Humanity Protocol will refocus its cybersecurity efforts on operational security following a June $36 million exploit that was traced back to a compromised employee laptop, according to the founder of the decentralized identity company, Terence Kwok.

In an interview with Cointelegraph, Kwok said that the exploit stemmed from last year’s mainnet launch, when several production keys were inadvertently backed up onto the laptop that was compromised, including admin hot wallet keys and a quorum of multisig owner keys across both chains.  He said:

“The hard lesson here is that operational security is as critical as smart-contract security, and we’re rebuilding accordingly.”

The exploit and Humanity Protocol’s action highlight an increase in cryptocurrency hackers refocusing their attacks on staff-level vulnerabilities and operational shortcomings, rather than exploiting smart contract code.

Humanity Protocol was exploited last month, when a compromised employee’s laptop enabled attackers to steal $36 million in Humanity (H) tokens. The token’s current market cap is roughly $211 million, according to CoinMarketCap data.

Blockchain security company Quantstamp said that the malicious attachment that was delivered through a phishing email pointed to the involvement of North Korea-linked threat actors. The malicious attachment was disguised as a token lockup schedule update from South Korean cryptocurrency exchange Bithumb and installed malware, giving attackers remote access to the machine.

The phishing email that led to the Humanity Protocol compromise.Source: Quantstamp

North Korea-linked threat actors were tied to at least $578 million of the $634 million stolen in crypto-related incidents in April alone. 

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Phishing and wallet compromises lead attack vectors in H1 2026

The Humanity Protocol exploit occurred during a resurgence of cryptocurrency exploits that stemmed from operational failures and social engineering schemes.

Phishing drove the majority of the first quarter losses for a total of $508 million, while wallet compromises emerged as the biggest attack vector in the second quarter, contributing $807 million in losses, according to blockchain security company CertiK.

Monthly change in crypto exploit amounts and number of incidents across H1. Source: CertiK 

To be sure, crypto losses to hacks fell 46.8% year-on-year to $1.32 billion in the first half of 2026, but CertiK said that the drop was misleading due to the $1.4 billion Bybit hack in early 2025 and stressed that North Korean malicious actors continue threatening the crypto industry.

During the second quarter of 2026, more than 70% of the losses stemmed from the Drift Protocol and KelpDAO exploits, which were also widely attributed to North Korean state-sponsored hackers.

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Coinbase Ventures, the corporate venture capital (VC) arm of cryptocurrency exchange Coinbase, led the ranks of crypto-focused VC’s with 30 deals in the first half of 2026.

Runner-up Animoca Brands completed 19 investments, while Silicon Valley VC a16z logged 18 deals and stablecoin giant Tether completed 15, according to data aggregator CryptoRank. 

In the past 12 months Coinbase Ventures completed a peer-best 75 deals, followed by Animoca Brands with 40, YZi Labs (previously Binance Labs) with 39, GSR with 31 and a16z with 30.

Those VC deals defy a bear market that saw the total amount raised by cryptocurrency companies fall to $1.4 billion in June, down 63% from $3.8 billion in April. 

Deal counts also fell in June, to 61 fundraising rounds, down from 89 rounds in May. Still, last month showed a slight recovery compared to April, when crypto VC funding hit a two-year low of $698 million across 71 total fundraising rounds.

So far in July, crypto firms raised $456 million across 12 funding rounds.

Top active investors and top categories by funding deals. Source: CryptoRank

Looking at the deals of the past six months, Coinbase Ventures participated in seven investment rounds tied to payment protocols, four rounds for DeFi projects and three rounds for infrastructure and real-world asset tokenization projects, respectively. 

However, the number of unique investors shrunk to 242 in June, from 452 unique investors in October 2025.

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DeFi, payments, AI remain leading VC categories

Decentralized finance (DeFi), payments and AI attracted the lion’s share of crypto VC funding during the past year.

DeFi protocols saw 216 fundraising rounds in the period, while payments startups logged 131 rounds and AI-crypto companies raised 128 rounds, according to CryptoRank.

Crypto VC capital, invested by category, one-year chart. Source: CryptoRank

Infrastructure providers raised 110 funding rounds, while all other sectors saw fewer than 100 investment rounds over the past year.

In terms of geographical distribution, US-based VCs accounted for $5.8 billion and Australia-based VCs contributed $3.6 billion of funds over the past six months. More than $11.6 billion was invested from undisclosed locations.

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The world’s biggest stablecoins are increasingly becoming chain-specific financial products, with Tether’s USDt (USDT) and Circle’s USDC (USDC) serving distinct roles across the crypto ecosystem rather than competing head-on.

Dune’s Digital Asset Brief found that USDT overwhelmingly dominates onchain payments. During the first half of 2026, the biggest stablecoin settled about $95 billion in identified commerce payments, compared with $14 billion for second-biggest USDC. It also accounted for roughly 92% of the $48 billion in business-to-business payment volume. On Tron, USDT’s largest network, around 93% of the token’s supply is held in ordinary wallets rather than on exchanges, underscoring its role as a payment and remittance asset.

USDC, meanwhile, has established itself as the dominant stablecoin in decentralized finance. USDC on Base processed roughly $2.6 trillion in transfer volume in June, the highest of any token-chain pair, while on Ethereum, that stablecoin handled another $1.6 trillion. 

USDC on Base recorded daily velocity of about 20 times its circulating supply in June, reflecting its extensive use in trading and DeFi. Source: Dune

The findings suggest the traditional USDT-versus-USDC narrative is becoming less useful. Instead, each stablecoin is carving out its own niche, with USDT dominating payments and USDC underpinning much of crypto’s trading and DeFi activity.

USDT’s supply is split almost evenly between Tron and Ethereum, while USDC remains heavily concentrated on Ethereum despite expanding to newer blockchains. Source: Dune

The findings come as the two digital assets continue to dominate the stablecoin market. Together, they account for roughly 83% of the sector’s approximately $315 billion market capitalization, according to Dune, which tracked more than 200 stablecoin tokens across multiple blockchains.

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US lawmakers reshape stablecoin rules

The stablecoin sector has gained momentum in the United States following the passage of the GENIUS Act. Signed into law in 2025, GENIUS established the first federal regulatory framework for payment stablecoins, paving the way for banks and other companies to issue US dollar-pegged digital assets.

Lawmakers are now debating the CLARITY Act, which would establish a broader market structure for digital assets by defining when crypto assets fall under the jurisdiction of the US Securities and Exchange Commission or the US Commodity Futures Trading Commission. While the bill does not regulate stablecoins directly, it would shape the broader regulatory environment in which stablecoin issuers, exchanges and DeFi platforms operate.

CLARITY cleared the Senate Banking Committee in May and could receive a full Senate vote before the August recess, although Galaxy recently trimmed its odds of passage before the break to 50% as lawmakers run short on time.

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Hedera-based lending protocol Bonzo Lend lost about $9 million after an attacker manipulated the price of SAUCE used as collateral, allowing the account to borrow assets far beyond the value deposited.

In a preliminary incident report published Saturday, Bonzo said the attacker deposited 250 SAUCE, worth only a few dollars, before submitting a price update that inflated the token’s value by roughly 12 orders of magnitude. The wallet then borrowed 6.63 million USDC and 34.5 million wrapped HBAR from the lending pool.

The case illustrates how oracle failures can turn low-value collateral into a tool for draining large amounts of liquidity from lending protocols, even when the application and underlying network continue operating as designed. 

Bonzo attributed the incident to a flaw in Supra’s on-chain oracle verifier, which accepted a manipulated SAUCE price carrying a zeroed signature. The protocol said Supra acknowledged the issue and deployed a fix, while stressing that the incident was not a vulnerability in Bonzo Lend’s contracts or Hedera’s core network.

Estimated economic impact of the incident. Source: Bonzo Finance

DeFi hacks continue to pressure the sector 

The incident adds to a growing number of exploits targeting decentralized finance (DeFi) protocols in 2026. 

The second quarter had become the most-hacked quarter on record by incident count, with 83 exploits and about $755 million stolen. Cross-chain bridge exploits accounted for $351 million, while compromised administrator attacks and fake token price manipulation represented 37% of quarterly losses. 

In 2026, DeFi’s total value locked (TVL) had fallen 39% to over $70 billion in June from about $115 billion in January. CryptoRank recorded 121 hacks and roughly $942 million in losses over the period, saying repeated security incidents likely weighed on user confidence and reinforced capital outflows.

Related: ‘All DeFi unsafe’ claim sparks AI security debate after April hack surge

The Bonzo incident also follows a similar collateral-pricing exploit on Stellar. In February, attackers drained roughly $10 million from a YieldBlox DAO-managed lending pool after manipulating the price path used to value USTRY collateral, allowing them to borrow assets beyond the token’s real worth. 

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Decentralized finance (DeFi) tokens have held up unusually well against Bitcoin over the past month, suggesting the market may be “quietly re-rating” the sector, says crypto index fund maker Bitwise.

Bitcoin (BTC) fell about 22% in June, while Bitwise’s index tracking tokens from major DeFi protocols fell only 4% over the same period, Bitwise said in a report Thursday.

“DeFi usually swings much harder than Bitcoin, so holding up this well is unusual, and almost no one is talking about it,” it said. 

DeFi tokens have a reputation for being highly volatile during crypto market swings, as they’re the first to be sold by risk-averse traders. However, Bitwise said this is changing as traditional institutions have begun to use the protocols, which have stabilized the wider DeFi ecosystem.

“We think DeFi is quietly re-rating,” Bitwise said. “Token economics are improving, the gap between usage and token value is closing, and real institutions are building on names like Morpho and Jupiter, with Aave alone generating ~$900 million in the past year.”

“We expect DeFi’s outperformance to keep playing out in Q3, the kind of shift the market tends to notice late,” it added.

Source: Bitwise

Bitwise’s DeFi index fund weighs assets by market capitalization, and its current holdings are weighted 61% toward Hyperliquid (HYPE), the native token used by the crypto perpetuals exchange of the same name that has gained more than 160% so far this year.

The index also holds Uniswap (UNI), Ondo (ONDO) and Aave (AAVE), among others, all of which have fallen by double-digit percentages year to date.

DeFi value locked drops over 2026

While HYPE has propped up the value of DeFi tokens, total value locked in DeFi has fallen nearly 40% so far this year through June, declining to just over $70 billion from roughly $115 billion in January, CryptoRank reported June 24.

The crypto data aggregator attributed the market decline to the major correction in early October, which came after the crypto market peak, when Bitcoin hit a high of more than $126,000.

However, the company said the current drawdown remains smaller than during the 2022 bear market, suggesting a more resilient DeFi market.

Bitwise says expect stablecoins, volatility if CLARITY fails

In its report, Bitwise also noted key upcoming events it expects will affect the crypto market.

It said it expects “a steady run of large firms to announce stablecoin projects” ahead of the GENIUS Act, a stablecoin-regulating bill the US made law last year that takes effect in January 2027.

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Stablecoin supply has held amid the crypto market downturn, it added, and their growth will positively affect blockchains such as Ethereum and Solana this quarter as regulators finalize their rules for the GENIUS Act.

Bitwise said it also expects the next three months will be “make-or-break for the CLARITY Act,” the crypto market structure bill currently under review and negotiation in the Senate that Bitwise said has an unlikely chance of passing before the November elections.

“If it passes, we believe it likely marks this bear market’s bottom,” Bitwise said. “If it fails, expect volatility initially, then a clearing of uncertainty as the industry keeps building under a pro-crypto SEC and CFTC.”

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Blockchain security experts are urging crypto protocols to reaudit their smart contracts as AI tooling is making it easier for hackers to identify vulnerabilities more quickly than ever before. 

“Our data argues for continuous review rather than a one-time audit,” TRM Labs head of policy Ari Redbord told Cointelegraph, adding that “attack techniques are moving faster than a single audit from launch day can account for.”

“An audit built for last year’s attack patterns leaves a protocol exposed to this year’s as bad actors are changing up.”

CertiK reported Monday that hackers stole another $1.32 billion in the first half of 2026 and have adopted increasingly sophisticated strategies in response to strengthened security measures across the industry.

One of those strategies has been to revisit old codebases, CertiK said, adding that the attackers’ efforts have likely been “aided by improved automated tooling for identifying latent vulnerabilities at scale.”

One of the most recent incidents involved privacy-focused blockchain Zcash, where Shielded Labs security engineer Taylor Hornby found a major security vulnerability using a custom auditing agent powered by Anthropic’s Claude Opus 4.8. The bug has since been patched.

The security vulnerability, which existed for four years, could have enabled undetectable counterfeiting inside the Orchard shielded pool, one of the network’s key privacy features.

“The window of maximum vulnerability does not close after launch,” CertiK warned. “Projects operating legacy infrastructure should treat reauditing as a recurring operational requirement rather than a one-time exercise conducted at deployment.”

In December, Anthropic conducted a study finding that AI agents found $4.6 million worth of exploitable vulnerabilities in smart contracts. Meanwhile, there is more than $72.3 billion worth of crypto locked across hundreds of DeFi protocols, giving hackers plenty of incentive to exploit vulnerable smart contracts.

SlowMist’s estimate of total crypto losses from blockchain hacks. Source: SlowMist

Defunct crypto protocols targeted

On June 14, hackers exploited a smart contract vulnerability to steal $2.1 million from the Aztec Connect, which had been shut down since March 2023.

Five days later, a smart contract on the decentralized exchange mySwap was exploited for $300,000, even after the mySwap user interface had been closed to new liquidity deposits for more than six months.

A more fortunate event took place in May, when a white hat, known as “0xflorent,” helped recover 1,003 Ether (ETH) worth over $1.72 million from 48 investors involved in the Hong Coin (HONG) initial coin offering in 2016.

Related: ‘All DeFi unsafe’ claim sparks AI security debate after April hack surge 

The ICO failed to launch after missing its funding target, and the funds remained locked in the smart contract due to a bug in the auto-refund function. 

Reaudits only part of the equation, TRM says

The work doesn’t stop with hardening the codebase and infrastructure, Redbord said, explaining that the broader industry and regulators need to continue finding ways to mitigate malicious cyberactivity from North Korea and disrupt Chinese money laundering networks:

“Protocols can lock their doors, but someone still has to go after the actor breaking in.”

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Bitcoin financial services platform Strike has launched a “volatility-proof” Bitcoin-backed loan that eliminates margin calls and forced liquidations amid the depths of a bear market, but only for those who can pay on time and handle a 14% interest rate.

In an announcement on Tuesday, Strike CEO Jack Mallers said the offering came in response to broad customer feedback on Strike’s first Bitcoin loan product, which launched in May 2025 and triggered many liquidations during a timeframe in which Bitcoin (BTC) dropped 54% from peak to trough.

“No margin calls. No price liquidations. No matter how far bitcoin falls, your bitcoin doesn’t move,” Strike CEO Jack Mallers said of the new Bitcoin loan product. The trade-off is an expensive interest rate, a shorter six-month loan term, and an obligation to pay on time to avoid liquidation, Mallers said.

Strike’s Jack Mallers is presenting the new Bitcoin-backed loan product. Source: Jack Mallers

The Bitcoin industry has spent the better part of a decade racing to build financial products that expand Bitcoin’s use case beyond a savings technology. A report in June from crypto lending platform Ledn, however, found that while 88% of surveyed crypto investors said they would consider a crypto-backed loan, only 14% use them.

Ledn said confidence in crypto-lending products and market volatility are among the main reasons for this 6-to-1 “crypto collateral gap” that has slowed adoption.

Volatility has been one of the biggest obstacles behind that push, with Bitcoin dropping 30% or more in 10 of the past 12 years, while also experiencing a 50% or more drawdown four times since 2014, Mallers noted.

Other crypto market participants offering Bitcoin-backed loans are Binance, Coinbase, Nexo and Xapo Bank.

Strike charges double-digit interest

The maximum initial loan-to-value ratio for the volatility-proof loans is 45%, meaning that a customer who puts up $100,000 in Bitcoin as collateral can borrow up to $45,000, while the annual percentage rate (APR) is also 2.95 percentage points higher than Strike’s standard loan product.

“The secret sauce is that we’re taking the extra charge that we’re giving you guys and we’re putting it on extra hedges in the market to protect all of us.”

Strike’s standard Bitcoin loans charge an annual percentage rate between 7.75% and 11.25%, meaning the volatility-proof products could carry interest between 10.7% and 14.2%. 

“If you’re OK with a slightly shorter term and a little bit higher of a fee, there is no price move that can liquidate you,” Mallers said.

Over the past year, Bitcoin has fallen 54% from its all-time high of $126,080 in October to $58,190 on June 25.

Bitcoin investor Fred Krueger said the loan product “could eliminate one of Bitcoin’s biggest structural problems: forced selling during market crashes.” 

“Instead of volatility causing automatic liquidations, defaults would be driven by borrowers’ inability to service debt rather than by temporary price swings,” he said.

Related: Coinbase rolls out UK crypto-backed loans as FCA shapes rules

“Great product for those who need near-term liquidity and don’t want to risk liquidation,” added Vibes Capital Management executive chairman Rob Topping, though he also acknowledged the 14% APR was expensive. 

Customers must pay up or face consequences

If a client misses a payment, they have 10 days to make the payment or contact Strike to explain their financial situation, Mallers said.

Failing to pay after that 10-day period may mean Strike starts liquidating their Bitcoin to cover the overdue amount, Mallers warned.

“If we don’t hear from you for a few weeks, then I may have no choice but to sell off some of the Bitcoin because it seems like you’re doing a hit-and-run.”

“That’s why we call it ‘volatility-proof,’ not ‘liquidation-proof,’” Mallers added.

The Bitcoin loans are offered in most US states and can be taken out in both personal and business names. They can be used for new loans, refinancing or consolidating.

While the minimum loan amount varies from state to state, the minimum loan offered through personal loans is $10,000, while businesses in certain states can access loans as low as $5,000.

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