Market Update & Industry News - Week ending 21 February 2025

🔷 Digital asset exchange Bybit reported a hack that resulted in the theft of approximately $1.4 billion in Ethereum tokens. Bybit’s offline “cold” wallet was compromised, leading to the unauthorised funds transfer. Bybit’s CEO confirmed the incident and assured users that the exchange remains solvent and plans to compensate any unrecovered assets. The hack has been allegedly linked to North Korea’s Lazarus Group. Ethereum’s price experienced a decline following the hack. 

Appold view: Compromised cold wallets will not sit well with clients, especially institutions assessing their options for sizeable deposits. This underscores the need by many digital asset Exchanges and Custodians for stronger controls, enhanced governance, more effective risk management and deeper clarity on institutional-grade security measures to protect digital assets and bring confidence back.

🔷 Leading digital asset market maker Wintermute announced plans to expand into the U.S. by opening a New York office and introducing over-the-counter (OTC) trading products. Wintermute expressed optimism about potential regulatory changes under the Trump administration, anticipating a more favourable environment for digital asset firms. 

Appold view: Wintermute’s expansion into the US is no surprise, as many firms in this space consider similar strategies. The challenges now are whether to keep sizeable UK & European operations, based on the regulatory environment, or scale down with potential job transfers and losses.  

🔷 The Government of Nigeria is suing Binance for $79.5 billion in economic damages and $2 billion in back taxes, accusing the exchange of contributing to naira depreciation and facilitating tax evasion. Binance is contesting the claims and working with Nigeria’s tax authorities to resolve past liabilities.

Appold view: There is a significant history of tension between Nigeria and Binance, with the Nigerian government appearing threatened by digital assets, particularly as the naira has faced devaluations. This lawsuit appears to escalate these ongoing issues in an attempt to monetise the alleged damage.

🔷 Global digital assets exchange Coinbase announced that the U.S. Securities and Exchange Commission (SEC) “agreed in principle” to drop the case against Coinbase over alleged violation of US securities law. 

Appold view: Nasdaq-listed Coinbase has stated this, but not the SEC yet. Based on recent activities, it is inevitable and reflects the significant shift in US regulatory strategy. It is also a welcome relief for major exchanges as it reduces their legal risks.

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