The Aftermath of the Aave Exploit: Clearing 2.7 Million CRV

DeFi protocol Aave has successfully cleared its bad debt of 2.7 million Curve (CRV) tokens, after a failed attack Eisenberg orchestrated.

The protocol was able to get out of its debt in 15 hours, due to a governance vote that approved the purchase of the necessary CRV tokens via the ParaSwap decentralized exchange aggregator. 

Following the community approval, Aave Improvement Protocol (AIP) 144, deployed a swap contract that acquires 2.7 million units of CRV with a spending limit of $3,105,000. USD Coin (USDC). 

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The maximum unit value of $1.15 per CRV, per the official statement.

This bad debt was the result of a sophisticated exploit staged by Avraham Eisenberg. The same individual exploited Mango Markets which resulted in a loss of $47 million for the protocol.

Eisenberg attempted to orchestrate a short squeeze on Aave by taking on heavy short positions. Yet he underestimated the protocol’s liquidity, resulting in a loss of over $10 million for him and leaving Aave with bad debt. 

However, an analysis by DeFi data platform EigenPhi revealed that the liquidator of the bad debt was able to pocket around $1 million in profit due to the recent upswing in the crypto markets.

The Mango Markets fallout continues as the protocol has filed a lawsuit against Eisenberg. The court has been asked to rescind its agreement with the hacker for the $47 million bug bounty for his role in the exploit. 

Eisenberg has also been charged by the United States Securities and Exchange Commission (SEC) with stealing $117 million worth of digital assets. He was arrested in Puerto Rico by the Federal Bureau of Investigation (FBI) on December 27, 2022, on charges of commodities manipulation and commodities fraud.

by Aaron S. – Expert Reviewer, BitDegree

SOURCE: COIN JOURNAL