The Daily: Bitget hit by $387.5 million security breach, and more

The following article is adapted from The Block’s newsletter, The Daily, which comes out on weekday afternoons.

Happy Friday! Bitcoin is trading around $84,000, largely flat over the past 24 hours.

In today's newsletter, Bitget confirms a $387.5 million security breach, the Fed proposes reserve limits and capital standards for stablecoin issuers under the GENIUS Act, KelpDAO sues LayerZero over the $292 million rsETH exploit, and more.

Meanwhile, Magic Eden legacy approvals left $5.7 million in NFTs exposed to an exploit before a rescue, and a man was charged in a $16 million crypto "pig butchering" scam.

P.S. Don't forget to check out The Latent, our new sister website covering AI. Get The Latent Daily here and all other The Block newsletters here.

Bitget confirms $387.5 million security breach affecting exchange hot wallets

Bitget said about $387.5 million in assets was transferred to attacker-controlled addresses after a critical backend system within the exchange's wallet infrastructure was compromised.

• The attacker spoofed transaction data and invoked Bitget's authorization process to move funds out of some of its hot wallets, CEO Gracy Chen said, while private keys were not compromised.
• Bitget's cold wallets and its separate self-custodial Bitget Wallet product were unaffected, with the company saying the two operate on separate infrastructure.
• The exchange initially reported $351.6 million in unauthorized transfers before raising the figure to $387.5 million after adding Zcash and Tron assets, saying the increase did not reflect additional theft.
• Chen said the loss falls within the coverage of Bitget's User Protection Fund, which currently holds more than $464 million.
• Withdrawals remain suspended while deposits and trading are available, with Bitget planning to announce a withdrawal resumption plan by Sept. 26 at 4 a.m. UTC.

Fed proposes reserve limits, capital standards for stablecoin issuers under GENIUS Act

The Federal Reserve proposed new rules for stablecoin issuers, including reserve-asset limits and standardized capital requirements as it works to implement the GENIUS Act.

• The proposal would require payment stablecoin issuers to fully back their tokens with short-term Treasury bills or other highly liquid assets and establish standards for managing risks.
• It would also create a specific application process for board-supervised banks seeking to issue stablecoins, with the GENIUS Act set to take effect in January 2027.
• Fed Governor Michael Barr supported the proposal but raised concerns about a standard that could limit supervisory or enforcement action over anti-money laundering deficiencies unless an issue is "significant or systemic."

KelpDAO sues LayerZero, claims it endorsed setup used in $292 million rsETH exploit

Evercrest Technologies, the company behind KelpDAO, sued LayerZero and co-founder Bryan Pellegrino over an April exploit involving 116,500 rsETH worth about $292 million.

• Evercrest alleges LayerZero reviewed and endorsed the 1-of-1 DVN configuration used by the exploited Unichain bridge and failed to warn KelpDAO about the security risks.
• The filing claims LayerZero had warned another developer, USDT0, about risks tied to default DVN configurations before the exploit, while KelpDAO was not given a similar warning.
• Pellegrino disputed the allegations, calling the claim "meritless," while Evercrest is seeking damages for negligent misrepresentation, negligence and defamation, along with aggravated and punitive damages.

Strategy proposes daily dividends for STRC, STRD, STRF and STRK preferred stocks

Strategy is seeking shareholder approval to move STRC, STRD, STRF and STRK to daily dividends, with a special shareholder meeting scheduled for Oct. 28.

• Under the proposal, each security would have a dividend record date every calendar day, including weekends and holidays, with any declared dividend paid on the next business day.
• The changes would not alter dividend rates or increase Strategy's total regular dividend obligations, with STRC set to switch first in November if approved.
• Strategy said more frequent payments could make the preferred stocks more attractive and support its ability to raise preferred equity capital for its bitcoin treasury strategy.

Ethena expands USDe backing strategy into bStocks and equity perpetuals on Binance

Ethena is expanding the basis trade behind USDe into tokenized U.S. equities, using Binance's bStocks as spot collateral and equity perpetuals to hedge the exposure.

• The strategy extends Ethena's existing delta-neutral approach beyond crypto assets, with founder Guy Young calling it the "most significant expansion of USDe's funding mechanism" since its launch.
• Binance has more than $2.9 billion in equity perpetual open interest, according to data provided by Ethena, while USDe's supply currently stands at about $4.9 billion.

In the next week

• U.S. consumer confidence and job openings data are due Tuesday, and ADP employment, second-quarter GDP and August PCE inflation data follow Wednesday. Weekly jobless claims and September ISM manufacturing are due Thursday, before the September jobs report on Friday.
• Euro Area economic sentiment and consumer confidence data are due Tuesday. September manufacturing PMI and August unemployment data follow Thursday, with ECB President Christine Lagarde and other officials scheduled to speak. September inflation data are due Friday.
• Plasma, Humanity Protocol and Sui are among the crypto projects set for notable token unlocks next week.

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