear raids are misleading market moves that resemble genuine downturns, often tricking traders into selling too soon. A quick drop in price may look like the start of a bearish trend, leading to impulsive decisions by retail traders. Often, these dips are short-lived and followed by a swift recovery once the whales take their profits. Recognizing the signs of crypto bear raids is key to avoiding losses.Here are a few signs of crypto bear raids:A sudden price drop that seems to break support levels Spike in trading volume during a market declineQuick rebound after the dipNegative sentiment causing trader panic No major news to explain the dropHow to protect yourself from crypto bear raids​To safeguard your investments from crypto bear raids, you can use the following strategies:​Conduct thorough technical analysis: Regularly analyze price charts and indicators to discern genuine market trends from manipulative movements. ​Implement stop-loss orders: Set predetermined sell points to automatically exit positions if prices fall to a certain level, limiting potential losses during sudden downturns. ​Diversify your portfolio: Spread investments across various assets to mitigate risk. A well-diversified portfolio is less vulnerable to the impact of a bear raid on any single asset. ​Stay informed: Monitor market news and developments to better anticipate and respond to potential manipulative activities. Use reputable exchanges: Engage with trading platforms that have robust measures against market manipulation, ensuring a fairer trading environment.The ethical debate: Crypto market manipulation vs free market dynamicsThe principles of free market dynamics starkly contrast to market manipulation tactics, such as bear raids. Proponents of free markets favor minimal regulatory intervention, arguing that it fosters innovation and self-regulation. A free market is an economic system in which supply and demand determine the prices of goods and services. Still, the decentralized and often unregulated nature of crypto markets has made them susceptible to manipulative practices. Bear raids require coordinated efforts by perpetrators to drive down asset prices, misleading investors and undermining market integrity. Such tactics bring losses to retail investors and erode trust in the financial system. Critics point out that without adequate oversight, these manipulative strategies can proliferate, leading to unfair advantages and potential economic harm. While free market dynamics are valued for promoting efficiency and innovation, the implications of unchecked market manipulation in the cryptocurrency space can be disastrous. Incidents like bear raids highlight the need for balanced regulation to ensure fairness and protect investors.Crypto regulations worldwide for market manipulation tacticsCryptocurrency market manipulation, including tactics like bear raids, has prompted varied regulatory responses worldwide. In the US, the Commodity Futures Trading Commission (CFTC) classifies digital currency as commodities and actively pursues fraudulent schemes, including market manipulation practices such as spoofing and wash trading. The Securities and Exchange Commission (SEC) has also taken action against individuals who have manipulated digital asset markets. The European Union has implemented the Markets in Crypto-Assets (MiCA) regulation to establish a comprehensive framework addressing market manipulation and ensure consumer protection regarding stablecoins.These efforts notwithstanding, the decentralized and borderless nature of cryptocurrencies presents challenges for regulators. Global cooperation and adaptive regulatory frameworks are essential to effectively combat market manipulation and safeguard investors in the evolving landscape of digital finance.Progression articlesLong and short positions in crypto, explainedA beginner’s guide on how to short Bitcoin and other cryptocurrenciesWhat is a bear trap in trading and how to avoid it?This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
Ethical hacker intercepts $2.6M in Morpho Labs exploit
A known maximal extractable value (MEV) white hat actor intercepted about $2.6 million in crypto assets stolen from Morpho Labs’ decentralized finance (DeFi) protocol. On April 10, Morpho Labs implemented a front-end update on its Morpho Blue application. A day later, a hacker breached an address through a vulnerability caused by the update. Blockchain security firm PeckShield reported that an address lost $2.6 million due to the vulnerability. However, the security firm noted that “c0ffeebabe.eth,” a known white hat MEV operator, had front-run the transaction, effectively intercepting the stolen funds.At the time of writing, the funds had been transferred to a different wallet address. It’s unclear whether the funds have yet been returned to their original owner.Morpho Labs reverts front-end updateResponding to the incident, Morpho Labs reversed its front-end update. In a post on X on April 11, the team confirmed it had been alerted to the issue and rolled back the changes. The team also said that normal operations had resumed:“All funds in the Morpho Protocol are safe and unaffected. The Morpho team will provide a detailed update later today in this thread.”After further investigation, the team confirmed that its front-end was safe and that users don’t need to perform additional actions to secure their assets. The team said the update was pushed to enhance the transaction flow. However, specific transactions on the front-end were incorrectly crafted. The Morpho Labs team said they’ve identified the issue and applied a fix. They added that they would publish a more detailed explanation of the incident next week. Cointelegraph reached out to the Morpho Labs team on X but did not receive a response by publication. Related: MEV bot loses $180K in ETH from access control exploitWhite hat MEV operator c0ffeebabe.ethC0ffeebabe.eth is known to have contributed to the recovery of funds during DeFi hacks. In 2023, the white hat MEV operator retrieved around $5.4 million in Ether (ETH) from the Curve Finance exploit in July 2023. During the incident, c0ffeebabe.eth used a bot to front-run a malicious hacker to secure 3,000 ETH. The funds were then returned to the Curve deployer address. In 2024, the mysterious white hat actor also recovered funds stolen during the Blueberry exploit. In an update, the DeFi protocol said all drained funds had been front-run by c0ffeebabe.eth and returned. Magazine: Illegal arcade disguised as … a fake Bitcoin mine? Soldier scams in China: Asia Express
Bollinger Bands creator says Bitcoin forming 'classic' floor near $80K
Bitcoin (BTC) is exhibiting familiar “bottom” behavior at current prices, according to one of its best-known leading indicators. In an X post on April 10, John Bollinger, creator of the Bollinger Bands volatility metric, offered potentially good news to Bitcoin bulls.Bollinger bands %b metric teases BTC price comebackBitcoin may already be establishing a long-term bottom, the latest Bollinger Bands data suggests.Analyzing weekly timeframes, Bollinger drew attention to one of his proprietary indicators, known as “%b,” which offers further clues about market trend reversals.The indicator %b measures an asset’s closing price relative to Bollinger Band position, employing standard deviation around a 20-period simple moving average (SMA). Among its insights is the “W” bottom formation, where a first low beneath zero is followed by a higher low retest later, something that could now be in play for BTC/USD.Bollinger confirmed to X followers:“Classic Bollinger Band W bottom setting up in $BTCUSD. Sill needs confirmation.”BTC/USD 1-week chart with Bollinger Bands data. Source: John Bollinger/XOn both weekly and daily timeframes, Bollinger Bands show no trend shift has yet taken place. Data from Cointelegraph Markets Pro and TradingView shows that the daily chart continues to walk down the lower band, with the middle SMA acting as resistance.BTC/USD 1-day chart with Bollinger Bands data. Source: Cointelegraph/TradingViewTurning to stocks, with which BTC/USD has become increasingly correlated, Jurrien Timmer, director of global macro at Fidelity Investments, drew similar conclusions.“Revisiting the Bollinger Bands, we have gone from 2 standard deviations above-trend to on-trend to now almost 2 standard deviations below-trend,” he said in reference to the S&P 500 on April 9. “Again, oversold but not at an historic extreme.”Bitcoin bounce may follow 10% Nasdaq plungeAs Cointelegraph continues to report, BTC price bottom targets increasingly center around the $70,000 mark.Related: Bitcoin, stocks shun CPI print win and give up tariff relief gains — Will BTC whales save the day?That level is significant for several reasons, including as a psychological barrier and its status as a liquidity magnet.Network economist Timothy Peterson, whose Lowest Price Forward metric previously offered 95% odds that $69,000 would stay intact as support, now sees Bitcoin reversing only after stocks find their own floor.“Bitcoin led NASDAQ on this decline As the asset perceived to be at the top of the risk pyramid, I would expect NASDAQ to rally first, and then Bitcoin Just something to look for,” he revealed this week. “But I think NASDAQ has another -10% to fall.”Bitcoin vs Nasdaq comparison. Source: Timothy Peterson/XThis article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
SEC, Ripple file joint motion to pause appeals in XRP case
The US Securities and Exchange Commission and blockchain payments firm Ripple agreed to pause their appeals in the ongoing XRP legal battle, signaling a potential move toward a final settlement.The SEC and Ripple agreed to put their appeals in “abeyance,” meaning the proceedings are now paused pending an anticipated settlement of the XRP (XRP) case.“An abeyance would conserve judicial and party resources while the parties continue to pursue a negotiated resolution of this matter,” the parties jointly stated in an April 10 court filing.Ripple CEO Brad Garlinghouse previously announced the end of the XRP case on March 19, and the new filing hints that the SEC is ready to settle once nominated and approved Chair Paul Atkins takes office, according to some community speculation.The filing cancels Ripple’s April 16 brief deadlineAccording to Ripple’s defense attorney, James Filan, the new filing supersedes the April 16 deadline for Ripple to respond to the SEC’s brief filed in January. “The settlement is awaiting commission approval. No brief will be filed on April 16,” Filan wrote in an April 10 X post.Some legal observers suggested the SEC’s willingness to pause the proceedings indicates that the agency may be prepared to drop the case after Atkins assumes office.Source: James Filan“SEC is ready to settle but is waiting for Atkins to take the helm as the new SEC chief so he can start off with dropping the biggest case of their career and start with a huge win,” one user suggested in a reply to Filan’s thread on X.When is Atkins expected to officially assume office?While the Senate confirmed Atkins as the new SEC chair on Wednesday, April 9, it’s unclear when he will take office.Related: Ripple acquisition of Hidden Road a ‘defining moment’ for XRPL — Ripple CTOIt could be several days before Atkins is sworn into office as the new SEC chair.Former SEC Chair Gary Gensler was sworn in three days after his confirmation in 2021, suggesting Atkins could take office as soon as April 12.A spokesperson for the SEC declined to comment to Cointelegraph on when Atkins is expected to be sworn in as the new SEC chair.Magazine: XRP win leaves Ripple and industry with no crypto legal precedent set
Bitcoin reserve bills advance in New Hampshire, Florida
New Hampshire’s House and Florida’s House Insurance and Banking Committee have respectively advanced bills allowing their states to create Bitcoin reserves.New Hampshire’s House passed its Bitcoin reserve bill, HB302, in a 192-179 vote on April 10 which will now head to the Senate. The state is now the fourth to pass a Bitcoin (BTC) reserve bill through one chamber, joining Arizona, Texas and Oklahoma.If HB302 clears New Hampshire’s Senate and Governor Kelly Ayotte signs it into law it would allow the state’s treasurer to use 10% of the state’s general fund and other authorized funds to invest in precious metals and certain digital assets. The bill also sets out how they should be custodied.The bill specifies that only cryptocurrencies with a market capitalization of over $500 billion would be eligible for investment, a criteria that only Bitcoin currently meets.New Hampshire’s House votes to pass HB302, the state’s Bitcoin reserve bill. Source: New Hampshire House of RepresentativesIn a debate prior to the vote, Democrat Representative Terry Spahr argued that the bill is unnecessary and could undermine the future security of the state’s digital assets stockpile. “Unbeknownst to the committee and to the sponsor […] the treasurer testified that they already have that authority,” Spahr said. He added that cryptocurrency is “constantly shifting and changing, and it’s sort of dangerous to be kind of locked into certain types of security measures, and I think that bill does this.”Republican Representative Jordan Ulery countered that the bill was necessary as it could create the “potential for a large amount of money being earned by the state in these investments.”New Hampshire has two other blockchain-related bills working their way through the legislature — HB310, which covers stablecoins and real-world asset tokenization (RWA) and HB 639, which deals with blockchain regulation and dispute resolution.Florida House Committee passes Bitcoin reserve bill Meanwhile on April 10, Florida’s House Insurance and Banking Committee passed the state’s Bitcoin reserve bill, HB487, with a unanimous vote.The bill has three committees to clear before it progresses to Florida’s House.WATCH: Florida House Committee PASSES Bitcoin Reserve BillThe Insurance and Banking Committee passed HB 487 unanimously todayIncluding moving testimony from bill sponsor Rep. Webster Barnaby pic.twitter.com/myAlNvtFl9— Bitcoin Laws (@Bitcoin_Laws) April 10, 2025Similar to New Hampshire’s bill, HB487 would allow Florida’s chief financial officer and the State Board of Administration to invest up to 10% of certain state funds — including the General Revenue Fund and the Budget Stabilization Fund — into Bitcoin.The bill’s sponsor, Republican Representative Webster Barnaby pleaded with the Committee before the vote “to vote up on this very important bill” which he claimed would “put Florida in the leading edge of this very new technology.”Related: US federal agencies to report crypto holdings to Treasury by April 7Florida’s bill gives the state’s financial chief the ability to invest in digital assets directly, through certain qualified custodians, or through exchange-traded products (ETPs) and details security and custody requirements.According to Bitcoin Laws, which tracks the progress of digital assets legislation, Arizona is currently leading the race to become the first US state to establish a strategic Bitcoin reserve. Source: Bitcoin LawsOn March 24, two digital assets reserve bills, SB1373 and SB1025, cleared Arizona’s House Rules Committee and are now headed to the state’s House for a full floor vote. If passed by the House, the bills would then need the signature of Arizona’s Democratic governor, Katie Hobbs to become law.Magazine: Financial nihilism in crypto is over — It’s time to dream big again
