Unexpected allies and controversial figures surface as Curve's founder looks to save sinking DeFi loans.
In a desperate attempt to alleviate his substantial debt, Curve Finance's founder, Michael Egorov, has turned to strange liquidity sources.
According to the data viewed on August 1st, Egorov aims to offload some of his DeFi positions through a hurried sale of tokens at below-market rates, drawing attention and scrutiny from crypto investors.
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Michael Egorov's plan began when he sold approximately 50 million CRV tokens at an under-market value of $0.40 per token, according to research analyst Sandra Leow at Nansen.
Most of the tokens were sold over the counter and are subject to a three to six-month vesting agreement.
What has caught the public's attention, however, are the controversial personalities involved in buying these discounted tokens. Tron founder Justin Sun, who was recently sued by the United States Securities and Exchange Commission, and tech entrepreneur Jeffrey Huang (aka "MachiBigBrother"), accused of embezzling over 22,000 Ether (worth over $41 million), were among the purchasers. Though Huang has denied these allegations and sued the accuser for defamation, their involvement has raised eyebrows.
Other less controversial entities have grabbed some of these tokens, including investment firm DWF Labs, DeFi lending protocol Cream Finance, an NFT project team member, "DCFGod," and three other crypto wallets. These buyers have not escaped scrutiny, with Wintermute CEO Evgeny Gaevoy expressing concern and noting that some of the parties Egorov is dealing with "are kind of questionable."
Egorov's need to scramble for liquidity comes on the back of his taking out a $100 million DeFi stablecoin loan with CRV as collateral. The situation took a turn for the worse when an exploit in the protocol on July 30th resulted in a 30% crash in CRV prices. This sent his collateral value plummeting and raised fears of a DeFi black swan event as CRV prices neared liquidation at $0.362.
Although the situation has somewhat stabilized, with the token recovering to $0.57 at the time of writing, Egorov's remaining debt amounts to around $80 million spread across various platforms.
The story of Michael Egorov's struggle to mitigate his escalating DeFi debt offers a vivid illustration of the risks and intricacies that can be inherent in decentralized finance. His decision to turn to unconventional and, in some instances, questionable counterparties underscores the fragile nature of the crypto world.
