🔮Bye(bit) Records Record Hack, BTC Price Movement, SEC Dealer Rule, Crypto Adoption, NTF Regulation

Top Stories

Bybit’s Billion-Dollar Ether Exodus: Hackers Humble a Giant

On February 21, Bybit, the world’s second-largest exchange, lost $1.5 billion when hackers siphoned 514,000 ETH and derivatives (mETH, stETH) from its multisig cold wallet via a phishing scam that exploited a routine transfer. ETH dropped 8% to $2,727 amid panic selling, though CEO Ben Zhou emphasized 1:1 reserves to reassure users. ZachXBT tied it to North Korea’s Lazarus Group, while Ethereum gas fees spiked as users rushed to self-custody. On February 27, 2025, the FBI confirmed North Korea's Lazarus Group was responsible, adding a geopolitical layer.

Source: Kaiko Research

Bitcoin’s Tariff Tantrum: $90K Floor Wobbles

Bitcoin fell 7.25% to below $80K, its lowest since November 2024, down from a $100K peak, driven by the Bybit hack and Trump’s 25% tariff threats on Canada and Mexico. Weekly losses were mild (-0.7%), but altcoins like DOGE and SOL tanked 20%. BlackRock’s ETF saw $341M inflows mid-week, hinting at institutional staying power.

Source: Farside

Ethereum’s Supply Surprise: Pre-Merge Ghosts Haunt the Chain

Ethereum’s circulating supply climbed to pre-Merge levels by February 25, driven by Dencun’s “blob” data easing staking withdrawals—a milestone overshadowed by the Bybit hack, with 62,200 ETH laundered by March 1. The Pectra upgrade promises to curb sell-offs, potentially lifting ETH/BTC ratios from a 4-year low. Whales snapped up dips, with Kaiko tracking $200M in buys post-hack. Blockworks noted growing Pectra hype among developers, with testnets firing up.

Solana Captures 70% of Market Share in Transaction Fees & MEV Spend

Over the past 12 months, Solana has surged from 7% to 70% market share in aggregate transaction fees and MEV spend, significantly outpacing Ethereum. This growth is largely driven by Solana’s superior user experience (UX) for traders, emphasizing low fees and high throughput while still generating substantial revenue to support $100B+ valuations. The data also underscores the importance of tracking both transaction fees and MEV auction tips (via platforms like Flashbots & Jito) to fully gauge blockchain demand. Solana’s rapid ascent highlights the potential for low-cost, high-speed networks to dominate on-chain trading activity.

Source: Token Terminal

Regulation

Regulatory Clarity from SEC's Decision on Dealer Rule

The SEC decided to drop its appeal on the dealer rule. This follows a November 2024 court ruling that vacated the SEC's expanded definition of a "dealer," which would have required many crypto firms, including decentralized finance (DeFi) protocols, to register as dealers. The initial rule, adopted in February 2024, faced legal challenges from crypto industry groups like the Blockchain Association and Crypto Freedom Alliance of Texas, arguing it was arbitrary and overly broad. The SEC's withdrawal of the appeal provides regulatory clarity, potentially reducing compliance costs and fostering a more favorable environment for crypto businesses, which could be seen as a positive for market sentiment.

Memecoin Frenzy Ends as LIBRA Scandal Wipes Out Solana’s Market Surge

The memecoin boom that drove Solana’s $97.53B weekly DEX volume in January collapsed after LIBRAgate, a $107M rug pull involving Argentine President Javier Milei. The scandal exposed insider manipulation by Kelsier Ventures and KIP Protocol, which also orchestrated the failed MELANIA token. The TRUMP token, which fueled the surge, lost 75% of its value, wiping out $2B from 800,000 traders, while over 700 fake Trump-themed coins and other political memecoins flooded the market. The Central African Republic’s botched memecoin, which collapsed from $600M to zero, further eroded confidence. Solana’s ecosystem suffered heavily, with DEX volumes plunging 92% to $7.12B, SOL dropping 54%, and Pump.fun seeing steep declines. Meteora’s co-founder resigned over insider trading allegations, and Jupiter launched an internal probe. As traders flee to safer assets and rival blockchains, the memecoin cycle appears to have ended—for now.

SEC’s Coinbase Cop-Out

On February 21, the SEC moved to dismiss its lawsuit against Coinbase, alleging unregistered exchange operations, with the decision awaiting commissioner approval—a stunning pivot after years of legal wrangling. Coinbase’s stock leaped 6% pre-market before the Bybit hack wiped out gains, reflecting market turbulence. CEO Brian Armstrong hailed it as a Trump-driven thaw, easing pressure on centralized exchanges after a bruising regulatory streak. The Block confirmed no new rules emerged, but the retreat lifts a major overhang for CEX legitimacy. X erupted with “Coinbase 1, SEC 0” memes, though skeptics warned of future SEC flip-flops . Reporters noted Wall Street’s muted cheer, with ETF flows steady but not surging. It’s a lifeline—unless the SEC’s next move surprises.

UK’s Crypto Cuffing: First Unregistered Rogue Gets Nabbed

On February 28, the UK handed down its first prison sentence to an unregistered cryptoasset operator under 2023 rules—a landmark for the Financial Conduct Authority (FCA) in its bid to tame the sector. Details are thin—likely a lone trader flouting registration—but Blockworks linked it to a wider FCA sweep, with 50+ firms warned since January and dozens shuttered. The Block highlighted the FCA’s backlog, noting 200+ pending applications as compliant firms wait. Decrypt warned of a chilling effect on startups, with fines looming for stragglers. More cuffs are likely as the FCA doubles down.

Global Crypto Adoption Surges in 2024, Outpacing Mobile and Internet Growth

Crypto adoption saw significant growth in 2024, with 659 million users by December, up 13% from 583 million in January, according to Crypto.com’s Market Sizing Report. Bitcoin ownership increased 13.1% to 337 million, while Ethereum holders grew to 142 million, driven by Layer 2 networks, the Dencun upgrade, and spot ETH ETFs. India, Indonesia, Nigeria, the U.S., and Vietnam led in per capita adoption, while Kenya saw the fastest transaction volume growth, according to TRM Labs. Iran’s crypto activity surged 70%, exceeding $4 billion in outflows, as citizens sought refuge from 90% currency devaluation and rising inflation, per Chainalysis. BlackRock highlighted that crypto adoption has outpaced mobile phones and the internet, reaching 300 million users in 12 years—faster than mobile’s 21 years and the internet’s 15 years—with younger generations driving the trend.

OpenSea’s NFT Escape: SEC Backs Off, Clarity Stays AWOL

By February 22, the SEC shelved its probe into OpenSea’s NFT marketplace, dropping a 2024 Wells Notice without charges—thanks, some say, to Trump’s lighter SEC leash. Decrypt called it a close call, with the SEC still mum on whether NFTs are securities, leaving creators in limbo. Blockworks interviewed traders who sighed in relief, though legal voices cautioned the SEC could revisit post-Trump. The Block noted OpenSea’s trading volume ticking up 5% post-news, a fleeting win. The sector’s fate hinges on future SEC moves—or lack thereof.

Other Domestic Regulation Updates

• Franklin Templeton Launches Crypto Index ETF 
• YLDS Debuts as First U.S. SEC Registered Yield-Bearing Stablecoin
• Citadel Looking to Become a Crypto Market Maker
• U.S. SEC Ends Investigations into Coinbase, Robinhood, Uniswap
• OKX Pleads Guilty to U.S. DoJ Charges; Will Pay $500MM+ Fine

Other International Regulation Updates

• Brazil set to launch world's first spot XRP ETF
• Hong Kong Moves to Expand Digital Asset Licensing Regime

Pain & Gain

Pain

• Record Heist Shows Growing Sophistication of Hackers--and Industry Responses
• Argentina’s Crypto Scandal Rocks Market as Bitcoin Plummets
• XRP Whales Dump Holdings, Price Slips Below $2
• Memecoin Hype Fades as $JAILSTOOL and $BRAT Crash

Gain

• Ethena Raises $100MM for New Blockchain in Private  
• OpenSea Reclaims Market Share on SEA Token Announcement
• Pi Mobile Mining Network Goes Live--After 6 Years in Development