Bitcoin breaks out while Coinbase breaks down: Finance Redefined
News broke on May 15 that Coinbase was the target of a $20 million extortion attempt after cybercriminals recruited overseas support agents to leak user data for social engineering scams.
While less than 1% of Coinbase’s active monthly users were reportedly affected, the expected remediation and reimbursement expenses range from $180 million to $400 million, as the exchange pledged to repay all phishing attack victims.
Despite the attack on the world’s third-largest cryptocurrency exchange, investor sentiment remains optimistic, with the Fear & Greed Index remaining firmly in the “Greed” zone above 69, according to CoinMarketCap data.
Adding to investor optimism, Coinbase saw over $1 billion worth of Bitcoin withdrawn on May 9, marking the highest net outflow recorded in 2025 so far, triggering analyst predictions of a supply-shock driven Bitcoin rally.
Coinbase faces $400 million bill after insider phishing attack
Coinbase was hit by a $20 million extortion attempt after cybercriminals recruited overseas support agents to leak user data, the company said on May 15.
Coinbase said a group of external actors bribed and coordinated with several customer support contractors to access internal systems and steal limited user account data.
“These insiders abused their access to customer support systems to steal the account data for a small subset of customers,” Coinbase said, adding that no passwords, private keys, funds or Coinbase Prime accounts were affected.
Less than 1% of Coinbase’s monthly transacting users’ data was affected by the attack, the company said.
After stealing the data, the attackers attempted to extort $20 million worth of Bitcoin (BTC) from Coinbase in exchange for not disclosing the breach. Coinbase refused the demand.
Instead, the company offered a $20 million reward for information leading to the arrest and conviction of those responsible for the scheme.
$1 billion Bitcoin exits Coinbase in a day as analysts warn of supply shock
Institutional demand for Bitcoin is growing, as Coinbase, the world’s third-largest cryptocurrency exchange, recorded its highest daily outflows of Bitcoin in 2025 on May 9.
On May 9, Coinbase saw 9,739 Bitcoin, worth more than $1 billion, withdrawn from the exchange, the highest net outflow recorded in 2025, according to Bitwise head of European research André Dragosch.
“Institutional appetite for Bitcoin is accelerating,” Dragosch added in a May 13 X post.
The outflow occurred as Bitcoin traded above $103,600 and just days after the White House announced a 90-day reduction in reciprocal tariffs between the US and China, easing market concerns and lifting broader investor sentiment.
The 90-day suspension of additional tariffs removed the risk of “sudden re-escalation,” which may help Bitcoin, altcoins and the wider stock market rally due to improved risk appetite, Nansen’s principal research analyst, Aurelie Barthere, told Cointelegraph.
DeFi lender Aave reaches $40 billion in value locked onchain
Aave, a decentralized finance (DeFi) protocol, has reached a new record of funds onchain, according to data from DefiLlama.
In an X post, Aave said it topped $40.3 billion in total value locked (TVL) on May 12. Onchain data reveals that Aave v3, the latest version of the protocol, has about $40 billion in TVL.
Aave is a DeFi lending protocol that lets users borrow cryptocurrency by depositing other types of cryptocurrency as collateral. Meanwhile, lenders earn yield from borrowers.
“With these milestones, Aave is proving its dominance in the Lending Space,” DeFi analyst Jonaso said in a May 12 X post. TVL represents the total value of cryptocurrency deposited into a protocol’s smart contracts.
SEC delays Solana ETF as decisions for Polkadot, XRP loom
The US Securities and Exchange Commission (SEC) pushed back its decision on a proposed spot Solana exchange-traded fund (ETF), with the cryptocurrency industry now looking to the deadlines for the Polkadot and XRP-based ETFs in June.
The SEC delayed its decision on listing Grayscale’s spot Solana (SOL) Trust ETF on the New York Stock Exchange (NYSE) to October 2025, according to a May 13 filing by the securities regulator.
The decision came the week after the SEC delayed its ruling on Canary Capital’s Litecoin (LTC) ETF, Bloomberg Intelligence analyst James Seyffart wrote in a May 5 X post.
Spot ETFs are key drivers of liquidity and institutional adoption for digital assets. For Bitcoin, the US spot Bitcoin ETFs accounted for an estimated 75% of new investment after launching, which helped BTC recapture the $50,000 mark in February 2024, a month after the ETFs debuted for trading.
While a Solana ETF may generate only a fraction of the inflows of Bitcoin ETFs, it could increase Solana’s institutional adoption in the long term by offering investors a “regulated investment vehicle” that may still attract billions of dollars in capital, Ryan Lee, chief analyst at Bitget Research, told Cointelegraph.
Starknet hits “Stage 1” decentralization, tops ZK-rollups for value locked
Ethereum layer-2 scaling platform Starknet has reached a decentralization milestone laid out by Ethereum co-founder Vitalik Buterin and is now the largest zero-knowledge rollup-based network by total value locked.
Starknet said in a news release shared with Cointelegraph that it has hit “Stage 1” decentralization, according to a framework Buterin laid out in 2022, which means the network operates with limited oversight or “training wheels.”
Starknet added that the framework was the “gold standard onchain tool for analyzing Ethereum scaling solutions,” and said it achieved the milestone through changes such as creating a security council and censorship-avoidance mechanisms.
While the system still allows intervention from a security council, it has implemented a fully functional validity proof system governed by smart contracts.
Starknet is now the only layer-2 ZK-rollup network to have reached Stage 1 and has grown to be the largest ZK-rollup blockchain with a total value locked of $629 million, just ahead of ZKsync’s $610 million, according to L2beat.
Starknet is the fifth-largest layer-2 network by value locked, with the top four all Optimistic rollup-based, having reached Stage 1 decentralization using fraud proofs.
DeFi market overview
According to data from Cointelegraph Markets Pro and TradingView, most of the 100 largest cryptocurrencies by market capitalization ended the week in the green.
Solana-based memecoin Dogwifhat (WIF) rose over 43% as the week’s biggest gainer, followed by decentralized exchange Raydium’s (RAY) token, up nearly 19% over the past week.
Thanks for reading our summary of this week’s most impactful DeFi developments. Join us next Friday for more stories, insights and education regarding this dynamically advancing space.
Faruk Fatih Özer was found dead in his prison cell on Nov. 1. The former CEO of now-defunct crypto exchange Thodex was serving an 11,000-year sentence for running one of the largest crypto scams in history.
His death marks the latest turn in the Thodex saga, with ripple effects so significant they altered Turkish cryptocurrency laws.
The initial details of Özer’s death point to suicide, but the investigation is still ongoing. It has once more brought Thodex back into the spotlight.
Here’s a look back at Özer’s story, how the crypto exchange impacted Turkish law and how it may have contributed to the country’s increased crypto adoption.
$2-billion Thodex scam sees raids, arrest and CEO out on the lam
On April 21, 2021, Thodex cryptocurrency exchange suddenly shut down trading and withdrawals. The initial announcement read that this could continue for four to five days. As Cointelegraph Turkey reported at the time, the exchange claimed that this was to improve its operations with the help of “world-renowned banks and funding companies.”
But local media reported that Özer had fled to Thailand with over $2 billion in funds as part of an exit scam. There were also reports that police had raided the exchange’s offices in Istanbul.
Istanbul’s chief prosecutor’s office corroborated the reports the following day. It announced a probe into Thodex and said police had arrested 62 people allegedly involved in the scam. Özer denied the accusations, claiming his trip abroad was to meet foreign investors.
As of April 30, 2021, a Turkish court decided to jail six suspects, including family members of the missing CEO and senior company employees, pending trial. Interpol also issued a red notice for Özer.
“When he is caught with the red notice, we have extradition agreements with a large part of these countries. God willing he will be caught and he will be returned,” said Interior Minister Süleyman Soylu.
Özer managed to evade capture for over a year. Albanian authorities eventually detained him on Aug. 30, 2022. He attempted to appeal extradition in court, but the decision was upheld, and Özer was in Turkish custody by April 30, 2023, two years after the scandal began.
The case against Özer was swift. In July 2023, just three months after arriving in Turkey, he was sentenced to seven months and 15 days in prison for failing to submit certain documents requested by the Tax Inspection Board during the trial.
On Sept. 8, 2023, the Anatolian 9th High Criminal Court sentenced Özer, along with two of his siblings, to 11,196 years, 10 months and 15 days in prison, along with a $5-million fine.
In court, Özer claimed that he and his family were facing false accusations. He said, “I am smart enough to manage all institutions in the world. This is evident from the company I founded at the age of 22. If I were to establish a criminal organization, I would not act so amateurishly. … It is clear that the suspects in the file have been victims for more than 2 years.”
Related: Turkey to empower watchdog to freeze crypto accounts in AML crackdown: Report
Özer was serving his sentence at the Tekirdağ No. 1 F-Type High Security Closed Penal Institution when he died. F-Type prisons are high-security institutions reserved for political prisoners, members of organized crime syndicates and other armed groups serving an aggravated life sentence.
Human rights advocates have repeatedly raised concerns about the conditions at F-Type prisons. In 2007, Amnesty International noted “harsh and arbitrary” disciplinary treatments, as well as isolation.
Turkey changes its laws to protect investors
The Thomex scandal and its ensuing fallout were so significant that they drove the Turkish government to change its policies toward cryptocurrencies.
Immediately following news of Özer fleeing the country, the Central Bank of the Republic of Turkey banned crypto payments and prohibited payment providers from offering fiat on-ramps for crypto exchanges. The official notice outlawed “any direct or indirect usage of crypto assets in payment services and electronic money issuance.” Notably, the ban excluded banks, meaning that users can still deposit lira onto crypto exchange accounts using bank transfers.
The ban aimed to ensure financial stability, while other agencies like the Capital Markets Board (CMB) and the Financial Crimes Investigation Board (MASAK) moved to legitimize trading activities. In May 2021, MASAK amended money laundering and terrorism financing laws to include provisions for cryptocurrency.
By 2024, the “Law on Amendments to the Capital Markets Law” came into effect. This built on the initial changes in 2021, which included extensive consumer protection measures in addition to provisions on licensing and reporting.
These new measures, which also aimed to move Turkey off the Financial Action Task Force’s “gray list” of countries with inadequate Anti-Money Laundering measures, have in turn helped spur the local crypto industry.
Chainalysis’ “2025 Geography of Crypto Report” found that Turkey led the Middle East and North Africa in value received in crypto. Trading activity also spiked last year.
In the long term, the Thodex scandal may have led to increased crypto adoption in the country, but only after it rocked the Turkish crypto industry and left many investors out to dry. It also resulted in the imprisonment and death of its orchestrator and CEO.
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