Crypto markets steady as cyberattacks hit major Wall Street hedge funds

This week, several of the largest hedge funds on Wall Street were targeted in a wave of attempted cyberattacks, which reportedly include Point72 Asset Management, Citadel, Two Sigma Investments and Millennium Management.

Attackers are said to have used voice phishing, or vishing, to manipulate employees into giving up their username and password credentials or allowing access to internal systems. This is a reminder of the ever-increasing danger posed by AI-assisted social engineering to financial institutions.

Even though there were overwhelming news headlines, there hasn’t been any major impact on the crypto markets. Traders are just observing how the attacks unfold, whether it is going to limit itself to traditional finance or expand to trading firms, exchanges, and custodians contributing to the crypto ecosystem.

Bitcoin and Ether hold their ground

Cryptocurrencies remained very stable. The price of Bitcoin (BTC) stood at around $64,500 on Glassnode, showing a minor gain of about 1% in the last week while the price of Ether (ETH) was around $1,900 and recorded a marginal drop of 0.5%. The total market size of cryptocurrencies remained around $2.3 trillion.

Traditional markets have behaved in a similar manner. According to TradingView, the CBOE Volatility Index (VIX) or “fear index” for Wall Street, is being quoted at approximately 15.8. Though it has increased somewhat by about 2.7% within the past twenty-four hours, it is still lower than what it was five trading sessions before, which hints that investors do not have a reason to panic.

The fact that the reaction is muted is noteworthy as hedge funds are paying more attention to digital assets. Some major firms have introduced quantitative and crypto-related strategies, while companies like Citadel Securities have helped with liquidity across financial markets.

Since some hedge funds use the same prime brokerage networks to finance investments in equities, derivatives, and digital assets, the cyberattack could disrupt trading activities without directly attacking any cryptocurrency exchange. Until now, the investors seem to treat incidents as operational issues rather than a potential threat in the market.

Why crypto sits inside the blast radius

Because cybercrime often intersects with crypto, crypto investors are paying attention. In the latest report “Navigating Cyber 2025” by FS-ISAC, a non-profit organization that provides cyber-solidarity to over 5,000 banks, it was mentioned that criminals tend to exploit the real-time payment systems and crypto for transferring their stolen money, thus making recovery almost impossible.

The report also shows the changing nature of cybercrime as a result of generative AI. The criminals are employing AI technology to produce deepfake impersonators that look like, communicate and behave like top business executives and even to make attempts at phishing simpler and far easier to undertake.

“The report’s findings underscore the complexity and unpredictability of today’s threat landscape,” said Chief Executive of FS-ISAC Steven Silberstein. He went on to explain that reliance on interconnected technology providers and external suppliers in the financial sector has increased.

Choosing the right targets is also crucial. Large multi-strategy funds churn out a massive volume of trades in stocks, bonds, derivatives, and quite often, cryptocurrencies. Even a minor incident threatening the integrity of customer funds may lead to difficulties in different markets when it comes to executing trades through disrupted internal operations or employee accounts.

At present, there are few indications to support this view. Point72 stated to Reuters that investors were informed that none of the firm’s client data was compromised. Similarly, Citadel stated that it had not undergone a successful breach. Furthermore, it has not been indicated whether crypto exchanges, crypto custodians or blockchain infrastructure providers had been compromised.

What the disclosure clock demands

The events also brought the focus to the rules regarding disclosure of cybersecurity issues. Since the year 2023, the US Securities and Exchange Commission had required all public companies to report any incidents regarding cybersecurity within the span of four business days after concluding the materiality of the incident.

According to research, it appears that investors have begun to factor in the risks represented by the companies they invest in. The Swiss Finance Institute conducted research which revealed that investment portfolios that are biased towards companies facing a relatively high level of cyber risk achieved excess annual returns of 18.72%, suggesting that investors require a higher price for taking such risks.

The insurance industry shares similar issues. It has been observed that Mario Greco, the CEO of Zurich Insurance Group has warned that sophisticated cyber breaches have become “uninsurable” owing to which it has been suggested that collaboration between the governments and insurance companies is necessary to manage systemic cyber risks altogether. Situation can be much worse for crypto firms because they do not have many cyber insurance options.

The next consideration is whether the campaign reaches over and above conventional finance. According to Financial Times, investigations are still underway at several firms, but there has not yet been any indication that trading infrastructure or assets were affected by the events.

Should future reports of attacks result in further interruptions in the normal operation of the market, it could turn out that the calm reaction of the crypto market would become a thing of the past.

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