Synapse Token Price Plummeted as VC Firm Conducts Rug Pull and Withdraws Liquidity from DeFi Bridge
Summary:
Synapse (SNY) token price plummets as an unknown liquidity provider sells 9 million SYN tokens and withdraws stablecoin liquidity from the DeFi cross-chain bridge. The provider is identified as Nima Capital, a venture capital firm, prompting frustration among users. Price recovers after a 20% drop. Rug pulls, a common scam in DeFi, occur when project creators manipulate tokens. DeFi bridges are targeted by exploiters. Controversy surrounds negotiating with hackers in the crypto space.
The price of Synapse (SNY), the native token of the DeFi cross-chain bridge, experienced a sharp decline on September 5th. This was due to an unknown liquidity provider on the platform selling nearly 9 million SYN tokens and withdrawing all stablecoin liquidity from the bridge. Synapse Labs confirmed the rug pull by the liquidity provider but assured that there was no breach in the bridge's security.
The identity of the liquidity provider was later discovered to be Nima Capital, a long-term capital partner of the project. The venture capital firm had previously received a grant from Synapse in exchange for locking $40 million worth of liquidity in SYN. However, Etherscan data revealed that the unknown whale who dumped the SYN tokens had received 10 million SYN worth $3.4 million from a Synapse wallet in April and currently holds no SYN tokens.
This rug pull by a VC firm is an uncommon occurrence and has caused frustration among users. Nima Capital's website went offline, and the project's social media presence, including their X (formerly Twitter) account, went dark. This led many to label it as a VC rug. Rug pulls, where project creators or developers manipulate the project after the token price reaches a certain threshold, are unfortunately a common scam in the DeFi ecosystem.
The token dump had a significant impact on SYN's price, causing it to drop by over 20% and reach a multi-week low of $0.30. However, the token later recovered to above $0.35. While DeFi bridges have facilitated interoperability among different protocols, they have also become attractive targets for exploiters, with several major DeFi hacks occurring on these cross-chain bridge protocols.
It is worth noting that negotiating with hackers is a controversial topic in the crypto space. Some argue that it sets a dangerous precedent, while others believe it can help recover stolen funds.
Published At
9/5/2023 11:47:19 AM
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