On the morning of September 5th, the community was surprised by two unusual transactions related to the SYN token of the cross-chain bridge Synapse. Specifically, there were two sell transactions of 9 million Synapse (SYN) tokens through the decentralized exchange SushiSwap, resulting in a total of 2.3 million USD.
Immediately after, the price of SYN plummeted by over 20%, from $0.41 to $0.30 USD. The community became detectives and began investigating. Eventually, the reason behind the sudden drop of SYN was revealed, and the key player behind it was Nima Capital, a major liquidity provider for Synapse. Nima Capital acted against the trust and independently sold 9 million SYN tokens, causing a sharp decline in the token’s value.
Previously, in March 2023, Nima Capital had proposed to provide a total of 40 million USD in liquidity to Synapse’s pools over 12 months. Nima Capital believed that having a third party ensuring liquidity on Synapse would optimize capital efficiency, not solely relying on individuals, but becoming a liquidity provider when beneficial.
At that time, the fund wanted the project to grant them 10 million SYN tokens along with receiving 33% of swap fees and bridge fees. This proposal was approved by Synapse DAO with an approval rate of up to 99.22%.
Thus, Nima Capital has been accused of selling SYN just 5 months after providing liquidity, even though the initial agreement was for 1 year. The community also alleges that after selling SYN, Nima Capital withdrew liquidity reserves from Synapse. Currently, the fund’s website is hidden, and their Twitter account has been locked.
In addition, some individuals discovered that when Nima Capital sold SYN, they conducted rushed transactions, swapping directly through SushiSwap’s UI without using aggregator solutions to optimize the exchange rate. This caused the fund’s selling transactions to slip in price by up to 50%. Seeing the “golden opportunity,” MEV quickly jumped in to front-run Nima’s sell order, snatching 6 million SYN tokens and gaining a massive profit.
Synapse subsequently confirmed the incident and emphasized that the protocol was not attacked and users’ funds remained safe.