This complexity of the crypto market has recently been highlighted in a recent reveal by blockchain analytics platform Lookonchain. The platform in an X post published earlier today details a sizable financial move performed by Curve Finance founder Michael Egorov.
According to Lookonchain, the famous name in the DeFi community, Michael Egorov, managed to liquidate almost 140 million CRV tokens worth $36.5 million without a personal total loss.
The manner of the sale reminds of the dynamic uncertainty of cryptocurrency investing as well as complex financial maneuvers executed by principals on many leading blockchain projects. Egorov’s behavior is especially alarming in light of the time at which his orders were submitted and the volume of the trading, which corresponded to some of the market’s largest moves in those securities.
Further Analysis of the Financial Plan
According to Lookonchain, the reason why liquidation occurred to Egorov was not the market falling, but a strategic decision after a large cash-out in 2023. Previously, the funds from the liquidated assets were strategically shuffled across platforms to purchase the $41-million-dollar home (mansion).
This saga began with Egorov sending 31 million USDT to Bitfinex on April 10 to 14, 2023, indicating a liquidation phase prior to its massive purchase. These transactions, in addition to personal finance, had consequences for the larger Curve Finance investor community as a whole.
This was to the chagrin of holders and investors who had picked up CRV at higher market prices, especially those who made some over-the-counter purchases of CRV in August 2023 at $0.4 per CRV. This was another reminder of the two sides of the crypto investment coin – a handful of decisions can heavily dominate the market narrative and investor results.
1/ Michael Egorov(@newmichwill) was liquidated ~140M $CRV($36.5M) today, but he did not seem to lose anything, as he had already cashed out and bought a mansion in 2023.
The losers are $CRV holders and investors who bought $CRV at $0.4 via OTC in August 2023. pic.twitter.com/OglcPw6WYY
— Lookonchain (@lookonchain) June 13, 2024
Two years later, another 30 million CRV were sold to increase cash reserves by another $30.3 million and in July 2023 he had to sell an additional 156.35 million CRV for $62.5 million to navigate backlash from an assault against Curve by market makers, at the same time illustrating the difficult balance between liquidity and keeping investment faith in the token of the project steady.
Those sales were OTC sales, which is a necessary process for managing such a substantial sum, but one that necessarily introduces real world risk and uncertainty when it comes to market visibility.
Regulatory and Market Considerations
Notably, this event again sparked talks about DeFi regulatory framework and the necessity of proper guidelines about the transactions above a specific threshold and their recording.
How one plus few people can sing-play with token economics is very likely in need of a better system and mechanism to prevent edge-acting and insider dealing against the major interests of retail investors and whole market stability at large scale.
It also shows why investors need to be better at being vigilant and questioning internal structures of the projects they back. Given the increasing complexity of the DeFi financial architecture, the conversation between DeFi protocols and financial regulation is increasingly necessary to facilitate a more stable and fair ecosystem where global economic activity can take place.
