Michael Egorov, Curve’s Finance Founder, Offloads 39M CRV to Prevent Financial Liquidation

Key Insights:

• Egorov offloaded 39 million CRV tokens to avoid loan liquidation.
• Curve Finance was crippled by a $50M hack and Egorov’s actions.
• Volatility and risks in DeFi could discourage potential investors.

In a desperate bid to prevent an impending financial meltdown, Michael Egorov, founder of Curve Finance, has offloaded a staggering 39 million CRV tokens. Notably, he sold 5 million to Justin Sun, Tron’s chief. As per reports, these OTC deals are Egorov’s attempts to stave off a potential financial catastrophe looming from a massive loan position’s liquidation.

According to sources, Egorov secured a loan of approximately $60 million in stablecoins from Aave, collateralized by a whopping $175 million in CRV. Earlier this year, he reportedly borrowed another $100 million from Aave to purchase an extravagant mansion in Australia, backed by then $280 million worth of CRV.

On the other hand, Blockchain data reveals that, aside from Sun, Egorov has sold 4.25 million CRV to DCFGod, a noted crypto trader, and 3.75 million to NFT trader Jeffrey Huang. Additionally, he sold 2.5 million each to DWF Labs and Cream Finance. 

Cumulatively, Egorov has traded a total of 39.25 million CRV for a return of 15.8 million USDT. These tokens sold at $0.40 each, will be locked for three to six months or until their open market value reaches $0.80.

Over $50 Million Stolen in Recent Hack Worsens Curve Finance’s Woes

Trouble brewed for Egorov when a nasty bug in the Vyper coding language allowed a devastating hack on Curve Finance. Based on sources, over $50 million in crypto assets drained from the protocol. Alarmingly, Vyper confirmed that three of its language versions are prone to reentrancy locks, placing any application or smart contract that uses this language at risk. 

Since the incident, Curve’s Total Value Locked (TVL) has plunged by more than 40%, a sharp drop from its glorious peak of over $24 billion last January. CRV’s value, too, took a severe hit amidst claims that the team owned a significant portion of the supply.

With the hacker holding around 7 million CRV, the markets braced for a potential sell-off. However, the bigger problem emerged as Egorov’s financial predicament became public, triggering a vicious sell-off cycle. As a result, CRV’s value is nosediving faster than a text from Gary Gensler.

Moreover, Egorov’s financial woes don’t end there. Reports purport he’s sitting on a precarious $45 million CRV position against FRAX. Should this position be liquidated, it could spell disaster for Inverse Finance (INV) and Magic Internet Money (MIM), likely leading to their downfall due to the new bad debt. 

Aave, too, could be left grappling with $63 million of bad debt. Fortunately, Aave’s safety fund, valued at around $330 million, should suffice to cover this debt, despite market fluctuations.

Within the last 12 hours, Egorov has already suffered a loss of $50 million due to CRV’s declining price. The liquidation prices for CRV are around $0.38-$0.40. As of now, CRV is trading at $0.50.

In conclusion, this crisis can be seen from two perspectives. On the one hand, it’s a testament to the raw, unregulated nature of DeFi. No one is above the rules, regardless of their stature. On the other, it may set the industry back significantly as potential investors are scared off by the volatility and risks.

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