Welcome to The Protocol, CoinDesk’s weekly wrap-up of the most important stories in cryptocurrency tech development. I’m Margaux Nijkerk, the Ethereum protocol reporter on CoinDesk’s Tech team.

In this issue:

• Vitalik Buterin Proposes Replacing Ethereum’s EVM With RISC-V
• Matter Labs, ZKsync Developer, Sued for Alleged Intellectual Property Theft
• Scroll’s Euclid Upgrade Pushes It Into ‘Stage 1’ Decentralization Era
• EigenLayer Adds Key ‘Slashing’ Feature, Completing Original Vision

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Network News

SWAPPING THE EVM FOR RISC-V?: Ethereum co-founder Vitalik Buterin shared a new proposal that would radically overhaul the system that powers its smart contracts. ​​Buterin’s suggestion, which he posted on Ethereum’s primary developer forum, involves replacing the Ethereum Virtual Machine, the software engine that powers programs on the network, with RISC-V, a popular open-source framework that offers built-in encryption and other benefits. The EVM has long played an essential role in Ethereum’s development. Other chains that use it can seamlessly connect with apps on Ethereum, and developers on EVM-based networks can transition more smoothly to building applications directly within the Ethereum ecosystem. Buterin argued that transitioning Ethereum to a RISC-V architecture will “greatly improve the efficiency of the Ethereum execution layer, resolving one of the primary scaling bottlenecks, and can also greatly improve the execution layer’s simplicity.” — Margaux Nijkerk Read more.

MATTER LABS SUED FOR ALLEGED INTELLECTUAL PROPERTY THEFT: Matter Labs, the company behind layer-2 blockchain ZKSync, has been sued by BANKEX, a defunct digital asset banking platform, for intellectual property theft. According to a complaint filed Mar. 19 with the New York State Supreme Court, former BANKEX employees Alexandr Vlasov and Petr Korolev allegedly stole the company’s technology to start Matter Labs, which received over $450 million in venture capital funding and has become a major player in the blockchain industry. The complaint, which names BANKEX CEO Igor Khmel and the BANKEX Foundation as plaintiffs, alleged BANKEX was approached by Ethereum co-founder Vitalik Buterin in 2017 to build operational software for “Plasma,” a technology that was seen at the time as a way to make Ethereum cheaper to use. — Margaux Nijkerk Read more.

SCROLL EUCLID UPGRADE BRINGS IN STAGE-1 DECENTRALIZATION ERA : Scroll, the Ethereum layer-2 network, shared that it has launched its Euclid upgrade, which the team called its most significant protocol transformation to date.According to Scroll Labs, a key consequence of the upgrade is that it transitions Scroll from a “stage 0” to a “stage 1” rollup, meaning the network will retire some centrally-controlled safety features in an effort to become more decentralized. “Euclid represents the biggest leap forward for Scroll since its inception,” the team wrote in a blog post shared with CoinDesk. “It’s a statement about Scroll’s future and its commitment to pushing the boundaries of what’s possible in the ZK Rollup arena.” — Margaux Nijkerk Read more.

EIGENLAYER ‘SLASHING’ FEATURE FINALLY GOES LIVE: Almost one year to the day after Ethereum protocol EigenLayer launched its “restaking” network to unprecedented industry fanfare, the network is finally adding a core feature that was, until now, glaringly absent: “slashing.”Eigen Labs hopes slashing — EigenLayer’s system for keeping “restakers” honest by revoking collateral if they act maliciously — will finally realize the year-old protocol’s original pitch. “We are happy to say now that the whole promise has been delivered,” said EigenLayer founder Sreeram Kannan. — Sam Kessler Read more.

In Other News

• Traders shorting Strategy (MSTR), the bitcoin buyer whose share price gained 13% in March, may be struggling to find enough stock to repay the lenders who underpinned their bets the company’s value would fall. More than $180 million worth of trades in MSTR stock failed to settle last month, data from the SEC and Fintel show. These events, known as Failures to Deliver (FTDs), happen when a seller doesn’t deliver shares to the buyer by the settlement deadline, now just one business day after the trade (T+1). — James Van Straten and AI Boost Read more.
• Bitcoin (BTC) has become the fifth-largest asset by market capitalization, reaching $1.86 trillion and surpassing Google (GOOG) as it breaks through $94,000. This marks the highest position bitcoin has ever attained in the rankings, even though its market cap previously exceeded $2 trillion when its price was over $109,000. At that time, however, tech stocks were significantly more elevated than they are at the moment. — James Van Straten Read more.

Regulatory and Policy

• Paul Atkins has taken the oath to formally become chairman of the U.S. Securities and Exchange Commission, which returns Mark Uyeda to his previous role as a Republican Commissioner after three busy months of service as the agency’s stand-in chief. Atkins permanently replaces the former chair, Gary Gensler, who the crypto industry had widely seen as its chief antagonist in the U.S. government. — Jesse Hamilton Read more.
• Fundraising for sophisticated crypto investment vehicles has yet to fully experience the anticipated positive headwind of the Donald Trump presidency, according to a new report by the Crypto Insight Group. Momentum “remains positive but slower than [fund] managers anticipated under the new Trump administration,” the Hedge Fund Outlook 2Q25 report said. — Jamie Crawley Read more.

Calendar

Russian national Alexander Vinnik, previously convicted for running a multi-billion-dollar money-laundering operation through his BTC-e crypto exchange, has been released in a prisoner exchange between Russia and the United States.

In return, Moscow freed American schoolteacher Marc Fogel, who had been detained on drug charges.

Vinnik’s Role in BTC-e and Legal Troubles

Vinnik operated the BTC-e platform from 2011 to 2017 when he was arrested by police in Greece at the request of American law enforcement agencies.

According to the U.S. Justice Department, the exchange processed transactions worth more than $9 billion across six years, much of which was allegedly tied to crimes such as ransomware attacks, drug trafficking, and identity theft.

Authorities claim that BTC-e’s lack of anti-money laundering (AML) and Know-Your-Customer (KYC) policies made it attractive to cybercriminals.

Vinnik was extradited to France in 2020 and sentenced to five years for money laundering. He was later sent back to Greece before finally being handed over to the Americans in 2022.

In May 2024, the Russian pleaded guilty to conspiracy to commit money laundering and faced up to 20 years in prison. During his trial, prosecutors accused Vinnik of facilitating over $120 million in losses and described BTC-e as a “significant cybercrime and online money laundering entity.”

Millions of dollars worth of assets belonging to the platform were seized, including $90 million that authorities bagged in New Zealand. Additionally, the U.S. Treasury Department imposed a $120 million fine on the exchange, with Vinnik personally facing a $12 million penalty.

A Long-Running Extradition Battle

Before his transfer to the U.S., the 45-year-old had been at the center of an international legal battle involving France, Russia, and the United States.

While Russia sought his extradition on lesser fraud charges amounting to just $11,000, France and the U.S. pursued him for broader financial crimes. In 2023, his lawyers tried to include him in a U.S.-Russia prisoner swap involving journalist Evan Gershkovich, but it was unsuccessful.

His exchange for Fogel, an American teacher detained in Russia, marks a rare moment of cooperation between the two countries, especially coming against the backdrop of the ongoing Ukraine war. Vinnik will have to forfeit tens of millions of dollars in assets as part of the deal.