The cryptocurrency market saw another eventful week as security concerns, U.S. crypto legislation, institutional fund flows, and blockchain development remained in focus. Liquid Network temporarily halted transactions after a major Bitcoin withdrawal, while the U.S. Senate prepared for a critical procedural vote on the CLARITY Act. At the same time, spot Bitcoin ETFs recorded significant outflows, although Ethereum ETFs attracted fresh capital.
Elsewhere, the U.S. Department of Justice restrained more than $52 million in cryptocurrency as part of an investigation into the Xinbi Guarantee network. Ethereum developers ranked proposals for the upcoming Hegotá upgrade, while Harmony proposed shutting down its layer-1 blockchain and migrating its ONE token to Ethereum.
Liquid Network Resumes Blocks After $320 Million Withdrawal
Liquid Network experienced a major security incident after an actor created unbacked L-BTC and withdrew approximately 3,996 BTC through an authorized peg-out service. The withdrawal, first reported on September 6, represented roughly 95% of the Bitcoin held in the network’s federation wallet at the time.
Following the incident, Liquid suspended transactions and peg operations while developers worked on a proof-verification flaw in the Elements software used by the network.
On September 10, Liquid announced that its nodes had resumed producing blocks after an emergency software update. However, transactions and peg operations remained suspended as the investigation continued.
The actors later returned approximately 3,400 BTC. Around 598 BTC remained outside the federation wallet. Liquid described the actors as “purported white-hat hackers,” while making clear that the description reflected the actors’ own claim.
CLARITY Act Faces Critical Senate Vote
The U.S. Senate is preparing for a major procedural test for the CLARITY Act on September 15. The bill requires 60 votes to move forward to full debate.
Republicans currently hold 53 Senate seats, meaning the legislation would need support from at least seven Democrats or independents if all Republicans vote in favor.
The legislation continues to face disagreements over several issues, including ethics rules concerning government officials and cryptocurrency interests, stablecoin rewards, and protections for decentralized finance developers.
A successful procedural vote would not mean the CLARITY Act had become law. Instead, it would allow the Senate to begin formal debate and potentially move the legislation toward further votes.
Bitcoin ETFs Record $462.7 Million in Outflows
U.S. spot Bitcoin ETFs experienced a difficult trading week, recording approximately $462.7 million in net outflows between September 8 and September 11.
Because of the Labor Day market closure, there were only four trading sessions during the period. Bitcoin ETFs recorded net outflows in each session, with Thursday’s $282.7 million withdrawal representing the largest single-day loss of the week.
Ethereum ETFs showed a different trend. Ether funds recorded approximately $196.9 million in net inflows, helped by $216.4 million of inflows on Friday. Solana funds also attracted around $9.7 million.
The divergence between Bitcoin and Ethereum ETF flows highlighted changing institutional demand as investors considered inflation data and the Federal Reserve’s upcoming September meeting.
DOJ Targets Xinbi Guarantee Network
The U.S. Department of Justice restrained more than $52 million worth of cryptocurrency while targeting wallets and online channels connected to the Xinbi Guarantee network.
Tether said authorities seized two wallets that had received roughly $12 million in payments and sought restraints against another 47 wallets associated with suspected money laundering.
U.S. authorities and blockchain researchers have described Xinbi as a marketplace allegedly connecting scam operators with financial and other services. Tether said it assisted authorities with the enforcement action.
The wallet restraints represent a significant step in the investigation, although allegations involving the network and its users remain claims made by authorities.
Ethereum Foundation Ranks Hegotá Upgrade Proposals
The Ethereum Foundation evaluated 62 proposed changes for the planned Hegotá upgrade. Around 60 protocol specialists contributed a total of 397 assessments during the evaluation process.
Transaction inclusion lists and Frame Transactions received the highest “must ship” ranking. Other proposals were given lower priorities or declined.
The rankings should not be interpreted as confirmation that every proposal will be implemented. Instead, they represent the development priorities currently being considered by Ethereum’s protocol teams.
Ethereum’s Protocol Cluster has also outlined a goal of making the network’s base layer resistant to quantum attacks by December 2029.
Harmony Plans to Retire Its Layer-1
Harmony has proposed retiring its layer-1 blockchain and migrating ONE balances to Ethereum-based tokens following a final network snapshot.
The project asked users to exit smart contracts before September 10 because liquidity pools, multisignature vaults, and applications would not automatically transfer alongside wallet balances.
Harmony has proposed allocating $1.372 million to eligible validators and delegators through payments spread across four quarters.
The proposal follows an August exploit that resulted in forged ONE tokens. The final network shutdown and Ethereum token distribution had not yet been confirmed in the available report.
Bitcoin Volatility Returns Ahead of Fed Meeting
Bitcoin also faced renewed volatility during the week. BTC dropped below $78,000 on September 10 after U.S. producer inflation came in above expectations. The cryptocurrency briefly touched approximately $76,676.
Bitcoin later recovered above $78,000 on September 11 after consumer inflation data broadly matched headline expectations.
The market remained focused on the Federal Reserve’s September 15–16 meeting, with rate expectations continuing to influence cryptocurrency prices and investor sentiment.
Robinhood Crypto Volume Jumps 61%
Robinhood reported a significant monthly increase in cryptocurrency trading activity during August. Its crypto trading volume reached approximately $17.5 billion, representing a 61% increase from July.
Bitstamp accounted for around $10.1 billion of the volume, while the Robinhood app processed approximately $7.4 billion.
Despite the monthly recovery, the combined figure remained 38% lower than the company’s August 2025 volume. This suggests that while trading activity improved from July, the broader market has not yet returned to last year’s levels.
Global Crypto Adoption Continues
Traditional financial institutions and banks also continued exploring digital assets.
Brazilian banks expanded customer access to cryptocurrencies without reporting virtual assets on their own balance sheets. Itaú offered 15 crypto assets, while Nubank listed 28. Banco do Brasil also reported processing more than R$11 million in customer crypto transactions since January.
In Europe, Italy’s UniCredit was reportedly exploring broader digital-asset services, including crypto custody, brokerage infrastructure, tokenized investments, and stablecoin-related services. The bank has not yet announced a final product lineup.
Meanwhile, Flare reported that staked FLR increased from approximately 16 billion to 21.5 billion tokens following changes to its network economics. The FIP.16 upgrade reduced annual inflation from 5% to 3%, while transaction-fee burns also increased significantly.
Conclusion
The week highlighted several major themes shaping the cryptocurrency industry. Liquid Network’s security incident showed the risks associated with cross-chain and peg mechanisms, while the CLARITY Act demonstrated that regulatory uncertainty remains a major issue in the United States.
At the same time, Bitcoin ETF outflows contrasted sharply with stronger demand for Ethereum funds. Blockchain projects such as Ethereum and Harmony continued making major decisions about their future infrastructure, while banks and financial institutions around the world expanded their exploration of digital assets.
With the U.S. Senate’s CLARITY Act vote and the Federal Reserve meeting both approaching, the coming days could bring further volatility and important developments across the crypto market.
