Cryptocurrency markets suffered a sharp sell-off this week as investor concern grew over stagnant US liquidity after President Donald Trump nominated Kevin Warsh to lead the Federal Reserve. Bitcoin exchange-traded funds logged three straight days of outflows, with $431 million withdrawn on Thursday, according to Farside Investors. Bitcoin (BTC) briefly fell to $60,074 on Friday before recovering to above $64,930 (7:49 a.m. UTC).
Warsh, who served as a Fed governor from 2006–2011, is expected to continue an interest-rate-cut trajectory. Thomas Perfumo, an economist at Kraken, told Cointelegraph the nomination may signal that broader market liquidity will “stabilize rather than meaningfully expand.” The industry also saw one of its largest liquidation events on Jan. 31, when more than $2.56 billion in leveraged positions were wiped out, per CoinGlass derivatives data.
TRM Labs completes $70M investment round at $1B, becomes crypto unicorn
Blockchain intelligence firm TRM Labs closed a $70 million Series C round that values the company at $1 billion, making it a crypto unicorn. The round was led by early investor Blockchain Capital and included participation from Goldman Sachs, Bessemer Venture Partners, Brevan Howard Digital, Thoma Bravo, Citi Ventures and Galaxy Ventures.
TRM provides AI-driven blockchain analytics to public and private institutions to detect and prevent automated illicit activity and cybercrime. Co‑founder and CEO Esteban Castaño said the funding will help the team innovate with institutions on high-consequence threats and expand AI capabilities to protect critical systems. The round underscores continuing institutional investment in blockchain analytics aimed at countering AI-enhanced scams and cyberattacks.
Avalanche tokenization hits Q4 high as BlackRock’s BUIDL expands onchain
Avalanche saw a surge in institutional tokenization in Q4, driven by tokenized money market funds, loans and indexes. Total value locked (TVL) of real-world assets on Avalanche rose 68.6% in Q4 2025 and nearly 950% year-over-year to exceed $1.3 billion, boosted by BlackRock’s $500 million USD Institutional Digital Liquidity Fund (BUIDL) launched in November, Messari reported.
Additional contributors included FIS partnering with Avalanche-based Intain to launch tokenized loans and Intain enabling some 2,000 US banks to securitize over $6 billion in loans on Avalanche. S&P Dow Jones also partnered with Dinari to launch the S&P Digital Markets 50 Index, tracking 35 crypto-linked stocks and 15 crypto tokens on Avalanche. Traditional finance firms appear increasingly willing to experiment with tokenization as regulators and markets evolve.
ParaFi Capital makes $35M investment in Solana-based Jupiter
Jupiter, a Solana-based onchain trading and liquidity aggregator, secured a $35 million strategic investment from ParaFi Capital — the protocol’s first outside capital after years of bootstrapped growth. The deal involved token purchases at market prices, settled entirely in Jupiter’s JupUSD stablecoin, with an extended lockup and warrants enabling ParaFi to buy additional tokens at higher prices to align long-term interests. Further financial details were not disclosed.
Jupiter has processed over $1 trillion in trading volume in the past year and expanded beyond swap routing into perpetuals, lending and stablecoins. Recent product launches include a beta onchain prediction market built with Kalshi and JupUSD, a Solana-native dollar-pegged stablecoin developed with Ethena Labs. Jupiter’s native token (JUP) was up about 9% over the past 24 hours, per CoinGecko.
Aave winds down Avara, phases out Family wallet in DeFi refocus
Aave Labs announced it is sunsetting its umbrella brand Avara as it refocuses on decentralized finance and streamlines its branding. Aave founder Stani Kulechov said Avara — which encompassed projects like the Family crypto wallet and Lens — is no longer needed as the team concentrates on bringing Aave to a wider audience.
The Apple iOS-based Family wallet is being wound down after the team concluded that onboarding millions of users requires purpose-built experiences (for example, savings products) rather than general-purpose wallets. Aave recently transferred stewardship of Lens to Mask Network and will reduce participation there to an advisory role while it focuses on core DeFi products.
Step Finance treasury wallets breached, $27M in SOL drained as STEP crashes 90%
Step Finance disclosed a security breach in which several treasury wallets were compromised during APAC hours, prompting remediation steps. Onchain analysis by CertiK shows roughly 261,854 SOL (about $27.2 million) was unstaked and moved from Step Finance-controlled wallets. The team has not confirmed the total losses, the breach vector, or whether user funds were affected beyond protocol-owned assets. The incident triggered a steep sell-off in STEP, which plunged roughly 90%.
DeFi market overview
Data from Cointelegraph Markets Pro and TradingView show most of the top 100 cryptocurrencies finished the week lower. Zcash (ZEC) led weekly declines among the top 100, falling about 35%, followed by Story (IP) down roughly 34%.
Thanks for reading this summary of the week’s notable DeFi and crypto developments. Join us next Friday for more updates.
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