Waves DEX decentralized exchange clients have been unable to withdraw funds from the internal protocol of the network for several months. The victims themselves told CryptoNewsHerald about this.
According to one client, he has over 200,000 Neutrino USD (USDN) blocked in his account. At the same time, the platform introduced daily withdrawal limits – no more than 100,000 USDN (approximately $35,000) for all users.
A Twitter user under the nickname Cryptohippo said that the withdrawal of stablecoins from Waves DEX through the Ethereum bridge took him 10 hours instead of 8 minutes declared by the system.
Update: my USDC withdrawal went through after 10 hours, when the transfer time was estimated to be just 8 minutes.
I will be trying more withdrawals to see if they simply sent the money to stop the story, as I asked customer support if the money was gone, and I got radio silence
— Cryptohippo (@cryptohippo65) January 14, 2023
Cryptohippo intends to continue withdrawing funds to test the performance of the system.
According to open statistics, there are almost no USDC and USDT left on the Waves DEX Ethereum bridge. On one of addresses at the time of writing, there are only 172 USDT.
Where the funds went is unknown. Wherein official data on the Waves DEX protocol capitalization show that the supply of USDT and USDC in the Waves blockchain is 26.6 million and 16.5 million, respectively.
According to the publication Protos“Over the past two months, a significant portion of USDT and USDC has gone to Binance wallets, while Waves DEX employees have confirmed that they withdraw coins from their gateways to cold wallets from time to time.”
However, the journalists could not confirm whether Waves DEX stores and trades cryptocurrencies on Binance.
A HAPI Labs representative explained in a CryptoNewsHerald comment that Waves DEX uses a centralized gateway, that is, “the withdrawal is carried out as from a centralized exchange.” For this reason, it is impossible to establish the exact number of users who have initiated a withdrawal and have not yet received their funds.
“Reports of lack of liquidity Waves official gateway for interaction with other blockchains have been coming for more than a year and for more than six months there has been a very acute lack of liquidity, ”he said.
The expert clarified that this address is centrally controlled by the Waves team and has been repeatedly suspected by users of fraudulent schemes related to phishing and money laundering.
“The team has never responded to numerous complaints from users, has not frozen funds after thefts and hacks, has not helped in any investigation. We have not found any official reaction or statement on any countermeasures to attacks by intruders on network users at all, ”added the HAPI Labs analyst.
According to him, at the moment the situation is aggravated:
“Because of depega and the growing hype, the number of those wishing to withdraw funds from the USDN is increasing and will probably soon be approximately equal to the entire circulating supply.”
According to open statistics, Neutrino currently stakes 84,431,545 USDN with a total supply of 629,984,944 USDN. Taking into account the established daily limits, the full withdrawal of funds will take about 2.5 years. Analysts suggest that the restrictions were introduced due to “a banal lack of funds to redeem USDN and issue USDT / USDC to users.”
“They used liquid stablecoins for the Pump & Dump scheme of their WAVES token in the spring – this has not been proven, but there was a lot of material about this during that period. They do not want to repay obligations at the expense of Waves, as this will lead to a new wave of dumping the native WAVES token. Therefore, we decided to issue a “teaspoon” per day, play for time and look for ways to solve the problem, although it’s not a fact that they are looking for, ”summed up a representative of HAPI Labs.
According to Protos, Waves Platform CEO and founder Sasha Ivanov manages most aspects of the Waves network, including the USDN algorithmic stablecoin and Waves DEX. There is no public information on this.
CryptoNewsHerald tried to contact Ivanov during the preparation of previous materials, but company representatives said that after leaving for Dubai, he changed all contacts and does not comment.
On the evening of January 18, Ivanov in his Telegram channel acknowledged the delays at USDT/USDC gateways. He attributed this to the integration on Waves DEX of new decentralized bridges from an independent team and the audit of old gateways.
The problem will persist for the next few weeks, he said.
“The old locks will remain operational and will function in parallel with the new bridges. All wrapped tokens will be available, including buybacks,” Waves CEO wrote.
He added that the exchange team will try to “compensate for withdrawal delays through other means” and promised to provide details at a later date.
Users created separate channel with his sarcastic replies regarding their problems.
On January 17, Ivanov made a statement on Telegram regarding the USDN token, which, according to him, “failed as a stablecoin, but is not dead yet.”
“Its architecture was unsuccessful for a hard-pegged stablecoin. But this will be enough for another interesting financial product, namely the ecosystem index. It does not require a hard peg, it just needs to track a portfolio of selected ecosystem tokens. We are phasing out USDN as a stablecoin but resurrecting it as a new asset with new value and utility,” he wrote.
At the same time, Ivanov separately emphasized that as a result of updating the protocol, the price of USDN could be “both lower than $1 and higher.”
Recall that at the end of 2022, Waves CEO announced his intention to update the blockchain of his project to version 2.0 in 2023.
Prior to this, Ivanov announced the release of a new stablecoin, the prospects of which raised doubts among the user. The platform developers also presented a USDN recapitalization plan. Algostablecoin lost parity against the US dollar at the end of August and has still not been able to restore the peg.
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