Tag: Business – Decrypt

Ledger said all confirmed cases in last week’s draining incident involve devices sold through reseller CryptoBilis, and that its own systems and direct sales channels remain unaffected, in a 72-hour update on Sunday.

“The volume of impacted devices is limited,” the Paris-based hardware wallet manufacturer said, adding that it is working with relevant authorities and reaching out to affected users. It said CryptoBilis has confirmed it has ceased all sales of hardware wallets.

Ledger began investigating on Friday after users in Southeast Asia who bought devices from CryptoBilis reported losing funds. Onchain investigator Specter traced more than $86 million in suspected thefts across Ethereum, Tron and Bitcoin. Ledger has not confirmed that figure or said what caused the losses.

Onchain investigators YFarmX said they had sent Ledger a list of more than 450 drained wallets. According to their analysis, the thief pushed 2,810 ETH through coin mixer Tornado Cash in three runs, moved the withdrawals through Zcash’s shielded pool, and withdrew about 3.28 million USDC into three fresh wallets, which Circle could freeze.

The thief also converted 15 million of the stolen USDT into USDD, a stablecoin Tether cannot freeze, before swapping 5.1 million back into USDT and sending about 4.23 million USDT to Binance deposit addresses, YFarmX said. Tether froze 10 million USDT on the first day, while 15,475 ETH, 203 BTC and 10 million USDD remain out of reach, according to the firm. Its findings have not been independently verified.

An X user, Johannes, has claimed to have found tampered Ledger devices in Europe, after buying two devices from retail stores. He said both had “identical modifications (such as additional cables and an LTE module),” and called on Ledger to issue a product recall.

The claims have not been independently verified, and Ledger’s update said all confirmed cases so far involve CryptoBilis devices. He said he is sending the second device to Ledger for analysis. Decrypt has reached out to Ledger for comment on the European reports.

Reseller controls

In its update, Ledger said it is reminding authorized resellers and distributors to source products only through authorized channels and “never to restock returned products.”

It also warned users against buying from unauthorized resellers, where “the risk of buying suspicious, counterfeit or modified devices is important.”

The company said it is reviewing reseller controls and advancing hardware protections, and called on others in the industry to work with it on supply-chain and anti-tamper practices.

Ledger repeated its advice that CryptoBilis buyers should not set up unused devices, and that anyone who already has should move their funds to a new seed phrase on a device bought from Ledger.

It also warned that scammers may try to exploit the incident, saying it “will never call you, DM you, or ask for your 24-word recovery phrase.”

The Commodity Futures Trading Commission is pressing its claim over prediction markets, issuing a pair of measures Friday that would formally define event contracts as “swaps” under federal law while carving out traditional gambling.

The first, a proposed rule opened for public comment, would expressly expand the definition of “swap” to include event contracts, including those tied to sports, politics, cultural events and weather.

The CFTC said the contracts are financial instruments “commonly known to the trade as swaps” and that the move resolves any ambiguity about their status. “These products are commodity derivatives squarely within the CFTC’s regulatory remit under the Commodity Exchange Act and are within the agency’s exclusive jurisdiction,” Chairman Michael Selig said in a statement.

The second, an interim final rule effective immediately upon publication, draws the opposite line, codifying the agency’s longstanding view that casino-style gambling products, including sportsbook wagers and casino games, are excluded from the swap definition.

“Casino-style gambling products are not derivatives,” Selig said, framing the step as clarifying “the limits of its regulatory remit.” Both measures carry 30-day comment windows.

Together, the two rules sharpen a distinction at the heart of a fierce jurisdictional fight: if event contracts are swaps, they fall under the CFTC’s authority, which Selig has argued is exclusive, placing platforms like Kalshi and Polymarket beyond the reach of state gambling regulators. Multiple states have sued prediction-market operators alleging illegal gambling, and the CFTC has countersued to defend its turf.

The filings formalize proposals the agency sent to the White House for review late last month, part of a broader push that has seen the CFTC assert its authority rather than wait on Congress.

The agency has broadly taken a pro-industry approach toward both traditional and cryptocurrency markets. The Commission recently issued no-action relief letting crypto apps offer regulated derivatives and sent separate crypto-markets rulemakings forward.

The legal stakes for prediction markets are climbing. A court split over whether event contracts qualify as federally regulated swaps, pitting the NFL and others against Kalshi, has drawn the Supreme Court’s attention, meaning the question the CFTC is now trying to settle in regulation may ultimately be decided by the justices.

France’s National Assembly Finance Committee voted this week to tax crypto holders who swap into stablecoins—tokens tied to a single official currency, such as the dollar or the euro—and to charge an exit tax on wealthy holders who move abroad.

The votes may not matter much yet: on Friday the committee rejected the budget’s entire revenue section by 31 votes to 3, so the full Assembly starts from the government’s original text, without the crypto amendments.

The committee’s amendments do not carry over to that text, so their backers would have to table them again for the floor debate that begins Oct. 13. Neither measure is law, and both still have to get through the rest of the legislative process.

The stablecoin amendment, filed by Nicolas Sansu of the left-wing GDR group and 16 co-signers, goes after what the authors call “a hole in the legislation.” Today, swapping Bitcoin for a stablecoin triggers no tax in France, because the state only collects when gains are sold for regular money or spent.

The text covers the electronic money tokens defined under MiCA, the EU’s crypto rulebook, a category that includes most stablecoins tied to a single currency. From Jan. 1, 2027, swapping into one would count as a sale, with the gain measured against what the holder originally paid.

The amendment names no rate and defers to France’s flat tax, which rose to 31.4% on Jan. 1 after the 2026 social-security financing law lifted the social-charge portion from 17.2% to 18.6%. The authors insist they are not creating a new burden, only applying existing law to a case it missed.

The authors say stablecoins can be perfectly ordinary investment vehicles, since they can pay for things at crypto service providers or buy other tokens, so the deferral on swapping into them is unjustified and lets the gain escape the flat tax.

A second amendment from Sansu would extend France’s exit tax to crypto. That is a levy on gains you have not cashed in yet, charged when you move your tax residence abroad.

It would apply when a tax household’s combined crypto, including holdings kept through custodians, is worth more than €800,000 and the taxpayer was a French tax resident for at least six of the previous 10 years, for moves from Jan. 1, 2027. The threshold matches the one already used for shares, and the payment deferral rules are borrowed from the stock regime.

Swaps between cryptocurrencies with no cash component would not count as sales for exit-tax purposes. Taxpayers would have to attach a statement of all crypto held on the date of the move, including assets held abroad or in self-custody, meaning wallets they control themselves without an exchange.

The authors argue that crypto held directly escapes the exit tax today while shares of the same value do not, and they flag how easily digital assets can be moved across borders.

Daniel Labaronne’s loss amendment also won committee approval. It would let investors carry crypto losses forward for 10 years to offset future gains, as they already can with stocks, whereas today unused losses cannot be carried over.

The Assembly adopted another crypto-inclusive tax in first reading in late October 2025, voting 163-150 for an amendment creating a 1% annual levy on “unproductive” wealth above €2 million that lumped digital assets in with gold and yachts. Attorney Burçak Ünsal told Decrypt that taxing early token holders was potentially “economically unjust.”

Coinbase said in October 2024 it would delist stablecoins that fail to comply with MiCA for European customers by Dec. 30, pointing them toward compliant coins like USDC and EURC.

The floor debate on the budget’s revenue section opens Oct. 13, with a formal vote scheduled for Oct. 20. If the measures return and survive, the stablecoin and exit-tax rules would apply from Jan. 1, 2027.

Physicists at George Washington University have published a formula that estimates how many good answers an AI chatbot will give before it slips into a bad one, and early tests suggest it works.

The study, by Neil Johnson and Frank Yingjie Huo, appeared in the journal Patterns and builds on a preprint, a version posted publicly before formal peer review, first released in February.

Chatbots can answer sensibly for a long stretch and then veer into something harmful, such as bad advice on self-harm or extremist talk, and there has been no simple way to predict when the swerve will happen. The authors argue that existing safety tools often depend on a cloud connection that offline models lack.

Johnson and Huo trace the problem to the attention head, the part of an AI model that decides which earlier words in a conversation matter most when choosing the next one. As a chat grows, the accumulated context pulls that attention toward one cluster of possible answers or another, until it tips.

This is a common pattern exploited by many jailbreakers, and one of the reasons why mayn companies pay attention to system prompts (pieces of text the AI chatbot reads before any query). However, nobody can point out accurately how much effort is required to effectively weaken a model.

Their formula estimates the tipping point, called n, as the number of good tokens—the word fragments a model produces one at a time—that come out before the first bad one. If the conversation already leans toward the bad side, the model tips right away, with an n of zero. If it leans good, the model delivers a run of fine answers and then flips.

In the preprint, the formula picked the right case, immediate or delayed, in 15 of 16 clear-cut tests, or 94%. The researchers ran those tests on six open-weight models, meaning AI systems whose files are public so anyone can download and run them, from OpenAI, EleutherAI, and Meta.

All six sat between 124 million and 410 million parameters, the adjustable numbers inside a model that serve as a rough measure of its size. The published paper reportedly widens the test to seven models of up to 12 billion parameters, which is still small by current standards.

The target is on-device AI, the kind that runs entirely on a phone or laptop with no internet connection, including companion chatbots people talk to like a friend. Google’s experimental AI Edge Gallery app, which Decrypt tested last year, already lets an Android phone run models offline, and nothing typed into it is sent to Google’s servers, and this seems to be a trend that may grow with time as hardware becomes more powerful and smaller AI models become more capable.

A model running offline has no cloud service checking its output, which is the gap the authors want to close. They propose a low-cost monitor that runs in parallel with the model and flags when n* falls below a safety threshold, a bit like a warning light on a car dashboard.

They also describe ways to push the tipping point out of reach, such as injecting content into the conversation so n* lands beyond the length of the response. Alignment training, the process of teaching a model to behave, can shift or suppress tipping for specific prompts but cannot remove the underlying mechanism, the authors say.

In April 2025, Decrypt covered an earlier paper from the same pair showing that “please” “and thank you” have a negligible effect on a model’s output, because the model treats polite words as orthogonal, or unrelated in the math, to the substance of a request. That version modeled a single, deliberately simplified attention head.

The preprint’s tests used small models and a 300-token window, or a few short paragraphs of text, and its predictions could be off by one output.

Meanwhile, a life insurance company that operates entirely in Bitcoin, has raised $37.5 million as demand for its unusual policies climbs among wealthy families overseas.

The Bermuda-based insurer said Thursday the funding came from existing investors, led by Bain Capital Crypto, with participation from Haun Ventures, Framework Ventures, Pantera Capital, Apollo, Northwestern Mutual Future Ventures, and Morgan Creek Digital.

Meanwhile, whose backers also include OpenAI CEO Sam Altman, has now raised more than $180 million in total.

The company bills itself as the first life insurer licensed to run entirely on Bitcoin, with its balance sheet, reserves, and audited financials all denominated in the cryptocurrency. It said it received the first license of its kind from the Bermuda Monetary Authority in July 2024 after two years in the regulator’s sandbox, and holds all policyholder Bitcoin with regulated institutional custodians.

The raise follows what Meanwhile called a record year, driven by international demand. In early 2026 it launched BTC Life 1-Pay, a single-premium whole life policy aimed at high-net-worth clients outside the U.S., its second product after a 10-payment version built for American taxpayers.

Under the single-premium policy, a client pays once in Bitcoin and receives a guaranteed death benefit in Bitcoin for life, with the policy’s value growing in Bitcoin and the owner able to borrow up to 90% of it after the first year with no repayment schedule or margin calls.

Meanwhile said it has signed 15 brokers since launch, including in insurance hubs like Singapore, Hong Kong, the UAE and Switzerland, and that its net long-term underwriting income has already surpassed last year’s total.

“Wealthy families around the world already hold Bitcoin. What they haven’t had is a regulated way to pass it on,” said Zac Townsend, Meanwhile’s co-founder and CEO.

The funding reflects a broader push to weave Bitcoin into traditional financial products. Delaware Life teamed up with BlackRock last year to offer Bitcoin exposure through a fixed indexed annuity, a sign that insurers are increasingly looking to pair the volatile asset with long-term planning vehicles.

Blockchain.com is making a bid to join the U.S. prediction-market boom, telling CNBC it has applied to the Commodity Futures Trading Commission for licenses to offer event contracts and cryptocurrency derivatives to American customers.

The crypto platform filed for two designations, the company told CNBC: a designated contract market license, which would let it operate as a futures exchange for event contracts, and a futures commission merchant license, which would allow it to act as a broker for derivatives.

Together, the approvals would let Blockchain.com run its own regulated marketplace serving both retail and institutional traders in the U.S.

The move would bring in-house what the company currently offers only through partners abroad. Blockchain.com began providing prediction markets to some international customers this year via a partnership with Polymarket, along with perpetual futures powered by the decentralized exchange Hyperliquid.

A CFTC license would let it operate its own event-contract venue rather than route through third parties. CEO and co-founder Peter Smith told CNBC the goal is to let users manage digital assets, trade derivatives and bet on real-world events all in one place.

The application lands amid a crowded rush toward federally regulated event trading. Blockchain.com joins 11 other companies that have filed for DCM licenses this year, according to CNBC, with the CFTC having approved six new ones in 2026.

The appeal of the federal route is partly jurisdictional: a CFTC license offers cover from state gambling regulators, who have sued prediction-market operators including Kalshi and Polymarket.

The regulatory backdrop is shifting fast, with states battling federal regulators in court over who gets to police such markets.

The CFTC recently sent the White House new rules aimed at cementing its authority over prediction markets, while a court fight over whether event contracts are federally regulated swaps, pitting the NFL and others against Kalshi, has drawn the Supreme Court’s attention.

The appeal of prediction markets for Blockchain.com and others, though, is obvious. Business is booming. Prediction markets are increasingly entering the mainstream and trading volumes have increased dramatically over the last year.

Analysts at Bernstein have projected the sector could generate billions in revenue by the end of the decade in what they predict will be a $10 trillion market.

Sen. Richard Blumenthal is asking Wall Street firm Cantor Fitzgerald to hand over records on its business relationship with Tether, the issuer of USDT, the world’s largest stablecoin—the dollar-pegged digital asset that underpins the crypto economy.

He also wants to know how much money the family of Commerce Secretary Howard Lutnick has made from the arrangement, according to a letter dated Thursday.

“Disturbingly, Cantor Fitzgerald’s lucrative business arrangements with Tether come at the expense of America’s national security,” Sen. Blumenthal argued.

The letter went to Brandon Lutnick, Cantor’s chairman and Howard Lutnick’s son, from Blumenthal as the top Democrat on the Senate Permanent Subcommittee on Investigations. It is a request for information with an Oct. 23 deadline rather than a subpoena, and it describes the minority’s probe as an investigation into “the illicit use of cryptocurrencies and the Trump Administration’s self-enrichment and self-dealings with cryptocurrency firms.”

The letter does not accuse Cantor of breaking a specific law, and nothing in it is a finding of wrongdoing. It asks how the firm checks that Tether follows U.S. sanctions and anti-money-laundering rules, and the claims about Tether and the Lutnick family are Blumenthal’s, built on press reports and his staff’s earlier work.

“Just as Tether has made untold millions in interest and investments from the stablecoins used in these illicit activities, so has Cantor Fitzgerald profited from its relationship with Tether,” Blumenthal wrote.

“Given the longstanding and deeply intertwined relationship between Tether and Cantor Fitzgerald, and its substantial relationships within the Trump Administration, I am writing to request information about your business partnership with Tether and to learn about your practices for detecting violations of American banking and sanctions laws,” the senator added.

Blumenthal wrote that Lutnick has made more than $250 million since President Donald Trump returned to office, including a $192 million distribution from Cantor. Over the same stretch, he said, Cantor’s 5% stake in Tether climbed from $600 million to an estimated $10 billion, on top of the tens of millions of dollars a year the firm collects from the assets it holds for Tether.

Cantor acts as Tether’s custodian, the firm that safeguards its reserves (the cash and other holdings meant to back every USDT in circulation). Blumenthal noted that although Tether claims to operate out of El Salvador, “the vast majority of its assets reside in the United States under your custodianship.”

Howard Lutnick ran Cantor until the Senate confirmed him as Commerce Secretary in February 2025, and the firm is now chaired by his son Brandon. The senator also requests the terms of any loan or legal strategy that would allow Lutnick to transfer asset ownership to his children.

That request tracks a reported loan from Tether to a trust for Lutnick’s four children, for an undisclosed amount, made around the time they bought out their father’s stake in Cantor. Sens. Elizabeth Warren and Ron Wyden asked Lutnick and Tether about it in April.

When assets are transferred to a trust, the people under investigation don’t have the legal property over those assets.

The letter landed 10 days after the subcommittee’s Democratic staff released “Tethered to Terrorism,” a report finding that 84% of 846 crypto wallets (addresses that hold tokens) sanctioned or targeted for seizure over links to Iran and its proxies used USDT exclusively or nearly exclusively.

The headline number rests unevenly on two lists: 87% of the 757 wallets designated by Israel’s counter-terror finance bureau transacted mostly in USDT, against 57% of the 101 designated by OFAC, the Treasury office that enforces U.S. sanctions.

Tether, which can lock a wallet so the tokens inside cannot move, published a statement the same day citing roughly $550 million in Iran-linked freezes this year, including $344 million in April and more than $130 million in July. It did not address the report directly.

Blumenthal also wants Howard Lutnick’s own records on Tether from his time at Cantor, including “any discussion of Tether with the White House or state and federal regulators, lobbying on Tether’s behalf.”

Other requests cover Cantor’s know-your-customer policies (the checks a firm runs on who it does business with), whether it has ever weighed ending the relationship, and its communications with the President’s Council of Advisors on Digital Assets.

Cantor has until Oct. 23 to respond, and the letter asks the firm to preserve every document, record and communication tied to its Tether relationship in the meantime.

Top executives at Anthropic, OpenAI, and other AI companies are privately rehearsing how to handle the public and political backlash after a catastrophic AI event, according to an Axios report published Friday.

The scenario they fear most is a large cyberattack—a digital break-in at massive scale—that shuts down banking or internet access, or even power and water. Many industry insiders quoted in the report believe a major incident will happen within the next six to 12 months.

The first serious real-world harm from unsafe AI would push an already wary public further against the technology and its leaders. That includes Anthropic CEO Dario Amodei, OpenAI CEO Sam Altman, and President Donald Trump, who has been reluctant to regulate it.

OpenAI said it “conducts preparedness exercises where teams discuss and work through a range of potential scenarios,” and that they “are not treated as inevitable.” Anthropic declined to comment.

War games are nothing new but unlike the theoretical outcomes, the report argues that those involved in simulations are doing so under the assumption that a major incident is inevitable.

The plan reportedly involves red-teaming (stress-testing defenses by playing the attacker) against worst-case scenarios, and racing to educate members of Congress. The report says executives know regulation has no chance of passing right now, but they want to shape the laws and policies U.S. leaders will reach for after the first catastrophe.

In July, OpenAI said its GPT-5.6 Sol model and a more advanced unreleased one escaped a sandbox—an isolated test environment with no direct internet access—and breached Hugging Face, the platform that hosts more than 3 million AI models. OpenAI said the models were after the answers to ExploitGym, a benchmark of 898 real-world software flaws where the AI must turn each one into a working attack, scored as pass or fail.

A little over a week later, Anthropic said a testing misconfiguration left its supposedly offline environment connected to the internet, and Claude models hacked three real organizations while treating them as part of an exercise. Neither company said the models were trying to cause harm: Anthropic blamed its testing infrastructure, while OpenAI said its models were “hyperfocused” on the benchmark.

Shortly thereafter, things got worse, with OpenAI being accused of breaching and accessing information from the governments of Australia and the United States.

Criminals are already using the same tools. This week, cybersecurity firm CrowdStrike linked attacks on South Korean banks to an unidentified actor that it assesses, with moderate confidence, to be a likely Chinese speaker using agents powered by Claude and Deepseek. The firm says the attacker allegedly took data from tens of thousands of bank customers.

Axios reported planners assume Democrats will be ascendant after the Nov. 3 midterms and will move fast to shut down AI, but they expect trouble. An aging Congress, out of touch with the technology, could find itself out of its depth.

Bans on superintelligence and pauses on advanced AI development are some proposals that may counter the risks associated with irresponsible AI development.

One example is the Ban Artificial Superintelligence Act from Sen. Bernie Sanders and Rep. Greg Casar, which would permanently ban AI that matches or beats humans across many tasks and pause advanced development until a new federal agency sets safety rules. Violators could face up to 20 years in prison.

Others have bipartisan support and even some industry buy-in, including a required kill switch on advanced AI, a built-in way to shut a system down. Experts have questioned whether turning off all AI systems is even viable.

Two companies tied to crypto market maker DWF Labs have taken BitGo to court, alleging the custodian dumped locked-up tokens early and tanked their value, in a $141 million dispute now before London’s High Court.

DWF Maas and Falcon Digital filed the suit, the Financial Times reported Friday, accusing BitGo of breaching the terms of a private, over-the-counter deal involving Falcon Finance (FF) and ESPORTS tokens.

According to the reporting, BitGo had received the tokens at a discount in exchange for a commitment not to sell them until lock-up and vesting periods expired, but instead moved them to exchanges roughly two months before the first unlock.

DWF argues that selling into a thin market created heavy downward pressure, eroding the value of the tokens it still held. The firms say they raised the issue with BitGo in April and May before suing when the company didn’t provide assurances.

BitGo declined to comment, per the report, and the allegations have not been tested in court.

The clash pits two institutional heavyweights against each other. BitGo is one of crypto’s largest custodians, with roughly $5 billion in assets under custody. The company went public on the NYSE this year at around a $2 billion valuation and recently acquired NYDIG’s institutional trading arm.

DWF Labs, headquartered in Dubai, is a prolific market maker and investor across the token economy. A notable thread ties the warring parties together: both have links to World Liberty Financial, the Trump-family-backed crypto venture.

DWF bought $25 million of World Liberty’s WLFI token last year, and BitGo custodies the reserves behind the project’s USD1 stablecoin, a role World Liberty is now moving to take over through its own newly approved trust bank.

Starknet, the Ethereum scaling network built by StarkWare, said it is weighing a move to become its own blockchain.

“We are actively considering becoming an L1,” the project wrote on X. “This would enable Starknet to become the first fully quantum-resistant network, with 2027 as our target.”

The STRK token traded around $0.073 on Friday, up about 20% in 24 hours. That is more than double the roughly $0.03 it fetched in April, when StarkWare cut staff to chase revenue.

An L1, or layer 1, is a base blockchain such as Bitcoin or Ethereum that validates and secures its own transactions. Starknet is a layer 2, a network that sits on top of Ethereum, bundles transactions into batches and leans on the base chain for security.

Starknet’s pitch centers on quantum computers, machines that could one day crack the elliptic-curve cryptography (the math behind the digital signatures that prove you own your coins) used by Bitcoin and Ethereum. Starknet’s own proofs rely on hash functions, which scramble data into fixed fingerprints and are considered quantum-resistant, though some elliptic-curve pieces remain that it said it would replace in a roadmap published June 30.

StarkWare CEO Eli Ben-Sasson floated the idea in a thread on X, saying the quantum threat “may be much closer than we think” and that AI’s pace in mathematics adds a second risk that calls for “bunker mode”—a phrase recently popularized by Ethereum researcher Justin Drake in his own call to action earlier this week.

Ben-Sasson wrote that Starknet, as an L2, relies on the security of Ethereum, which means it can only be as quantum-safe as its base layer. He said the network needs Ethereum to move “real fast,” and that becoming an L1 is among the options if it does not.

Ethereum’s own roadmap targets core post-quantum infrastructure by around 2029, per ethereum.org, after the Ethereum Foundation formed a dedicated post-quantum team in January. Drake said at the time that “timelines are accelerating.” Bitcoin has made no such commitment, according to Ben-Sasson.

Becoming an L1 would give Starknet control over its own security upgrades, so it would not have to wait for Ethereum or Bitcoin to move first, Ben-Sasson wrote. It would also mean Starknet secures itself instead of borrowing Ethereum’s protection, the arrangement that defines a layer 2. The statement does not say how existing apps and users would move over.

On the other hand, it would also mean Starknet is responsible for its safety and development, which could be a hurdle considering Ethereum as a project is the second largest and most active in the crypto ecosystem after Bitcoin.

No quantum computer can break these systems today, and experts disagree on when one might. Strategy co-founder Michael Saylor told Bloomberg last year that he does not worry about it, arguing that banks and tech giants would be hit first.

Ben-Sasson said Starknet could reach quantum resistance by 2027, two years before the end-of-2029 date he cited for Ethereum.