According to information shared by the WhaleWire X account, the price of YFI tokens, one of the largest platforms in the DeFi ecosystem, Yearn Finance, has plummeted by over 45% following a scam attributed to insiders. Over half of YFI’s total supply is held by 10 wallets, and more than $250 million in market value disappeared in a matter of minutes.
It seems that the internal Yearn Finance fraud hypothesis stems from suspicions surrounding insiders of the protocol orchestrating a Pump & Dump scheme, causing significant losses for regular YFI token holders. This massive sell-off occurred shortly after YFI surged from $4,900 in mid-October to $16,000.
The sudden spike in YFI’s price appears to have been manipulated to push it to an astonishing high, reaching its peak on November 17th. However, the fact that half of the total YFI supply is controlled by only 10 wallets somewhat indicates the level of concentration in this coin. Consequently, when the price reached its zenith, insiders withdrew their funds, causing the value of YFI to plummet within minutes.
The developers behind the Yearn Finance protocol may now face close scrutiny and a strong reaction from the community after this YFI value drop. This serves as another warning to DeFi investors regarding the token distribution schedules of projects. Protocols controlled by a select few individuals may encounter numerous issues that can lead to a rapid collapse in coin value.
Before the suspicions of internal Yearn Finance fraud arose, YFI recently witnessed an impressive recovery. YFI’s price had surged by over 160% in November, reaching a high of $15,591. However, in the past 24 hours, the price has dropped from $15,591 to $8,421. Over $250 million in market capitalization evaporated within hours, falling from $525 million to just $275 million. At the time of writing, although YFI’s price has bounced back above $9,000, and market capitalization has also begun to recover, investors have lost confidence due to the sudden drop in value.
According to Coinglass data, YFI experienced a liquidation of over $5 million in the past 24 hours. YFI’s futures position once reached $162 million but has since decreased. Furthermore, YFI’s Open Interest (OI) has increased significantly, indicating that traders are predominantly taking short positions.