Cryptopolitan

A Nevada state court has rejected an attempt by state regulators to immediately halt Coinbase’s newly-launched prediction markets, marking a setback for the Nevada Gaming Control Board in its bid to block the popular crypto exchange’s event-based trading products under state gaming laws.

Paul Grewal, Coinbase’s chief legal officer, stated that the court ruled a hearing set to take place next week. At this hearing, the firm will be allowed to present its case.

On Monday, the Nevada Gaming Control Board (NGCB) filed a civil enforcement action in the First Judicial District Court in Carson City, accusing Coinbase of offering unlicensed gambling through sports and other real-world outcome contracts without a Nevada gaming license. The complaint alleged that such contracts, including wagers related to sporting events and elections, fall under the state’s strict gaming statutes and require a license normally reserved for casinos and sportsbooks.

NGCB sues Coinbase, initiating a significant legal battle 

The Nevada Gaming Control Board sued Coinbase in Carson City, alleging that the company is offering bets on unlicensed sports-event contracts and calling on authorities to take action. To halt its operation, the Nevada state governmental agency submitted a request for a TRO and a preliminary injunction to restrict resident access to these products.

Coinbase responded to this request, claiming that the nature of Nevada’s order was overbroad and would effectively prohibit the issuance of any event contracts regulated under the requirements of the Commodity Futures Trading Commission (CFTC) in the state. This includes contracts that determine financial or commodity outcomes. Notably, the crypto exchange filed this complaint on Tuesday, February 3.

Apart from this argument, the company also defended itself in court, alleging that the agency’s claims lack evidence to back them further, noting that they did not pose any harm since Kalshi, which chose Coinbase Custody to safeguard their USDC, could still offer those products directly to consumers in Nevada while the litigation process is ongoing.

Moreover, Grewal stated that the cryptocurrency exchange filed a lawsuit in the US District Court for the District of Nevada, challenging the state’s enforcement actions as violations of federal law. According to him, Congress granted the CFTC exclusive authority over these listed contracts and retains the power to create the rules.

In this case, the CEO stated that, “the Commodity Exchange Act gives the CFTC exclusive jurisdiction over swaps and event contracts traded on regulated exchanges,” further noting that, “Nevada’s attempt to classify these instruments as state-regulated gambling is overridden by Congress’s rules on derivatives.”

Several US states express disapproval of the existence of prediction markets in the area

The Nevada Gaming Control Board regulatory push comes just weeks after Coinbase rolled out its prediction market product nationwide, powered through a partnership with CFTC-regulated exchange Kalshi, as part of its larger strategy to expand beyond traditional crypto trading. This broader launch has faced growing scrutiny from state regulators, who fear that unlicensed gambling could undermine consumer protections and state-licensed gaming businesses.

Regarding the NGCB and Coinbase’s legal battle, reports from sources revealed that their disagreement followed a 14-day temporary restraining order issued by a Nevada judge just days ago, which mandated that Polymarket halt specific event markets in Nevada.

At this point, analysts confirmed that several other US states are opposed to prediction markets, in addition to Nevada. To support this claim, a report from a reliable source dated January noted that Tennessee’s Sports Wagering Council (SWC), a government agency in the United States, notified several prediction markets, including Kalshi and Polymarket, to discontinue issuing sports-event contracts to its residents.

Meanwhile, amid regulatory crackdowns on prediction markets, Coinbase recently followed Kalshi’s lead by launching legal action against regulators in Connecticut, Illinois, and Michigan. The firm’s team stressed that prediction markets regulated under CFTC requirements should be subject to federal, rather than state, oversight.

Vietnam’s Ministry of Finance has introduced new tax rules for digital currency transactions, introducing a 0.1% levy on transfers made through approved service platforms.

The proposed regulations are now available for public review on the ministry’s online portal.

The draft circular covers tax policies for buying, selling, and moving crypto assets within the country. These activities won’t fall under value-added tax rules. The government plans to apply a different tax structure depending on whether the investor is an individual or a business.

Tax rates for individuals and companies

People who trade digital currencies will pay a 0.1% personal income tax on the total value of each transaction. This matches what the government currently charges for stock market trades. The tax applies to all individual traders, whether they live in Vietnam or abroad.

Vietnamese companies that make money from selling crypto assets will be charged a 20% corporate income tax. The taxable amount equals the selling price minus what the company paid to buy the asset and any direct costs tied to the sale.

Foreign companies that trade digital currencies through Vietnamese service providers would face a 0.1% corporate income tax based on revenue from each sale.

The ministry describes crypto assets as digital items that use special computer codes or digital methods to verify their creation, release, storage, and transfer.

Starting in September 2025, Vietnam intends to conduct a test program for the cryptocurrency market. During the five-year trial period, Vietnamese dong must be used for all digital currency transactions. The government has been taxing cryptocurrency trading in the same manner as stock transactions prior to the implementation of these new regulations.

A number of topics will be covered under the pilot program. Businesses can create trading platforms, provide and issue cryptocurrency assets, and offer associated services. According to officials, the test will be conducted cautiously to ensure that operations remain transparent and secure while safeguarding the rights of participating companies and individuals.

Strict capital requirements for exchange operators

The proposed rules set high financial requirements for companies wanting to open digital asset exchanges. They must have at least VND 10 trillion in starting capital, which equals about $408 million. This is three times what banks need to start operations and roughly 33 times what airline companies require.

Foreign investors can own up to 49% of these exchanges. Institutional members must provide at least 65% of the service provider’s starting capital. Of that portion, at least 35% must come from two or more organizations such as banks, securities firms, or insurance companies.

Companies providing crypto services under Resolution No. 05/2025/NQ-CP, issued by the government on September 9, 2025, must pay 20% corporate income tax on their service income. Some exceptions apply under Corporate Income Tax Law No. 67/2025/QH15.

The draft sets out when companies and individuals must report revenue and income from crypto sales. These timing rules follow existing corporate and personal income tax laws for securities transfers.

Only Vietnamese companies can issue crypto assets during the trial period, according to the Ministry of Finance. These businesses must register as limited liability or joint-stock companies. The assets they issue must have real backing and cannot take the form of regular money or traditional securities.

Service providers with licenses must send monthly reports to tax officials showing transaction amounts and taxes collected.

Public comments on the draft paper are still welcome via the Ministry of Finance’s website. Before officials complete the regulations, residents and businesses can express their opinions about the proposed tax system during the feedback period.

President Donald Trump will have to contend with a group of policymakers in Congress over his crypto-business ties, threatening the progress of the administration’s proposal for a digital asset market structure law.

Liberal senators are well aware of the foreign-backed investments made to the Trump-associated World Liberty Financial, revealed by the Wall Street Journal’s report earlier this week. The Trump administration should now expect new demands from Democrats, such as the inclusion of strict ethics provisions in the bill. 

The White House is still lobbying members of Congress to pass long-awaited market structure rules for the crypto sector. But after withstanding the storm of Coinbase’s withdrawal of support, negotiations may be slowing again owing to concerns about the US President’s ethics.

$500 million investment in WLFI could bring down the market bill

At the center of the fight is a reported $500 million investment from Abu Dhabi in the Trump family’s World Liberty Financial. Democratic lawmakers argue the transaction raises many unresolved questions about foreign money intersecting with businesses within the president’s circle. 

Republicans need Democratic votes to pass the bill, so the liberals have leverage to question Trump directly. Democrats say ethics language must prevent elected officials from benefiting from crypto ventures during their terms.

Senator Cory Booker, a proponent of digital asset innovation, said the situation changed their willingness to negotiate. “It has created more of a sense of moral urgency for us to have ethics as part of this. The Trump administration has demonstrated the grossest, most egregious corruption from the White House we have ever seen,” Booker said.

Senator Adam Schiff said ethics rules should not “treat the president differently than any other federal employee.” “If anybody needed another reminder, they just got it.”

White House, Republican Senators defend Trump

According to Billionaire donor Ken Griffin, the administration made decisions that were enriching to the families of those in the administration. 

“Is the public interest being served?” He added society must “re-embrace some of the critical concepts of ethics in public services.”

In a recent statement from the White House, spokesperson Anna Kelly insisted the POTUS is “not involved in running his businesses” as he turned them over to his children.

“President Trump performs his constitutional duties in an ethically sound manner, and to suggest otherwise is either ill-informed or malicious. Mere appearances of business deals with which he has no involvement plainly cannot violate the Emoluments clause.”

Moreover, Republican Senator Cynthia Lummis believes the allegations concerning the Abu Dhabi deal were exaggerated. She coined them as “another attack on Trump that is pretty baseless.” 

Lummis questioned how far a president must distance himself from children’s financial decisions before facing criticism, but admitted the issue is complicated. Like her, several GOP negotiators are willing to discuss ethics provisions if necessary to draw bipartisan support for the crypto market structure bill.

Robert Weissman of Public Citizen said the situation is “categorically different than anything that has come before and fundamentally compromising our foreign policy.” 

The Senate Agriculture Committee advanced part of the bill last month on a party-line vote, but the Banking Committee is still drafting its section. At least 7 Democratic senators must back the bill for it to pass. 

Bipartisan talks stall as candidates collect donations for midterms

As talks on the crypto bill cool amid a standoff between banks and crypto firms, election candidates are racking up donations from digital asset businesses. SuperPAC Fairshake, a political movement backed by Coinbase, Ripple, and Andreessen Horowitz, reported more than $190 million in funds ahead of the 2026 midterms.

Senator Elizabeth Warren said crypto supporters and donors should consider past ethics disputes before entering politics. 

“This latest apparent bribe from the UAE, that puts our national security at risk, means that crypto supporters now have to overlook an even taller steaming pile of corruption,” Warren said.

Kazakhstan intends to build the Central Asian region’s first “crypto city” with support recently secured in China, local officials unveiled.

The project is centered on establishing a special zone for blockchain business where even cryptocurrency payments will be possible.

Kazakhstan gears up for mega ‘CryptoCity’ project

The mining hotspot of Kazakhstan plans to create a new hub for the country’s growing crypto economy that will be the first of its kind in the region as well.

The ambitious initiative will be implemented in the newly established city of Alatau, a strategic project of the government in Astana, which wants to turn the place into an international venue.

The latter was formed under a presidential decree issued in early 2024, by merging over a dozen former villages and settlements, with a total population now exceeding 50,000 people, into a new urban area in the Almaty region.

The city is situated along the main Almaty-Qonaev highway, a link in the Western Europe – Western China transport corridor, and should become a major economic and logistics hub.

Kazakh officials plan to grant it the status of a free economic zone, which will give foreign visitors and investors a number of benefits, including visa-free access to the 880 square kilometer district and unrestricted purchases of real estate.

Crypto hub at Eurasian route to be created with Chinese help

The authorities in Astana have some big plans for the new city of Alatau and intend to make it a future-oriented hub for business and innovation, the Kazakhstani news outlet Kursiv wrote in a report on Thursday.

During a visit to China, a Kazakhstani delegation managed to conclude agreements worth billions of U.S. dollars with a number of global companies. Among them, a construction firm that participated in the building of the Shenzhen technopolis, the article highlighted.

Commenting on the project, a representative of the local administration emphasized that Alatau will not be a simple digital city and elaborated:

“Our goal is to create a ‘crypto city.’ This concept goes beyond the typical smart city. Blockchain and cryptocurrency will be integrated into all areas of urban life – management, finance, services, data storage, and exchange. All of this will be open, secure, and convenient.”

“This isn’t just an opportunity to pay with Bitcoin, but a city with its own economic and social system built on decentralized principles,” the municipal government official insisted.

Kazakhstan takes another step towards crypto adoption

The initiative to establish a special place for crypto operations was presented by Kazakhstan’s President Kassym-Jomart Tokayev at the Astana International Forum last May. At the time, the head of state was quoted by local media as stating:

“We plan to create an innovative pilot zone, ‘CryptoCity,’ in which cryptocurrencies can be used to purchase goods, services and for other purposes.”

In November, the National Bank of Kazakhstan (NBK) announced it wants to integrate crypto exchange tools into bank terminals to facilitate cryptocurrency payments. The following month, the regulator said it had launched a pilot project.

By all indications, these payments will be made through conversion to fiat as officials have made it clear the Kazakhstani tenge will remain the only legal tender in most of the country’s jurisdiction.

More recently, the monetary authority unveiled it will allow crypto traders to top-up their exchange accounts using QR codes at point-of-sale (POS) terminals.

Also in November, Tokayev approved legislation lifting some restrictions on crypto mining and expanding the legal circulation of cryptocurrencies beyond the narrow framework of a fintech hub in the capital city called the Astana International Financial Center (AIFC).

At the end of 2025, Kazakh lawmakers passed provisions permitting the establishment of crypto exchanges outside the AIFC, which will be licensed by the NBK. According to official estimates, quoted by Kursiv, only 5% of Kazakhstani investors are using the platforms registered as residents there.

Then, in January 2026, the president signed another two laws, concerning the banking and the financial sectors, which liberalize the crypto market, too.

The Kazakhstani news outlet noted that the new urban center of Alatau, including the planned crypto city, are expected to generate up to $50 billion for the Central Asian nation over the next 30 years, provided the project reaches its full potential.

The Federal Communications Commission (FCC) on Wednesday opened a public review of SpaceX’s plan to establish a non-geostationary satellite system in orbit. The orbital satellite system aims to move energy-intensive AI computing into space and enable SpaceX to launch up to 1 million data-center-style satellites to train xAI models.

The FCC revealed that the proposed satellites will incorporate high-bandwidth optical inter-satellite links. The satellites will also conduct telemetry, tracking, and command (TT&C) operations. The agency is seeking comment on the application and the associated waiver request.

SpaceX seeks to deliver energy-efficient AI compute for users globally

The FCC welcomes and now seeks comment on the SpaceX application for Orbital Data Centers.

The proposed system would serve as a first step towards becoming a Kardashev II-level civilization and serve other purposes, according to the applicant. pic.twitter.com/TDnUPuz9w7

— Brendan Carr (@BrendanCarrFCC) February 4, 2026

The FCC’s review comes as SpaceX filed an application on January 30 to launch and operate the SpaceX Orbital Data Center. The firm plans to operate the system at altitudes ranging from 500 kilometers to 2,000 kilometers and in 30-degree and sun-synchronous inclinations. 

SpaceX wrote in a waiver request for the filing that its orbital data center system will enable the firm to begin delivering much-needed energy-efficient AI compute for users globally. The firm also seeks authority to operate NGSO systems in the U.S. on a non-interference, non-protection basis.

SpaceX revealed that its Orbital Data Center system will be able to reroute beams and traffic to prevent interference with other operators. The firm said the initiative will be possible through the combination of beam steering, optical links, and a flexible on-orbit network architecture.

The Orbital Data Center system also aims to connect with SpaceX’s existing Starlink constellations. The firm said the connection will enable data to be routed and processed in orbit before transmission to ground stations. 

The agency also approved a major expansion of SpaceX’s second-generation Starlink system last month, authorizing 7,500 additional satellites. The authorization doesn’t constitute the agency’s acceptance of the orbital data center application for filing approval.

The FCC stated that it has begun a formal public comment period and regulatory review window through March 6. The period is meant to allow researchers, environmental groups, and industry competitors to opine on the proposal.

Musk says global electricity demand can’t be met with terrestrial solutions

AI data centers are currently one of the largest new sources of electricity demand, driven by the surge in AI systems. The U.S. reported it used about 183 terawatt-hours of power in 2024, equivalent to Pakistan’s annual energy consumption. The U.S. expects that figure to climb as demand for AI training and usage expands.

SpaceX believes that its Orbital Data Center system brings it a step closer to becoming a Kardashev II-level civilization. Musk also revealed that harnessing a millionth of the sun’s energy would require over a million times more energy than our civilization currently uses.

“Global electricity demand for AI simply cannot be met with terrestrial solutions, even in the near term, without imposing hardship on communities and the environment. In the long term, space-based AI is obviously the only way to scale.”

–Elon Musk, Co-Founder and CEO of SpaceX.

SpaceX’s orbital system would mark a shift from the firm’s consumer-focused Starlink internet service and position satellites as space-based computing infrastructure. The satellites will be designed to operate beyond the power and cooling constraints of AI development on Earth.

SpaceX argued that operating its system in low Earth orbit will enable it to rely on near-constant solar power. The company also acknowledged that the initiative would help reduce dependence on water- and energy-intensive cooling systems that have disadvantaged local communities.

Elon Musk also revealed on Monday that he plans to merge his artificial intelligence startup, xAI, into SpaceX. The initiative aims to consolidate AI development and launch capabilities within a single company.

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BitMine Immersion Technologies is facing increasing pressure as plunging ether prices have led to heavy unrealized losses. The Ethereum Treasury, which is chaired by Fundstrat’s Tom Lee, sits at the center of one of the largest single-asset corporate bets in crypto history as market conditions continue to weaken.

Ether hit a local low of around $2,048 on February 5, putting BitMine’s holdings deep underwater. The company holds about 4.28 million ETH, which was accumulated as part of an aggressive treasury strategy adopted last summer. As a result, unrealized losses now exceed $7 billion, a drawdown of over 45% on its position.

Ether slump tests the Ethereum treasury strategy

BitMine turned away from Bitcoin mining in mid-2025 and rebranded itself as an Ethereum-focused treasury company. Since then, it has been steadily accumulating ETH at an average estimated price of $3,800 to $3,900 per token. However, market conditions have changed drastically.

Ether is currently trading more than 50% off its August 2025 all-time high price of $4,946. As a result, BitMine’s once-valued portfolio, estimated at $8.4 billion, has lost a large chunk of its paper value. According to market data, the company’s ETH holdings are now worth less than $9 billion, compared with an estimated $15 billion acquisition cost.

In addition, broader weakness in the crypto space has increased the pressure. The global digital asset market recently dipped to around $2.4 trillion, marking one of the largest daily declines in years. Ethereum has followed suit, struggling to hold the psychologically important $2,000 level with ongoing selling pressure.

Onchain data highlights the scale of unrealized losses

On-chain analytics companies have focused on BitMine’s scale of exposure. Data cited by Lookonchain shows the company as the largest public holder of Ethereum, with unrealized losses of more than $7 billion.

CoinGecko estimates that BitMine holds 4,285,126 ETH, with a current market value of around $8.93 billion. Based on an average purchase price of around $4,001 per coin, the company’s treasury has fallen by over 40%. As ETH trades near $2,088 at press time, daily losses have accelerated, with the token down about 8% over 24 hours.

Still, Ethereum’s performance over time sends mixed signals. While it has been volatile in recent weeks, ETH has registered gains of about 29% per week and 35% on a monthly basis.

Tom Lee defends the drawdown

Despite growing criticism, BitMine’s leadership has continued to invest in its strategy. Tom Lee has publicly defended the company’s approach, noting that the reduction in size is a sign of the market structure, rather than operational errors. In recent posts on X, he discussed the paper losses as a predictable result of crypto downturns.

These tweets miss the point of an ethereum treasury:
– BitMine is designed to track the price of $ETH
– outperform over the cycle (think up ETH)
– crypto is in a downturn, so naturally ETH is down$BMNR will see “unrealized” losses on our holdings of ETH during these times:
-… https://t.co/VpoNjAnJdC

— Thomas (Tom) Lee (not drummer) FSInsight.com (@fundstrat) February 3, 2026

Lee likened the exposure of BitMine to ETH to an index-like product, and asked why passive investment vehicles are not subjected to the same scrutiny when markets are collapsing. He has also cited post-October deleveraging and the influx of funds into precious metals as other factors contributing to Ethereum’s weakness. Importantly, BitMine has continued to add its holdings. The company recently acquired more than 41,000 ETH, the latest lot of about 41,788 tokens.

The Bitcoin capitulation metric spiked again, returning to levels not seen since the October 10 deleveraging. This time, forced selling and closing of positions, as well as holder capitulation, extended the general BTC slide. 

Bitcoin capitulation is underway, based on the forced selling metric by Glassnode. After most wallets showed signs of holding during the previous market slides, the recent rapid unwinding of BTC led to forced selling. Historically, the capitulation metric has correlated with market bottoms and reversals. However, the October 11 crash went without a reversal, and the current crash arrived with signals of more selling pressure.

BTC dipped below $70,000 for the first time since Q3 2024, erasing most of the euphoric gains from the last bull rally. Bitcoin recovered to $70,171.86, but remains pressured by extremely fearful sentiment. 

Bitcoin capitulation is the second-biggest event in this market cycle

Glassnode’s metrics revealed the recent market sell-off is the second-biggest in the last two years. The shift in selling comes after the market never recovered since the October 10 crash.

From October onward, BTC also never returned to the previous levels of open interest, as derivative traders feared liquidations. 

Over time, the sentiment also affected spot traders. The capitulation event follows weeks of relatively stable holding from almost all cohorts. However, the loss of several support levels caused increasing panic and a rush to avoid a bigger drawdown. 

Bitcoin is now 122 days away from its most recent all-time peak above $126,000, and has lost over 42% since its peak. Even at this stage, BTC is expected to drop more, resembling previous market cycles. 

Bitcoin whales are shedding coins

Whales were in distribution in the past day, selling 14,095 BTC. This time, shark wallets absorbed 181 BTC to their wallets. 

In the past month, all wallet cohorts sold BTC. Whales shed 43,779 BTC, offsetting any buying from Strategy and other DATs. Shark wallets sold 83,771 BTC in January, and 19,194 BTC in the past week alone. 

In the past day, over 30,000 small retail wallets with under 1 BTC sold all their holdings. Surprisingly, those small retail wallets have been buying in the past month, but capitulated as Bitcoin continued to dip. 

Shark wallets with 100-1,000 BTC remain the most numerous holders, which have been accumulating while others have sold. While shark wallets did not capitulate dramatically, they have also distributed some of their holdings in the past few weeks. 

Accumulation peaked in October, and has shifted downward since. While the whales are not in mass distribution mode, short-term selling accelerated and added to the overall capitulation event. 

The current selling is seen as only the beginning of the capitulation, with ongoing potential for more liquidations and selling. Some analysts are preparing for a much lower range and more capitulation events, as crypto sentiment remains low. In the short term, a local bottom is expected in the $50,000 range, with the worst scenarios seeing a pullback to $30,000.

Hon Hai Precision Industry Co., the world’s largest electronics manufacturer and leading technology provider, reported a 35.5% surge in revenue in January. This rise demonstrated that the global demand for artificial intelligence (AI) server hardware continues to expand strongly. 

The Taiwanese electronics giant, a key manufacturing partner for Nvidia Corp., said it achieved roughly NT$730 billion (about US$23 billion) in revenue last month. That performance reflects brisk orders for server systems that house Nvidia’s AI chips, used by major cloud providers and enterprises to train and run large-scale AI applications.

However, analysts conducted research and discovered that the Lunar New Year holiday shift could skew the year-over-year analysis. Afterwards, they predicted that Hon Hai would report a substantial sales increase for the three months ending in March, amounting to a 28% surge. 

Hon Hai positions itself as a key supplier in the tech industry 

Hon Hai manufacturers servers play a crucial role in Nvidia’s AI hardware industry. In this industry, they actively house chips for data centers. In line with its unique role, the firm has generated significant profits from US-based companies such as Meta Platforms Inc. and Amazon.com Inc., which are allocating considerable funds to the infrastructure needed to train and operate AI models. Even so, these firms raised concerns regarding the consistency of the oversupply issue as the industry struggles to find a clear path to profitability for the technology.

In the meantime, towards the end of last year, Hon Hai also saw a major increase in its third-quarter gains amid a surge in demand for AI servers. The Taiwanese electronics manufacturer, best known as a key assembler of Apple’s iPhone, reported net profit of NT$57.67 billion for the July-to-September period.

This figure represents a 17% year-over-year increase, exceeding analysts’ forecasts. On the other hand, the firm reported revenue of NT$2.06 trillion, in line with expectations. In response to this rise, the technology provider noted that AI revenue growth had surpassed that of the consumer electronics sector and asserted that this growth trajectory would likely continue in 2026.

Liu Young, the Chairperson of Hon Hai Precision Industry, urged investors to stick to the money trends. He also assured them that the firm is aggressively investing to meet growing demand. Nonetheless, he cited currency instability and geopolitical issues as risks to global supply chains.

Meanwhile, to reinforce its dominance in the tech sector, Hon Hai enhanced its collaborations in AI and automation, partnering with major players such as Mitsubishi Electric to develop sustainable, high-efficiency AI infrastructure and teaming up with Nvidia, Stellantis, and Uber on self-driving vehicle technologies. 

In 2025, Hon Hai’s stock rose by more than 30%, cementing its role as a key player in AI hardware. This move is poised to drive its future growth.

Broadcom projects an all-time high in AI revenue this year 

Just like Hon Hai, Broadcom is a dominant, high-growth technology firm deeply integrated into the AI and electronics supply chains. Earlier, Broadcom’s CEO, Hock Tan, predicted that its AI revenue would rise in fiscal 2026. Tan made this speculation after the tech giant secured over $10 billion in AI infrastructure orders from a new client.

Broadcom’s chief executive, who was 73 at the time of the company’s March filing,  also made clear his plan to maintain leadership for at least the next five years. The statement was welcomed by investors, sending the company’s shares up about 4% in after-hours trading, as the CEO is widely credited with building Broadcom into a global powerhouse in chip design.

To demonstrate heightened interest in the firm, Tan noted the presence of four new potential clients actively collaborating with Broadcom to create their own custom chips, as well as the firm’s three current key clients.

This was after a new potential client placed a firm order in the last quarter, officially qualifying them as a customer. However, the CEO failed to disclose their identities during an earnings call.

India will start swapping information about cryptocurrency transactions with tax departments in other countries starting April 1, 2027.

The move comes as the government tightens its grip on digital currency dealings, particularly those happening through foreign platforms.

Officials are already laying the foundation for this information-sharing agreement, according to The Economic Times. Once India joins this global exchange system, the government intends to apply severe penalties to make sure that cryptocurrency platforms and intermediaries adhere to the new reporting rules.

Joining the global reporting framework

The data sharing will occur through something called the Crypto-Asset Reporting Framework, or CARF for short. This international standard is run by the Organization for Economic Co-operation and Development. Under this framework, countries must automatically send details about crypto transactions between their tax offices, much like what already happens with regular banking information.

India has agreed to join CARF and will begin both sending and receiving information come April 2027. An official told the newspaper that the technical setup for swapping this data is still being worked out and should be ready within a few months.

Penalties to enforce compliance from April 2026

Even though the international data swap won’t start until 2027, the government is using the 2026-27 budget year to ensure domestic reporting is up to scratch. A senior official explained that the main goal right now is to get India’s own reporting systems working properly before the international exchange kicks off.

To do this, the government has introduced new fines under Section 509 of the Income-tax Act. These penalties are meant to discourage platforms from breaking the rules.

Based on budget papers, crypto exchanges and middlemen who don’t submit the required statements about their users’ transactions will have to pay ₹200 every single day starting April 1, 2026. On top of that, if they report wrong information or don’t fix mistakes in their data, they’ll face a flat fine of ₹50,000.

These steps are designed to plug the “reporting gap” that has let transactions on overseas platforms stay hidden from tax collectors.

The preparation work now involves adopting the CARF XML Schema, which is a standardized technical format created by the OECD. This framework tells “Reporting Crypto-Asset Service Providers” (RCASPs) to gather detailed information, including users’ full names, addresses, tax identification numbers, and even transfers to “unhosted” or private wallets.

India ensures that its systems are compatible with almost 50 other nations that have joined, including key financial hubs like the UK, France, and Singapore, by finalizing this technical structure in the coming months. The “automatic” portion of the exchange depends on this technical alignment, which enables tax authorities to identify discrepancies between a taxpayer’s reported income and their actual global cryptocurrency activity.

Stricter user verification rules

On January 8, 2026, the Financial Intelligence Unit (FIU-IND) revised its Anti-Money Laundering and KYC standards in conjunction with these statutory amendments. To combat the use of VPNs and false identities, these regulations go beyond simple ID verification.

Under the updated requirements, platforms must now perform liveness detection, which means taking live video selfies when someone signs up. More importantly, they must also record the geolocation data (exact location coordinates) and IP addresses with timestamps for every new account.

This guarantees that the data being prepared for the 2027 global exchange is checked properly from the start. The changes significantly reduce the anonymity of cross-border transfers and bring India in line with the latest standards from the Financial Action Task Force.

Congressional investigators have launched a formal probe into World Liberty Financial (WLFI), the cryptocurrency venture affiliated with President Donald Trump’s family, after reports that an Abu Dhabi–backed investment vehicle secretly acquired a major ownership stake in the firm.

The United States House Select Committee on the CCP has launched a congressional inquiry into foreign sovereign capital on WLFI to determine whether the investment violated government policy on the export of advanced artificial intelligence technology.

The investigation follows a Wall Street Journal report revealing a previously undisclosed agreement between WLFI and Aryam Investment 1, an entity tied to the United Arab Emirates. According to the WSJ, Aryam’s “Spy Sheikh” agreed to purchase a 49% stake in WLF for $500 million just days before Trump’s inauguration in January 2025.

Did WLFI Emirati investors create a political overlap with US laws?

Per documents cited in the WSJ report, the agreement was signed by the US president’s son, Eric Trump. Of the first $250 million installment, $187 million was supposedly directed to Trump family entities DT Marks DEFI LLC and DT Marks SC LLC. Another $31 million was routed to an entity said to belong to WLFI co-founders Zak Folkman and Chase Herro. 

The WSJ also cited a document showing that at least $31 million was set aside for entities affiliated with Steve Witkoff’s family, a WLFI co-founder who had recently been appointed US envoy to the Middle East.

The backer behind Aryam Investment 1 is Sheikh Tahnoon bin Zayed Al Nahyan, a senior Abu Dhabi royal. Tahnoon is the brother of the UAE president and a national security adviser in charge of key sovereign wealth and technology investment vehicles, including AI-focused firm G42 and investment entity MGX. 

In its letter to WLFI, members of the select committee said Tahnoon’s G42 sought access to cutting-edge US semiconductors to improve the UAE’s AI capabilities. The Biden administration blocked those efforts due to concerns that the technology could be transferred onward to China. 

Lawmakers and Intelligence officials in the previous administration found that G42 had past relationships with Huawei and other Chinese companies, even though the firm insisted it had severed those ties.

The Aryam agreement made the Emirati vehicle WLFI the largest shareholder and the only known outside investor. Two Aryam executives who also held senior roles at G42 joined WLF’s five-member board that included Eric Trump and Zach Witkoff, the son of Steve Witkoff.

Public disclosures on WLFI’s website showed the Trump family’s equity stake dropped from 75% to 38% last year. The company did not publicly state if the reduced stake had a buyer or who the buyer was. 

The second half of Aryam’s $500 million commitment was due by July 15, 2025. The Journal reported it could not determine how those funds were distributed. Congress is now demanding a full accounting of where that money went, including the beneficial owners of any recipient entities.

Binance ties and USD1 transactions spark document demands

USD1, WLFI’s dollar-pegged stablecoin was used to settle a $2 billion investment by Emirati interests into crypto exchange Binance. Binance was founded in China by Changpeng Zhao, who was pardoned by Trump in October last year.

The select committee on CCP competition wants to understand why USD1 was selected as the settlement asset for that transaction instead of more established financial channels. They have requested internal records from WLFI that explain who approved the stablecoin’s use, what fees or revenues it generated, and if the transaction created financial benefits for the Web3 company or its owners.

Representative Ro Khanna, who is leading the inquiry, said he opened the investigation into “seemingly corrupt activities” and their impact on US policy toward China. The committee formally requested capitalization tables, profit distribution records, board appointment documents, and due diligence materials related to Aryam Investment 1.

Funds linked to the January exploit of Aperture Finance have been caught moving on-chain. The hacker allegedly moved the looted funds through the Ethereum-based mixer Tornado Cash. Addresses flagged linked to the attacker deposited about 1,243 Ether (approx. worth roughly $2.4 million) into the mixer.

Aperture Finance, on January 25, disclosed that it had suffered an exploit affecting its V3 and V4 contracts. The losses are estimated at around $3.67 million. However, this move comes in when the crypto market is dealing with high selling pressure and bearish sentiments. Ethereum price has dropped by around 28% over the past 7 days.

Crypto hack losses jump 13% month-on-month

The hacking incident occurred during a month marked by several other crypto-related losses. PeckShield in a post reported that around 16 hacking incidents happened in January, which resulted in losses of $86.01 million. The amount is slightly lower than compared to Jan 2025 (approx. amount $87.25 million), but a notable 13.25% MoM surge from Dec 2025 (approx. $76 million).

Phishing-related losses during the same period exceeded $300 million. Among the largest incidents reported in January were attacks on Step Finance, Truebit Protocol and SwapNet. Step Finance lost around $29 million. There has been a breach of security for some of its treasury wallets. Truebit protocol lost approximately 8,535 ETH, valued at around $26.4 million, in the theft.

PeckShield has mentioned that the Aperture Finance exploit was unrelated to the SwapNet incident, despite it happening around the same time.

Security firm BlockSec reported that Aperture Finance contracts exposed an arbitrary-call capability. This unfolded because of insufficient input validation. That weakness allowed attackers to exploit existing token approvals and drain assets using transferFrom calls.

The vulnerability reportedly emerged from a helper module that executed low-level calls using user-supplied calldata. It was triggered without enforcing restrictions on call targets or function selectors. Attackers were able to craft malicious calldata to siphon ERC-20 tokens and approve transfers of Uniswap V3 position NFTs.

Users who had enabled Aperture Finance’s “Instant Liquidity Management” features were affected. In one Ethereum-based transaction analyzed by security firms, an attacker deployed a contract that triggered the vulnerable function with a minimal amount of ether. It was wrapped into WETH and executed a transferFrom call on WBTC. This allowed funds to be drained while passing internal balance checks.

Aperture launched forensic probe

Aperture Finance said the exploit had been contained and that affected web application functions were disabled. The company said it was conducting a forensic investigation with external security firms. It is also coordinating with law enforcement to trace the stolen funds. It added that its automation strategies were not impacted because they operate on a separate system. However, they advised users who had used instant liquidity features to revoke relevant approvals.

Ether is suffering from the high sell-off as Bitcoin price dipped below $70,000 before recovering. ETH price is down by almost 7% in the last 24 hours. It has nosedived by 29% since the beginning of this year. Ether is trading at an average price of $2,087 at the press time.

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Tether’s dollar-pegged stablecoin USDT closed the fourth quarter of 2025 with a record-breaking market cap of $187.3 billion. The expansion followed the cascade of liquidations in October, which triggered heavy losses across the digital asset space and sent competing stablecoins running for cover.

According to Tether’s latest quarterly report, USDT has added $12.4 billion to its net market capitalization in Q4. As a result, its dominance grew, while rivals scrambled to regain momentum. Circle’s USDC, the second-largest stablecoin, experienced volatility after the October 10 liquidation event but largely closed at the quarter’s level. Meanwhile, Ethena’s synthetic dollar USDe lost more than 57% of its market cap.

USDT expands supply while rivals lose ground

USDT’s growth was remarkable despite the falling crypto prices and liquidity. While the total crypto market cap lost more than a third between October 10, 2025, and early February 2026, USDT still attracted inflows. Tether reported that USDT grew by 3.5% in the same period, and outperformed both USDC and USDe, which declined by 2.6% and 57%, respectively.

Furthermore, the data show that the demand for USDT went beyond speculative trading. About two-thirds of the total supply was in savings wallets and centralized exchanges. The remaining third were in favor of payments, remittances, and decentralized finance activity.

Beyond supply growth, on-chain USDT activity reached record levels. Average monthly active wallets jumped to 24.8 million during the quarter, representing nearly 70% of all stablecoin-holding wallets. At the same time, the transfer volume in quarters skyrocketed to $4.4 trillion, with a total of 2.2 billion on-chain transfers.

User adoption also picked up. Tether estimated that it added 35.2 million new users in Q4, bringing the global total to 534.5 million. Notably, the quarter was the eighth consecutive quarter in which the stablecoin added more than 30 million users.

On-chain holders grew 14.7 million to 139.1 million, with USDT wallets holding over 70% of all stablecoin wallets. In addition, Tether estimated that more than 100 million users hold USDT on centralized platforms, reinforcing its role as a core settlement infrastructure.

Reserves grow as Tether boosts treasury exposure

Tether’s balance sheet has also become more robust during the quarter. Total reserves increased by $11.7 billion to $192.9 billion, with net equity of $6.3 billion. Exposure to U.S. Treasuries rose to $141.6 billion, making Tether one of the largest holders worldwide and ahead of many sovereign nations. Reserves also consisted of 96,184 BTC and 127.5 metric tons of gold, giving more diversification.

However, the report recognized the remaining challenges. USDT was the most used among stablecoins in illicit transfers. According to Bitrace, $649 billion in stablecoins flowed to high-risk addresses in 2024, of which Tron-based USDT accounted for well over 70%.

Tether has had a few shifts in its capital strategy, with Tether’s advisers discussing a potential $5 billion fundraising round, down sharply from earlier numbers.  In January, Tether introduced USAt, a US-focused stablecoin by Anchorage Digital Bank within the framework of the GENIUS Act. As Cryptopolitan previously reported, Tether partnered with Opera to bring USDT and Tether Gold into Opera’s MiniPay, targeting digital payments adoption in emerging markets.

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ZKsync token surged by 970% on Upbit exchange, sparking concerns over possible price manipulation. The volatility has triggered an investigation by South Korean financial regulators, who believe the spike was a result of suspicious trading activity.

South Korean financial regulators have opened investigations into the Upbit exchange after the ZKsync token surged by 970% in three hours before dropping back to its initial price. Regulators believe the spike was the result of price manipulation and said they are investigating the matter.

ZKsync token spikes by 970% on Upbit, prompting regulatory action

ZKsync was trading at $0.023 on Sunday morning, South Korean time, as the Upbit exchange prepared for scheduled system maintenance. At 11:30 AM, just before maintenance began, the price rose significantly to $0.24 over the next three hours, only to drop back to around $0.023 by 6:30 PM the same day, after the maintenance period ended.

A spokesperson for the Financial Security Service’s Virtual Asset Investigation Bureau said that the financial watchdog had noticed the peculiar price behavior ZKsync experienced that day and was looking into the matter, after which things “may quickly transition to a formal investigation after determining the severity of the case.”

Experts told a local South Korean newspaper that traders on the exchange set up a “buy wall” just before the maintenance period began, as part of a coordinated effort to artificially spike demand for the coin and push its price higher. According to data from the Upbit exchange, trading volumes in ZKsync surged by over 4,200% at the time of the incident. In comparison, the token’s trading volume on Coinbase rose by a more modest 150% on the same day, while prices increased by just under 40%. The volume on Binance rose by 180%, while the crypto asset’s price moved by just 38-42%.

Source: Upbit Chart showing ZKsync’s price fluctuation on February 1.

According to legal experts, the action falls under the Virtual Asset User Protection Act, which came into effect in July 2024. Jin Hyeon-su, managing partner at Decent Law Firm, said that “a large number of buy orders being concentrated in a short period of time, followed by a release of the volume afterwards” likely results in “price manipulation, collusive trading, and unfair trading.” 

The action is illegal under South Korean regulations, and perpetrators face over a year in prison and fines totaling up to five times the realized profits if found guilty. The court can also impose additional fines on the manipulators if it finds that other traders have suffered financial losses as a result of the price manipulation.

Bithumb CEO sentenced to three years in prison for price manipulation on the exchange

A previous Cryptopolitan report dated February 4 noted that the Criminal Division of the Seoul Southern District Court, presided by Judge Lee-hee, sentenced Lee Jong-hwan, the CEO of Bithumb, a South Korean cryptocurrency company, to up to 3 years in prison for manipulating virtual asset prices on the exchange. 

On top of the sentencing, Lee Jong-hwan was fined 500 million won (more than $340,000), and an additional 846.56 million won (more than $550,000) for breaking the Virtual Asset User Protection. The court also found Kang Min-cheol, a former employee of the Bithumb exchange, guilty and sentenced him to two years in prison with a three-year suspension.

The news comes after South Korea’s authorities rolled out artificial intelligence technology to detect market scams and suspicious transactions in real time. The Financial Supervisory Service (FSS) highlighted the growing sophistication used by criminals, including the use of Application Programming Interfaces (APIs) to conduct high-frequency trading (HFT) that can manipulate prices in milliseconds.

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As the first quarter of 2026 begins, the crypto market is shifting its focus from established giants to emerging utility-driven protocols. While Ripple (XRP) remains a staple for institutional payments, investors are increasingly tracking Mutuum Finance (MUTM) as a high-growth crypto opportunity.

Analysts are drawing comparisons between the two because they both aim to solve financial problems. While XRP has built its legacy on cross-border settlements, MUTM is gaining ground by offering a decentralized lending and borrowing system that prioritizes user control. With its low entry price and a successful V1 protocol testnet launch, many see it as the “early-stage” opportunity for this cycle, mirroring the growth potential XRP once offered to its first supporters.

Ripple (XRP)

Ripple (XRP) is one of the leaders in the crypto world since it has more than ten years in the market. It has become known because of its initial spurt and an emphasis on assisting the banks in transferring money between nations. As of today, XRP has a huge market value of about $100 billion. It is extremely hard to see the price doubling and even tripling in such a short time due to its large size. It merely takes an excessive amount of new money to move the needle.

XRP is now facing a negative trend. Other commentators have made a poor price forecast as early as Q1 2026 and the coin might fall to a price of around $1.25 in case the wider market remains weak. It is highly resisted at the $1.75 and the 1.85 levels. The lack of intrinsic value in XRP by simply holding the currency is causing a large portion of investors to invest their assets in newer ventures which do compensate them to engage.

Mutuum Finance (MUTM)

Mutuum Finance (MUTM) is a developing decentralized lending and borrowing platform. The protocol aims to enable individuals to gain interest on their idle assets or borrow against it, without surrendering control of their personal keys through dual market mechanisms P2C and P2P. The project is still at a very successful presale stage. Up to this point, it has collected more than $20.35 million and got almost 19,000 holders.

At its stage, the MUTM token is priced at $0.04. This is by 300% of its initial price, which is $0.01 at the beginning of 2025. As the price of this launch is determined at $0.06, current investors are receiving a 50% discount. This orderly development has seen it become a favorite among the people who need a cheap crypto but with developing high utility.

Here’s Why Investor Add MUTM Over XRP

Many experts believe that MUTM could be even more successful than XRP in the next two years due to 3 main arguments. To begin with, Mutuum Finance already introduced its V1 protocol on Sepolia testnet. This implies that the code is operational. The users are already able to test such features as liquidity pools, debt tokens and mtTokens that are going to earn yield by default, and the automated liquidator bot that will keep the system safe.

Second, MUTM market cap is significantly lower as compared to XRP. This implies that a small capital is needed to drive the price high. Third, the project’s roadmap implies a sense of buying and distributing with a constant demand mechanism for MUTM. Analysts believe that XRP may not increase, but MUTM may explode to reach $0.50 or even $1.00 by 2027. This would increase 2,400% of the current price as long as the roadmap unfolds as planned.

Phase 7 and Security

Phase 7 of the Mutuum pre-sale is selling fast. Big “whale” buyers have acted in recent times with one single purchase of $175,000. The level of trust is high since the project successfully passed a full security audit conducted by Halborn and got a high rating by CertiK.

In order to maintain the activity of the community, they have a 24-hour leaderboard that rewards the best daily contributor with a $500 bonus in MUTM. It is easy to participate since you can purchase tickets with direct card payments. This is the final opportunity to buy into the $0.06 double to $0.04 price without having to wait until the protocol reaches its final mainnet phases.

For more information about Mutuum Finance (MUTM) visit the links below:

Website: https://www.mutuum.com
Linktree: https://linktr.ee/mutuumfinance

Britain has announced plans to work with Microsoft, academics and technical experts to build a deepfake detection system, as concern grows over the scale of AI-generated deception online.

The initiative places deepfake, AI, Britain, Microsoft and detection systems at the center of a new push to curb harmful content that is becoming increasingly realistic and harder to spot.

Britain is targeting fraud and non-consensual images

According to the government, the partnership will develop a deepfake detection assessment framework, which will create a set of shared standards for evaluating circuitry detection devices for altered audio, video, and image files.

As well as providing a benchmark for these types of detection device against actual world examples of usage (fraud and impersonation) as well as images or videos of sexual exploitation of children.

Technology Minister Liz Kendall cautioned that this risk does not exist only theoretically.

“Deepfakes are being used by criminals to deceive the public, take advantage of women and girls, and decrease the credibility of what we see and hear. And will continue until we take measures to protect citizens and democratic institutions from manipulation.”

Kendall

Altering media has been around for many decades. However, experts say that with the development of AI, the amount of money and skill required to produce a high-quality forgery is more accessible than ever before.

In the UK, there is an increased focus on the criminal act of producing intimate images without consent as a direct result of the rapid rise in the number of fake images produced by AI.

According to government data, there were eight million fake images produced as deepfakes in 2025 compared to only 500,000 in 2023. This shows how quickly people are creating these types of images.

The framework has been created to enable law enforcement to detect, prevent and prosecute this crime and to provide industry with a clear set of expectations concerning safety regulations.

This is a move that governments have been urged to do and Microsoft called on Congress in 2024 to pass new legislation targeting AI-generated deepfakes. Brad Smith, Vice Chair and President of Microsoft had emphasized the urgency for lawmakers to address the growing threat of deepfake technology.

In his blog post, Smith highlighted the importance of adapting laws to address deepfake fraud and prevent exploitation. According to Smith, there should be a statute that one can use to charge scams and frauds of deepfakes.

According to Microsoft’s report, several legal interventions can be taken to prevent the misuse of deepfake technology. One of the suggestions is to create a federal ‘deepfake fraud statute.’

Pressuring platforms through regulation

Around the world regulators are having difficulty keeping up with the rapid advancements of AI technology.

In the UK, both the office that regulates communications (the “Communications Regulator”) and the office that regulates privacy (the “Privacy Regulator”) have begun investigating the Grok chatbot, which is operated by Elon Musk, due to the chatbot producing sexualized images of children that were produced without their consent.

As part of this investigation, the two regulatory bodies will be working together to develop a new framework for assisting law enforcement and regulating agencies in establishing consistent standards for how to assess detection tools used by law enforcement and regulating agencies.

According to Kendall, the purpose of this new framework is “to promote the restoration of trust in what people see and hear online,” and to require that all technology providers assume responsibility for mitigating potential harm related to the accelerating use of AI technologies.

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An X user had accused Binance of allegedly manipulating a price wick in the SOL/USDT trading pair on October 11, blaming the exchange for wiping away “ten years of their heart and soul.” 

A cryptocurrency trader named Edison Zhang is facing legal action from Binance after publicly accusing the exchange of causing a market event that liquidated his leveraged positions. The trader, known on X as @edisonzz, published an open letter that also included evidence to back his claims. 

He also shared screenshots of his trades on the SOL/USDT pair on October 11, claiming that an unusual price movement, also known as a wick, led to the liquidation of his long positions. “Everything had been wiped out. My account was at zero. Ten years of heart and soul vanished into thin air,” Zhang lamented.

Binance leverage market price wick caused liquidations, user claims

A price wick, also called a shadow or tail, is the thin vertical line on a candlestick chart that represents the highest and lowest prices reached during a trading period, even if the price did not close there. 

The upper wick shows the highest level reached before an asset’s price pulls back and selling pressures intensify. On the flipside, the lower wick shows the lowest level reached before price rebounds and buying interest jumps in.

Zhang says the disputed movement began from a downward wick in SOL trading on Binance. He states his liquidation price was $145, while the market low at the time was $141. According to his account, the move pushed the price below his liquidation threshold, commencing an automatic closure of his positions.

“In 2025, I was working in Abu Dhabi, UAE. My strategy for the year was to be a steady, conservative player, aiming for consistent growth. Betting on the positive outlook for the U.S. ETFs, I opened a long position on SOL at over $240, expecting approval within the next 1–2 weeks,” he narrated.

On the morning of October 11, at nearly 2:00 AM, I woke up with a jolt. I checked the price—it was around $180. I had received absolutely no SMS or email notifications regarding a margin call. But, feeling uneasy, I opened the app anyway, only to find that everything had been wiped out. My account was at zero.

Zhang.

After the incident, Zhang says he attempted to resolve the matter through Binance customer support, but the conversations went nowhere, support tickets were rejected, and he was repeatedly directed to official announcements. 

Zhang initially considered seeking recourse through the Financial Services Regulatory Authority, or FSRA, in Abu Dhabi. He says he later learned FSRA regulates Binance FZE, a different legal entity from the one serving global users, so he had to abandon that path.

In December, the bereft trader discovered that Binance Global had changed its registered address to the Abu Dhabi Global Market (ADGM). Because ADGM falls under the same jurisdiction as his workplace and is physically close, he believed it could be his chance at getting compensation.

According to Zhang, he made several public posts about his ADGM pursuit, which prompted a cease-and-desist notice dated February 3 from Al Tamimi & Company, a law firm he claimed represents Binance. Per the email shared in the X article, the firm is the legal counsel to Nest Exchange Limited, the entity responsible for Binance[dot]com.

Nest Exchange email to Zhang. Source: X.

Zhang says Binance’s representatives cited his customer service chat records and insisted that seeking recourse through FSRA would be “illegal.” He says they insisted disputes must go through arbitration at the Hong Kong International Arbitration Centre or the International Chamber of Commerce. 

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Vitalik Buterin stated the crypto space does not need more L1 infrastructure, just a day after claiming the L2 model is overdone and broken. Buterin warned against non-EVM layers as virtually useless. 

Vitalik Buterin dealt another blow against yet another ‘Ethereum killer’, claiming hardly anyone needed another EVM-compatible L1 chain. The renewed discussion came just a day after Buterin stated that L2 no longer makes sense, as Cryptopolitan reported. 

This time, Buterin attacked the creation of L1, using hype to draw attention to yet more newly created networks. 

Buterin was direct in disclaiming any more attempts to create more L1 infrastructure: 

“If you make an EVM chain *without* an optimistic bridge to Ethereum (aka an alt L1), that’s even worse. We don’t friggin need more copypasta EVM chains, and we definitely don’t need even more L1s,” he wrote in a longer post. 

Even new chains compatible with Ethereum were now redundant, endlessly copying the model of other networks with an optimistic bridge to the main network. Despite the creation of new chains, nothing guarantees an inflow of users or liquidity. 

Vitalik Buterin calls for more useful products

Buterin has called for building useful products, citing some of his favorite areas such as privacy, fast apps, and low-latency products. He also called out projects not to make a ‘connection to Ethereum’ the main feature. Buterin called out against teams that used his reputation to promote their networks. In late 2024, Buterin also stopped mentioning new L2s if they were not evolving to a more decentralized stage. 

Previously, the proximity to Ethereum was used as a narrative driver for both L2 and L1 chains. Bridging and inflows were also used as a proxy for success, though bridging was sometimes incentivized with point farming programs. 

Buterin made an exception for app chains, which have a singular use case, such as prediction markets. Some chains may have a suitable architecture tailored to one powerful app, instead of aiming to become a general activity and tokenization hub. 

Connected L1 with their own L2 may be a more suitable architecture, as Buterin once again spoke against bridges. Bridging has proven to be a low-capacity method to move liquidity, and one exceedingly at risk for exploits. 

L1s slow down activity, value deposits

L1s activity has slowed down, though Ethereum remains an exception. L1 expansion happened mostly in 2024, while most chains coasted at a higher baseline level of daily active wallets. 

L1 chains operate at a higher baseline, but have stalled in the past year, with outflows of users and value. Smaller chains carry a limited number of transactions. | Source: Token Terminal.

The usage of L1 was mostly linked to specific apps and the available liquidity. Solana and BNB Chain remained active based on meme token trading, while Ethereum retained its status as a key DeFi hub. 

The value locked in L1 chains also declined in the past month, due to the crypto market crash. Solana lost over 21% of its value locked, while Ethereum saw an outflow of over 22%. 

Some niche, smaller chains saw an increase in value, but most fail to show sustainable growth. Even high-profile L1 like Berachain has gone quiet, handling a limited number of real economic transfers.

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Google’s parent company is now winning praise from Wall Street for its artificial intelligence efforts, a major change from just one year ago when investors worried the tech giant was falling behind its competitors.

Alphabet executives showed fresh confidence during their earnings call on Wednesday, held after the company launched Gemini 3, a new AI model that has impressed users and helped Google close the gap in the race to develop artificial intelligence technology.

Without naming OpenAI directly, company leaders highlighted an important difference between the two firms: their AI spending has started producing financial gains throughout the entire business.

Gemini app reaches 750 million monthly users

This reasoning helped Alphabet defend plans to potentially increase capital spending to as much as $175 billion to $185 billion in 2026. That amount would be roughly double what the company has spent before, driven mainly by huge investments in computing systems needed to run AI programs.

In previous earnings discussions about AI during 2025, Alphabet had talked mostly about product usage numbers and money earned through its cloud computing division. “Overall, we’re seeing our AI investments and infrastructure drive revenue and growth across the board,” CEO Sundar Pichai told investors on the call. The company’s renewed confidence about making money from AI comes from gains in both consumer products and business services.

Pichai revealed that the Google Gemini app, which goes head-to-head with OpenAI’s ChatGPT, had more than 750 million people using it each month by the end of the December quarter. That number was up from 650 million users at the end of the previous three-month period.

However, ChatGPT still has more users. OpenAI CEO Sam Altman said in October that ChatGPT had passed 800 million people using it each week. “We are also seeing significantly higher engagement per user, especially since the launch of Gemini 3,” Pichai added.

Google has built Gemini 3 into “AI Mode” in its search engine and uses the technology to run the business version of Gemini. Pichai said during the call that this enterprise product now has 8 million paying customers.

Stock rebounds as cloud revenue surges

The massive spending forecast initially worried investors, causing the stock price to drop as much as 6% in trading after regular market hours. But strong results from the cloud division, which saw revenue jump 48% in the December quarter, and AI-driven improvements across other parts of the business quickly restored Wall Street’s faith that Google’s AI bets are starting to work.

Google Cloud growth crushes Wall Street estimates. Source: Company Statements – Deborah Sophia – Reuters.

The stock recovered from the initial drop and ended after-hours trading unchanged, supporting a message Wall Street has been sending to technology companies: big AI spending can only continue if companies show they’re making real money from it. Over the past year, Alphabet has moved from the back of the pack to the front among the “Magnificent Seven” group of large technology companies.

The company now joins only Nvidia and Apple as firms worth more than $4 trillion. Meanwhile, Microsoft’s stock took a major hit last week, partly because of growing worries about how much the company depends on OpenAI.

Despite speaking more cautiously about spending for the year ahead, Microsoft said its spending in the fiscal third quarter would decrease from the record $37.5 billion it spent during the October through December period. Financial experts pointed out that this difference in how the market responded shows changing investor attitudes.

People who buy stocks now prefer companies that have built their own AI systems rather than those relying on outside partners. While Microsoft deals with its complicated relationship with OpenAI, Alphabet’s unified strategy across search, cloud services, and consumer products gives a clearer picture of how the company will make money over time.

The company’s ability to use its large existing customer base to roll out Gemini 3 also suggests it has an edge in bringing new technologies to market quickly. As the industry enters the next stage of AI development, Alphabet seems ready to keep moving forward through solid execution and smart use of resources.

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The United Nations Children’s Fund (UNICEF) on Wednesday pointed to reports of a rapid surge in the volume of AI-generated sexualized images circulating on the internet. Those AI-generated images mainly included cases where photographs of children have been manipulated and sexualized.

The agency argued that the rise in AI-powered image or video generation tools producing child sexual abuse materials escalates the risks to children through digital technologies. UNICEF also called for urgent action by governments and the industry to prevent the creation and spread of AI-generated sexual content of children.

Sexualized AI-generated content causes long-term emotional harm to children

Deepfake abuse is abuse.

Sexualised images, videos, or audio of children generated or manipulated using AI tools are child sexual abuse material. Even without an identifiable victim, it normalises the sexual exploitation of children.

UNICEF calls for urgent action to prevent…

— UNICEF (@UNICEF) February 4, 2026

The UN organization noted that less than 5 years ago, high-quality generative models required significant computing power and expertise. However, the current open-source models make it easier for perpetrators to create sexual abuse content. 

The agency believes that although no real child is directly involved, such content normalizes the sexualization of children and complicates victim identification. UNICEF also argued that perpetrators can create realistic sexual images of a child without their involvement or awareness. 

UNICEF said such content can violate a child’s right to protection without even knowing it has happened. The agency also stated that children are faced with shame, stigma, more judgment from peers and adults, social isolation, and long-term emotional harm.

UNICEF also revealed that the rise in accessibility of AI-powered image or video generation tools has led to a surge in the production and spread of child sexual abuse materials (CSAM). The UK’s Internet Watch Foundation (IWF) found approximately 14,000 suspected AI-generated images on a single dark-web forum dedicated to child sexual abuse materials in just one month. The report disclosed that a third of the materials were criminal and the first realistic AI videos of child sexual abuse. 

The IWF also discovered 3,440 AI videos of child sexual abuse, a 26,362% surge from the 13 videos found the previous year. 2,230 (65%) of the videos were categorized as Category A for being so extreme, while a further 1,020 (30%) were categorized as Category B.

IWF also identified AI CSAM on mainstream platforms, which included deepfake nudes created in peer-to-peer contexts targeting girls. The organization also pointed to an instance in Korea where law enforcement reported a 10x surge in sexual offenses involving AI and deepfake technologies between 2022 and 2024. 

The AI and deepfakes mainly included teenagers, constituting the majority of the accused. Thorny’s survey discovered that 1 in 10 teens in the U.S. knew of cases where friends had created synthetic non-consensual intimate images of children using AI tools.

UNICEF, ECPAT International, and INTERPOL also found that across 11 countries, around 1.2 million children found their images manipulated into sexually explicit deepfakes through AI tools in 2025. The agencies also reported that up to two-thirds of children in some 11 countries worry that AI could be used to create fake sexual images.

UNICEF argued that parents and caregivers need to be informed about AI-enabled sexual exploitation and abuse. The agency also called for schools to educate students about AI-related risks and the harm they cause to affected individuals.

Countries dissociate from Grok due to its sexualized AI deepfakes

UNICEF’s report comes as Elon Musk’s AI tool Grok implemented features that prevent the tool from editing real photos of real people to show them in revealing clothing in countries where it’s prohibited. The initiative came after widespread concern over sexualized AI deepfakes.

The UK government called on X to control Grok while regulator Ofcom said it’s working around the clock to fix it. X said in a statement that the firm had geoblocked all users’ ability to generate images of real people in bikinis, underwear, and similar clothing via the Grok account and in Grok in X in countries where it’s prohibited.

Malaysia and Indonesia also blocked access to Grok earlier last month over its ability to generate sexually explicit deepfakes. Cryptopolitan reported earlier this month that Indonesia had allowed Grok to resume operations after X committed to improving compliance with the country’s laws.

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