Curve Founder’s Wallet Repays $13M to Aave Amid CRV Token Decline

A Curve founder’s wallet has repaid $13 million to Aave after borrowing the funds using Curve’s CRV token as collateral. The transaction came amid a significant decline in the CRV token’s value.

The anonymous founder, who is believed to be involved in developing Curve’s lending protocol, borrowed around $2.8 million worth of Ethereum on June 11 and quickly converted the funds into CRV tokens, using them as collateral for another $10.2 million in Ethereum loans.

However, the value of the CRV token fell dramatically just a day later, which triggered a “margin call” and forced the founder to repay the entire $13 million loan. Aave confirmed the repayment on Twitter, adding that the move helped to “prevent a larger-scale liquidation event”.

Curve founder denies any foul play or ill-intent

Whilst some speculated that the move could have been a deliberate attempt to manipulate the CRV token’s value, Curve founder Michael Egorov denied any malicious intent, stating that the loan was made for “valid reasons”.

Speaking to CoinDesk, Egorov said: “We didn’t intend to influence the token’s price in any way and we were acting strictly within the confines of the system…The cryptosphere is still small, and we know very well that, ultimately, any attempt to manipulate the price harms all participants. So, we have no interest in such practices and will never do it.”

However, the incident has raised concerns about the risks associated with using cryptos as collateral for loans, particularly as volatility in the crypto markets continues to plague investors.

Effects of repayment on the CRV token’s price

The repayment of the $13 million loan appears to have had a short-term positive impact on the CRV token’s price. Following the repayment, the token’s value increased by more than 20% to above $1.60 on June 14th, though it has since fallen back to around $1.30.

Whilst accusations of market manipulation may have been dispelled, the incident still highlights the potential risks associated with investing in the volatile crypto market. With the value of cryptocurrencies still largely unpredictable, investors must navigate a complex and often risky landscape in order to reap the potential rewards.