One of the video game studios impacted by Xbox’s layoffs in July has successfully reclaimed its independence, as well as control over its intellectual property.

Compulsion Games, headquartered in Montreal, was founded as an independent studio in 2009 and acquired by Xbox in 2018. Its one release as a member of the Xbox Games Studio network was 2025’s South of Midnight, an action/adventure game set in a magical Deep South.

In July, Microsoft announced the first wave of a planned 3,200 job cuts throughout its Xbox department, alongside plans to spin out or shut down five of its studios. Compulsion Games was one of those five, alongside Double Fine Productions (Psychonauts), Ninja Theory (Hellblade), Undead Labs (State of Decay), and Arkane Studios (Deathloop, Dishonored).

Subsequently, on Aug. 20, Compulsion CEO Guillaume Provost revealed in an interview with GamesBeat’s Dean Takahashi that Compulsion’s management had successfully reacquired the studio, its staff, and the South of Midnight IP on Aug. 11.

South of Midnight is still available via its previous storefronts, including Steam and the PlayStation Network, but is currently self-published by Compulsion.

Provost told GamesBeat that no layoffs had been made at Compulsion as it transitioned to independence, and most of the team elected to stay together.

As for the other studios affected by Xbox’s July 6 layoffs:

• Double Fine Productions, headquartered in San Francisco, confirmed on July 28 that it had laid off 23 employees to return the studio to a “sustainable size.” It is once again fully independent and has control of its IP, such as Psychonauts, and will be exhibiting in Seattle on Labor Day weekend as part of the Penny Arcade Expo.
• Ninja Theory, from Cambridge, England, was one of the more unexpected shutdowns, as it had debuted Senua, a third entry in its Hellblade series, only a few days before the layoffs announcement. It has reportedly been spun off from Microsoft and will continue work on Senua under an unspecified new owner.
• Likewise, Seattle’s Undead Labs is currently under unidentified new ownership and still plans to release the long-anticipated third entry in its zombie survival series State of Decay at some point next year.
• Finally, Arkane’s status has yet to be firmly established. It formerly consisted of two studios, in Austin, Texas and Lyon, France, but its Austin office was closed down as part of a wholly separate wave of Xbox layoffs in May 2024. Several of the affected employees in Texas, including former studio head Harvey Smith, announced on Aug. 19 that they’d founded a new company, Black Pony Immersive, with plans to create new games in the same “immersive sim” subgenre as Dishonored.

Xbox is currently exhibiting at the Gamescom conference in Cologne, Germany.

Midnight Token Falls After $13M Wanchain Bridge Exploit

Midnight’s NIGHT token fell sharply after a Wanchain bridge exploit drained 515 million NIGHT tokens worth approximately $13.2 million, according to validated on-chain and project materials.

The incident was tied to a signature reuse flaw affecting the cross-chain bridge infrastructure. Wanchain paused the affected bridge route after the exploit, while the NIGHT token saw a steep market reaction as traders assessed the damage.

The key distinction is that this was a bridge exploit, not a compromise of Cardano’s base layer or Midnight validator infrastructure.

That matters because cross-chain bridge failures can hit ecosystem tokens hard even when the underlying chains remain secure. The damage often comes from liquidity disruption, confidence loss, and uncertainty over whether stolen tokens can be frozen, recovered, or absorbed by the market.

TL;DR

• A Wanchain bridge exploit drained 515 million NIGHT tokens worth about $13.2 million.
• NIGHT fell roughly 30% after the incident.
• The exploit affected bridge infrastructure, not Cardano or Midnight validator nodes.

https://x.com/wanchain_org/status/1814945019283947520

Why Bridge Exploits Keep Hurting Crypto

Bridges remain one of crypto’s most vulnerable infrastructure layers.

They connect assets across chains, but that connection often depends on signing systems, validators, relayers, wrapped assets, custody assumptions, or smart contract logic. If any part of that design fails, attackers can move quickly.

In this case, the validated materials point to a signature reuse flaw.

That kind of issue can be especially damaging because it affects authorization. If attackers can reuse or manipulate signatures, they may be able to trigger transfers that should not be valid.

The result was a large movement of NIGHT through the bridge route.

Even if the underlying Layer-1 chains remain safe, the asset can still suffer because bridge liquidity is part of the market structure. Users care whether tokens can move safely across ecosystems. If that trust breaks, liquidity can dry up quickly.

Midnight And Cardano Were Not The Same Attack Surface

The exploit’s relationship to Cardano needs careful wording.

Midnight is associated with the Cardano ecosystem, and the affected bridge involved Cardano-related routes. But the validation materials state the incident hit bridge smart contracts and cross-chain infrastructure, not Cardano Layer-1 validator nodes.

That distinction is important for readers.

A bridge exploit can involve assets connected to a chain without implying that the chain itself was compromised. In crypto markets, those details often get blurred, especially when token prices fall quickly.

The same applies to Midnight.

A token price decline after an exploit does not necessarily mean the entire network has failed. It means the market is repricing risk around liquidity, bridge exposure, and potential recovery.

Still, perception matters. When a major exploit hits a token ecosystem, traders often reduce exposure first and wait for technical details later.

Market Confidence Depends On The Response

For NIGHT, the next phase depends on how Wanchain and related ecosystem teams handle recovery.

Users will want to know whether affected routes remain paused, whether stolen tokens can be traced, whether any funds can be recovered, and what changes will be made before bridge operations resume.

The market also needs clarity on token supply.

If a large amount of stolen NIGHT can enter circulation or move through exchanges, traders may worry about selling pressure. If the tokens can be frozen, recovered, or otherwise contained, confidence may stabilize faster.

That is why post-incident communication matters.

A technical exploit is damaging. A vague response makes it worse. A clear timeline, transaction evidence, mitigation plan, and compensation framework can help restore trust.

The Larger Lesson Is About Cross-Chain Risk

The Midnight/Wanchain incident is another reminder that cross-chain convenience comes with trade-offs.

Users want assets to move freely between ecosystems. Projects want broader liquidity. DeFi applications want multi-chain access. But every bridge adds another layer of assumptions and potential failure points.

That does not mean bridges are useless. It means their security model matters enormously.

Signature handling, key management, validator design, audit quality, monitoring, and emergency controls all determine whether a bridge can survive hostile conditions.

For traders, bridge risk should be part of token risk.

If a token depends heavily on cross-chain liquidity, a bridge incident can affect price even if the native protocol remains intact. That is exactly what happened here.

Midnight’s next test is not only technical recovery. It is whether users believe the cross-chain path can be trusted again.

This article is based on Wanchain’s public statement and CardanoScan transaction data.

This article was written by the News Desk and edited by Samuel Rae.

This report is based on information released in official primary source disclosures at primary source documentation.