NY Sues Exchanges Over Betting; Arbitrum Freezes $71M

New York Attorney General Letitia James filed lawsuits in New York state court against Coinbase Financial Markets and Gemini Titan, alleging the platforms operated prediction markets in the state without licenses from the New York State Gaming Commission.

The complaints seek to recover alleged illegal gains, provide restitution for affected users and bar the platforms from offering the products to people under 21. James wrote in a statement: “Gambling by another name is still gambling, and it is not exempt from regulation under our state laws and Constitution.”

Prediction markets let users place wagers on outcomes such as elections, sports or economic indicators. The complaint argues those activities meet the state definition of gambling when conducted without a license and names Coinbase Financial Markets and Gemini Titan as operators that offered the markets to New York residents.

Separately, Arbitrum’s elected 12-member security council moved 30,766 Ether, about $71 million, from a wallet tied to an exploit of the Kelp protocol into an intermediary frozen wallet. The council said the intermediary wallet is not accessible to the original address and that any further transfer requires Arbitrum governance approval.

Kelp, a liquid restaking protocol that used a LayerZero-powered bridge, was exploited over the weekend for at least $293 million, producing millions in bad debt across connected lending markets. The exploit prompted the emergency action on Arbitrum.

Some users criticized the freeze on social media. Griff Green, a member of the Arbitrum security council, wrote on X that the council “did not make this decision lightly” and that members debated technical, practical, ethical and political considerations before acting.

Maritime security firm Marisks warned that scammers posing as Iranian authorities contacted shipowners whose vessels remain stranded west of the Strait of Hormuz, demanding payment in Bitcoin or USDt for safe passage. Marisks described the messages as a scam, and Iranian authorities have not commented.

The Strait of Hormuz previously handled about one-fifth of global oil and liquefied natural gas exports before regional hostilities reduced normal transit. State regulators and attorneys general have previously reviewed crypto products that allow event betting or leveraged wagers without clear licensing.