A Curve founder’s pockets has repaid $13 million to Aave after borrowing the funds utilizing Curve’s CRV token as collateral. The transaction got here amid a major decline within the CRV token’s worth.
The nameless founder, who’s believed to be concerned in growing Curve’s lending protocol, borrowed round $2.8 million value of Ethereum on June 11 and rapidly transformed the funds into CRV tokens, utilizing them as collateral for an additional $10.2 million in Ethereum loans.
Nevertheless, the worth of the CRV token fell dramatically only a day later, which triggered a “margin name” and compelled the founder to repay the whole $13 million mortgage. Aave confirmed the reimbursement on Twitter, including that the transfer helped to “forestall a larger-scale liquidation occasion”.
Curve founder denies any foul play or ill-intent
While some speculated that the transfer may have been a deliberate try to govern the CRV token’s worth, Curve founder Michael Egorov denied any malicious intent, stating that the mortgage was made for “legitimate causes”.
Chatting with CoinDesk, Egorov stated: “We didn’t intend to affect the token’s worth in any means and we have been performing strictly inside the confines of the system…The cryptosphere remains to be small, and we all know very properly that, finally, any try to govern the worth harms all individuals. So, we’ve got no real interest in such practices and can by no means do it.”
Nevertheless, the incident has raised issues concerning the dangers related to utilizing cryptos as collateral for loans, significantly as volatility within the crypto markets continues to plague traders.
Results of reimbursement on the CRV token’s worth
The reimbursement of the $13 million mortgage seems to have had a short-term optimistic affect on the CRV token’s worth. Following the reimbursement, the token’s worth elevated by greater than 20% to above $1.60 on June 14th, although it has since fallen again to round $1.30.
While accusations of market manipulation could have been dispelled, the incident nonetheless highlights the potential dangers related to investing within the unstable crypto market. With the worth of cryptocurrencies nonetheless largely unpredictable, traders should navigate a posh and sometimes dangerous panorama with a purpose to reap the potential rewards.