WAVES, the native token on the blockchain of the same name, plunged as much as 18% overnight amid mounting allegations of market manipulation. A new board proposal to prevent short selling of the token was also criticized by the crypto community.

WAVES fell 18% to $44.09 and pulled back from some of its recent gains. The token had risen exponentially by the end of March, doubling in value and largely outperforming the broader market.

But this rally had led to accusations of price pumping by the project, through its defi-lending platform Vires. While founder Sasha Ivanov denied the allegations, Vires began undergoing mass liquidations after the news. Total value on the platform plummeted by about $300 million in two days, to $972 million on Monday, according to Defillama.

The sharp drop in liquidity also dented the blockchain’s dollar-pegged stablecoin, Neutrino (USDN). The token was now at $0.91, a record low.

WAVES FUD heats up

In a series of tweets, Ivanov accused crypto trading house Almeda Research of conducting a smear campaign to make a short position profitable. Almeda, founded by FTX CEO Sam Bankman-Fried, denied the allegations, while users including: Friedchided Ivanov for spreading “conspiracy theories.”

But the main source of controversy over WAVES has been a new governance proposal from Ivanov, which aims to prevent WAVES and USDN from borrowing on Vires, as well as limiting interest rates on deposits on the platform.

The proposal has been widely criticized as it only benefits certain traders with large USD coin loans (USDC) on the platform. And since Ivanov was recently accused of borrowing USDC from his own platform to inflate WAVES prices, the proposal was met with suspicion. The outcome of the vote on the token was still unclear.

Vires liquidity crisis

In the wake of the massive liquidations, Vires appeared to have exhausted its supply of USDC and Tether (USDT) stablecoins. Users of the platform have already complained that they were unable to withdraw their USDC/USDT deposits.

USDC and USDT are also said to have been used by the platform in its WAVES price pumps, further indication that early allegations of market manipulation could hold water. The platform currently promotes stablecoin deposits with high returns, but given the liquidity crisis, such an investment could be risky.

USDC/USDT Supply Matches Debt, Indicating Zero Liquidity

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About the author

With over five years of experience in global financial markets, Ambar plans to leverage this knowledge for the fast-growing world of crypto and DeFi. His main interest lies in finding out how geopolitical developments could affect crypto markets and what that could mean for your bitcoin holdings. When he’s not scouring the internet for the latest news, you can watch him play video games or watch Seinfeld reruns. You can reach him at [email¬†protected]





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