On the evening of June 13th, Arkham announced that Curve founder Michael Egorov’s nearly 9-figure loan position (worth $141 million in CRV) had been completely liquidated, resulting in bad debts exceeding $1 million on Curve’s lending platform Llamalend.
In response to the liquidation turmoil, Curve founder Michael Egorov posted on social media the same day, stating that the Curve team and himself had been working diligently to address the liquidation risk issue. He acknowledged that all his loan positions had been liquidated, leading to approximately $10 million in bad debts. However, he reassured that 93% of the debts had already been repaid and the remaining portion would be settled soon.
The 12-hour liquidation storm seemed to have paused, with the CRV token price hovering around $0.28. Yet, the reasons behind the massive liquidation of CRV loan positions still warranted investigation. Michael Egorov’s calm demeanor during the liquidation, with his “no replenishment, no rescue” approach, raised suspicions within the community about whether he was using collateralized loans to cash out CRV.
The liquidation of the $1.41 billion CRV position may not have come as a surprise, as warnings about potential liquidation risks had been raised about Egorov’s loan position on lending platforms two months earlier. Despite this, no actions were taken by Egorov to address the situation, leading to the inevitable liquidation when the CRV token price plummeted.
Arkham’s data indicated that Egorov’s positions on several lending platforms, where he collateralized $141 million in CRV to borrow $95.7 million stablecoins, were at risk of liquidation with a 10% further drop in the CRV price. As the CRV token price fell from $0.35 to a low of $0.21, experiencing a 40% intraday drop, Egorov’s CRV loan positions on platforms like Inverse and UwU Lend were liquidated.
Despite the liquidation of Egorov’s $1.41 billion loan position, which was forewarned two months prior, his behavior during the liquidation process raised eyebrows. His lack of response, absence of proactive measures, and nonchalant attitude towards the liquidation left many questioning his intentions.
Whether the liquidation was a calculated cash-out strategy or an inadvertent move, the impact of the multi-million dollar liquidation on the crypto market, particularly on Curve investors, was significant. The plummeting CRV price triggered liquidations on other lending platforms, causing losses for investors.
While some individuals profited from the turmoil, such as NDV co-founder Christian who supported Curve and DeFi’s future by purchasing CRV from Egorov, others faced losses. The ongoing crises on the Curve platform, from the VC coin controversy to the recent liquidation of the $1.41 billion CRV position, have raised concerns about the platform’s stability and leadership.
Despite once being on par with Uniswap, Curve’s reputation has been tarnished by a series of crises, leading to a dramatic drop in TVL and market rankings. The future of Curve and its place in the DeFi ecosystem remain uncertain as the fallout from the liquidation continues to unfold.