As risk assets including cryptocurrencies struggled on Thursday amid tariff uncertainties, tokenized gold once again emerged as an outperformer in the carnage.

The market capitalization of gold-backed tokens swelled to just under $2 billion on Wednesday, up 5.7% over the past 24 hours, according to CoinGecko data. The rise coincided with the yellow metal briefly touching a fresh all-time above $3,170/oz, TradingView shows.

Alongside the price rally, gold tokens experienced a frenzy of activity and demand over the past weeks, fueled by the broader market turmoil. Weekly tokenized gold trading volume surpassed $1 billion, the highest since the U.S. banking turmoil of March 2023, according to a report by digital asset platform CEX.IO.

The two largest tokens, Paxos Gold (PAXG), Tether Gold (XAUT), making up the bulk of the tokenized gold market, saw their weekly trading volumes surging over 900% and 300%, respectively, since January 20, according to the report citing CoinGecko data. PAXG also experienced continuous inflows totalling $63 million during this period, DefiLlama data shows.

The rally tracks the broader gains in physical gold, which posted double-digit increases in 2025 amid geopolitical uncertainty and inflation concerns. However, even gold wasn’t spared during the market-wide sell-off triggered by U.S. tariffs, with prices briefly dropping 6% before quickly recovering to record highs.

Since Trump’s inauguration, tokenized gold has been one of crypto’s top performing sectors, with its market cap up 21%, the report noted. By contrast, stablecoins gained a more modest 8% in market cap, while bitcoin declined 19% and the total crypto market lost 26%.

“Tokenized gold is emerging as one of the key diversification strategies among crypto-native users, alongside bitcoin,» wrote Alexandr Kerya, VP of product management at CEX.IO. «It provides a safer and more stable approach to portfolio management, enabling users to stay within the crypto ecosystem while benefiting from the value and stability of the underlying physical asset.”

«At the same time, the broader RWA narrative helps make gold exposure more accessible and intuitive for users who may not have considered it before,» Kerya added.

Disclaimer: This article, or parts of it, was generated with assistance from AI tools and reviewed by our editorial team to ensure accuracy and adherence to our standards. For more information, see CoinDesk’s full AI Policy.

NEW YORK, NY — A recent U.S. Department of Justice staff memo dismantling the DOJ’s crypto unit and narrowing the scope of its crypto-related enforcement priorities will have no impact on the prosecution of Terraform Labs co-founder and former CEO Do Kwon, prosecutors said Thursday.

The memo, sent Monday evening by U.S. Deputy Attorney General Todd Blanche, informed staff that the DOJ would no longer be pursuing prosecution against crypto exchanges, mixing services, or offline wallets for the acts of their end users. Blanche told staff not to criminally charge any violations of federal securities or commodities laws, except under specific circumstances, in cases where the charges would “require the [DOJ] to litigate whether a digital asset is a ‘security’ or a ‘commodity’” and there is an adequate alternative criminal charge.

During a hearing on Thursday, U.S. District Court Judge Paul Engelmayer of the Southern District of New York (SDNY) asked prosecutors whether Blanche’s memo would have any impact on the charges against Kwon, which include two counts of commodities fraud and two counts of securities fraud, as well as five other charges including wire fraud and conspiracy to defraud.

The prosecution told Engelmayer that they have “no plans” to change their charges against Kwon at this time.

David Patton, Kwon’s lead attorney and a partner at Hecker Fink LLP, told Engelmayer that the contents of Blanche’s memo could — at least indirectly — lead to some pre-trial motions from the defense.

“I do think it could potentially be the subject of some pre-trial motions,” Patton said. “It may or may not be directly related to the memo.” Patton specified that the questions of whether the cryptocurrencies involved in the case were securities or not could be relevant.

In a separate civil case brought by the U.S. Securities and Exchange Commission (SEC) against Kwon and Terraform Labs last year, in which Kwon and his company were found to be liable for fraud, another SDNY judge found that the tokens involved in the case were, in fact, securities.

During Thursday’s hearing, Engelmayer told both the prosecution and the defense to inform him well in advance of the trial if they planned to request that he adhere to any of the rulings or findings made by the court in the SEC case.

The next batch of pre-trial motions are expected to hit the docket in July, and a third status conference has been scheduled for June 12 at 11 a.m. in New York.

Due to scheduling challenges, the start date for Kwon’s criminal trial has been pushed back three weeks from January 26, 2026 to February 17, 2026.

Read more: Do Kwon’s Criminal Trial Set for 2026 as Lawyers Deal With ‘Massive’ Trove of Evidence

Just two months ago, the total value of funds locked (TVL) on HyperLiquid, a decentralized derivatives exchange (DEX) that allows traders to generate returns by staking to a shared vault, sat at a record $540 million.

Now, users are fleeing, TVL has slumped to $150 million and the yield has dropped to a measly 1%, in many cases, less than they’d get if they stashed their cash in a bank account.

At issue is an exploit that saw one user manipulate the price of a token called JELLY and force the vault, known as Hyperliquidity Provider, into a loss. But the negative PNL wasn’t the reason for the exodus. Rather it was HyperLiquid’s response, which led to concerns about how decentralized the protocol actually was, and whether it was acting exactly like the centralized exchange model it tried to distance itself from.

For the manipulation, the user shorted JELLY on HyperLiquid, that is sold tokens they didn’t own. They also bought tokens on illiquid decentralized exchanges. The lack of liquidity tricked the pricing oracle to relay an inflated price to HyperLiquid, forcing HyperLiquid’s vault to inherit a toxic position via liquidation.

As the price of JELLY rose further because of the spot buying pressure, the PNL for HyperLiquid’s vault sank more heavily into the red. Eventually, the exchange force closed the JELLY market, settling it at $0.0095 as opposed to the $0.50 that was being fed to oracles via decentralized exchanges.

This meant that the negative PNL was wiped away and, on paper, the vault performed well throughout the saga. But the action raised concerns about the control of what’s meant to be a decentralized process. At the time, Newfound Research CEO Corey Hoffstein questioned the legality of HyperLiquid’s actions and social media descended into outrage.

Some believe that the exploit was a mistake on HyperLiquid’s part.

“The Jelly exploit on Hyperliquid wasn’t a fluke,» Jan Philipp Fritsche, managing director at Oak Security, told CoinDesk. «It was a textbook case of unpriced vega risk: when leveraged trading on volatile assets is allowed without properly accounting for how that volatility can drain the risk fund. The attacker opened massive opposing positions in JELLY, knowing that one side would collapse and the other would cash out.

«This isn’t theoretical. It happened. And it will happen again. We flagged this exact risk vector in audits before, but economic flaws often get ignored because they’re not technical. That’s a mistake,» Fritsche added.

In this case, the manipulator ended up with a small loss.

It’s worth pointing out that HyperLiquid attempted to remedy the centralization concerns, upgrading its system to a include an on-chain validator voting for asset delisting, which means that the exchange will not be able to remove like JELLY in future without validator consensus.

Volume remains steady as HYPE tumbles

While the vault suffered a major blow in terms of trust and branding, the exchange itself continues to tick along just fine in terms of trading volume. Over $70 billion worth of volume has been notched so far this month and it looks to be on track to break it’s January record of $197 billion.

Still, the exchange’s native token (HYPE), which was distributed to users in December, has failed to mimic the positive performance of the exchange, losing 60% of its value over the past four months with its market cap dwindling from $9.7 billion to $4.6 billion.