Category: Business

Police officers from the Gangnam Police Station in Seoul, South Korea didn’t adhere to crypto custody guidelines, leading to the loss of more than $1.4 million in Bitcoin at today’s prices, per a new report from local media outlet Dong-A Ilbo. Now two suspects have been arrested in relation to the swiped Bitcoin.

After confiscating 22 Bitcoin from a company that was hacked in 2021, police were supposed to securely custody the crypto in an offline or cold wallet that they controlled. Instead, they allowed the funds to sit in a wallet managed by a third-party and didn’t even have the seed phrase to access the funds, the report said.

“When seizing virtual assets, it is appropriate to transfer them to the investigative agency’s hard wallet and store them in a separately installed safe,” the seized asset guidelines from the National Police Agency recommended, according to the report.

Without control of the wallet, the police lost the funds in 2022 when the firm with the seed phrase borrowed Bitcoin from an individual identified as “Jeong,” who was also given the wallet’s secret phrase.

The funds were only discovered to be missing this year after a review by the Gwangju District Prosecutors’ Office found a different case of 320 Bitcoin that were missing—around $21 million worth.

Now in connection to the 22 BTC missing from the Gangnam Police Station, two individuals have been arrested by the Gyeonggi Northern Provincial Police Agency, which is conducting an investigation. 

“We are currently investigating the specific circumstances, including how the Bitcoin was leaked out,” a police official said, according to Chosun Daily.

While the investigation is ongoing, it is known that a member of the original hacking investigation team was “indicted on bribery charges” last year, and the third-party firm in question “reportedly offered bribes in exchange for ensuring the investigation proceeded in their favor,” Dong-A Ilbo’s report says. 

The ordeal follows increased scrutiny on South Korean financial regulators after they failed to find an internal system flaw which led to $43 billion in erroneous Bitcoin distributions on crypto exchange Bithumb earlier this month.  

Instead of sending 2,000 South Korean won (around $1.40) to users as part of a promotion, the exchange accidentally sent as much as 2,000 BTC—about $135 million at today’s prices—to hundreds of users.

Meta’s use of artificial intelligence to police its platforms is generating large volumes of low-quality reports that are draining resources and slowing child abuse investigations, according to a report by The Guardian.

The news comes as New Mexico law enforcement officials testified last week that AI-generated reports are overwhelming investigators and slowing child exploitation cases.

Officers with the Internet Crimes Against Children Task Force program specifically cited Meta’s automated systems, saying they generate thousands of unusable tips each month that are forwarded to law enforcement.

“We get a lot of tips from Meta that are just kind of junk,” Benjamin Zwiebel, a special agent with the ICAC taskforce in New Mexico, testified during the state’s trial against the company.

Another ICAC officer, speaking anonymously, told The Guardian the department’s cybertips doubled from 2024 to 2025. 

“It’s pretty overwhelming because we’re getting so many reports, but the quality of the reports is really lacking in terms of our ability to take serious action,” they said.

In a statement shared with Decrypt, a Meta spokesperson said the company has long cooperated with law enforcement and noted that the Department of Justice and the National Center for Missing & Exploited Children have praised its reporting process. 

“In 2024, we received over 9,000 emergency requests from U.S. authorities and resolved them within an average of 67 minutes and even more quickly for cases involving child safety and suicide,” the spokesperson said. 

“Consistent with applicable law, we also report apparent child sexual exploitation imagery to NCMEC and support them to prioritize reports, from helping build their case management tool to labeling cybertips so they know which are urgent,” they added.

ICAC officers, however, said some of the reports sent by Meta are not criminal in nature, while others lack credible evidence needed to pursue a case.

The increase follows the Report Act, which was signed into law in May 2024 and expanded reporting requirements to include planned or imminent abuse, child sex trafficking, and related exploitation, while requiring companies to preserve evidence longer. 

By the numbers

Meta remains the largest source of reports to NCMEC’s CyberTipline, accounting for about two-thirds of the 20.5 million tips received in 2024, down from 36.2 million in 2023. The decline has been attributed in part to changes in Meta’s reporting practices.

In its August 2025 integrity report, Meta said Facebook, Instagram, and Threads sent more than 2 million CyberTip reports to NCMEC in the second quarter of 2025. Of those, more than 528,000 involved inappropriate interactions with children, while more than 1.5 million involved the sharing or re-sharing of child sexual abuse material.

Despite those figures, JB Branch, a policy advocate at Public Citizen, said the increased reliance on AI has made the Report Act less efficient for investigators reviewing cases, arguing that while algorithms have long helped reduce moderators’ workload, human reviewers were the most effective filter.

“Part of the problem here is that a lot of these tech companies have laid off content moderators and replaced them with AI security features,” Branch told Decrypt. “As a result, there is an overabundance of false positives being selected out of an overabundance of caution.” 

In the past, Branch said, there were typically more human reviewers in the review chain who could identify and remove content that did not warrant escalation.

“Because these companies have removed human content moderators or reviewers from the chain, way more things are getting passed off because they want to err on the side of caution,” he said. “They’re basically dragging a broader net and capturing things that don’t even qualify, and they’re relying heavily on AI tools to do that.”

Investigators say the impact of faulty AI-generated tips is now being felt inside the task forces reviewing them.

“It is killing morale. We are drowning in tips, and we want to get out there and do this work,” an ICAC officer reportedly said. “We don’t have the personnel to sustain that. There’s no way that we can keep up with the flood that’s coming in.”

A bipartisan group of lawmakers introduced a bill Thursday that would exempt certain decentralized software developers from criminal liability.

With crypto’s stalled market structure bill poised to contain similar language, what does the bill’s introduction mean for the state of privacy-focused crypto legislation in Washington?

The new bill goes further than similar language currently being debated in market structure legislation—but should not be seen as an indication that the market structure bill’s language on developer protections is too weak, nor that the market structure bill itself is doomed, a source familiar with the thinking behind the new bill told Decrypt.

The new bill, dubbed the Promoting Innovation in Blockchain Development Act, would formally amend the language of a U.S. criminal statute that has been successfully used—by both the Joe Biden administration and the current Donald Trump administration—to prosecute crypto software developers.

The statue, U.S. code 1960, defines an illegal money transmitting business. Today’s legislation would amend the code to ensure it applies only to individuals who “exercise control over currency.” It was introduced in the House today by Reps. Scott Fitzgerald (R-WI), Ben Cline (R-VA), and Zoe Lofgren (D-CA).

Last year, an Ethereum software developer was found guilty by a Manhattan jury of violating code 1960 for developing a crypto privacy tool called Tornado Cash. The developer argued that because the software was decentralized, and he did not take custody of user funds, he should not be considered the operator of an illegal money transmitting business.

Some months later, the Trump Department of Justice secured guilty pleas under code 1960 from two Bitcoin software developers who created a similar platform called Samourai Wallet. The developers are both currently serving sentences in federal prison.

“This bill is critically important for engineers,” the DeFi Education Fund, an industry advocacy group, said today of the Promoting Innovation in Blockchain Development Act.

“It makes it clear that software developers who do not take custody of or control other people’s money can build neutral technology, here at home, without worrying about being criminally prosecuted as if they are a financial intermediary,” the group said.

The crypto market structure bill is likely to include language addressing code 1960—but not language that actually rewrites the statute itself. The language would, instead, order that “non-controlling developer[s]” not be treated as engaged in money transmitting under code 1960. 

Language in the bill surrounding decentralized finance, or DeFi, is currently in relative flux, however, as lawmakers and industry stakeholders attempt to salvage the legislation after months of delays. DeFi refers to the collection of financial applications that exist natively on blockchain networks, circumventing the need for third-party intermediaries such as banks.

DeFi language in the bill, though, while not finalized, is unlikely to be the hill the bill dies on, sources familiar with the matter told Decrypt. Industry leaders and the banking lobby are currently locked in another disagreement regarding stablecoin rewards, while Senate Democrats and the White House remain at an impasse on language regarding conflicts of interest and President Trump’s numerous crypto ventures.

Lawmakers have urged that the bill needs to see significant progress in the coming weeks, or it risks falling by the wayside as Congress grinds to a halt in the spring ahead of November’s midterms.

Jack Dorsey’s Block Inc said it will cut more than 4,000 jobs, over 40% of its workforce, as part of a broad restructuring unveiled alongside its fourth-quarter and full-year 2025 earnings.

Shares of the New York Stock Exchange-listed payments company jumped more than 23% in after-hours trading, Yahoo Finance data shows.

The scale of the layoffs places Block among the companies carrying out the largest workforce reductions in the fintech sector so far this year, as payments and financial technology firms grapple with slower growth, tighter capital conditions, and increased scrutiny of operating costs.

In a 8-K filing with the Securities and Exchange Commission on Thursday, Block said the workforce reduction is intended to better align its organizational structure with its “operating model and strategic priorities.”

Block said it expects to record between $450 million and $500 million in restructuring charges, largely related to severance, notice-period pay, employee benefits, and other cash costs, as well as non-cash expenses tied to the vesting of share-based awards. 

Most of the charges are expected to be recognized in the first quarter of fiscal 2026, with the restructuring largely completed by the end of the second quarter.

The company cautioned that the estimates are based on assumptions and that actual costs could differ materially.

As of the end of 2025, Block employed just over 10,200 full-time workers globally, according to its 10-K annual filing with the regulator, underscoring the scale of the cuts.

Cash App had 59 million monthly transacting users in the U.S. at year-end, bringing in $316 billion of customer inflows during 2025.

Block’s core business spans consumer and merchant payments through Cash App and Square, alongside a long-running push into Bitcoin products, including trading, self-custody, and merchant payments.

Block now reports its business across three revenue categories: commerce enablement, financial services, and its Bitcoin ecosystem, which together generated $10.4 billion in gross profit in 2025, per its annual filing.

Block said it would hold an earnings conference call and webcast later Thursday to discuss its results for the quarter and year ended December 31, 2025.

The Office of the Comptroller of the Currency on Wednesday proposed rules to implement the GENIUS Act, laying out how payment stablecoins would be issued and supervised under the agency’s jurisdiction.

In a notice of proposed rulemaking issued Wednesday, the OCC said it is launching a 60-day public comment period to determine how payment stablecoins are issued, backed, supervised, and potentially shut down under federal oversight.

Wednesday’s move aims to operationalize the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act, the first federally established stablecoin framework that passed into law last July.

The law generally prohibits anyone other than a “permitted payment stablecoin issuer” from issuing a payment stablecoin in the U.S. and bars digital asset service providers from offering non-compliant stablecoins to U.S. users.

“The regulations effectively bring the industry into the traditional finance world with significant oversight and connectivity with the banking industry,”  Musheer Ahmed, founder and managing director of Finstep Asia, told Decrypt.

The U.S. market is expected to see a host of “regulated stablecoins from non-banks, payments, and crypto institutions” for “tokenized TradFi use cases.” 

The OCC’s draft covers reserve asset standards, mandatory redemption at par, liquidity and risk management controls, audits, supervisory examinations, custody requirements, and application pathways for new issuers. 

It also introduces a “capital and operational backstop” and amends existing capital adequacy and enforcement rules.

The agency said it “will have regulatory or enforcement authority over certain permitted payment stablecoin issuers,” including subsidiaries of national banks and federal savings associations, Federal qualified payment stablecoin issuers, and certain State qualified issuers. 

“In addition, the OCC will have regulatory authority over foreign payment stablecoin issuers,” the proposal says, an expansion that could pull offshore issuers seeking U.S. access into federal oversight.

Notably absent are Bank Secrecy Act and sanctions rules, which the OCC said will be addressed separately with the Treasury Department.

The new stablecoin regime is expected to kick in no later than January 2027, but could begin as soon as 120 days after regulators finalize implementing rules, shortening the transition window if rulemaking moves faster than the statutory 18-month deadline.

Last August, the banking groups wrote to Congress demanding closure of “several loopholes” in the GENIUS Act, warning that third-party yield offerings on stablecoins could still trigger major deposit flight.

OCC Chief Jonathan Gould has previously dismissed fears of a sudden deposit crisis, telling ABA conference attendees in October that any material deposit flight “would not happen in unnoticed fashion” and “would not happen overnight.”

To that end, Ahmed said regulated stablecoins could be “potentially safer than traditional banks” in stress events, noting banks operate on 10–20% capital ratios while stablecoin issuers are mandated to hold 100% reserves for 1:1 redemptions, making them “fairly solvent” if rules are maintained.

In an extreme market scenario, Ahmed said, “one could say that the lender of the last resort will be the U.S. Fed,” not by directly backstopping issuers, but by “supporting the underlying assets that form stablecoin reserves — largely US treasuries and cash equivalents.”