DIDX founder claims targeted attack results in $9M in insurance.
Decentralized exchange (DEX) dYdX was forced to use its insurance fund to cover $9 million in user liquidations on November 17. According to DIDX founder Antonio Giuliano, the loss was caused by a “targeted attack” on the exchange.
According to reports from the dYdX team at X (formerly Twitter), the v3 insurance fund was used to “fill gaps in the liquidity process in the YFI market.” The Yearn.Finance (YFI) token fell 43% on November 17, after rising more than 170%. The sudden price crash has raised concerns about possible exit scams in the crypto community.
The alleged attack targeted long positions in YFI tokens, wiping out approximately $38 million worth of positions. Giuliano believes that the trading losses affecting DYdX and the sharp drop in YFI were caused by market manipulation:
“This was a targeted attack on DYdX, including market manipulation of the $YFI market in general. We are investigating with multiple partners and will be transparent with what we find.”
According to Giuliano, v3's insurance fund still holds $13.5 million, and users' funds were not affected by the disaster. Even if user funds are not affected, we will thoroughly review our risk entries and make appropriate changes to both v3 and dYdX Chain software if necessary.
The lucrative trade wiped out more than $300 million in market capitalization from the YFI token, causing the public to raise eyebrows about insider dealing in the YFI market. Some users have reported that 50% of the YFI token supply is held in 10 wallets controlled by developers. However, Etherscan data indicates that some of these owners are crypto exchange wallets.
Cointelegraph has reached out to the dYdX and Yearn.Finance teams for comment and is awaiting a response.
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