WAVES Scandal Nightmare For FTX Creditors?

Following its delisting from Binance, WAVES, a multi-purpose blockchain platform is gaining interest among traders. However, the sentiment is leaning

Binance recently delisted WAVES, a multi-purpose blockchain platform, sparking interest among traders. However, market analysts indicate that the sentiment is predominantly bearish.

Binance did not provide any explanation for removing the token, but its Ukrainian founder, Alexander Ivanov (also known as Sasha Ivanov), has been accused of fraud since 2023.

Onchain sleuths alleged that Ivanov orchestrated a scheme by borrowing stablecoins (USDT and USDC) against USDN (a stablecoin collateralized by Waves) to artificially inflate the Waves coin price. This was achieved by purchasing the token on exchanges, effectively pumping its price. The borrowed stablecoins were then used to purchase more stablecoins from Vires Finance, which offered attractive yields due to near-full utilization.

In mid-June of last year, the Waves coin experienced a drastic 93% plunge, resulting in losses of $500 million for users. Notably, the incident received minimal media attention, which may have encouraged Ivanov to pursue his plan further.

This time, Ivanov proposed liquidating all users shorting Waves and USDN on-chain, compelling them to either deposit more funds into the scheme or risk losing their assets.

Although the proposal failed to pass, Ivanov injected liquidity into the scheme, leading to a temporary pump in Waves value. Additionally, changes were made to the governance structure, granting the team complete control over protocol changes.

The most serious allegations against WAVES involve its founder's alleged embezzlement of $90 million from Alameda Research, a matter of concern for FTX creditors.

Overall, Ivanov's actions highlight the inherent risks associated with decentralized finance and the importance of conducting thorough due diligence when engaging with such platforms.

In response to Binance's delisting, Ivanov stated that the platform is moving forward with new products and working on new governance protocols and DExs. He did not address the fraud allegations.

“The end of an era. New dawn, new beginnings. WAVES is moving forward, launching new products, and working on new governance protocols. A new generation of DEXs will be able to onboard Web2 users to the Web3 world as well as CEXs, and I’ll try to participate in the process. We will, of course, collaborate with all centralized exchanges that want to work with us because blockchain is essentially about collaboration.”