Swiss Borg's Sol Wallet Affiliated for $41.5 million

Table of Contents

Welcome to Protocol, a weekly rap of Coindesk’s most important story in cryptocurrency technology development. I am Margaux Nickelk, a reporter for Coindsk.

In this issue:

Swissborg’s Sol Acquisition Wallet was misused for $41.5 million after partner API was compromised
Ledger CTO warns NPM supply chain attacks that hit 1B+ downloads
Backpacks open permanent exchanges regulated in Europe following the acquisition of FTX EU
Polygon POS is transaction finality delay, patching is underway

Network News

Swiss Borg’s Sol Acquisition Wallet has been misused: Crypto Exchange’s Swissborg said about 192,600 Sols ($41.5 million) have been stolen from external wallets used only in the SoL acquisition strategy. The exploit comes from the compromised application programming interface (API) of partners, a mechanism by which software systems communicate with each other and affect a single counterparty, the exchange says in X’s post. The losses affected less than 1% of users, accounting for about 2% of Swissborg’s total assets, the company said. All other funds and strategies are safe and the user balance within the Swissborg app is unaffected. While recovery efforts progress, redemption of Sol earnings will be suspended. Swissborg says it will cover the shortage and make sure there is no user loss. The company works with white hat hackers, security companies and law enforcement agencies to collect funds. Once the investigation is complete, a complete incident report will follow. The exploit arrived amid a rapid rise in crypto theft, and by 2025 more than $2.17 billion had already been stolen. Shaurya Malwa read more.

Ledger CTO warns about PNM attacks: Charles Guillemet, Chief Technology Officer of Hardware Wallet Maker Ledger, warned with X that a massive supply chain attack was ongoing after the reputable developer Node Package Manager (NPM) account was compromised. According to Guillemet, malicious code is already pushed into a package with over 1 billion downloads – is designed to quietly exchange Crypto wallet addresses in transactions. That means that unsuspecting users can send funds directly without realizing the attacker. Guillemet did not name the developers that the account said it had compromised. The incident highlights how deeply interconnected open source software is and why the security of developer tools can ripple over the crypto economy. A day later, Guillemet shared that almost zero crypto users were affected by the hack. “NPM is a commonly used tool in software development using JavaScript, making package integration easier for developers,” says Guillemet in a message to Coindesk. If an attacker compromises a developer’s account, it can slip malicious code into a widely used package. “Malicious code attempts to eject users by exchanging addresses used in transactions or common on-chain activities and replacing them with hacker addresses,” Guillemet added. – Margaux nijkerk read more.

The backpack EU will be live following the acquisition of the FTX I: Backpack Exchange, a global cryptocurrency trading platform, said the European division’s Backpack EU is officially live. Operated from Cyprus and approved under the European Union’s MiFID II framework, the exchange places itself as one of Europe’s first fully regulated venues offering crypto derivatives starting with a permanent future. “As far as I know, it’s just going to be Kraken with us,” Armani Ferrante, CEO of Backpacks, which offers the eternal future of Europe, said in an interview with Coindesk. The debut follows the acquisition of backpack FTX EU earlier this year. In January, FTX Bankruptcy Property said it was not permitted to sell FTX EU backpacks. Since then, the issue has been resolved, and in April the exchange began distributing funds to former FTX EU customers, fulfilling its pledge to compensate users affected by the collapse of Sambankmanfried’s crypto empire. The Backpack EU will provide users with access to more than 40 trading pairs with up to 10 times leverage, the team said in a statement. The platform says it aims to provide traders in both retail and institutional industries with gateways compliant with advanced crypto trading products. The rollout also highlights Backpack’s broader strategy of rebuilding trust in digital assets following a series of exchange obstacles. – Margaux nijkerk read more.

The polygon POS chain experiences a final delay: Polygon’s Proof-of-Stake chain is live, but transactions take longer than usual, with finality 10-15 minutes behind. Finality is the guarantee that a transaction or data is irreversible once it is verified and added to a block on the block of the blockchain. The foundation says in a post on X that the fix has been identified and is being deployed to validators and service providers. According to the Polygon status page, slowing down is tied to issues with some BOR/Erigon nodes and RPC providers. Restarting the node resolved many validator issues, but others had to rewind to the final block before rejoining. The confusion comes just weeks after Polygon’s Heimdall V2 upgrade promised a 5-second finality through a modernized consensus stack. – Shaurya Malwa read more.

In other news

World Liberty Financial (WLFI), a cryptographic protocol linked to Donald Trump and his family, blacklisted the blockchain address of Tron’s founder and major investor Justin Sun, preventing the transfer of WLFI tokens. According to Arkham data, the move affects 595 million unlocked WLFI tokens held at the address, worth around $107 million at its current price. This action shows several outbound transactions (including $9 million worth of tokens) of WLFI tokens on the Ethereum blockchain in blockchain data, according to the tanned address. In a translated post for X, Sun said, “Addresses are conducted in a very small amount of some general exchange deposit tests and create address diversification without buying or selling, which could have an impact on the market.” In a later statement, Taiyo urged the WLFI team to unblock the token. – Sam Reynolds read more.
Decentralized Finance Protocol Ecena has entered a bid race that has already attracted companies such as Paxos, Sky, Frax and Agora and submitted a proposal to issue Hyperliquid’s upcoming Stablecoin. The token is fully supported by Ecena’s USDTB. It is issued by the federal chartered bank Anchorage Digital, fully supported by Buidl and fully supported by asset management giant BlackRock and tokenized money market funds by securitization. If adopted, Ecena has pledged that 95% of its net revenue from USDH reserves will return to high lipid ecosystems, the proposal said. Esena also said it would cover the cost of migrating existing USDC trading pairs to USDH to facilitate recruitment. – Kim Jiang Sandor read more.

Regulation and policy

The Nasdaq is a US exchange where the biggest name in the tech sector lists stocks, seeking to list stocks on the U.S. Securities and Exchange Commission, urging the U.S. Securities and Exchange Commission to congratulate its efforts, despite the fact that others in the securities world are sprinting towards the same tokenization goals. As a legacy method. The move by Nasdaq follows an effort by digital brokerage company Robinhood to issue inventory tokens to European customers in July, with access to approximately 200 US stocks and exchange sales funds (ETFs). Bringing stocks and other real-world assets to the blockchain rail is the hottest of the digital assets world innovation, with competition intensifying for both traditional financial names and encryption movements to move. – Jesse Hamilton read more.
President Donald Trump’s new crypto man, Patrick Witt, has picked up the baton from his predecessor, Beau Hines, to wipe out our crypto policy and urge regulators to put in place new stubcoin laws, he said in an interview with Koindsk. Working under David Sachs, the administration’s cryptocurrency, Witt is a new point of contact in the White House cryptocurrency issue. Hines saw Congress’s conversion to the stupid efforts law and was able to attend the White House ceremony to solidify it, but he soon left and “will not drop off here,” said Witt, who was promoted to last month’s job. “We hold the metal pedals with all of the various initiatives on the legislative front and interagency actions recommended in the report.” – Jesse Hamilton read more.