Yield-Bearing Stablecoins Reach $22.7 Billion – Rapid Growth Amid US Regulatory Dispute

Key Takeaways

Yield-Bearing Stablecoins Outpace Broader Market Growth

Yield-bearing stablecoins are expanding significantly faster than the overall stablecoin sector, according to research published by Messari. Over the past six months, these products have grown 15 times faster than the broader stablecoin market.

Data cited by Messari shows that Circle’s USYC recorded a 198% increase in market capitalization during the period. Paxos’ Global Dollar (USDG) rose 169%, while the Tron DAO-linked Decentralized USD (USDD) gained 114%. Ondo Finance’s Ondo US Dollar Yield (USDY) increased by 91%. In comparison, the total stablecoin market capitalization rose by 9%.

The acceleration began in mid-October 2025, when yield-bearing stablecoins started to outpace the growth of the wider stablecoin supply. The trend indicates rising demand for blockchain-based US dollar instruments that provide yield while limiting direct exposure to broader crypto market volatility.

Market Size and Leading Products by Value and Yield

According to Stablewatch data, yield-bearing stablecoins currently have a combined market capitalization of $22.7 billion. That figure reflects an 11% increase over the past 30 days and represents a doubling from the $11 billion recorded in May 2025.

Despite this expansion, the segment accounts for 7.4% of the total $303 billion stablecoin market. In May last year, yield-bearing stablecoins represented 4.5% of overall stablecoin supply, indicating a gradual increase in their share of the market.

Among the largest yield-bearing stablecoins by value are Sky’s sUSDS, Ethena’s sUSDe, and Maple’s Syrup USDC, according to DefiLlama data cited in the report.

In terms of weekly yield, Messari data shows Maple’s Syrup USDC leading with a 4.54% annual percentage yield (APY). Maple USDT follows at 4.17% APY. Sky Lending’s sUSDS offers 3.75% APY, while Ethena’s USDe stands at 3.49% APY.

Messari notes that the largest yield-bearing stablecoins are increasingly functioning more like money market funds or bank deposits. According to the report, the leading issuers are not primarily focused on payment use cases but instead concentrate on offering a single yield-generating asset.

Regulatory Dispute in Washington Over Stablecoin Yield

The rapid growth of yield-bearing stablecoins coincides with ongoing debate in Washington over how such products should be treated under US law.

Yield-bearing stablecoins have become a key point of contention in discussions surrounding the Digital Asset Market Structure Clarity Act, also known as the CLARITY Act. The House of Representatives passed the bill on July 17, 2025, and it has since been under debate in the Senate.

US Senate Majority Leader John Thune reportedly stated that he does not expect the chamber to move forward with the crypto market structure bill before April. The Senate Banking Committee had previously postponed its markup in mid-January as bipartisan negotiations continued. The delay drew criticism from US President Donald Trump.

Banking groups have raised concerns that yield-bearing stablecoins could create a loophole that diverts deposits from traditional banks. The regulatory treatment of yield mechanisms remains central to the dispute.

In parallel, the federal stablecoin framework known as the GENIUS Act was signed into law on July 18, 2025. The act prohibits issuers from paying interest or yield on payment stablecoins. However, it allows third-party platforms to offer reward programs tied to stablecoin holdings.

This distinction has placed yield-bearing models under closer scrutiny, particularly when structured in ways that may resemble deposit products or money market instruments.

Implications for Crypto Market Participants

For users evaluating stablecoin options, the growth of yield-bearing products signals a shift within the market. These instruments differ from traditional payment-focused stablecoins by integrating yield mechanisms directly into their structure or through associated platforms.

The data shows that while the segment remains a minority share of total stablecoin supply, its relative growth rate is significantly higher. At the same time, regulatory clarity in the United States remains unresolved, particularly regarding whether and how yield components may be offered.

The combination of rapid capital inflows and pending legislative decisions places yield-bearing stablecoins at the center of current US crypto policy discussions.

Our Assessment

Yield-bearing stablecoins have expanded to $22.7 billion in market capitalization and are growing faster than the broader stablecoin market. Several leading products have posted triple-digit percentage gains over six months. At the same time, US lawmakers remain divided over how yield mechanisms should be regulated, with the CLARITY Act still under Senate debate and the GENIUS Act restricting interest payments by issuers. The segment’s continued growth is occurring alongside ongoing regulatory uncertainty in Washington.

US Treasury Sanctions Alleged North Korea IT Fraud Facilitators – 21 Crypto Addresses Added to OFAC List

Key Takeaways

US Treasury Targets Alleged Facilitators of North Korea IT Worker Network

The US Department of the Treasury has imposed sanctions on six individuals and two entities accused of facilitating an IT worker fraud scheme linked to North Korea. The measures were announced by the Office of Foreign Assets Control, which oversees US sanctions enforcement.

According to the Treasury, the sanctioned network operated across North Korea, Vietnam, Laos and Spain. Authorities allege that the scheme generated revenue for North Korea’s weapons program.

The sanctions freeze any US-based assets connected to the named individuals and entities. They also prohibit US persons and businesses from engaging in financial transactions or other dealings with them. Violations can result in civil and criminal penalties.

Named Entities and Individuals

Among the sanctioned entities is Amnokgang Technology Development Company, described as a North Korean firm accused of managing overseas IT workers. The Treasury also sanctioned Nguyen Quang Viet, identified as the CEO of Quangvietdnbg International Services Company Limited, a Vietnam-based company.

Authorities allege that Nguyen Quang Viet’s company laundered 2.5 million US dollars through cryptocurrency on behalf of the network. In addition, five individuals were designated for their alleged roles in the IT worker operations: Do Phi Khanh, Hoang Van Nguyen, Yun Song Guk, Hoang Minh Quang and York Louis Celestino Herrera.

All listed persons and entities are now subject to US sanctions restrictions, including asset freezes and transaction bans involving US jurisdictions.

21 Cryptocurrency Addresses Added Across Ethereum and Tron

As part of the enforcement action, OFAC included 21 cryptocurrency addresses in its sanctions designation. The addresses span the Ethereum and Tron blockchains.

Blockchain analytics firm Chainalysis stated that the inclusion of addresses on multiple networks reflects what it described as North Korea’s increasingly multi-chain approach to moving funds. By designating specific wallet addresses, authorities aim to limit the ability of sanctioned actors to transact in digital assets through compliant platforms and intermediaries.

For cryptocurrency exchanges, payment processors and other digital asset businesses, the addition of wallet addresses to the sanctions list requires updated compliance screening. Businesses operating internationally, including those serving crypto betting and iGaming platforms, must ensure that they do not process transactions linked to sanctioned addresses.

Fraudulent IT Worker Schemes Target Blockchain Companies

The Treasury action follows reports that fraudulent IT workers with alleged ties to North Korea have targeted a wide range of industries. Blockchain companies have been among the affected sectors.

An April 2025 report by Google found that the infrastructure supporting these schemes had spread worldwide. According to Chainalysis, the operations rely on stolen identities and fabricated personas to obtain employment with legitimate companies.

Beyond receiving salaries under false pretenses, some workers have allegedly introduced malware into company networks. Chainalysis stated that this tactic has been used to extract proprietary and sensitive information. The firm described the IT worker schemes as a sophisticated and growing threat.

For companies handling cryptocurrency transactions, including exchanges and service providers connected to online gambling platforms, such tactics raise operational and compliance risks. Screening counterparties against updated OFAC sanctions lists and monitoring for unusual payment patterns form part of standard risk management procedures when new designations are issued.

Compliance Implications for Crypto and iGaming Businesses

The addition of individuals, entities and wallet addresses to the OFAC sanctions list has direct consequences for businesses that interact with US financial systems or serve US customers. Any assets within US jurisdiction linked to the sanctioned parties are blocked.

Crypto businesses must ensure that they do not facilitate transactions involving the 21 listed addresses on Ethereum and Tron. Failure to comply with sanctions requirements can expose companies to enforcement action.

For international users of crypto betting and iGaming platforms, sanctions actions can affect the availability of certain payment routes or counterparties if platforms adjust their compliance controls. Operators typically respond by updating internal blacklists, transaction monitoring systems and onboarding procedures.

Our Assessment

The US Treasury’s sanctions designate six individuals, two entities and 21 cryptocurrency addresses connected to an alleged North Korea-linked IT worker fraud network. The measures freeze US-based assets and prohibit transactions with US persons. The case highlights how authorities are targeting both individuals and blockchain wallet addresses in response to schemes that have affected multiple industries, including blockchain companies.

Coinbase Denies Lobbying Against Bitcoin De Minimis Tax Exemption – Public Dispute Highlights Divide Over Crypto Tax Policy

Key Takeaways

Coinbase Executives Publicly Reject Lobbying Allegations

Coinbase has publicly denied allegations that it is working against a proposed tax exemption for small Bitcoin transactions. The claims surfaced on March 11, when Bitcoin podcaster Marty Bent wrote that the exchange was telling lawmakers a de minimis exemption was unnecessary.

According to Bent, Coinbase allegedly argued that “no one is using bitcoin as money” and that a de minimis exemption would be “a hand out that will be DOA.” He further claimed the company was pushing for stablecoins only treatment in order to advance its own business interests.

Coinbase Chief Policy Officer Faryar Shirzad responded directly on social media platform X, stating: “This is a total lie @MartyBent. We have never and will never lobby against Bitcoin. Ever.” The statement was issued as the allegation gained attention within the crypto community.

Block co founder Jack Dorsey publicly called on Coinbase CEO Brian Armstrong to clarify the company’s position. Dorsey wrote that he hoped the denial also applied to the de minimis issue and tagged Armstrong in his message.

Armstrong later responded and rejected the rumor, describing it as “totally false.” Bent subsequently stated that he had three different sources for his claims. No additional documentation was provided in the reported exchange.

What the De Minimis Tax Exemption Would Change

The proposed de minimis exemption would eliminate capital gains taxes and Internal Revenue Service reporting requirements on small Bitcoin transactions. Under current law, Bitcoin is treated as property. This means that every transaction, including everyday payments such as buying coffee or paying a freelancer, creates a taxable event.

As a result, users must calculate cost basis and report gains or losses for each transaction. Supporters of the exemption argue that this compliance burden discourages the use of Bitcoin as a medium of exchange.

Legislation backed by Senator Cynthia Lummis would introduce a $300 per transaction threshold with a $5,000 annual cap. Transactions below these limits would not trigger capital gains taxes or reporting obligations. According to supporters, this would align small Bitcoin payments more closely with minor foreign currency exchanges.

The proposal is currently being considered as part of broader digital asset tax reform discussions in Congress.

Reports of a Shift Toward Stablecoins Only Treatment

On the same day the allegations surfaced, Bitcoin Policy Institute Managing Director Conner Brown commented on developments in Washington. Brown stated that over the past three months there has been “a strong shift on the Hill to limiting the de minimis exemption to stablecoins only.”

Brown said the Bitcoin Policy Institute continues to meet with lawmakers and described such a limitation as a strategic mistake for the United States. His statement indicates that discussions around the scope of any exemption remain ongoing and that policymakers are considering alternative approaches.

If the exemption were restricted to stablecoins, Bitcoin transactions would continue to be treated as taxable property transfers for small payments, while certain stablecoin transactions could receive different treatment.

Lightning Network Data Cited in the Debate

The debate over whether Bitcoin is used as money has also drawn attention to transaction data from the Lightning Network. According to figures published on February 19, 2026, aggregated data from River Financial covering more than 50 percent of network capacity showed $1.17 billion in monthly volume across 5.22 million transactions in November 2025. The average transaction size was reported at $223.

An earlier report from June 18, 2025 stated that the network had reached roughly 1.5 million users and $1.5 billion in trading volume.

Block Inc., the company behind Cash App and Square, has been a vocal supporter of the de minimis exemption. In November 2025, Block launched its “Bitcoin is Everyday Money” campaign, explicitly calling for the exemption while introducing Lightning Network tools that allow Square merchants to accept Bitcoin payments with zero fees through 2027.

Block reported that its own Lightning node generated a 9.7 percent yield from routing payments. The company also stated that Cash App handled one in four outbound Lightning transactions following a sevenfold increase in usage.

Block Bitcoin product lead Miles Suter summarized the company’s position by stating that Bitcoin payments validate Bitcoin’s role as money.

Implications for Crypto Users and Platforms

For crypto users, particularly those considering Bitcoin for everyday transactions, the outcome of the de minimis proposal could directly affect reporting obligations and tax exposure. Under the current framework, even small payments require tracking and documentation.

For exchanges and payment providers, the regulatory approach may shape how Bitcoin and stablecoins are positioned within their services. The public exchange between Coinbase executives, industry advocates, and media commentators highlights differing priorities within the sector.

As Congress continues to evaluate digital asset tax reforms, the scope of any exemption remains unresolved.

Our Assessment

Coinbase leadership has formally denied lobbying against a Bitcoin de minimis tax exemption following public allegations. At the same time, policy discussions in Washington appear to include the possibility of limiting any exemption to stablecoins only. The proposed legislation would reduce tax and reporting requirements for small Bitcoin transactions, a change that supporters argue would affect everyday usage. The issue remains under consideration as part of broader digital asset tax reform efforts.

New Zealand Regulator Classifies NZDD Stablecoin as Non-Financial Product – FMA Sandbox Decision Clarifies Local Crypto Treatment

Key Takeaways

FMA Determines NZDD Is Not a Debt Security

New Zealand’s Financial Markets Authority (FMA) has formally determined that the NZDD stablecoin, which is pegged to the New Zealand dollar, does not qualify as a financial product. According to the regulator, the economic substance of NZDD means it is not a debt security and does not meet the definition of an investment.

In its statement, the FMA explained that holders of NZDD do not receive income, interest, or any other financial gain from holding the token. As a result, the regulator concluded that the stablecoin does not constitute an investment instrument under its current structure.

The designation directly stems from the FMA’s financial technology sandbox pilot program. This initiative allows firms to test innovative financial products within a supervised regulatory framework. The NZDD ruling represents one of the concrete outcomes of that pilot process.

Legal Counsel Highlights Product-Specific Nature of the Ruling

The law firm MinterEllisonRuddWatts, which acted on behalf of NZDD issuer ECDD Holdings during its participation in the sandbox, described the regulator’s decision as an important step toward regulatory clarity for stablecoins in New Zealand.

However, the firm emphasized that the designation applies specifically to the NZDD stablecoin in the form described in the official notice. It does not amount to a general determination of how all stablecoins will be treated under New Zealand law. This distinction means that other stablecoin structures may still be assessed differently depending on their features, including whether they offer returns or resemble traditional financial instruments.

According to MinterEllisonRuddWatts, the FMA’s approach reflects a pragmatic stance toward financial innovation and aligns with developments in comparable jurisdictions. The law firm indicated that the decision creates a foundation from which further regulatory pathways may be developed.

Sandbox Pilot Expands With Planned Restricted License

Alongside the NZDD decision, the FMA announced plans to introduce an on-ramp or restricted license as part of its sandbox framework. The proposed license is designed to allow fintech firms to access the market with certain limitations in place.

FMA chief executive Samantha Barrass stated that the financial system is evolving rapidly and that the new type of license would enable firms to enter the market under defined restrictions. These limitations could later be removed as firms grow and meet regulatory expectations.

For crypto-related businesses operating in or considering entry into New Zealand, the sandbox and restricted licensing model signal a structured pathway for launching new products. Rather than operating in a regulatory vacuum, firms can engage directly with the regulator under supervised conditions.

Crypto Adoption and Market Context in New Zealand

The regulatory clarification comes amid notable levels of crypto engagement in New Zealand. A 2024 report by Web3 consumer research firm Protocol Theory estimated that nearly half of the country’s 5.2 million residents are either current crypto investors or are considering investing.

Separately, data analytics firm DataCube Research projects that New Zealand’s crypto market will be worth approximately 254 billion dollars. While the FMA’s designation concerns a specific stablecoin rather than the broader market, the scale of projected activity underscores the relevance of regulatory clarity for digital asset users and service providers.

For users of crypto payment systems, including those engaging with digital platforms such as exchanges or online services that accept stablecoins, the classification of tokens can directly affect how they are issued, marketed, and supervised. A determination that a token is not a financial product may reduce certain regulatory requirements typically associated with securities or investment products.

Implications for Stablecoin Structures in New Zealand

The FMA’s statement focused on the specific economic characteristics of NZDD. The absence of yield, interest, or profit-sharing features was central to the decision that the token is not a debt security. This highlights that structural design remains critical in regulatory assessments.

Issuers that attach income or return mechanisms to digital tokens may face different classifications. The FMA made clear that its decision does not automatically apply to all stablecoins, even those pegged to the same national currency.

For businesses evaluating stablecoin integration, including payment processors and platforms serving crypto users, the ruling illustrates how regulatory outcomes can depend on technical and economic details rather than labels alone.

Our Assessment

The FMA’s decision that NZDD is not a financial product provides product-specific regulatory clarity within New Zealand’s sandbox framework. The ruling is based on the token’s lack of investment characteristics and does not extend to all stablecoins. Combined with the planned introduction of a restricted license for fintech firms, the move outlines a defined pathway for digital asset innovation under regulatory supervision in a market with significant crypto participation.

Binance Files Defamation Lawsuit Against The Wall Street Journal – Dispute Centers on Alleged Iran-Linked Crypto Flows

Key Takeaways

Binance Challenges February Report on Iran-Linked Transactions

Binance has initiated legal action against The Wall Street Journal, accusing the newspaper of defamation over a report published on February 23. According to Binance, the article falsely alleged that the company halted an internal compliance investigation into cryptocurrency transactions tied to Iranian networks.

The report claimed that internal investigators at Binance had identified more than $1 billion in crypto flows connected to entities associated with Iran-backed militant groups. It further stated that these transactions were traced through intermediaries, including a Hong Kong trading firm that allegedly moved hundreds of millions of dollars in stablecoins linked to Iranian networks.

The article also alleged that employees who raised concerns about the activity were later suspended or dismissed. Binance rejects these assertions and states that no compliance investigation was dismantled.

A company spokesperson said that Binance “categorically did not dismantle any compliance investigation” and accused the publication of continuing to report what it described as false information.

Binance Says Investigation Continued and Accounts Were Offboarded

In its response, Binance stated that the internal investigation was not stopped and that the company continued to pursue the matter. According to the company, the probe identified what it described as a “sophisticated, multi-jurisdictional pattern of financial activity” spanning parts of Asia and the Middle East.

Binance says it offboarded accounts connected to the identified activity and reported its findings to law enforcement authorities. The company also pointed to its broader compliance framework, stating that it has invested hundreds of millions of dollars in monitoring and investigative systems.

According to Binance, more than 1,500 staff members are employed in compliance, risk, and investigative roles. The company presents these figures as part of its effort to demonstrate the scale of its internal oversight and monitoring capabilities.

Dugan Bliss, global head of litigation at Binance, said the lawsuit was filed to address what the company describes as misinformation and the resulting reputational and business consequences. He stated that Binance views the legal action as necessary to defend itself against inaccurate reporting.

Department of Justice Reported to Be Examining Sanctions-Related Flows

In a separate development, The Wall Street Journal reported that the U.S. Department of Justice is examining whether Iranian actors used Binance to evade sanctions. According to that report, officials have contacted individuals with knowledge of transactions involving more than $1 billion in alleged flows linked to Iran-backed groups.

The newspaper stated that investigators are seeking interviews and gathering evidence. However, it remains unclear whether the inquiry is focused directly on Binance as a company or on customers who may have used the platform.

Binance responded by stating that it is not aware of any such investigation. The company said, “We are not aware of any investigations,” and reiterated that it continues to cooperate with regulators and law enforcement where appropriate.

Ongoing Dispute Highlights Compliance Scrutiny for Major Exchanges

The lawsuit marks the latest escalation in a dispute between Binance and The Wall Street Journal over reporting tied to sanctions-related crypto flows. At issue are allegations concerning how the exchange handled internal findings related to potentially sanctioned networks.

For users of crypto platforms, particularly those engaged in activities such as trading, payments, or crypto-based betting, compliance practices and regulatory scrutiny can affect platform operations. Allegations related to sanctions compliance may lead to legal proceedings, regulatory reviews, or changes in account policies.

In this case, Binance maintains that it acted on its internal findings by offboarding relevant accounts and reporting to law enforcement. At the same time, the reported involvement of the Department of Justice indicates that authorities are reviewing transactions linked to Iranian actors, though the scope of that review has not been clarified.

Our Assessment

Binance has formally challenged The Wall Street Journal over allegations that it dismantled an internal investigation into Iran-linked crypto flows exceeding $1 billion. The company denies the claims, states that it continued its compliance probe, offboarded accounts, and reported findings to law enforcement. Separately, the newspaper reports that the U.S. Department of Justice is examining whether Iranian actors used the exchange to evade sanctions, while Binance says it is not aware of any such investigation. The dispute centers on compliance practices, internal investigations, and potential sanctions-related activity involving the platform.

ASIC Fintech Chief Says Crypto Is Not a Separate Asset Class – Australia Signals Technology-Neutral Regulatory Approach

Key Takeaways

ASIC Advocates Technology-Neutral Regulation for Crypto

Australia’s corporate and financial services regulator is signaling that digital assets should not be treated as a separate category under the law. Speaking at the Melbourne Money & Finance Conference, Rhys Bollen, head of fintech at the Australian Securities and Investments Commission, said blockchain-based assets perform the same core financial functions as traditional instruments.

According to Bollen, regulation should focus on “economic substance rather than technological form.” He argued that distributed ledger technologies represent new infrastructure for longstanding activities such as capital allocation, payments and risk management. While issuance, transfer and record keeping mechanisms have changed, the underlying economic purpose remains comparable to traditional finance.

Bollen drew a parallel to earlier shifts in financial infrastructure, noting that regulators did not introduce entirely new legal systems when markets moved from paper-based records to electronic systems. Instead, existing principles such as consumer protection, market integrity and systemic stability were adapted to new technologies. He said a similar approach should apply to blockchain-based systems.

Application of Existing Laws to Tokenized Assets and Stablecoins

Under the approach outlined by Bollen, tokenized securities would fall within established securities legislation. Stablecoins, depending on their function, could trigger payment services laws. Other crypto-related products and services may be subject to consumer protection frameworks.

This model contrasts with crypto-specific regulatory regimes introduced in other jurisdictions, including the CLARITY Act in the United States and the Markets in Crypto-Assets framework in the European Union. Rather than creating a standalone crypto statute, Australia is integrating digital assets into its existing regulatory architecture.

Bollen said this method reduces opportunities for regulatory arbitrage. By focusing on economic characteristics instead of labels such as “token” or “digital asset,” regulators can apply consistent standards across financial products that serve similar functions.

For users of crypto trading platforms, payment services or tokenized investment products, this approach means that the legal classification will depend on how a product operates in practice. A digital asset that functions as a security, derivative, managed investment scheme interest or non-cash payment facility may fall within the existing perimeter of financial regulation.

Digital Asset Framework Bill Amends Corporations Act

Australia’s main legislative initiative in this area, the Digital Asset Framework bill, reflects this integration strategy. According to Bollen, the bill does not abandon the current financial services framework. Instead, it introduces targeted amendments to the Corporations Act to incorporate digital asset platforms into established law.

This signals that crypto businesses operating in Australia may be brought under licensing, conduct and disclosure obligations already applicable to traditional financial service providers, depending on the nature of their activities.

In addition, ASIC Information Sheet 225 provides guidance on how existing definitions of “financial product” and “financial service” under the Corporations Act apply to digital assets. The document explicitly rejects the idea that digital assets constitute a discrete asset class for regulatory purposes. Instead, it assesses whether a given product falls within established categories based on function.

For international operators assessing the Australian market, this means regulatory analysis will focus less on branding or technical structure and more on the economic role played by a token or platform.

Focus on Intermediaries and Consumer Harm

ASIC’s regulatory emphasis is directed primarily at intermediaries rather than the tokens themselves. Bollen noted that most consumer harm in the digital asset sector has stemmed from the conduct of crypto platforms offering custody, trading, lending or yield services.

By concentrating oversight on service providers, the regulator seeks to address risks arising from operational practices, governance and client asset handling. This is particularly relevant for centralized platforms that control user funds or facilitate complex financial products.

For market participants, including crypto payment providers and betting platforms that integrate digital assets, intermediary obligations may become a key compliance consideration if their activities fall within the scope of financial services regulation.

Decentralized Structures Present Classification Challenges

Bollen acknowledged that decentralized products and services can raise classification issues. In such cases, the regulatory assessment should focus on practical control and economic benefit rather than formal claims of decentralization.

He stated that where identifiable parties exercise influence over protocol design, governance or economic outcomes, regulatory obligations can and should attach. This indicates that labeling a system as decentralized will not automatically remove it from oversight if individuals or entities retain meaningful control.

For projects structured around decentralized governance or automated protocols, the analysis may therefore examine who makes key decisions, who benefits financially and how the system operates in practice.

Our Assessment

ASIC’s position outlines a technology-neutral regulatory model that integrates digital assets into existing financial law rather than creating a separate asset class. Tokenized securities, stablecoins and platform services are assessed based on their economic function. The proposed Digital Asset Framework bill and ASIC guidance reflect this approach by amending established legislation and focusing on intermediaries. For market participants, regulatory treatment in Australia will depend on how products and services operate, not on their technological label.

Gondi Disables Sell & Repay Contract After $230,000 NFT Exploit – Platform Says Core Functions Remain Secure

Key Takeaways

Exploit Targeted Sell & Repay Smart Contract

Gondi, an NFT lending protocol, reported that a hacker exploited its Sell & Repay smart contract, resulting in the theft of approximately $230,000 worth of nonfungible tokens. According to the company, the affected contract allows borrowers to sell escrowed NFTs and automatically repay outstanding loans on the platform.

The incident occurred at around 8:12 am UTC, when 78 NFTs were transferred out of the protocol. Data from Ethereum block explorer Etherscan confirms the timing and number of assets involved. Blockchain security platform Blockaid estimated the total damage at $230,000.

Gondi stated that it has since disabled the faulty contract. The company also clarified that no other part of its infrastructure was impacted by the exploit.

Updated Contract Had Been Deployed in February

Gondi noted that an updated version of the Sell & Repay contract had been deployed on Feb. 20. The company did not provide technical details on how the attacker was able to exploit the contract following that update.

At the time of reporting, a new fix for the Sell & Repay contract had not yet been deployed. The vulnerable component remains disabled while the company works on remediation.

Despite the incident, Gondi stated that users can continue to engage with other core functions of the platform. These include repaying, renegotiating, and refinancing loans, starting new loans, and buying, selling, trading, and listing NFTs.

Security Review Conducted by Blockaid and Independent Auditor

Following the exploit, Gondi said that both Blockaid and an independent auditor reviewed the platform. According to the company, the review concluded that the system is safe to use in its current state, excluding the disabled contract.

The company emphasized that its focus has shifted to compensating affected users. This includes direct engagement with NFT owners who suffered losses during the exploit.

Blockchain security firms such as Blockaid typically analyze smart contract behavior and transaction patterns to identify vulnerabilities or malicious activity. In this case, Blockaid not only estimated the financial damage but also tracked the movement of stolen NFTs.

Community Efforts Lead to Partial NFT Recovery

Blockaid reported that the attacker had begun selling some of the stolen NFTs. However, members of the NFT community were able to recover and return several assets. Gondi identified recovered items including Doodle, Aluminum Gazer, Lil Pudgy, and Servant of the Muse NFTs.

The company added that discussions are ongoing regarding additional items, including NFTs from the Taxmen collection.

Crypto researcher Tinoch reported that one user, identified by the wallet address 0x8d1…47051, lost approximately $108,000 worth of NFTs. This amount represents nearly half of the total value stolen in the exploit.

Compensation Through Comparable NFT Purchases

Gondi stated that it has already purchased comparable items from the same NFT collections as those stolen and transferred them to affected owners. The company acknowledged that these replacements are not the exact same tokens but described them as a fair and meaningful resolution.

The process of compensation is ongoing. Gondi said it will continue acquiring comparable NFTs for any remaining cases and coordinate directly with each impacted user.

This approach reflects the structure of NFT markets, where individual tokens within the same collection can vary in traits and value. By purchasing items from the same collections, Gondi aims to restore users to a comparable position prior to the exploit.

Operational Continuity After the Incident

According to Gondi, activities unrelated to the disabled Sell & Repay contract remain operational. Users can continue to manage loans and trade NFTs on the platform.

The incident highlights the operational risks associated with smart contract based lending mechanisms. In NFT lending models, escrowed assets are typically locked in contracts that automate collateral management and repayment processes. A vulnerability in one such contract can expose user assets if exploited.

In this case, Gondi maintains that the vulnerability was isolated and that broader platform functionality was not compromised.

Our Assessment

The exploit resulted in the theft of 78 NFTs valued at approximately $230,000 and was limited to Gondi’s Sell & Repay smart contract. The company disabled the affected contract, conducted a review with Blockaid and an independent auditor, and began compensating users through the purchase of comparable NFTs. Other platform functions remain active while remediation of the contract continues.

Flow Foundation Files Court Motion to Halt Korean Exchange Delistings – Legal Action Follows Security Incident and Sharp Token Decline

Key Takeaways

Flow Foundation Seeks Court Intervention Over Korean Delistings

Flow Foundation and its parent company Dapper Labs have filed a motion with the Seoul Central District Court to suspend the termination of trading support for the FLOW token on three major South Korean exchanges. The application targets decisions by Upbit, Bithumb, and Coinone, which announced on February 12 that they would end FLOW trading support effective March 16.

The court reviewed the application on March 9 and will determine the next procedural steps. The legal move comes after Korean exchanges halted trading following a security incident that affected the Flow blockchain in December.

For users in South Korea, the outcome of the court review will determine whether FLOW remains accessible on the affected platforms. At present, Korbit continues to support FLOW trading in the country.

December Security Incident Led to Trading Suspensions

Flow, a layer-1 blockchain, experienced a security incident in December when an attacker exploited a vulnerability in the network. The flaw allowed certain assets to be duplicated rather than minted through standard supply controls. As a result, tokens could be created outside the intended issuance process.

According to the Foundation, the exploit led to $3.9 million in duplicated tokens. The organization stated that no user funds were compromised and that the counterfeit tokens were permanently destroyed. The attacker did not access or drain existing user balances.

Despite these remediation measures, several exchanges suspended FLOW trading due to concerns about the impact of duplicate tokens on asset value and overall network trust. The Korean exchanges later moved toward full delisting, prompting the current legal challenge.

Global Exchanges Continue to List FLOW

While Korean platforms announced plans to terminate support, Flow Foundation stated that major global exchanges have independently reviewed the situation and restored full FLOW services.

The Foundation reported that FLOW remains available on Coinbase, Kraken, OKX, Gate.io, HTX, Binance, and Bybit. It also emphasized its commitment to maintaining open access to FLOW in every market.

For international users, this means that despite regional trading suspensions in South Korea, the token continues to be listed and tradable on multiple large exchanges. The differing approaches between Korean exchanges and global platforms highlight how individual venues respond independently to security incidents.

Token Price and Ecosystem Metrics Show Sharp Declines

Market data indicates that FLOW has faced significant price pressure since the December incident. The token has fallen 75% since late December and is currently trading at $0.043.

The longer term performance shows a more substantial decline. FLOW is down 99.9% from its 2021 all-time high of $42, according to CoinGecko data cited in the report.

On-chain activity metrics have also contracted. Total value locked on the Flow platform has decreased 82% to $21 million since its November 2025 peak, according to DeFiLlama. Data referenced in the report shows that TVL losses accelerated following the security incident.

The broader non-fungible token market has also contracted significantly. Total NFT market capitalization has declined 92% from a mid-2022 peak of around $17 billion to approximately $1.4 billion today, according to CoinGecko.

Flow’s Background and Ecosystem Development

Dapper Labs, known as the creator of the NFT project CryptoKitties, announced the development of Flow in 2019. The blockchain was designed as a new layer-1 network intended to address scalability challenges in Web3 games and digital collectibles.

According to the Foundation, the Flow ecosystem continues to develop, with brands including Disney, the NBA, the NFL, and Ticketmaster actively building on the blockchain.

The recent legal and market developments, however, have placed renewed attention on the network’s stability and token performance. Exchange support remains a critical factor for liquidity and accessibility, particularly in markets where local platforms play a dominant role in trading activity.

Our Assessment

Flow Foundation’s court filing represents a direct response to planned delistings by three major South Korean exchanges following a December security incident. Although the duplicated tokens were destroyed and no user funds were compromised, the event led to trading suspensions and a significant decline in FLOW’s market value and total value locked.

At the same time, the token remains listed on several major global exchanges, and Korbit continues to support trading in South Korea. The court’s decision will determine whether FLOW maintains access to the affected Korean platforms ahead of the announced March 16 termination date.