The zkLend exploiter lost all 2,930 ETH in a phishing scam while trying to launder the stolen money using what they thought was Tornado Cash.

According to a Mar. 31 post on X by Consensys-backed De.Fi Antivirus Web3, the attacker mistakenly deposited the stolen funds into a fake Tornado Cash website, resulting in an immediate loss. On-chain data shows that after realizing the mistake, the hacker sent a desperate message to zkLend’s deployer address, admitting their blunder. 

“I tried to move funds to Tornado, but I used a phishing website, and all the funds have been lost. I am devastated,” the hacker wrote. They went on to apologize for the attack and urged zkLend to focus its recovery efforts on the phishing scam operators.

More than $9.6 million in Ethereum (ETH) was stolen in the zkLend exploit, which took place on Feb. 12 . In an attempt to engage in negotiations, the Starknet-based lending protocol offered the hacker a 10% reward in exchange for returning the remaining funds by Feb. 14.

ZkLend was forced to escalate the matter to law enforcement because the hacker ignored the deadline. The platform announced that it had enlisted security experts from the Starknet Foundation, StarkWare, and Binance Security to locate and recover the funds. But now that the stolen ETH has been lost to a phishing scam, things seem to have taken a surprising turn.

The zkLend attack is part of a growing trend of high-profile cryptocurrency exploits. According to Immunefi’s Q1 2025 report, the first three months of 2025 saw the worst quarter for crypto security breaches in history, with hackers stealing $1.64 billion. The zkLend hack was the fifth-largest exploit of the quarter.

Decentralized finance protocols lost $106.8 million across 38 incidents, with Ethereum and BNB (BNB) Chain being the most targeted networks. While DeFi suffered multiple attacks, centralized finance platforms saw just two incidents, but those resulted in a staggering $1.5 billion in losses.

Bitcoin (BTC) has always been the face of crypto, the first thing that comes to mind when you think of this market. But for years, its role has been largely static—held as a store of value, yet rarely used for anything else. Then BTCFi entered the scene: unlike traditional DeFi, which has been dominated by Ethereum (ETH) and other smart contract platforms, BTCFi is built around Bitcoin as the core asset.

In the last quarter of 2024, BTCFi’s total value saw a massive surge—from $800 million all the way to $6.5 billion. The momentum is impressive, to say the least. More institutional players are taking notice, and analysts predict that by 2030, roughly 2.3% of Bitcoin’s circulating supply (about $47 billion) could be actively used in decentralized finance. 

So clearly, BTCFi is not just a passing trend. But why is it gaining so much traction? Can it really be called the future of Bitcoin’s utility as a financial asset?

Let’s try to figure it out.

What is BTCFi, and why is it growing now?

BTCFi represents the intersection of Bitcoin and decentralized finance, with the first crypto playing the role of the core asset in this case. Typically, DeFi platforms have been built on blockchains like Ethereum, while Bitcoin holders had to wrap their BTC into ERC-20 tokens (like wBTC) to participate in this field.

This kind of tokenization started picking up the pace around 2020, allowing BTC holders to access DeFi services that are typically not available on the Bitcoin blockchain. These “wrapped” tokens are built in a way that makes them compatible with other blockchain networks. And so, they effectively extended Bitcoin’s functionality.

However, advancements in Bitcoin L2 solutions and LRTs, or layered rollup technologies, are now changing the rules. It is becoming unnecessary for Bitcoin to use “second class citizen” ERC-20 tokens anymore.

BTC LRTs, for example, operate on Ethereum and other chains as well, but use Bitcoin as the primary collateral in transactions. This means unlocking the use of Bitcoin as a yield-generating asset in other networks beyond its native chain.

The emerging Bitcoin L2s, meanwhile, are tackling this blockchain’s long-standing scalability issues, allowing for faster and more cost-efficient transactions. These innovations are going to fundamentally redefine Bitcoin, turning it from a passive store of value to an actively utilized financial asset.

Why is BTCFi the gateway for Bitcoin whales in 2025?

Large Bitcoin holders—miners, in particular—have often used CeFi loans backed by their BTCs to fund their operations since they didn’t want to outright sell those assets. This practice is still going on today, but BTCFi promises to make some changes. And that’s where everything will start from, really: by BTCFi enabling new opportunities for Bitcoin holders to put their assets to work.

Soon enough, Bitcoin whales will start looking at BTCFi as a powerful gateway that can be used to enter the DeFi space. And the way I see it, there are two key factors in 2025 that will influence that perception.

The first is the rise of Bitcoin ETFs. BTC ETFs currently account for almost 6% of all Bitcoin supply, having crossed $100 billion in holdings at the beginning of 2025. With them gaining mainstream traction, Bitcoin is increasingly perceived as the safest and most stable cryptocurrency asset.

This makes it a prime choice for DeFi, attracting large-scale holders who want to use their BTC without selling. Earlier in February this year, Goldman Sachs announced that it had invested $1.63 billion in Bitcoin ETFs. That’s easy proof right there.

The second major factor is the appearance of BTC L2 technologies, which we’ve already covered earlier. Until recently, the lack of scalability and transaction efficiency held Bitcoin back from DeFi adoption. Now, we are going to see a surge of L2 solutions that will enhance the network’s performance. And here’s the important part: they will do so while preserving Bitcoin’s core principles of decentralization and simplicity (and, hence, its robustness).

What DeFi platforms need to do for proper BTCFi integration

There are several challenges that will need to be overcome before BTCFi can achieve truly seamless integration. The biggest technical issue will be ensuring that Bitcoin-based L2 solutions become genuinely trustless. At the present time, they are not quite there, often relying on intermediaries and centralized elements, which goes against Bitcoin’s core philosophy.

The good news is that there’s a lot of R&D going on to make it happen. If successful, it could make the vast amounts of BTCs that are currently just lying there “collecting dust” be useful in DeFi.

Another big challenge is going to stem from people’s trust. Among Bitcoin holders, there are many who do not quite trust Ethereum and the existing Bitcoin tokenization methods. The key to winning them over will lie in creating robust and cost-effective solutions on the native Bitcoin network. Having a fully trustless and inexpensive execution layer on the BTC blockchain could really become the dealbreaker for these people.

The future of Bitcoin: More than just ‘digital gold’

For years, Bitcoin has been carrying the moniker of “digital gold”—a safe-haven asset meant for holding rather than using. These days, this is becoming increasingly untrue. As more institutional players enter the crypto space, the potential for BTCFi to become Bitcoin’s next-level evolution is very real.

The demand is on the rise, and the infrastructure is already being built. For Bitcoin whales looking to maximize their assets without selling, BTCFi could become the perfect answer.

Michael Egorov

Michael Egorov is a physicist, entrepreneur, and crypto maximalist who stood at the origins of DeFi creation. He is a founder of Curve Finance, a decentralized exchange designed for efficient and low-slippage trading of stablecoins. Since the inception of Curve Finance in 2020, Michael has developed all his solutions and products independently. His extensive scientific experience in physics, software engineering, and cryptography aids him in product creation. Today, Curve Finance is one of the top three DeFi exchanges regarding the total volume of funds locked in smart contracts.

Law enforcement in India has arrested five suspects who allegedly duped a businessman out of roughly $700,000 via a fake cryptocurrency trading platform.

According to local media, the five suspects, including one woman, were taken into custody following an investigation by the cybercrime wing of Odisha’s Crime Branch. 

The accused reportedly ran a scam using a bogus trading app called ZAIF, where they promised massive returns of up to 200% on digital currency investments. The trading platform was promoted as being based in Japan.

It’s worth noting that ZAIF is the name of a legitimate Japanese cryptocurrency exchange, which suffered a $60 million hack in 2022. However, the platform used in this scam is likely unaffiliated and merely borrowed the name to appear credible.

The fraud kicked off when the victim, an Indian businessman, was contacted on Facebook by a woman claiming to be a Hong Kong-based IBM software developer. 

She gained his trust and convinced him to invest in crypto via ZAIF. Over a month, he transferred more than INR 6 crore (approximately $$699,352) across various accounts controlled by the scammers.

As is common in such crypto trading scams, the victim was initially shown fake profits on the platform to build trust. However, when the victim attempted to withdraw gains, the platform demanded an additional INR 89 lakh to unlock the funds — a tactic commonly referred to as an advance fee fraud.

Once the victim refused, the scammers vanished, cutting off contact.

Police tracked down the suspects through digital trails and banking records. Authorities seized phones, SIM cards, ID documents, and other incriminating materials during a raid.

With cryptocurrencies still operating in a grey area, India remains a hotspot for scams and fraud targeting unsuspecting users. Earlier this month, police cracked down on a similar scam that promoted a fake token called RSN and promised 2% daily returns. Losses were estimated to be between $1.14 and $2.29 million.