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Trump's Crypto Project Is on Fire, and Bitcoin Is Feeling the Heat

Trump's Crypto Project Is on Fire, and Bitcoin Is Feeling the Heat

Plus: ⚖️ Aave ends its governance war - token holders win, 🪙 Attacker mints $1B in fake Polkadot tokens, nets just $250K

Margaret Kuria & David Okoya
April 13, 2026

Hi! In today's edition:

⚖️ World Liberty Financial threatened to sue Justin Sun after he accused the Trump-linked project of hiding a blacklist backdoor in its token contract that could freeze investors' funds
📉 Bitcoin slid to $71,000 after Trump ordered a naval blockade of the Strait of Hormuz, wiping out weeks of gains as traders repriced global inflation risk
🏛️ Aave's token holders voted to seize control of the protocol's fee revenue, ending months of conflict with the development firm over who gets to spend the money
🚨 An attacker minted $1 billion in counterfeit Polkadot tokens on Ethereum but only walked away with $250,000 after liquidity collapsed before the drain could complete

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WLFI Threatens Justin Sun With Lawsuit as Token Revolt Deepens

World Liberty Financial, the crypto project backed by the Trump family, is facing an investor revolt after Justin Sun alleged the token contract contains a hidden blacklist backdoor that could freeze or seize user funds. Sun — himself a controversial figure who invested $75 million into the project — called it a betrayal. WLFI fired back with a legal threat, telling Sun in public posts: "See you in court."

The timing couldn't be worse. WLFI's governance token has already struggled for traction, and the public clash between two of the project's most prominent names raises fresh questions about the project's structure, transparency, and who actually controls it.

For investors who bought into WLFI's high-profile launch, this week's fallout is a sharp reminder that political branding doesn't substitute for clean tokenomics.

Bitcoin Falls to $71,000 as Trump Orders Hormuz Blockade

Bitcoin dropped to $71,000 after President Donald Trump ordered a naval blockade of the Strait of Hormuz, a move that sent shockwaves through global financial markets. The strait handles roughly 20% of the world's seaborne oil, and any prolonged closure would spike energy costs across the global economy.

Risk assets across the board sold off on the news. Bitcoin, which had recently been trading near $75,000, fell sharply as traders retreated toward cash and short-duration Treasuries. The move underscored how sensitive crypto markets remain to macro shocks, particularly ones that threaten the inflation outlook.

Aave Token Holders Just Won Everything

After four months of governance warfare, Aave has handed its token holders the keys to the kingdom. The "Aave Will Win" proposal passed Saturday with a landslide — nearly 75% in favor — redirecting 100% of revenue from all Aave-branded products to the DAO treasury and cementing AAVE as the single asset that captures the protocol's full economic upside.

The dispute kicked off in December when swap fees from CoWSwap's integration with the Aave interface were quietly routed to Aave Labs instead of the community treasury. What started as a fee spat snowballed into an existential fight over who really controls DeFi's largest lending protocol. Token holders lost early skirmishes, but this time the outcome wasn't close.

The new framework also hands Aave Labs a $25 million stablecoin package plus 75,000 AAVE vesting over four years. Founder Stani Kulechov has set his sights on scaling Aave from $40 billion to $1 trillion in assets under management. Token holders, at least, are now along for the full ride.

Hacker Mints $1 Billion in Fake Polkadot Tokens, Walks Away With Only $250,000

An attacker managed to mint $1 billion worth of counterfeit Polkadot (DOT) tokens on Ethereum but ultimately extracted only $250,000 in actual funds, a result that reveals both the audacity and the limits of this class of exploit.

The attacker exploited Polkadot's Hyperbridge cross-chain interoperability protocol to mint 1 billion DOT tokens worth $1.19 billion, according to onchain analysts. Despite the massive nominal mint the attacker was only able to walk away with a $250,000 payout due to a lack of liquidity.

🏛️ The U.S. government moved bitcoin potentially tied to a steroid distribution conspiracy, according to on-chain data flagged by analysts.
⚖️ A federal judge blocked Arizona from bringing criminal charges against prediction market platform Kalshi, a significant win for the federally regulated exchange in its ongoing clash with state regulators.
🟡 Circle CEO Jeremy Allaire defended the company's decision not to freeze USDC during the $285 million Drift exploit, calling it a "moral quandary" and arguing freezes require legal compulsion. Critics including ZachXBT say Circle had six hours to act while $232 million in stolen USDC bridged from Solana to Ethereum unfrozen.
📉 StarkWare cut staff and reorganized into two independent business units after fees on its Starknet network fell more than 99% from a late-2023 peak.
🏦 Gemini's $330 million in loans to the Winklevoss twins are drawing scrutiny following a market downturn, raising questions about the exchange's balance sheet exposure.
⚖️ Alameda Research transferred $16 million in SOL tokens in a move analysts say could signal an upcoming creditor distribution.
🇰🇷 The Bank of Korea called for a "circuit breaker" mechanism in the country's crypto markets after a Bithumb incident highlighted risks from extreme volatility.
🌐 World announced it will cut its WLD token unlock rate by more than 40% starting in July, a move aimed at easing sell pressure on the token.
💻 Exodus launched "Exodus Pay," a new feature that lets users spend bitcoin directly from the wallet app, turning it into a payments tool.
📊 Bitget is offering pre-IPO exposure to SpaceX as Elon Musk's rocket company nears a $1.75 trillion valuation ahead of a potential public listing.

🏛️ Bhutan moved another $18 million in bitcoin, according to Arkham Intelligence, as the kingdom's tracked holdings continue to shrink.
🏦 Morgan Stanley is weighing tokenization services and crypto tax solutions as part of a broader push into digital assets, with executives signaling the firm doesn't plan to stop at bitcoin.
📉 The $1.6 billion Ether Machine SPAC deal collapsed after parties cited unfavorable market conditions, marking another setback for ethereum-focused institutional vehicles.

💰 Vietnam-focused exchange CAEX secured backing from OKX Ventures and HashKey ahead of Vietnam's upcoming exchange licensing regime, positioning itself as an early regulated player in the market.

Enter Bitcoin Capital Markets