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Crypto firms’ tokenized stocks spark investor protection concerns

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Crypto companies are racing to launch stock-backed tokens, but traditional financial firms and regulators are sounding alarms over potential risks to investors and market stability.

Encouraged by President Trump’s pro-crypto policies, major players such as Robinhood, Gemini, and Kraken have rolled out tokenized stock products in Europe, with Coinbase and Dinari seeking U.S. approval. Even Nasdaq has proposed offering tokenized shares — a sign that the concept is moving into mainstream finance.

These blockchain-based instruments are designed to mirror traditional equities while enabling 24/7 trading and instant settlement. Their combined market value has surged to $412 million from just a few million a year ago, according to RWA.xyz. But critics warn that many of these products lack ownership rights, dividends, and regulatory safeguards, making them more akin to derivatives than stocks.

“There’s a real risk investors don’t know what they’re buying,” said Diego Ballon Ossio, a partner at Clifford Chance. Legal experts say inconsistent rights and disclosures across issuers could undermine market integrity.

While some firms like Kraken and Ondo Finance claim to fully back their tokens with underlying assets, others — including Robinhood’s tokens pegged to OpenAI — have faced regulatory scrutiny for using derivative structures.

Regulators in both the U.S. and Europe are divided over how to classify and supervise these products. Financial groups including Citadel Securities and SIFMA argue that tokenization should not bypass investor protection rules, warning that liquidity could fragment across unregulated markets.

North Korean Hackers Using Fake Job Offers to Steal Cryptocurrency, Research Shows

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North Korean hackers are increasingly impersonating recruiters to steal cryptocurrency, saturating the industry with convincing fake job offers, according to new research and interviews conducted by Reuters. The cyber campaign, dubbed “Contagious Interview” by cybersecurity firms, has grown so pervasive that many applicants now screen recruiters to ensure they are not acting on behalf of Pyongyang.

Experts say North Korea stole at least $1.34 billion in cryptocurrency last year, funding its sanctioned weapons program. The FBI has previously warned that Pyongyang was “aggressively” targeting the crypto industry with elaborate social engineering schemes.

The scams typically begin on LinkedIn or Telegram, with a recruiter offering a role at a major blockchain or crypto firm. Applicants are then directed to obscure websites to complete a skills test or record a video—sometimes requiring them to download malicious code. In one case, a U.S. product manager lost $1,000 in ether and Solana after sending a video to a fake recruiter impersonating Ripple Labs. Others, like consultant Ben Humbert, cut off conversations after being asked to complete “virtual interviews” through suspicious links.

Companies such as Robinhood and Kraken have acknowledged being impersonated. Robinhood said it acted to disable fake web domains linked to the scam. LinkedIn and Telegram confirmed that the fraudulent accounts identified by Reuters had been removed. Still, security experts say the impersonations are difficult to police, as “anybody out there can say they’re a recruiter,” noted Nick Percoco, Kraken’s chief security officer.

Research by SentinelOne and Validin found exposed hacker log files containing details of more than 230 targeted individuals—ranging from coders and consultants to executives—between January and March. Analysts linked the activity to North Korea based on IP addresses and emails tied to previous state-backed hacks.

Although only a fraction of North Korea’s overall crypto theft efforts, experts warn the campaign is highly organized and rapidly evolving. “It’s scary how far they’ve come,” said Carlos Yanez of Global Ledger, one of the recent targets.

North Korea’s mission to the United Nations did not respond to Reuters’ request for comment, though Pyongyang routinely denies involvement in cryptocurrency theft.

Circle’s Blockbuster IPO Signals Renewed Investor Appetite for Crypto Listings

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Stablecoin issuer Circle made a powerful Wall Street debut on Thursday, raising $1.05 billion in its initial public offering, a move that analysts say could inspire a new wave of crypto companies to pursue public listings amid renewed optimism in the digital asset sector.

Circle priced its shares at $31 on Wednesday. Investor enthusiasm drove shares to open at $69 on the New York Stock Exchange and close at $83.23, underscoring the strong appetite for crypto-related equities. This marks the first major crypto IPO since Coinbase went public in 2021, signaling a potential resurgence for the sector.

Experts believe Circle’s successful IPO could pave the way for other crypto firms like Kraken and Gemini to consider public offerings. “It would not be surprising if other crypto companies follow suit,” said Jacob Zuller, an analyst at Third Bridge. “Public markets have accepted that crypto is not going away.”

Circle’s primary business centers around USDC, a stablecoin pegged to the U.S. dollar that facilitates instant digital payments and trading in the cryptocurrency markets. CEO Jeremy Allaire described the IPO as the culmination of a long-term vision: “We’ve had a deep conviction from the inception of the company that we could build a new infrastructure for money, built on the internet, that could radically reshape the utility of money.”

The IPO’s success reflects not only Circle’s business model but also broader shifts in the political and regulatory landscape. U.S. President Donald Trump has embraced the crypto industry, vowing to support its growth if elected. Since taking office, Trump has established a cryptocurrency working group and hosted industry leaders at the White House. Legislative efforts to create a federal regulatory framework for stablecoins are also gaining momentum in Congress.

Market observers see Circle’s public debut as a broader signal of renewed confidence in both crypto and fintech IPOs. NYSE Group President Lynn Martin called the offering “a bellwether for the IPO markets this year, not just for crypto listings.” Other fintechs have also found success recently, with retail brokerage eToro surging 34% in its May Nasdaq debut and digital banking startup Chime targeting an $11 billion valuation for its upcoming IPO.

After the collapse of FTX in 2022, institutional investors had largely pulled back from crypto markets. But with prices recovering and regulatory clarity improving, investment firms are once again showing strong interest. “There’s a plethora of high-tech and blockchain-focused investment funds that have been starved of new issues for a long time,” said Sui Chung, CEO of crypto index provider CF Benchmarks.

The Circle IPO underscores how shifting regulatory winds and growing institutional demand may soon trigger a new chapter for publicly listed crypto companies.