Cryptocurrency

Truebit Exploit Drives $26M Token Over Issuance Amid Regulatory Crackdown as CLARITY Act Gains Momentum

Picture from Freepik

TL;DR

Truebit smart contract exploited to mint $26M in unauthorized TRU tokens via Solidity 0.6.10 vulnerability, exposing blockchain token systems to similar risks
Bitcoin price surges to $96,000 as institutional ETF inflows reach $1.2B, while DOJ opens criminal investigation into Fed Chair Jerome Powell
Strive acquires Semler Scientific, expanding Bitcoin treasury to 12,797.9 BTC after purchasing 123 coins at $91,561 each, triggering 17% stock dip
Newrez becomes first top-25 U.S. mortgage lender to accept crypto assets for down payments and reserves, aligning with 45% Gen Z/Millennial crypto ownership
NYC Token collapses 81% within 30 minutes of launch, with $2.3M liquidity withdrawn by insiders, prompting rug-pull allegations and DOJ scrutiny
Solana price targets $190 as spot SOL ETF inflows remain positive, with $10.7M net inflow in latest session and $2B+ year-to-date total inflows

Truebit Smart Contract Exploit Sparks $26M Token Over Issuance and Regulatory Pressure

The Truebit smart contract was compromised via an unchecked arithmetic underflow in Solidity 0.6.10, allowing an attacker to bypass ETH payment validation and mint 26 million TRU tokens at a cost of approximately 0.3 ETH. The vulnerability resided in the calculateReward() function, which returned a maximal uint256 value when msg.value was zero.

What was the market impact?

TRU’s price dropped 27% from $0.98 to $0.71 within 24 hours of the exploit. Trading volume surged 200% to $12.9 million, reflecting arbitrage and liquidation activity. Truebit’s DeFi total value locked (TVL) declined 12% from $210 million to $185 million. ETH’s price remained stable, indicating the exploit’s financial footprint was negligible relative to overall market liquidity.

How does this affect regulatory frameworks?

The Digital Asset Market Clarity Act (CLARITY), released concurrently, introduces a functional-lifecycle oversight model for digital assets. It explicitly identifies unchecked arithmetic in smart contracts as a material risk, requiring pre-deployment audit certification. If enacted—estimated at 80% probability—the Act mandates registration of token issuance mechanisms with the Digital Asset Regulatory Authority (DARA) and authorizes SEC-CFTC joint review of non-compliant issuances.

What regulatory actions are likely?

Truebit faces potential SEC enforcement, including a temporary trading injunction until over-minted tokens are burned or re-allocated under court supervision. Compliance costs are estimated at $1.2 million for a full audit and migration to Solidity 0.8.20. Custodians such as Coinbase and Kraken must disclose exposure to flagged contracts under CLARITY’s Regulation Best Interest clause, likely reducing institutional demand for TRU and similar assets.

What technical mitigations are recommended?

Upgrade to Solidity 0.8.20 with built-in overflow protection.
Implement formal verification using tools like Certora or Mithril.
Enforce on-chain token minting caps via governance.
Deploy a protocol-level kill-switch to pause minting during emergencies.

These measures align with CLARITY’s audit and risk-mitigation requirements and reduce exposure to repeat exploits.

What broader risks are exposed?

The exploit coincided with a Trust Wallet v2.68 breach using the same Solidity 0.6.x vulnerability pattern, confirming a systemic risk across DeFi protocols using legacy compiler versions. Without mandatory upgrades, similar attacks are probable on other contracts with unchecked arithmetic operations.

Bitcoin Hits $96,000 Amid $1.2B ETF Inflows as DOJ Probes Fed Chair

Bitcoin price reached $96,000 on January 13, 2026, marking a 4.4% daily gain and a 7-day high. Market capitalization rose to $1.92 trillion, supported by $1.2 billion in net inflows into U.S.-listed Bitcoin ETFs. Trading volume exceeded $88 billion, reflecting increased participation from institutional and retail investors. Price action broke above the $94,000 resistance level, forming a bullish flag pattern with key support at $91,000–$92,000.

How are ETF inflows affecting market dynamics?

Net inflows into Bitcoin ETFs totaled $1.2 billion, the largest weekly amount since the 2024–25 ETF expansion began. Concurrently, $260 million exited Ethereum-linked ETFs, and over $1 million left altcoin products. This capital reallocation signals a preference for Bitcoin over other digital assets, reinforcing its role as the dominant institutional crypto holding.

What is the impact of the DOJ investigation into Fed Chair Jerome Powell?

On January 13, 2026, the Department of Justice opened a criminal investigation into Federal Reserve Chair Jerome Powell. Despite this high-profile regulatory development, Bitcoin maintained its upward trajectory, gaining 3–4.8% while equities and the dollar declined. Gold prices hit record highs above $4,600 per ounce, indicating a broader flight to traditional safe havens. Bitcoin’s resilience suggests market perception of it as a distinct asset class, insulated from central bank political risk.

How do ongoing regulatory delays influence Bitcoin?

The Senate Agriculture Committee delayed markup of the Digital Asset Market Structure CLARITY Act, creating regulatory uncertainty. However, Bitcoin’s price did not reverse, suggesting investors view it as the most politically resilient digital asset. The Senate Banking Committee’s scheduled markup on January 15 remains a key future catalyst for market clarity.

What is the outlook for Bitcoin?

Bitcoin’s current rally is driven by institutional demand, strong volume, and technical breakout momentum. The $96,000–$97,000 range is the next resistance level; sustained holding above this level would confirm a new bullish phase. Support remains at $91,000–$92,000. Further regulatory escalation, particularly if linked to Federal Reserve policy or Supreme Court rulings on monetary authority, could trigger risk-off sentiment and downward pressure.

Strive Acquires Semler Scientific, Expands Bitcoin Treasury to 12,797.9 BTC Amid 17% Stock Dip

Strive added 5,048.1 BTC from the Semler Scientific acquisition and purchased an additional 123 BTC at $91,561 each, increasing its total Bitcoin holdings to 12,797.9 BTC. The cash outlay for the new purchase totaled approximately $11.26 million. The expanded treasury is valued at $1.17 billion based on the purchase price.

Why Did Strive’s Stock Decline 17% Despite Bitcoin’s Rally?

Strive’s stock dropped 12% to 17% on the announcement, despite Bitcoin’s 24-hour price gain of 3% to 4.4% and a market cap near $1.9 trillion. The decline reflects investor concern over dilution, the $11.26 million cash expenditure relative to balance sheet size, and execution risk associated with the acquisition, not underlying asset value.

What Regulatory Factors Are Pressuring Strive’s Equity?

Regulatory uncertainty is amplifying equity volatility. The U.S. Department of Justice initiated a criminal probe into Federal Reserve Chair Jerome Powell, increasing systemic risk perception. The Digital Asset Market Structure CLARITY Act remains delayed in Senate markup, prolonging regulatory ambiguity. The SEC-CFTC jurisdictional dispute over stablecoins and DeFi further complicates the operating environment for crypto-linked firms.

How Does Strive’s Balance Sheet Adjust Post-Acquisition?

Strive executed a 1-for-20 reverse split on Class A/B shares to improve per-share metrics. It retired a $100 million convertible note and proposed a $20 million loan from Coinbase, contingent on market conditions. Debt reduction improves leverage, but reliance on Coinbase introduces counterparty risk amid ongoing exchange scrutiny.

What Is the Valuation Gap Between Bitcoin Holdings and Market Cap?

Strive’s Bitcoin treasury, valued at $1.17 billion, implies a market discount of approximately 15% on its equity. This gap persists due to regulatory sensitivity and investor skepticism toward corporate Bitcoin exposure, not Bitcoin price weakness. Bitcoin’s yield on corporate treasuries exceeds 15%, supporting potential cash flow generation for debt servicing.

What Are the Key Catalysts for Equity Recovery?

Price realignment requires two conditions: sustained Bitcoin price stability above $94,000 and resolution of key regulatory milestones, including the CLARITY Act markup and DOJ probe developments. The 15% month-to-date stock recovery prior to the dip suggests underlying bullish sentiment remains, contingent on regulatory clarity.

How Does Market Context Influence Strive’s Position?

Bitcoin trading volume exceeded $52 billion, with institutional demand rising amid macro risk aversion, as evidenced by record highs in gold and silver. The rally confirms breakout momentum, yet corporate equity markets remain disconnected from asset performance due to structural regulatory risks.

Newrez Leads Crypto Mortgage Adoption as Gen Z Demand and Regulatory Frameworks Align

Newrez has become the first top-25 U.S. mortgage lender to accept Bitcoin, Ethereum, and other on-chain assets as verifiable down payments and reserves without mandatory liquidation. This move unlocks an estimated $1.5 billion monthly in crypto-sourced funding, targeting the 45% of Gen Z and Millennial borrowers who hold digital assets—representing approximately 30 million potential homebuyers.

What market impacts are emerging?

Crypto-enabled mortgage volume: $1.5 billion/month (Newrez pilot). If replicated by all top-25 lenders, annual volume could reach $18 billion, or 15% of total U.S. mortgage originations.
Loan origination growth: Newrez projects 12% year-over-year growth in its crypto pipeline, aligned with 10–15% YoY growth in comparable crypto-lending platforms.
Secondary market access: Fannie Mae and Freddie Mac now accept on-chain proof of funds for mortgage-backed securities (MBS), enabling securitization. FY2027 MBS issuance from crypto-backed loans could reach $5–7 billion.

What regulatory developments are enabling this shift?

Fannie Mae/Freddie Mac 2025 guidance permits crypto-derived documentation for MBS eligibility, reducing liquidity risk and lowering capital costs for lenders.
The OCC’s Special Purpose Depository Institution (SPDI) charter, issued December 2025, allows banks like Old Glory Bank to hold crypto on-balance-sheet, enabling nationwide custodial services and supporting Nasdaq IPOs.
FinCEN’s 2025 AML/KYC rules mandate blockchain analytics (e.g., Chainalysis), increasing compliance overhead by 1–2 business days per loan but improving source-of-funds transparency.
State-level pilot programs in California and New York provide regulatory sandboxes to scale statewide adoption.

What is the long-term trajectory?

0–12 months: 5–7 additional top-25 lenders adopt Newrez’s model; crypto-backed mortgages reach 5% of total U.S. originations.
12–24 months: OCC expands collateral guidance to include stablecoins and tokenized real estate, adding $3–4 billion in eligible down-payment volume.
24–36 months: A federal Crypto-Mortgage Act could codify MBS treatment, unlocking $10 billion+ in institutional capital for a new mortgage asset class.

What are the key risks?

Price volatility: Newrez applies 15% loan-to-value price-floor buffers and automated liquidation triggers; Old Glory Bank provides instant on-chain liquidation.
Compliance costs: Blockchain analytics licensing and reporting upgrades increase annual technology spend by ~$15 million for custodial partners.
Secondary market liquidity: Newrez is securing private-label MBS with boutique investors as a bridge to broader institutional acceptance.

Crypto is transitioning from speculative asset to legitimate mortgage capital source, driven by demographic demand and regulatory standardization. Adoption across major lenders could generate $20–30 billion in new mortgage volume within three years.

NYC Token Drops 81% in 30 Minutes as Insiders Withdraw $2.3M, Prompting DOJ Probe

The NYC Token price fell from $0.50 to $0.09 within 30 minutes of launch, driven by the withdrawal of $2.3 million in USDC liquidity from insider-controlled wallets. On-chain analysis shows that the top five wallets held 92% of the total token supply, creating a single-point failure. The liquidity drain reduced the USDC backing of the token pool by approximately 30%, triggering a cascade of sell orders that overwhelmed order-book depth.

What regulatory actions are underway?

The U.S. Department of Justice issued a memo citing possible securities-law violations and insider fund extraction. The token’s structure—concentrated ownership, rapid liquidity withdrawal, and lack of public disclosure—mirrors the 2023 NYC Coin incident, which led to regulatory delisting. The DOJ is expected to issue a formal Request for Information within seven days. If the token is determined to meet the Howey Test criteria, the SEC may issue a stop-order and pursue civil penalties.

What legal risks does the project face?

On-chain evidence shows that the same wallets that withdrew $2.3 million in USDC later re-deposited $1.5 million after the price dropped below $0.20, suggesting reactive rather than protective behavior. This pattern supports allegations of a rug pull under wire-fraud statutes (18 U.S.C. § 1341). The concentration of supply in five wallets also raises concerns under Section 9(b) of the Securities Exchange Act for potential market manipulation.

What is the projected regulatory timeline?

0–7 days: DOJ issues formal RFI to developers and Meteora exchange.
1–4 weeks: SEC evaluates token under Howey Test; potential stop-order.
1–3 months: Civil penalties and possible asset seizure of remaining USDC liquidity.

3 months: Permanent delisting from U.S. exchanges and potential restitution to retail investors.

What is the market impact?

Trading was suspended by Meteora after one hour. Retail investors incurred estimated losses exceeding $3 million. The token’s market cap, which briefly reached $730 million, is now effectively frozen pending regulatory determination. No further trading activity is permitted until regulatory clarity is established.

Solana Price Targets $190 Amid Strong ETF Inflows and Technical Breakout

Solana’s spot price stands at $142, holding above its 50-day moving average of $150 since September 2025. A confirmed cup-and-handle breakout above $155 on January 12, 2026, aligns with historical price patterns that project a 25–30% rally, targeting $180–$190.

How are ETF inflows supporting the rally?

Year-to-date net inflows into U.S. spot SOL ETFs exceed $2 billion since January 1, 2026, with $10.7 million recorded in the latest session. Bitwise’s BSOL fund contributed $8.6 million of this total. These inflows persist despite broader crypto ETF outflows, indicating institutional demand specifically for Solana-linked products.

What technical levels define price movement?

Support: $130 ± $5 (≈$1 billion in long-liquidation cluster)
Resistance: $160 ± $10 (≈$520 million in short-liquidation cluster)
Breakout zone: $155–$160 (confirmed on January 12)

A sustained close above $160 could trigger short-covering and accelerate momentum toward the $180–$190 target.

What fundamental developments underpin the outlook?

Real-world asset (RWA) tokenization on Solana reached $12.3 billion in total value as of December 2025, with an 18% year-over-year increase in active wallets.
Alpenglow upgrade, scheduled for Q1 2026, aims to deliver sub-second finality and a 10-fold throughput improvement. Past SOL upgrades have preceded 20–30% price rallies within 6–8 weeks.

What risks could derail the rally?

A breach below $130 could activate $1 billion in long-liquidations, potentially pushing price toward $120–$125.
Failure to break $160 may sustain short-selling pressure, capping upside.
The $190 level represents a technical ceiling; sustained gains beyond this would require new catalysts.

What metrics should be monitored?

Daily SOL ETF net inflows ≥ $8 million
Reduction in $130 long-liquidation cluster below $800 million
Week-over-week ≥5% increase in RWA token transfers

The convergence of technical breakout signals, sustained institutional inflows, and expanding on-chain utility supports a $180–$190 price target. Market action at $130 and $160 remains critical to confirming trend durability.

What else is happening?

RYVYL Inc (RVYL) merges with Web3 platform Roundtable to build programmable financial infrastructure, integrating blockchain-based commerce and digital payments.
Senate Banking Committee advances Digital Asset Market Clarity Act, granting Dogecoin 'non-ancillary asset' status and enabling Coinbase to list DOGE without securities risk
Ethereum network fees drop 87% to $2.6M as DApp usage declines, limiting ETH’s ability to reclaim $4,000 despite institutional backing and Layer-2 activity
JPMorgan Chase warns stablecoins threaten regulated banking, supporting GENIUS Act to prohibit interest payments on dollar-pegged tokens
Dogecoin rallies 5% after Senate draft bill grants it regulatory parity with Bitcoin, enabling asset managers to resubmit ETF applications with legal clarity