The FTC’s recent settlement with Illusory Systems, a blockchain infrastructure company, highlights the increasing sophistication of regulators when it comes to identifying perceived deficiencies and risks in rapidly evolving technologies. The settlement also indicates that the FTC under the second Trump administration is still an active enforcer, and that it is focused on cryptocurrency. With insights from Cooley, Covington and Robinson+Cole, this article examines Illusory’s alleged security failures, the reasons behind the FTC’s investigation and key settlement terms. It also offers practical compliance lessons. See “SEC Commissioners Urge Balance of Crypto Innovation and Privacy” (Jan. 21, 2026).