Curve (CRV) Token Falls to OTC Price of $0.4

Overview

The Curve (CRV) token has dropped to the OTC (over-the-counter) price of $0.4 USD amidst the market downturn, the same price at which the founder, Michael Egorov, sold tokens to maintain his loan positions in August.

Recent Update

On the afternoon of 13/09/2023, CRV's price fell below $0.4 USD, reaching $0.38 USD. According to PeckShieldAlert, an investor with the address 0xb0b8, who purchased 2.5 million CRV OTC 43 days ago, transferred 609,000 CRV to Binance, potentially indicating a decision to sell off the tokens.

Background

In early August, Michael Egorov, the founder of Curve, began selling CRV through OTC transactions to raise funds for maintaining his loan positions on various DeFi platforms.

Since then, Egorov has sold over 160 million CRV to various investors at a rumored OTC price of $0.4 USD per CRV, raising $64 million USD in stablecoins.

OTC CRV Sales

Egorov's OTC transactions took place when the market price of CRV ranged between $0.5 to $0.7 USD. Over the past month, CRV's market price has gradually declined to match the OTC price of $0.4 USD, following the general market downtrend.

Investors

The list of investors participating in the "rescue" of CRV includes Wintermute, DWF Labs, Binance Labs, Gnosis, Yearn Finance, Cream Finance, Reserve Protocol, Stake DAO, and individual investors such as Justin Sun, Huobi founder Du Jun, and DCF GOD.

Reason for the Sell-Off

The massive sell-off of CRV by Egorov was prompted by a security breach on 31/07 that exploited a vulnerability in Curve Finance’s pools using the Vyper programming language. This incident resulted in a loss of $52 million USD to hackers.

The DeFi protocol faced a crisis as investors began withdrawing funds to prevent potential losses from the exploit spreading, causing CRV's price to drop by nearly 20%. This devaluation of Egorov's CRV collateral threatened the liquidation of his loans on platforms like Aave, Abracadabra, and Fraxlend.

To prevent a cascading effect across the DeFi ecosystem, Egorov resorted to selling CRV at discounted OTC prices. This strategy allowed him to repay debts and avoid liquidation, while also preventing a massive market sell-off that could worsen the crisis.

The drop of CRV to its OTC price underscores the volatility and interconnected risks within the DeFi ecosystem. The strategic decisions made by key players like Egorov highlight the complex dynamics of maintaining liquidity and stability in decentralized finance.