Today in crypto, decentralized exchange Drift Protocol warned users that it detected “unusual” trading activity, with some researchers pointing to a compromised admin key. US Federal Reserve Governor Michael Barr said clearer rules could help digital asset markets grow, but warned that GENIUS Act implementation must still guard against runs, weak reserves and illicit finance. Meanwhile, the Commodity Futures Trading Commission’s chief enforcement director said those who tip or trade on prediction markets with misappropriated information will be pursued.
Drift Protocol halts deposits after “unusual” activity detected
Decentralized exchange Drift Protocol warned users to pause deposits after detecting “unusual” trading activity on its platform, triggering an ongoing investigation into a potential exploit.
The team did not immediately disclose the cause or scope of the incident, saying only that it was actively investigating. The lack of detail left users assessing potential risks in real time, as the protocol moved to limit further exposure by halting deposits and withdrawals.
Blockchain security researchers suggested the issue may be tied to a compromised admin key, with early estimates putting potential losses as high as $200 million. Funds reportedly included wrapped Bitcoin and various stablecoins, which were moved across multiple wallets following the incident.
Fed’s Barr backs stablecoin clarity but warns of run risks
US Federal Reserve Governor Michael Barr said Tuesday that clearer US stablecoin rules could speed the market’s growth, but warned that regulators still need to address money laundering risks, bank run risks and consumer safeguards as they implement the Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act.
Speaking at a Federalist Society event on stablecoin regulation, Barr said the law provides “needed clarity” for issuers, but that “a great deal will depend on how federal and state regulators implement the statute.”
Barr said stablecoins are still used mainly for crypto trading and as a US dollar store of value in some foreign markets, though they could also lower remittance costs, speed up trade finance processing and help firms manage treasury operations. He also highlighted the risk of bad actors buying stablecoins in secondary markets without identity checks, and said issuers may be tempted to stretch for yield in reserve assets in ways that undermine confidence during stress.
Barr’s speech also cast the stablecoin debate in historical terms. He said private money has a “long and painful history” when safeguards are weak, pointing to the Free Banking Era in the US, the Panic of 1907, money market fund stress during the global financial crisis and COVID-19 shock, and more recent stablecoin valuation pressure as reasons to be cautious about any asset marketed as redeemable at par on demand.
CFTC enforcer puts prediction market insider traders on notice
The US commodities regulator’s enforcement chief sent a cautionary message to prediction market insider traders on Tuesday, vowing that violators will face enforcement action.
“We are aware of the speculation about insider trading,” CFTC director of enforcement David Miller said at a panel at New York University on Tuesday. “We are watching.”
“There’s a myth in mainstream media and social media that insider trading doesn’t apply in the prediction markets … That is wrong.”
Miller, a former federal prosecutor who was appointed to the position on March 2, said the Commission will use its prosecutorial discretion and will not dedicate resources to “trivial” cases.
“We will only be prosecuting cases against those who tip or trade with misappropriated information,” he said, according to Bloomberg.
Prediction market insider trading has become a top-of-mind issue among US lawmakers in recent months, threatening the credibility of an industry that recently exceeded $20 billion in monthly volume, according to TRM Labs.
