“The thing people don’t really know about is that the government, in many cases, went to founders of DeFi protocols […] and basically told the founders you effectively have to do a settlement with us,” Krug said on stage at the ETHDenver conference on Feb. 27.

“In many cases, they said you also have to sign a thing that says you will never work in crypto again,” he added. “By the way, this agreement, you can’t really talk about it publicly because there’s a non-disparagement clause.”

Krug’s claim adds to a crypto industry rumor dubbed “Operation Chokepoint 2.0” that says the Biden administration tried to kill the local industry through regulators’ enforcement actions and by pressuring banks to cut off or limit services to crypto firms.

“These agencies would basically go to the founders, and they would say, ‘Hey, if you don’t agree to this, you’re just going to end up in jail.’”

Krug said such civil agencies would have to defer to the Department of Justice for it to file criminal charges, but “none of these matters have been referred to the DOJ yet.” He also claimed that “none of these founders actually broke the law.”

Krug said that at first, he “didn’t really believe” such settlements existed, but some founders — who he didn’t name — later showed him their agreements.

“Sure enough, there are clauses that say you can never work in crypto again [and] you can’t talk about this to anyone,” he said. 

“It was just a crazy, crazy administrative state that got really out of control.”

The SEC did not immediately respond to a request for comment.

Related: Saga CEO discusses crypto industry’s shift toward GOP — ETHDenver

Since 1972, the SEC has included a “gag rule” in its settlements that forbids defendants from criticizing the agency’s claims — a clause that Commissioner Hester Peirce has said “undermines regulatory integrity.”

Krug said the only way DeFi founders could comment on the settlements is if Congress asked them to testify. He added there are “a lot of founders who would love to talk about how the government basically really screwed them over if Congress asked them to testify.”

Earlier this month, the bank-regulating Federal Deposit Insurance Corporation released nearly 800 pages of so-called “pause letters” that it sent banks and finance firms over their crypto services.

Both the US House and Senate held hearings on crypto debanking in early February that heard from crypto executives on their claimed torrid dealings with trying to access financial services under the Biden administration.

Magazine: How crypto laws are changing across the world in 2025 

Additional reporting by Turner Wright.

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The Finance Ministry of Pakistan is considering forming a “National Crypto Council” to explore the legalization of cryptocurrencies in the country, according to a report from local publication Dawn. The change in position came after Finance Minister Muhammad Aurangzeb had a meeting on digital assets with a foreign delegation that included US President Donald Trump’s advisers.

According to the report, the crypto council will be made up of key government representatives, regulatory authorities and industry experts. It will oversee policy development, address regulatory challenges, and ensure that the country’s crypto ecosystem evolves in a sustainable and secure manner.

Pakistan has over 20 million residents involved in crypto, but they face significant challenges, including high transaction fees. Aurangzeb directed the stakeholders to create a framework that would ensure economic viability and regulatory compliance while protecting against financial crimes and illicit activities.

Pakistan’s preliminary move to legalize cryptocurrency is in line with global trends. The United States, Europe, the United Arab Emirates and other countries have taken preliminary steps over the past year to increase industry regulation, which may increase innovation while bettering consumer protection.

In years past, the Finance Ministry and State Bank of Pakistan opposed the idea of cryptocurrencies. Aisha Ghaus Pasha, a previous Pakistani Minister of State for Finance and Revenue, once said that cryptocurrencies would never be legal in the country and that the State Bank sought to ban all cryptocurrencies in January 2022.

However, Finance Minister Aurangzeb asked authorities to approach the legalization and regulation of crypto in the country with “an open mind.” In November 2024, the State Bank of Pakistan announced a package of proposals that would have paved the way for a central bank digital currency, or CBDC, and the buying, selling and trading of crypto.

Related: IMF wants Pakistan to tax crypto gains to pay for $3B bailout

According to Dawn, the foreign delegation that met with Aurangzeb included Gentry Beach Jr., a business associate of President Trump; Nikita Goldsmith, a tech entrepreneur; Alex Malkov, a consultant for blockchain firms; and Jerad Finck, CEO of Cosmic Wire. The delegation’s visit was not announced by the US Embassy.

The Trump administration has worked to change the tone surrounding crypto in the United States, overhauling the crypto arm of the US Securities and Exchange Commission, appointing David Sacks as a crypto czar and forming a committee to explore the possibility of creating a national digital asset stockpile. President Trump made several promises to the crypto community while campaigning and has even launched his own memecoin.

Magazine: Bitcoiners are ‘all in’ on Trump since Bitcoin ’24, but it’s getting risky

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According to Fortune, the CEO told an audience at the Economic Club of Washington DC, “If they make that legal, we will go into that business.”

Moynihan added that the bank could offer dollar-backed tokens linked to customer deposit accounts but did not go into greater detail on any potential products.

Stablecoins are expected to thrive under President Donald Trump’s administration as comprehensive regulations are established to use overcollateralized dollar-pegged tokens to extend US dollar dominance in international trade and bring stablecoin firms onshore.

Related: Stablecoin firms should be registered in US — Circle’s Jeremy Allaire

Stablecoin regulations become priority for US lawmakers

Several stablecoin regulatory bills have been proposed by US lawmakers, including the Lummis-Gillibrand Payment Stablecoin Act, the Clarity for Payment Stablecoins Act of 2024, and the GENIUS stablecoin bill.

In February 2025, US House Financial Services Committee ranking member Rep. Maxine Waters called for bipartisan regulation on stablecoins.

The Congresswoman said the stablecoin regulatory bill drafted by former House Financial Services Committee chairman Patrick McHenry in 2024 was preferable to other legislation.

The Clarity for Payment Stablecoins Act of 2024, introduced by Senator Bill Hagerty, builds upon Rep. McHenry’s bill with one key distinction. Hagerty included a provision to allow stablecoin issuers with less than $10 billion in market capitalization to be regulated at the state level rather than the federal level.

Federal Reserve governor Christopher Waller said banks should be allowed to issue stablecoins in a Feb. 12 conference.

Waller described stablecoins as a chance to overhaul cross-border payments and international commerce — adding that banks and non-banking institutions should be allowed to issue regulated stablecoins.

“I am seeing a lot of new, private sector entrants looking to find ways to support the use of stablecoins for retail payments,” the Federal Reserve governor said.

The low-cost and near-instant settlement times for stablecoins have made digital fiat tokens the clear choice for remittances and cross-border payments that would normally take days or even weeks to settle and often feature significant transaction costs.

Magazine: Unstablecoins: Depegging, bank runs and other risks loom

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The T-REX 2X Long MSTR Daily Target ETF (MSTU) lost some 40% of its value in the past three trading sessions alone, the investment researcher said in a Feb. 26 X post. 

Shares of MSTR, Strategy’s stock, dropped roughly 20% over the same period, according to data from Google Finance. 

“Leverage ETFs are seeing massive downswings,” The Kobeissi Letter said. 

Leveraged ETFs add additional risk to MSTR and tend to underperform due to the costs of daily rebalances to maintain a leverage target. They also typically hold financial derivatives rather than the underlying stock. 

One study by GSR Markets found that in volatile market conditions — when daily rebalances are largest — leveraged ETFs lag comparable strategies by more than 20%.

Strong uptake

In September, asset managers REX Shares and Tuttle Capital Managed jointly launched two ETFs designed to provide leveraged exposure to MSTR share performance.

The ETFs — MSTU and T-REX 2X Inverse MSTR Daily Target ETF (MSTZ) — aim for two-times leveraged long and short exposure to MSTR, respectively, REX and Tuttle said.

They launched shortly after another asset manager, Defiance, clocked $22 million in volume during the first day after launching a similar ETF. 

That “may be a Day One record for a leveraged ETF,” Eric Balchunas, a Bloomberg Intelligence ETF analyst, said in an Aug. 15 X post.

Originally a business intelligence firm, Strategy transformed into a de-facto cryptocurrency hedge fund in 2020 when founder Michael Saylor started using the company’s balance sheet to buy Bitcoin (BTC).

Strategy has spent upward of $33 billion buying BTC at an average cost of around $66,000 per coin, earning an unrealized profit of more than $10 billion, according to data from MSTR Tracker.

At the peak of MSTR’s performance in November, the stock had clocked 2500% returns. As of Feb. 26, MSTR shares are down around 15% in the year-to-date, largely due to Bitcoin’s February price correction.

Magazine: BTC above $150K is ‘speculative fever,’ SAB 121 canceled, and more: Hodlers Digest, Jan. 19 – 25

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The US Securities and Exchange Commission and Justin Sun have asked a federal court to pause the regulator’s case against the crypto entrepreneur to allow for settlement talks.

In a Feb. 26 filing to a Manhattan federal court, the SEC and Sun said they “jointly move to stay this case to allow the Parties to explore a potential resolution.”

“In this case, the Parties submit that it is in each of their interests to stay this matter while they consider a potential resolution,” the filing added.

The SEC and Sun asked the court to allow them 60 days to submit a joint status report if the stay is approved.

It’s the latest crypto-related enforcement action the SEC has paused under the Trump administration as the regulator has also moved to stay or dismiss its cases against crypto exchanges Binance and Coinbase, among others.

US President Donald Trump had promised during his campaign to ease regulatory enforcement on the digital asset industry, vowing to make the country the “world capital” for crypto.

The SEC has reportedly prioritized pausing its crypto cases that have imminent deadlines and could later stay its lawsuits against crypto firms Kraken and Ripple, which have respective court deadlines in late March and mid-April.

In March 2023, the SEC sued Sun and three of his companies, the entity behind layer-1 blockchain Tron, the Tron Foundation and the file-sharing platform backers the BitTorrent Foundation and its San Francisco-based parent firm, Rainberry Inc.

Related: House Democrats want ethics probe on Trump over crypto projects

The regulator alleged Sun and the companies sold unregistered securities through the sale of the crypto tokens Tron (TRX) and BitTorrent (BTT) and engaged in “manipulative wash trading” of the tokens on secondary markets.

Sun had moved to dismiss the lawsuit, arguing the SEC had no sway over the token sales as it was “predominantly foreign conduct.” The agency argued that Sun “traveled extensively” throughout the US, which gave it jurisdiction.

Sun is the biggest investor in and an adviser to Trump’s crypto platform, World Liberty Financial, and has invested a total of $75 million through two major buy-ins of the platform’s self-titled token.

He first bought $30 million worth of World Liberty Financial in November to become its largest investor, then upped his stake last month with an additional $45 million WLFI buy.

An SEC spokesperson said the agency declined to comment. A Tron spokesperson said the firm had no comment on pending legal matters.

Magazine: How crypto laws are changing across the world in 2025 

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In a Feb. 26 notice shared by Gemini co-founder and president Cameron Winklevoss, the SEC said it had concluded its investigation and “based on the information we have as of this date,” the regulator will not recommend an enforcement action.

The SEC charged crypto lending firm Genesis Global Capital and crypto exchange Gemini with offering unregistered securities through Gemini’s “Earn” program on Jan. 12, 2023.

However, the agency added the notice isn’t an exoneration and that it must not be construed as an indication that no action will be taken at a later date as a result of the SEC’s investigation.

Winklevoss said closing the investigation for now is of little consolation after the “damage this agency has done to us” and the broader crypto industry.

”The SEC cost us tens of millions of dollars in legal bills alone and hundreds of millions in lost productivity, creativity, and innovation. Of course Gemini is not alone,” Winklevoss said.

“The SEC’s behavior in aggregate toward other crypto companies and projects cost orders of magnitude more and caused unquantifiable loss in economic growth for America,” he added.

It follows a swathe of similar actions by the SEC, with the agency closing its cases against crypto exchange Coinbase on Feb. 21, the exchange was accused of operating as an unregistered securities broker. The case against NFT marketplace OpenSea was closed on the same day.  

The SEC also recently dropped its investigation into Uniswap Labs, the developer behind the Uniswap decentralized exchange and online brokerage Robinhood Crypto, which received a Wells notice on May 4. 

Winklevoss said the move marks another milestone to end the war on crypto but added that the damage may have already been done, as some projects and other talent may have avoided the space in the face of the “regulatory attacks.” 

To avoid similar situations, Winklevoss said there should be “thoughtful legislation” and a “cost and price to be paid” for “sham investigations and baseless enforcement actions.” 

This could involve staff involved in the SEC enforcement actions being fired, barred from working at the agency, and affected crypto firms being reimbursed for costs. 

Related: SEC task force continues meeting with firms over crypto regulations

“It’s wholly unacceptable for an agency like the SEC to bully, harass and attack a lawful industry and then decide one day to simply say we’re good and walk away,” Winklevoss said. 

“I’m glad to be turning the page here as an industry, but this is not the end, rather the beginning toward ensuring this never happens again to the crypto industry or any other exciting, new frontier industry in the future.” 

Former SEC Chair Gary Gensler, known for his hardline stance on crypto regulation, resigned on Jan. 20, 2025. Under his reign, which started in 2021, the SEC took an aggressive regulatory stance toward crypto, bringing upward of 100 regulatory actions against firms. 

Gensler departed the same day that crypto-friendly Donald Trump started his second presidential term as US president. Trump had promised to fire Gensler once elected. 

Magazine: MegaETH launch could save Ethereum… but at what cost? 

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Set to take effect in 2027, the IRS regulation approved on Dec. 5 would expand existing reporting requirements to include decentralized exchanges and require brokers to disclose gross proceeds from sales of cryptocurrencies, including information regarding taxpayers involved in the transactions.

During its Feb. 26 committee markup, the House Ways and Means Committee, a key group within the US House of Representatives that deals with financial issues, voted 26 to 16 to pass the resolution.

In a statement, Miller Whitehouse-Levine, the CEO of DeFi advocacy group the DeFi Education Fund, said the rule is an “unlawful and unconstitutional overreach” and needs to be overturned to “protect Americans’ freedom of choice in how they transact.”

“We urge all members —and all who want to establish the United States as a hub for financial innovation—to act swiftly to uphold Congress’s original intent by supporting the motion to overturn this misguided rule,” he said.  

If the resolution passes through the House, it then moves to the Senate, and if it is passed there, it would then be sent to US President Donald Trump to either veto or sign into law.

Ways and Means Committee Chairman Jason Smith said in a Feb. 26 statement that the legislation, implemented during former President Joe Biden’s final days in office,  “could stifle America’s digital asset leadership.”

“Not only is it unfair, but it’s unworkable. DeFi brokers do not even collect the information from users needed to implement this rule,” he said.

Related: Timeline: Trump’s first 30 days bring remarkable change for crypto

“Former IRS Commissioner Charles Rettig publicly stated that this regulation would create a blizzard of paperwork that the IRS can neither handle nor administer in an efficient and effective way,” Smith added.

Smith claims the IRS stretched its directives from Congress in 2021 to unnecessarily regulate the providers of digital wallets, which has only benefitted foreign crypto firms exempt from the requirements.

“The losers are the roughly one in four Americans who own cryptocurrency,” he said.

Hundreds of pro-crypto candidates won seats in Congress, and the Republican Party’s majority control of the US Senate and House has led to speculation by industry leaders that the US government might become the most pro-crypto in history.

The change in leadership has already seen many positive developments in the crypto space, including the United States Securities and Exchange Commission ending multiple cases against crypto firms throughout February.

Magazine: Elon Musk’s plan to run government on blockchain faces uphill battle

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Aleksei Andriunin was arrested by Portuguese authorities on Oct. 8, and was extradited to the US on Oct. 25. Sometime after, he appeared in a federal court in Boston, where he was ordered to remain detained until further notice, the US Attorney’s Office for the District of Massachusetts said on Feb. 26.

It comes as Andriunin and Gotbit directors Fedor Kedrov and Qawi Jalili were indicted by a federal grand jury on Oct. 31. 

Gotbit and Andriunin were among several entities and individuals that allegedly fell for the US Federal Bureau of Investigation’s NexFundAI (NEXF) “trap token” in May — which was created to catch fraudsters engaged in market manipulation.

Gotbit allegedly carried out market maker services by implementing software that facilitated wash trading to artificially inflate trading volumes for its clients looking to secure crypto token listings on market aggregators like CoinMarketCap and trading on exchanges.

Kedrov and Jalili were accused of marketing these wash trading tactics to prospective clients, and authorities said they admitted to using a specific strategy to conceal those wash trades on public blockchains in a 2019 interview. 

US authorities allege that Gotbit “received tens of millions of dollars” in proceeds in connection with those services between 2018 and 2024.

Andriunin, a 26-year-old Russian national, has also been accused of transferring a portion of those proceeds into his personal Binance account.

Related: Crypto firm pleads guilty to wash trading FBI-made token

If convicted, Andriunin faces up to 20 years in prison for wire fraud and a fine of up to $250,000 or “twice the gross gain or loss from the offense, restitution and forfeiture.”

The charge of conspiracy to commit market manipulation and wire fraud charges also carry a sentence of up to five years in prison.

The US Securities and Exchange Commission also filed a fraud suit against Gotbit and Kedrov in October.

Magazine: Legal issues surround the FBI’s creation of fake crypto tokens

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The FBI confirmed earlier industry investigation that North Korea was responsible for the hack, which the US law enforcement agency dubbed as “TraderTraitor” in a Feb. 26 public service announcement.

The FBI noted in an April 2022 statement that TraderTraitor is commonly referred to in the industry as the Lazarus Group, APT38, BlueNoroff and Stardust Chollima.

“TraderTraitor actors are proceeding rapidly and have converted some of the stolen assets to Bitcoin and other virtual assets dispersed across thousands of addresses on multiple blockchains,” the FBI said in its recent announcement.

“It is expected these assets will be further laundered and eventually converted to fiat currency.”

The FBI has called on Remote Procedure Call node operators, exchanges, bridges, blockchain analytics firms, decentralized finance service providers and others to block transactions linked to TraderTraitor.

The Bybit hackers have already laundered more than 135,000 Ether (ETH) since the Feb. 21 incident — which comprised mostly liquid-staked Ether tokens, pseudonymous crypto analyst EmberCN noted in a Feb. 26 X post.

Another 363,900 Ether, worth around $825 million at current prices, has remained untouched since the hack.

Crypto forensics firm Chainalysis said the hackers had converted portions of the stolen Ether into Bitcoin (BTC), the Dai (DAI) stablecoin and other assets via decentralized exchanges, crosschain bridges and an instant swap service without Know Your Customer protocols.

Related: Bybit hack forensics show SafeWallet compromise led to stolen funds

The FBI shared 51 Ethereum addresses operated by TraderTraitor or closely connected to them for industry players to block or refrain from interacting with.

Meanwhile, blockchain analytics firm Elliptic has already flagged 11,084 crypto wallet addresses suspected of being linked to the Bybit exploit. 

Those with important information were asked to reach out to the FBI’s Internet Crime Complaint Center.

Magazine: MegaETH launch could save Ethereum… but at what cost?

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The partnership, announced on Feb. 26, will enable BDACS to integrate Ripple Custody, the company’s institutional crypto and digital asset custody solution, to safeguard XRP (XRP), Ripple USD (RLUSD) and other crypto assets for financial institutions in South Korea.

Ripple president Monica Long highlighted the importance of institutional-grade custody amid growing enterprise interest in crypto.

“South Korea is gearing up for a wave of institutional crypto adoption — very excited for Ripple Custody to plant another flag in APAC with BDACS for XRP and RLUSD,” Long said in a statement.

Ripple aligns with South Korean regulatory requirement

According to Ripple, the partnership aligns with the roadmap for regulatory approval of institutional participation set by South Korea’s Financial Services Commission (FSC). The company stated:

“This partnership will support the growth of XRPL developers and its ecosystem, expand the usability of Ripple’s stablecoin (RLUSD), and leverage synergies with Busan, Korea’s blockchain regulation-free zone.”

BDACS CEO Harry Ryoo said his firm is committed to ensuring a secure infrastructure for institutional crypto adoption.

“BDACS will provide a secure and reliable custody service to support Ripple’s pioneering blockchain initiatives. Ultimately, this partnership will enable both companies to enhance and expand the digital asset ecosystem,” Ryoo said.

Ripple Custody said it expects the total amount of custodied cryptocurrencies to reach $16 trillion by 2030.

Related: South Korea sanctions Upbit with 3-month ban on servicing new clients

Working on a future-ready infrastructure

Alongside the partnership with the South Korean crypto custodian, Ripple Labs unveiled a new roadmap for building an institutional decentralized finance (DeFi) ecosystem on the XRP Ledger blockchain network.

The proposal roadmap includes a permissioned decentralized exchange (DEX), a credit-based DeFi lending protocol and a new token standard, multi-purpose token (MPT), as shown in the graph above.

XRP Ledger’s roadmap builds on top of existing infrastructure, including price oracles and an automated market maker.

Magazine: Elon Musk’s plan to run government on blockchain faces uphill battle

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