DEFI

CRV sellers emerge? Drops 12% in a day, DWF Labs responds: Just needed for trading

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CRV sellers emerge? Drops 12% in a day, DWF Labs responds: Just needed for trading

Curve Finance experienced a security breach in early August, causing founder Michael Egorov to sell CRV over-the-counter due to the impact of the coin's price decline to avoid a liquidation crisis. It has now been revealed that the consensus agreement between him and the buyers for a six-month lock-up is merely a verbal commitment and not enforced through a smart contract. On-chain observers have noticed that some buyers have already transferred their tokens to exchanges, indicating they may be preparing to sell.

Background: Curve Finance Vulnerability Attack

Decentralized exchange Curve Finance was attacked a few weeks ago. Apart from suffering a loss of over $70 million, its token $CRV also dropped by 24% within two days, nearly causing its founder Michael Egorov to be liquidated across various lending protocols, leading to a severe crisis affecting the entire DeFi ecosystem.

Reportedly, Egorov had debts of up to $110 million across protocols, with over 427.5 million CRV tokens pledged, accounting for 47% of the circulation.

Recap: Understanding CurveCRV Founder's Liquidation Crisis! Sun Yuchen's Aid, High Reward CRV Pool, Gradual Repayments to Aave/FRAX/MIM

Realizing the severity of the situation, Egorov sought to sell a large amount of CRV tokens over-the-counter within a few days and gradually repaid some debts, gradually restoring the financial situation.

Just when everything seemed to be returning to normal, over ten buyers involved in OTC transactions with Egorov are now under scrutiny.

OTC Trading of CRV, Moral Lock-in for Six Months

Although the trading terms have not been officially disclosed, according to previous reports, these $CRV tokens were sold at a price of $0.40 per token, which was far below the market price at that time and now.

According to Blockworks, these sold tokens come with a "non-binding" lock-in period of six months. In other words, these CRV tokens that were initially subject to mandatory lock-in through smart contracts were merely sent to buyers in exchange for USD stablecoins, with both parties verbally committing to a six-month lock-in period, which holds no legal enforceability or obligation.

Blockworks stated that Egorov confirmed that buyers who violate this commitment will not face any negative consequences, but he believes they will adhere to the six-month lock-in period.

Concerningly, blockchain observers have found that some buyers have already transferred a large amount of tokens to CEX, seemingly preparing to sell, such as prominent market maker DWF Labs.

DWF Labs Denial

DWF Labs' head Andrei Grachev denied this, claiming that the move was solely for trading purposes, not for selling, and added that they might transfer more CRV tokens.

Egorov's Current Lending Situation

TradingView shows that the price of $CRV fell by 12.3% yesterday but rebounded early this morning, currently around $0.473.

However, seemingly unaffected by the price drop, Egorov's lending health is still normal, with an AAVE health rate of 1.93.

It is reported that he has a $14.84 million loan on Aave and an additional $27 million debt on other protocols.