Bitcoin ‘Donation’ to Silk Road Founder Raises Eyebrows

Hi! In today’s edition:

• 💸 Who sent Silk Road’s Ulbricht $31M?

• 🧠 North Korean hackers screw up

• 🛡️ Ethereum upgrade: Wallet worries

• 🧱 Telegram’s blockchain stumbles

• 📊 Crypto treasury firms: Crisis in the making?

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Silk Road Founder’s Belongings Net $1.8M at Auction

The personal belongings of Silk Road founder and pardoned criminal Ross Ulbricht have fetched more than $1.8 million in a Bitcoin auction.

The auction was hosted on the Bitcoin-only marketplace Scarce City and featured a range of items from Ulbricht’s life before his 2013 arrest and from his 12 years in prison.

Among the items auctioned were personal effects such as a sleeping bag, a backpack, a drum, and Vibram FiveFingers shoes, alongside prison memorabilia such as a lock, a notebook, clothing, and several paintings he created during his time behind bars.

Ulbricht’s prison ID card alone sold for 5.5 BTC, worth around $577,500 at current prices. 

Additionally, an unidentified wallet sent Ulbricht 300 BTC worth $31.4 million, according to data from blockchain analysis firm Arkham Intelligence, prompting speculation that the transaction was made by Ulbricht himself with funds he was able to retain, although no firm evidence has been found.

Ulbricht, who was pardoned by U.S. President Donald Trump earlier this year, said the auction was part of an effort to shed some of his property and move forward. 

“I’ve left Arizona, the state where I was in prison,” he wrote on the auction page. “It’s time to travel. That means downsizing and turning the page. I don’t need the reminders and I’m sure some of you will love to have them.

Today at 4:30 pm ET, Noelle, James, Ram and Joe will go live to discuss all things crypto and macro. Turn on your notifications and don’t miss it!

BitMEX Rumbles Lazarus Hackers’ Security Lapses

Researchers at crypto exchange BitMEX on Friday said that they had uncovered several critical missteps that North Korean state-sponsored hacker group Lazarus had made during its campaigns.

Those lapses included exposed IP addresses, an accessible Supabase database, and tracking algorithms.

One finding was a rare slip-up in which a hacker likely revealed their real IP address during operations. The IP was traced to the Chinese city of Jiaxing, near Shanghai, and represents a significant lapse for the notoriously secretive group.

BitMEX’s analysis revealed an internal divide within Lazarus, with the group splintering into sub-groups with varying levels of technical skill. Lower-skilled teams focus on social engineering and phishing, while more advanced members handle sophisticated post-exploitation and code development, it found.

Since Lazarus emerged in 2007, it is estimated to have misappropriated crypto worth more than $3.4 billion.

TON Blockchain Back Online After Brief Outage

The TON blockchain, closely tied to cloud-based messaging app Telegram, suffered a brief outage on Sunday that halted block production. 

The issue was traced to an error in the masterchain dispatch queue affecting how the main chain processed its data queue.

TON’s development team announced the problem at 9:21 a.m. ET on Sunday and restored network functionality about 40 minutes later. Only a few masterchain validators required updates to resume block production, and no funds were lost during the incident.

It’s not the first time TON has seen outages. In August last year, several similar incidents occurred due to high demand for the DOGS memecoin, causing network congestion and halts in block production.

Ethereum EIP-7702 Brings New Risks, Wintermute Says

Crypto market maker Wintermute has warned that Ethereum’s Pectra upgrade — specifically the implementation of the EIP-7702 account-abstraction feature — leaves users at higher risk of automated attacks.

EIP-7702 was designed to improve the user experience by allowing wallets to temporarily act like smart contracts, enabling features such as transaction batching, gas sponsorship, and spending limits in a single transaction.

But Wintermute’s analysis suggests that more than 90% of EIP-7702 delegations are being used by malicious actors deploying copy-pasted contracts dubbed "CrimeEnjoyor," which automatically scan for wallets with compromised private keys and drain them.

Blockchain security firm Scam Snigger highlighted one such instance of an EIP-7702 upgraded address that was targeted by malicious actors, in which the victim lost $146,551.

SlowMist, another blockchain security firm, said that if EIP-7702 users unintentionally delegate their accounts to malicious contracts, they could become more susceptible to phishing risks.

“In case it wasn't clear: These wallets were not hacked using 7702,” pseudonymous Base engineer 0xKofi wrote on X. “The hacker obtained the private keys without doing anything related to 7702.” 

Crypto Treasury Companies Are All the Rage. Could They Cause an Industry Collapse?

Crypto loves a good fad. In 2017 it was ICOs. The summer of 2020 brought DeFi tokens. Then came NFTs in 2021 and memecoins over the past two years.

This year, the fad is crypto treasury companies. These firms are following the playbook launched by Strategy chairman and former CEO Michael Saylor, whose firm currently owns 580,250 bitcoin worth $60 billion, but has a market capitalization of $102.4 billion. Put another way, the firm is trading at 1.7x the value of its bitcoin.

But with premiums soaring, leverage building, and warning lights flashing, are we watching the next Grayscale Bitcoin Trust-style unraveling take shape in real time?

• 🧾 The U.S. Securities and Exchange Commission warned on Friday that proposed Ethereum and Solana exchange-traded funds offering staking rewards might not legally qualify as ETFs, citing misleading filings and raising doubts about the funds’ registration under investment company laws.

• 🔓 The Sui community approved a governance vote on Friday with 90% support to recover $162 million in frozen stolen assets from a $223 million Cetus exploit, enabling the decentralized exchange to restart within a week using validator-approved transfers and compensation contracts.

• 🐘 Trump Media closed a $2.44 billion private offering and will use $2.32 billion in net proceeds to buy bitcoin in one of the biggest corporate crypto treasury deals to date alongside its existing $759 million in liquid assets.

• 📤 BitGo and Kraken began distributing a second round of FTX bankruptcy payouts worth $5 billion on Friday, with former users set to receive 74% of their claim value now and smaller claimants expected to recover at least 119% including interest.

• 🕵️‍♂️ Binance founder Changpeng “CZ” Zhao on Sunday proposed a privacy-focused perpetual DEX that hides user trades, deposits, and liquidation points using zero-knowledge encryption to prevent front-running, and invited developers via his messaging app, ReachMe, to help build it.

• 🛑 Blockchain investigator ZachXBT reported today that Taiwanese exchange BitoPro was likely hacked for over $11.5 million on May 8 via hot wallet exploits, with the stolen crypto routed through Tornado Cash, Thorchain, and Wasabi Wallet, although the exchange has not publicly confirmed the breach.

• 🎮 Bored Apes creator Yuga Labs last week sold its Moonbirds, Mythics, and Oddities intellectual property to Orange Cap Games as it continues offloading once-premium NFT brands amid a deep market slump, shifting its full focus to Bored Apes and Otherside.

• 📁 A U.S. federal judge on Friday declined to force the Justice Department to recheck its records in the Tornado Cash case, saying no Brady violations had been committed despite related Financial Crimes Enforcement Network discussions in a separate crypto mixer investigation.

• 🚨 Czech Justice Minister Pavel Blazek resigned on Friday after a public backlash over his acceptance of nearly $45 million in bitcoin from a convicted drug trafficker without vetting its origins, prompting a police investigation and political fallout just months ahead of a parliamentary election.

• 👮‍♂️ French prosecutors charged 25 people on Saturday, including six minors, over a coordinated string of kidnapping attempts targeting crypto figures such as Paymium CEO Pierre Noizat’s family, but despite the arrests, the masterminds behind the attacks remain unidentified.

• 💱 Payments company Stripe on Friday confirmed early talks with banks to integrate stablecoins into payment systems, with co-founder John Collison saying the firm expects a major share of future global transactions to rely on stablecoins, thanks to their speed and cost advantages.

• 🚀 Stablecoin startup Atticus, still in stealth, is nearing a $2 billion valuation with a new raise led by Anduril CEO Palmer Luckey and backed by Haun Ventures, potentially making it the year’s first stablecoin unicorn.

1. Bloomberg: Saylor’s Contrarian Bet Morphs Into Crypto Gold Rush

2. DL News: How a Hyperliquid whale lost $100m on leveraged Bitcoin bet