The original promise of Bitcoin centered on decentralizing financial power. In recent years, however, large parts of the crypto industry have moved in the opposite direction. Startups building products for broader audiences have reintroduced various vectors of centralization, leading to cases of insiders pumping and dumping memecoins, increased concentration around dollar-pegged stablecoins, and moves away from public crypto networks toward a revamped version of traditional finance. Situations like crypto infrastructure going down when Amazon Web Services is experiencing downtime and so-called decentralized finance (DeFi) protocols reverting to centralized solutions after they get hacked also indicate that much of the decentralization here is marketing theater.
The latest example of crypto looking far too much like the traditional financial system comes from an investigation by ZachXBT, a blockchain investigator and advisor to crypto investment firm Paradigm, who has been called “one of the best digital detectives” by The New York Times. He examined Axiom Exchange, a Solana-based non-custodial trading platform that went through Y Combinator’s Winter 2025 batch and has brought in over $390 million in revenue mainly from memecoin trades. ZachXBT reported that senior business development employee Broox Bauer used an internal dashboard with poor oversight to view users’ private wallet lists, transaction records, and linked details. He and others then allegedly tracked hidden wallets of major traders and influencers and positioned trades to benefit from their activity.
Targeted individuals verified that the listed wallets belonged to them, and Axiom stated it was disappointed by the conduct, revoked the excessive access rights, and started its own review.
This story also includes suspected insider trading related to the revelations from ZachXBT on prediction market platforms, according to The Block. Ahead of the Axiom reveal, multiple wallets bet nearly $400,000 on Polymarket that the report would focus on this company, and those bets generated profits exceeding $1 million. The episode echoes a recent Kalshi case in which the prediction market platform banned and fined users accused of insider trading, and earlier questions around a Coinbase acquisition deal late last year that led to suspicious trading activity around an associated crypto token.
All of these events are taking place as the Senate works on the finalization of the CLARITY Act for digital asset market rules. Crypto support forms a central part of the Trump administration’s agenda for his second term in office, but Trump himself has drawn scrutiny over the allegedly corrupt pardon granted to former Binance head Changpeng Zhao, the lackluster performance of the TRUMP memecoin, and questions about potential pay-to-play influence regarding the lack of enforcement around crypto cases at the SEC.
Some Bitcoin and cypherpunk purists worry that the CLARITY Act could pass without firm safeguards for software developers and instead focus on regulatory clarity for centralized companies built on top of this technology, such as exchanges and stablecoin issuers. Crypto policy advocate Coin Center recently made its position clear, writing in a recent blog post, “There is no sustainable blockchain ecosystem in the US if developers who write or deploy neutral software must operate under the constant threat that they will be prosecuted as unlicensed money transmitters for that conduct alone.”
Markets on Polymarket and Kalshi currently price the chance of crypto market structure legislation passing this year near 69%, but those contracts do not specify whether developer exemptions will survive negotiations. Lawmakers introduced the Promoting Innovation in Blockchain Development Act of 2026 in the House on Thursday, which can be viewed as a sign that the CLARITY Act is indeed missing full, extensive protections for crypto developers.
Although it’s generally viewed as the most credibly decentralized crypto network, Bitcoin itself is also not immune from the increasing centralization and financialization of the crypto industry. Fidelity Digital Assets released a report highlighting the crypto asset’s lower volatility, more stable market behavior, and further development as a global reserve asset; however, there are concerns that this sort of institutional growth via custodians and bitcoin-backed banking initiatives like Strategy will dilute many of the original goals of the Bitcoin project. That said, Bitcoin users still have the option of running their own nodes and avoiding the potential development of the Bitcoin banking system.
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