The $292M KelpDAO bridge hack wasn't a smart contract failure. It was an off-chain verification failure, and the legal fight over who owed users the duty of care is just starting.
What builders should take from it:
▶️LayerZero (built the bridge) and Kelp DAO (configured it) are now arguing over whether "insecure by default" shifts the duty of care up the stack.
▶️Off-chain infrastructure is squarely in the negligence conversation, not just smart contract code.
▶️Downstream protocols are exposed too. Aave absorbed a $10B liquidity crunch from unbacked rsETH used as collateral.
▶️A federal court fight over $71M in recovered ETH will shape how victim-recovery actually works.
Full breakdown here: https://t.co/OuioxYjIao
CFTC just brought its first insider trading case involving prediction markets
Allegation: a U.S. service member used classified info about a Maduro operation to trade on Polymarket
This is a big deal:
-Event contracts are now clearly in scope
-Insider trading applications are expanding
-“Eddie Murphy Rule” being used in crypto-adjacent markets
Prediction markets are increasingly less of a gray area
My conversation with Joe Doll (@sh0edog), Counsel at @DayOneLaw, on what founders should know about the SEC and CFTC's joint interpretive guidance on crypto and securities law.
0:00 Intro
0:07 Why Does the Howey Test Exist?
3:11 Non-Security Tokens
7:47 The Five-Category Token Taxonomy
8:45 Digital Commodities and Consumptive Use
12:13 The "Statement Test"
15:57 The Chilling Effect on Disclosure
19:32 Minimum Attachment Period
23:30 Fungibility and the Token Sales
28:29 Decentralization, Disclosure, and CLARITY
29:41 The Attachment Theory
31:51 Airdrops
37:53 The CLARITY Act and Control
38:58 Linux, Red Hat, and the Case for Immutability
43:12 Equity vs. Token Value
43:25 Why the handle @sh0edog?
45:04 Decentralized Communities
10 Foreign National Executives and Employees of Four Different Cryptocurrency Financial Services Firms Are Charged by @USAO_NDCA With Orchestrating Fraud Schemes to Artificially Inflate the Trading Volume and Price of Cryptocurrencies. Three defendants, including 2 CEOs, were arrested and extradited from Singapore to the United States. https://t.co/3yna8THtTS
Last week's @WireNetwork Incubator session had @Nimathefish from @DayOneLaw dropping knowledge on the Cayman Tax Shelter Myth.
Coming up this week: Tokenomics. Join the Wire Discord for the latest resources and schedule: https://t.co/lFv5zSbyeC
@CryptoVonDoom@DayOneLaw@WireNetwork@ProtaVentures Thanks for having me @CryptoVonDoom! It was a fun conversation.
Also, I’m not sure what I said that gave the impression not to incorporate in Delaware, but I certainly don’t think it’s a bad jurisdiction. In fact, quite the opposite (particularly for U.S. based teams)
This week's Wire Incubator Guest Spotlight goes to @Nimathefish !
Nima is Counsel at Day One Law, where he works with founders building in markets where technology routinely outpaces the law.
He architects token launch and fundraising structures that translate novel crypto models into legally coherent, risk-aware frameworks.
Tune into the Incubator session Thursday at 2pm CT to catch him!
If you build or advise in crypto, this is the legal update worth reading this week:
⚡️CFTC just issued manipulation guidance targeting prediction market exchanges, with specific flags around sports, elections, and concentrated-outcome contracts
⚡️Market structure odds have slipped from 82% to 61% as the stablecoin yield debate stalls around a handful of key Senate votes
⚡️The SEC quietly gave broker-dealers a path to hold stablecoins without punitive capital treatment
Full breakdown in the article:
We’re in the age of AI and yet I just got an agreement with double spaces after every sentence. The legal equivalent of finding a floppy disk in the wild
Really excited to see what the team at @donatedotgg is building
Crypto has always promised more transparent, global giving. Platforms like this are actually making it happen.
Excited to watch this grow!
@SecScottBessent@USTreasury How dare a private company in the US freely negotiate with our government. They shouldn’t be allowed to dictate their own terms. That’s unacceptable. So performative 🤦♂️
I woke up this morning to more tweets about AI vs lawyers, and I just don't get it.
Yes, AI will replace juniors and lower-tier lawyers. But those jobs were never that secure in the age of ever-better forms and legal self-help platforms.
We are as busy as ever at @DayOneLaw, and I don't think AI is changing that anytime soon. It's already making legal work faster and cheaper. So lawyers can do more for less. This efficiency effect isn't new and has slowly been occurring throughout my career. It's been sped up by legal literacy increasing and now by AI.
This means the good lawyers will end up handling more clients and spend less time on each. But I don't think that means we're all out of jobs.
The lawyers who (i) can leverage AI to drive their clients' bills down, and (ii) have the skills that AI can't replace (i.e., personal judgment, designing regulatory strategies, managing ambiguity, etc.) will win.