$2M USDC Investor Receives $0.05 USDT Trying To Avoid Crash
Even though the crypto market responded by selling off a lot, not all USDC investors were lucky enough to get their money back.
As soon as Circle said that Silicon Valley Bank had not moved $3.3 billion of its USD Coin USDC reserves, the market sold off a huge amount of the stablecoin, which made it no longer tied to the U.S. dollar. However, not all investors were lucky enough to walk away with their funds amid the uncertainty.
Investors sold USDC tokens for Tether USDT to reduce losses. BowTiedPickle, a member of Crypto Twitter, brought up a transaction where a USDC investor paid over $2 million to get $0.05 of USDT.
With USDC insolvency fears rampant, users are fleeing to safety in other stables. Not all of them are going to make it there in one piece, however.
— BowTiedPickle.eth | Solidity Shipper (@BowTiedPickle) March 11, 2023
On-chain investigations showed that the user had put the assets in a liquidity pool (LP), which is a common way to make passive income in cryptocurrencies. The user could have sold his LP tokens for USDT for a 6% slippage. But they chose a “questionable” way to do it. As BowTiedPickle has said:
“The unfortunate soul used the KyberSwap aggregation router to dump a large clip of 3CRV (DAI/USDC/USDT) LP token into USDT.”
In the rush, the USDC investor forgot to establish his slippage, which lets investors determine an exact token price for the transaction. After paying $45 in petrol and $39,000 in MEV bribes, a maximal extractable value (MEV) bot made $2.045 million.
The above episode highlights how human error can result in a permanent loss of funds. A report tells investors to double-check the information and methods of transfer when cashing out USDC for cash or other cryptocurrencies.
Soon after Circle confirmed that $3.3 billion was stuck with Silicon Valley Bank, people started selling USDC, which caused the stablecoin’s value to drop below its $1 peg.
1/ Following the confirmation at the end of today that the wires initiated on Thursday to remove balances were not yet processed, $3.3 billion of the ~$40 billion of USDC reserves remain at SVB.
