BITCOIN’S NIGHTMARE SCENARIOS ARE COMING TO LIFE

AI breakthroughs raise new fears about cryptography, while a sophisticated Ledger supply-chain attack exposes alarming risks to self-custody.

Join 40,000+ Bitcoiners getting the signal every Monday morning.

Subscribe for free 👇

⁠ https://bitcoinnews.com/subscribe

FORMER CRYPTOBILIS OWNERS BREAK SILENCE ON LEDGER SUPPLY CHAIN ATTACK

CryptoBilis co-founders Arravind Prabu and Vimalatheethan have issued an official statement distancing themselves from the company’s current operations following reports of compromised Ledger devices.

According to the statement:

• CryptoBilis was acquired by new ownership earlier this year.

• Both founders stepped down and completed the operational handover in March 2026.

• Neither has had access to customer databases, order histories, backend systems, or administrative accounts since the handover.

• The acquisition agreement prohibited a joint public announcement until mid-October 2026, although suppliers had reportedly been informed of the ownership change.

• Both founders offered to provide Ledger with historical information to assist its investigation.

The statement identifies Nicholas Chang as the current person in charge of CryptoBilis.

The revelations raise further questions about the reseller’s ownership transition and the timeline of the suspected Ledger supply chain attack.

NEW: US spot bitcoin ETFs took in $21.13M yesterday, almost all into BlackRock's IBIT.

The funds still lost $681M over the week, the largest weekly outflow in over three months.

THORCHAIN VAULTS AFTER HALTING TRADING

Tether has reversed its decision to blacklist four THORChain USDT vaults on the Tron blockchain, approximately three hours after freezing $1.45 million in assets.

The affected vaults reportedly held 93% of THORChain’s Tron-based USDT liquidity, forcing the protocol to suspend trading, transaction signing and liquidity-provider operations.

THORChain co-founder Chad Barraford said the protocol received no warning or explanation from Tether before the freeze.

The four addresses were subsequently removed from the blacklist, allowing Tron trading and related operations to resume.

However, 19 other addresses reportedly blacklisted during the same operation remained frozen.

The incident comes amid heightened scrutiny of Tether’s ability to freeze assets across decentralized financial infrastructure.

THORChain facilitates native Bitcoin swaps without requiring users to wrap BTC or transfer custody to a centralized exchange.

While THORChain’s validators collectively control its vaults, they cannot override restrictions imposed by centralized token issuers.

The reason for Tether’s initial action remains unclear.

HARDWARE WALLET RESELLER CRYPTOBILIS SOLD TO CHINESE NATIONAL BEFORE SUSPECTED SUPPLY CHAIN ATTACK

Newly surfaced corporate records indicate that Malaysian hardware wallet reseller CryptoBilis changed ownership, with an individual identified as Jiaming, whose registered address is in China’s Heilongjiang province, listed as holding 100% of the company’s shares as of August 3.

The company’s former co-founder has now confirmed that CryptoBilis was acquired in March, when the original owners stepped down from all operational, managerial, and administrative roles.

According to the statement, the founders have had no operational visibility since the handover, although they continued assisting with event coordination.

“We are no longer part of the company,” the former co-founder stated, urging current management to resolve the situation transparently.

The revelation comes amid an investigation into a suspected Ledger hardware wallet supply chain attack involving devices modified with hidden implants capable of stealing seed phrases.

There is currently no confirmed evidence linking CryptoBilis’ ownership change to the suspected wallet compromises.

h/t cryptoian and Bored2AI

Strategy's Oct. 5 filing puts the Q3 fair-value gain on its bitcoin at $20.91 billion, which the company stacked above Meta's latest $19 billion operating income on its own chart.

That is mark-to-market on coins it already held. BTC went from about $58,625 on June 30 to about $83,624 on Sept. 30.

Q1 and Q2 losses of $14.46 billion and $8.32 billion still leave it about $1.87 billion underwater on digital assets for 2026.

The treasury now sits at 848,000 BTC.

NEW: US-labeled wallets moved 833.6 BTC, about $71.6 million, toward Coinbase Prime deposit addresses, Arkham data shows.

568.7 BTC is tied to the HashFlare forfeiture and 264.9 BTC to the Bitfinex hack stash.

A Prime deposit is not a confirmed sale. Coinbase also custodies government coins, as in a similar $288 million transfer in July.

NEW: A New Jersey industrial company's former core infrastructure engineer, Daniel Rhyne, has been sentenced to 32 months for locking admins out and demanding bitcoin.

U.S. District Judge Michael A. Shipp in Trenton imposed the term on September 28 after an April guilty plea.

On November 25, 2023, an email titled "Your Network Has Been Penetrated" demanded 20 BTC, then about $750,000, by December 2.

The FBI complaint says a hidden virtual machine reused one password across hundreds of accounts, and Rhyne's home IP lined up with the session.

It's been 146 days since $STRC traded at $100.

Capital Group's Growth ETF adds 535,304 shares of Strategy, lifting the fund to 2.19M shares, ($336M).

The $3.3T manager already went larger through ANCFX, which bought 4.32M shares in April 2026 for about $747M and now holds 10.33M shares ($1.78B).

For a traditional allocator, MSTR is still leveraged Bitcoin exposure that clears a stock-exchange compliance desk.

🇺🇸 🇨🇳 GLOBAL LIQUIDITY EXPANSION IS ACCELERATING

US and China M2 supply growth has shifted significantly higher.

Before 2020, their combined M2 increased by roughly $3 trillion per year on average.

The current pace is more than 2.5x that rate, with YoY growth exceeding $7 trillion for eight straight months.

Bitcoin's difficulty ticked down 0.03% to 132.72T at block 969696, the smallest adjustment of 2026.

Eleven cuts against eight increases leave difficulty 11.96% lower than January, while hashprice has hovered near $40 per petahash.

September mining revenue came in at $1.12B, just under January's $1.15B and the best month since then.

The next retarget is due Oct. 18.