- Justin Sun sold approximately 40.7 million USDT (Tether) and 11.7 million USDC (USD Coin) in a surprise to the crypto community.
- Some reports suggest that Sun is buying Curve Finance’s CRV coin to prevent the DeFi platform from falling apart.
The decentralized finance (DeFi) market has come under shaky ground following a major exploit of Ethereum-based second-largest decentralized exchange Curve Finance. In another surprising event, Tron founder Justin Sun has withdrawn a massive sum of $52.5 million in stablecoins from Aave.
The sudden removal of approximately 40.7 million USDT (Tether) and 11.7 million USDC (USD Coin) has surprised the crypto community and caused significant effects on Aave’s liquidity. This event has sparked widespread discussions and speculations among industry participants. The same has been confirmed by blockchain analytics firm Peckshield.
#PeckShieldAlert #JustinSun has withdrawn ~52.5M Stablecoins (~40.7M $USDT & ~11.7M $USDC) from #AAVE https://t.co/gvvwErLIpthttps://t.co/cjMiaTYflX pic.twitter.com/tzY0uwJPqI
— PeckShieldAlert (@PeckShieldAlert) August 1, 2023
Sun’s unexpected withdrawal from Aave’s platform has caused significant and immediate effects, especially concerning liquidity and borrowing rates. With fewer stablecoins available for lending, borrowing costs have surged.
The borrowing rate for USDC reached 39.8%, and for USDT, it skyrocketed to an unprecedented 82.43%. These high-interest rates create an unfavorable environment for borrowers, potentially driving them to look for better rates on other platforms. This situation may lead to further liquidity outflows from Aave.
There’s speculation that Sun has been buying Curve Finance CRV to save the DeFi platform from potential collapse. Lookonchain reported that Michael Egorov, the founder of Curve, sold 5 million CRV tokens to Justin Sun through over-the-counter (OTC) transactions at a price of $0.4.
Apart from Sun, there are 7 other addresses engaging in OTC transactions with Egorov at the same price of $0.4. Additionally, 0xSifu, the former CFO of Frog Nation, stated that he was approached for OTC trading and agreed to a 6-month lock-up period.
The founder of #Curvefi sold 5M $CRV to Justin Sun at an average price of $0.4 via OTC.https://t.co/WM1nW8JKwU pic.twitter.com/2smWxRbqHp
— Lookonchain (@lookonchain) August 1, 2023
DeFi Tokens Face Selling Pressure
The Curve Finance exploit has led to major selling pressure in the broader cryptocurrency market with the decentralized finance (DeFi) token suffering the most. Curve’s CRV coin experienced a 25% drop over three days following a hack on the platform. Founder Michael Egorov borrowed over $100 million, using CRV as collateral for various crypto-lending projects. Concerns arise as further CRV declines may trigger forced liquidations of the loan positions, potentially resulting in losses.
There’s a growing fear that if the CRV coin price slips further, some liquidation levels will be hit leading to a domino effect ahead. However, Egorov believes that the DeFi industry will survive this incident. “We, and I personally, work on minimizing or eliminating the impact,” he wrote in an email. Additionally, he also stated that he has plans to reduce his loans.
Since the hack was disclosed on Sunday, the total amount of cryptocurrency held in the Curve Finance service has decreased from $3.6 billion to $1.9 billion, according to DefiLlama data. The recent Curve incident had a significant impact on mainstream DeFi tokens, causing a sharp decline in their prices.
COMP is currently valued at $61.98, reflecting a 24-hour drop of 18.19%; CVX is at $2.94, with a 24-hour drop of 13.92%; FXS stands at $5.16, experiencing a 24-hour drop of 13.11%; and AAVE is currently trading at $62.14, showing a 24-hour drop of 12.63%.
Subscribe to our daily newsletter!
No spam, no lies, only insights. You can unsubscribe at any time.
