Failed Aave Exploit Leaves Protocol with $1.6 million Bad Debt

Failed Aave Exploit Leaves Protocol with $1.6 million Bad Debt

• Notorious crypto trader has pulled a price manipulation scheme on Curve DAO.
• Their plan failed, with Aave incurring a few insolvent positions.
• Blockchain data shows the insolvent position was a bad debt of $1.6 million.

The infamous crypto trader who boasted last month about getting off with more than $100 million in a contentious price manipulation scheme has pulled another trigger. But this time, the plan failed.

According to on-chain data, Avraham Eisenberg, the trader responsible for the Mango Market breach in October, recently borrowed 40 million Curve (CRV) tokens through the decentralized lending site Aave. The dramatic action appears to be part of a plan to sell off the coins to drive down the value of CRV and profit handsomely from millions of short bets.

A huge $CRV shorter borrowed 20M $CRV($9.9M) from #Aave and transferred 10M $CRV($4.9M) to #OKEx.He has lent 37M $CRV from #Aave in the past 7 days.The price of $CRV dropped from $0.625 to $0.464, a decrease of about 26%.Now he is dumping the 20M $CRV he borrowed! pic.twitter.com/sSiMqEE5C3

— Lookonchain (@lookonchain) November 22, 2022

According to a statement from Gauntlet Network, the planned exploit failed with Aave, however, incurring a few insolvent positions.

The attempt to squeeze CRV on @AaveAave has been unsuccessful and unprofitable. Despite this Aave has accrued a much smaller insolvent positionOur immediate recommendation is to freeze a number of tail assets on v2 to mitigate the risks of similar, likely unprofitable, squeezes

— Gauntlet (@gauntletnetwork) November 22, 2022

According to blockchain data examined by Blockanalitica, the less severe insolvency position Gauntlet Network pointed out was a bad debt on Aave’s end of $1.6 million. Notably, the amount could have been much higher had Eisenberg’s exploit been successful.

Interestingly, following the failure of Eisenberg’s CRV exploit, an Aave governance proposal was created to prevent future manipulation of other cryptocurrencies on the platform. Some members reacted negatively to the proposal. One wrote:

Gauntlet should have made this proposal before Avraham pulled the trigger. What were you doing while Avraham bragged about his attempt to exploit AAVE economically?

Early on Tuesday, CRV’s price dropped from $0.53 to $0.41, but it rapidly recovered and soared as high as $0.71. As of this writing, data from CoinMarketCap shows that CRV increased by 31% over the last seven days.

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