Crypto Regulation and Compliance Updates

The founder of SlowMist, Yu Xuan, disclosed that the Drift Protocol theft incident was caused by its migration to a 2-of-5 multisig scheme without a timelock, which enabled the attacker to quickly seize control of permissions and resulted in losses of over $200 million. He urged DeFi project teams to regularly review risks, and users need to pay attention to the protocol’s risk of capital loss.

Gate News message, April 2, a certain CEX issued a Drift (DRIFT) token warning notice. For the purpose of protecting users, member companies of the Digital Asset eXchange Alliance (DAXA) may take measures such as issuing warnings, designating trading warning assets, or terminating trading support.

ZachXBT criticized Circle for not taking action in the Drift hacking incident, with millions of USDC moved from Solana to Ethereum. Circle has frozen part of its hot wallets, but progress has been slow to resume. He says Circle is a bad actor in the industry.

Gate News, April 2, Unitas Protocol, a yield generation protocol, released a statement saying it was not affected by the Drift Protocol attack incident. Unitas Protocol has no exposure on Drift; all collateral is safe; all strategies (including the JLP Delta-neutral strategy) are running normally, and user funds are secure. Collateral can be accessed via Accountable and Primus

On April 2, an on-chain analyst disclosed that the Drift protocol vault was attacked. The attacker obtained funds via NEAR Intents 8 days earlier, remained inactive until receiving a large amount of assets, then moved the funds to multiple KYC-verified money-laundering addresses and transferred them to Ethereum via Wormhole, involving Tornado Cash.

On April 2, on-chain monitoring firm PeckShield warned that HyperEVM could face a major outage, with blocks and transactions coming to a halt, impacting users’ transaction confirmations and smart contract interactions. The official status page, however, shows “All Systems Operational,” reflecting insufficient monitoring of HyperEVM layer conditions. This outage exposed issues with the new mainnet’s early stability; the specific causes are pending an official announcement.

The U.S. Department of the Treasury issued the broad principles of Section 4(c) of the GENIUS Act, which require that state-level regulation be materially similar to the federal framework, including consistency of standards and requirements that allow adjustments based on local circumstances. It applies to state-qualified issuers of payment stablecoins with issuance of no more than $10 billion.

Bitcoin (BTC) dipped in the short term to $67,600. The U.S. Department of the Treasury launched a small consultation on regulatory guidance for stablecoins under the “GENIUS Act,” and the CFTC Chair said he is ready to regulate the entire crypto market. Amid market developments, spot Bitcoin inflows are slightly higher than outflows, and the CFTC and the SEC have signed an agreement to coordinate digital asset regulation.

The Hong Kong Monetary Authority failed to issue stablecoin licenses by the end of March as scheduled, with review delays caused by the high threshold requirements. In addition, state-linked enterprises such as Ant and JD.com have paused their applications due to mainland regulatory pressures, further affecting the approval timeline. The Monetary Authority did not provide a specific schedule, only stating that it is still moving forward with the licensing process.

The Federal Reserve Board member Barr warned of the potential risks of bank runs and money laundering posed by stablecoins, emphasizing that stronger regulation is needed rather than relying solely on the “GENIUS Act.” He said that stability depends on reserve assets and liquidity, and that the problem of illicit capital flows must be addressed. The bill will require follow-up implementing details and coordination across agencies to avoid regulatory arbitrage, and to emphasize finding a balance between promoting innovation and maintaining financial stability.

Drift Protocol was attacked on April 2, and about $220 million to $270 million in assets were transferred, causing its TVL to fall to $255 million. The attacker moved some funds to Ethereum and performed swaps, and a statement from the Jupiter platform said it was not affected. Security organizations warned that after the attack, the native token faced prolonged downward pressure, and the future outlook for the DRIFT token needs to be carefully assessed. The investigation is still ongoing.

Gate News message. On April 2, according to monitoring by ZachXBT, Trust Wallet’s Discord short link discord.gg/trustwallet has been hijacked and is currently pointing to a phishing server. Users should avoid joining that Discord via links provided through official channels (including the website, Telegram, blogs, etc.).

Jupiter on X confirmed it was not affected by the Drift security incident. Jupiter Lend is not related to the Drift market, and JLP is fully backed by underlying assets. Drift Protocol suffered a security incident, with losses totaling between $200 million and $270 million, half of which was stolen JLP assets.

Gate News report: On April 2, Galaxy Digital (GLXY) recently experienced a cybersecurity incident. Hackers carried out unauthorized access to its isolated R&D work area. The company stated that the affected environment is solely used for research and development and is completely isolated from core infrastructure, production systems, trading platforms, and customer accounts. The loss amount is less than $10,000, and customer funds and data were not impacted. Galaxy Digital responded swiftly, completing the lockdown and reinforcement of the compromised work area, and deploying additional security measures at the on-chain infrastructure layer.

Elon Musk and the U.S. Securities and Exchange Commission (SEC) failed to reach a settlement, and will head to trial to resolve allegations that he misled investors before acquiring Twitter. Both sides filed a joint case-status report, stating that the court’s alternative dispute resolution options are unhelpful.

Two US senators introduced the “Mined in America Act” to promote domestic Bitcoin mining and establish a certification for mining facilities. The bill aims to reduce reliance on foreign manufacturers and enhance US-made mining equipment.

Crypto Super Political Action Committee Fellowship PAC appoints Tether U.S. executive Jesse Spiro as chair, pushing for action supporting pro-crypto candidates. Meanwhile, the “Digital Asset Market CLARITY Act” is stalled in the Senate, with controversy over stablecoin yield policy affecting the bill’s progress. The crypto industry is stepping up lobbying efforts, seeking a more favorable policy environment.

A South Korean cryptocurrency exchange announced that it will postpone its IPO until after 2028 due to the need to improve internal controls and accounting policies, and it is still in the preparation stage. Although it is expected to generate $43 billion in revenue in 2025, internal and regulatory issues have impacted the IPO process.

EDX Markets has applied to the U.S. Office of the Comptroller of the Currency for a national trust bank charter, planning to provide digital asset custody and trading services to strengthen its competitiveness in the crypto industry. This move reflects how the crypto industry is rapidly moving closer to a regulated financial system.

Drift Protocol has suspended all deposits due to a significant security breach, with over $270 million drained from the platform. This incident is marked as one of the largest hacks in decentralized finance, making Drift the second-largest Solana exploit in history.