Curve/Aave Whale Games and Bad Debt

Daily Bullets: Tuesday, November 22nd

Nov 22, 2022

All eyes still remain on Genesis/DCG/Grayscale as we await to find out whether another big name will go bust and what the effect will be on the market. Could be bad...
Also, we have whale games being played around Curve and Aave by Avraham Eisenberg, the Mango Markets exploiter. He's been busy working on a new "highly profitable trading strategy" shorting $50M worth of Curve and may cause Aave to end up with bad debt, however the full intent of his plan is still uncertain.
A detailed explanation of Curve/Aave scheme can be found here
Most recently, it appears that Curve is undergoing a short squeeze. Hit as low as .40 cents before spiking
Bitcoin has also made a new 2 year low while ETH hangs precariously at the $1000 level. Fun times.

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Daily Bullets:

Genesis faces possible bankruptcy without funding, Binance decided not to bail them out, Genesis lowered target from $1B to $500M, says they have no imminent plans to file bankruptcy
FTX Group has $1.2B in cash, $514M unrestricted cash, owes $3.1B to top 50 creditors; the liquidity gap is about $8B
Avraham Eisenberg in progress trading strategy - borrowed 83M CRV tokens from Aave to short
Curve releases whitepaper and official code for its stablecoin - crvUSD
Tornado Cash developer Alexey Pertsev to remain in jail until at least late February
Ark Invest purchased another 176,945 shares ($1.4M) in Grayscale’s Bitcoin Trust (GBTC) fund
Magic Eden has added support for NFTs on the Polygon network
Grand Theft Auto has followed Minecraft in banning NFTs from its third-party online servers

Now for a more expanded and detailed look at the day…

Crypto News:

Genesis faces possible bankruptcy without funding. Binance decided not to bail out Genesis, fearful that its business could create a conflict of interest down the line. Genesis also has lowered target from $1B to $500M and says they have no plans to file bankruptcy imminently

Bitcoin Miners have been selling at the most aggressive rate in almost seven years, with a 400% increase in selling pressure over the last three weeks. Several Bitcoin miners could go out of business if the value does not rise soon

Core Scientific Inc., the largest US publicly-traded Bitcoin mining company in terms of computing power, lost $1.7B in the first 9 months of this year. Substantial doubt that it could keep operations going past November 2023

Tornado Cash developer Alexey Pertsev to remain in jail until at least late February

Ark Invest, the investment firm led by Cathie Wood, has purchased another 176,945 shares worth about $1.4M in Grayscale’s Bitcoin Trust (GBTC) fund

FalconX, the crypto prime broker, resumed use of Silvergate’s payment network after pressing pause on the partnership last week

Dubai Multi Commodities Centre (DMCC) has partnered with ComTech Gold to enable blockchain-based trading of physical gold bars

Asset managers Apollo Global Management and Hamilton Lane are launching investment vehicles on the blockchain using technology developed by fintech company Figure

Avalanche releases second SDK for building Avalanche Virtual Machines, the Rust SDK

An information-stealing Google Chrome browser extension named 'VenomSoftX' is being deployed by Windows malware to steal cryptocurrency and clipboard contents

Binance Pool launches Cloud Mining service, which allows users who do not have access to mining equipment to earn mining rewards from Binance Pool

UBET Sports is hosting a World Cup event. A prize pool of $2,000 USDT is up for grabs in the UBET Sports Betting Tournament. Nov 20th-Dec 18th

Economic/Government/Regulatory:

The African Kenya Revenue Authority will tax 8.5% of the country’s population, 4M Kenyans who own cryptocurrencies

The two founders of the now-defunct Bitcoin cloud miner HashFlare have been arrested in Estonia over their alleged involvement in a $575M crypto fraud conspiracy

Exchange News:

Court documents show that FTX Group has $1.2B in cash, about $514M is unrestricted cash and owes $3.1B to the top 50 creditors; the liquidity gap is about $8B

FTX is responsible for all costs associated with the digital wallet that holds FTX Digital Markets' assets and is being kept under the supervision of The Securities Commission of The Bahamas

Gemini working with Genesis and Digital Currency Group to find a solution that will allow users to redeem their funds from the crypto exchange's Earn product

Huobi launches refreshed brand, unveils post-acquisition global expansion roadmap

FTX Japan is developing a workaround to allow customers to retrieve their funds by December

Binance has been meeting with investors in Abu Dhabi seeking cash for the exchange's crypto recovery fund

CoinMarketCap, a subsidiary of Binance, launched the exchange reserve data function

Coinbase shares fell to a record low under $42 due to the negative impact on user confidence in centralized exchanges

At least 19 properties worth around $121M were reportedly purchased under FTX’s name, Sam Bankman-Fried’s parents and senior-level executives

Investment platform Bitpanda has been granted a crypto trading and custody license in Germany

DeFi News:

A trader (Avraham Eisenberg) borrowed 70M CRV tokens from Aave and sold the majority of them in an effort to short the token’s price

Curve releases whitepaper and official code for its stablecoin - crvUSD will rely on a algorithm called Lending-Liquidating AMM (LLAMMA)

Uniswap Labs Contracts Bug Bounty - Rewards will be allocated based on the severity of the bug disclosed and evaluated for rewards up to 3,000,000 USDC

NFT/Gaming/Metaverse News:

Magic Eden has added support for NFTs on the Polygon network

Grand Theft Auto has followed Minecraft in banning NFTs from its third-party online servers. MyMetaverse runs games on GTA 5 that integrates NFTs in the form of cars and swords

The Sandbox is kicking off its three-part LAND sale on Thursday in collaboration with popular brands like Tony Hawk, Snoop Dog, and Playboy, among others

Global toy company Mattel has launched its own NFT marketplace on Mattel Creations, the company's direct-to-consumer platform with Hot Wheels collection

Crypto custodian Aegis Trust offers $25M insurance policy for institutional investors’ NFTs

Fundraises:

Foresight Ventures, a crypto fund with $400M in assets under management (AUM), is launching a $10M incubator program called Foresight X
Web3 and VR gaming studio, Thirdverse, making a blockchain game based on the popular 80s football manga Captain Tsubasa raised $15M in its latest funding round. MZ Web3 Fund led the round with participation from Dash Ventures, OKX Ventures and Yield Guild Games

Crypto privacy startup Nucleo raised $4M in seed funding to create a private multi-sig solution for organizations to transact on the Ethereum blockchain through zero-knowledge cryptography. Led by Bain Capital Crypto and 6th Man Ventures with participation from Aztec Network, Aleo, and Espresso Systems

NFT utility platform Tropee, which helps brands easily create user experiences out of their collections, raised a $5.1M seed investment led by European web3 firm Tioga Capital. Crypto founders such as The Sandbox's Sébastien Borget, Exclusible's Thibault Launay, Geometry's Grégoire le Jeune, and Lorens Huculak, founder of the Gem, also participated

DEFYCA raises $1.3M in seed funding to build the next generation of decentralized capital markets led by QBN Capital and Blizzard Fund

Vezgo Closes $750k in oversubscribed pre-seed round to accelerate growth and development of new features for leading crypto data API

Early Stage Projects:

Canto live on Synapse - the 18th chain interconnected by Synapse’s cross-chain messaging system and the protocol’s first entry into the Cosmos ecosystem

Spin will have an airdrop for it's early adopters

Introducing SteakHut Liquidity: Avalanche's liquidity layer. A protocol to automate and optimize concentrated liquidity on The Liquidity Book

Skip Protocol live on EVMOS - allows traders to bid for top-of-block execution, redirecting profit from MEV back to the community

The Vertex Public Testnet is live - Vertex is a CLOB, cross-margined DEX protocol built on Arbitrum

LinoSwap is airdropping to NFT users

Coherent is live - building the most comprehensive set of human-readable, opinionated APIs

What’s your take on today’s news? Anything interesting that you have to say about these stories? Did we miss anything that should’ve been included?

Data:

TL;DR: On-chain speculation over what the Mango Markets exploiter is up to with his Curve position borrowed from AAVE

Avraham Eisenberg’s wallet address is: 0x57e04786e231af3343562c062e0d058f25dace9e and we can see that he currently has ~ $58M USDC supplied on Aave and about $50M of CRV borrowed. His endgame is still unknown - whether he’s trying to actually short CRV or AAVE itself by leaving AAVE with bad debt or hedging on a CEX.

What is the Data telling you? See anything that sticks out to you?

Research/Reads:

NEAR Transparency Report: the State of Staking - source

FTX and Alameda Research lost $3.7B before 2022 - source

Polynya - Sustainability - source

The Merge series (part 3): MEV landscape - source

Expanding Uniswap's Addressable Market - source

Internal rollups and Fractal sidechains - source

Have you seen our institutional-quality research?

M6 Research

Crypto Twitterverse:

Genevieve Roch-Decter, CFA @GRDecter

FTX has just $900 million in assets to cover over $9 billion in liabilities. But who gets paid back first, and who isn’t getting any funds back? Time for a 🧵

ZachXBT @zachxbt

Here’s everything mapped out about the FTX attack on both the Ethereum and Bitcoin side. Will keep this report updated with all of the relevant addresses: chainabuse.com/report/b6fb4e1…

Arkham | Crypto Intelligence @ArkhamIntel

Rehypothecation is the word of the day, and now we see @avi_eisen's profitable trading strategy in action. Since 1 week ago, he built up total positions on AAVE of over $100 million. He started all this with under $40 million. Here's why this is very dangerous for AAVE👇

DefiMoon 🦇🔊 @DefiMoon

🚨Wow, conman @avi_eisen has a 17m $CRV short position. Avi started shorting on Nov. 14 by borrowing CRV on AAVE via the @FortressDAO multisig addy, which he controls: debank.com/profile/0x57e0… #DeFi

Value Kingdom @valuekingdom33

9/ @avi_eisen is in full control of everything. He is the deployer and owner of both FUSD and Fort contracts. The legality of his actions is questionable at best and full control implies full responsibility Pretty ignorant activities for a doxed US/NY resident, if you ask me

Jason Choi @mrjasonchoi

So this guy has a ~$50M loan about to be liquidated on Aave if he doesn't cover his $CRV short ... Quick thoughts/questions:

Andrew Kang @Rewkang

First, he came for Mango, and I did not speak out, for I am not an investor Then he came for USDT, and I did not speak out, for he did not pose a risk Now, he tries to hunt the loan of one of the godfather's of DeFi and that's when the foot is put down to defend

kamikaz ΞTH 🦇🔊 @kamikaz_ETH

Summary of Today's $CRV Ocean's Eleven Plot 1⃣Whales go giga-short CRV on CEX 2⃣Whales borrow CRV on $AAVE, sell the coins on CEX 3⃣As CRV prices goes down, whales borrowed more CRV to sell on AAVE, loop and repeat continued ->