Wintermute Raises Concerns Over Near’s Decision to Exit $11.2M Stablecoin Redemption Agreement
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Wintermute CEO Evgeny Gaevoy has claimed that the NEAR Foundation and Aurora Labs defaulted on an initial agreement to convert $11.2 million worth of USN stablecoins. The stall of a potential resolution may lead to legal action.
Deep Insights Into Wintermute Relationship & Transaction With NEAR Foundation
In an unexpected disclosure, Wintermute, a leading global arithmetic trading platform in digital assets, has raised strong allegations against the NEAR Foundation (NF) and Aurora Labs regarding USN’s redemption process.
In a series of tweets on November 7, Evgeny Gaevoy, the current chief executive officer (CEO) of the trading platform, criticized both entities and cited their decline in corporate friendship.
Public service announcement or “how we are not really friends with Near @NEARFoundation and Aurora Labs @auroraisnear going forward”🔽
— wishful cynic (@EvgenyGaevoy) November 7, 2023
Gaevoy noted the troubled journey of USN, highlighting that the algorithmic stablecoin, similar to Terra’s UST, transformed a non-algorithmic model anchored by the USDT amid market fluctuation.
1. USN background
At the center of the issue is Near’s ill fated stablecoin, USN, initially designed to be algorithmic not too dissimilar to Terra’s UST. After UST collapsed, USN was upgraded to a non-algorithmic model in June 2022, which was fully backed by USDT. After USN…
— wishful cynic (@EvgenyGaevoy) November 7, 2023
However, this caused a downtrend in the USN trajectory due to poor implementation and collateral mismatch, which propelled the decision to discontinue or terminate a project permanently.
NF had to step in, incorporating significant funds known as the ‘USN Protection Programme,’ while Aurora Labs got the green light from the firm to operate the program.
Sharing a background of Wintermute involvement and transaction deal, Gaevoy explained that Wintermute had initially worked with the FTX bankruptcy estate to facilitate liquidations and reimburse creditors.
2. Transaction background
Since spring this year Wintermute has been working with FTX bankruptcy estate to facilitate liquidations of their assets for the maximization of creditor distributions. As part of this, we were asked to facilitate selling 11.2 million $USN (with FTX…
— wishful cynic (@EvgenyGaevoy) November 7, 2023
While serving as the asset liquidator for the FTX bankruptcy estate, Wintermute successfully sold 11.2 million USN, based on an alleged agreement with NF that it could redeem USN to USDT on a one-to-one basis.
This agreement was based on NF’s and Aurora’s assurances through private chats, which were rescinded.
Gaevoy stated that it had been nearly three months since the redemption agreement was made, yet Wintermute has yet to receive any USDT for the USN sent to them in August.
The last offer amounted to only 20% of the $11.2 million. The trading firm has made several efforts to propose an alternative solution that would benefit both NF and Aurora Labs.
This includes the trading platform accepting a significant portion of the owed cash as an investment in locked $NEAR tokens and a commitment to integrate into the ecosystem.
However, NF has yet to show interest in exploring these potential solutions.
Stall on Resolution Could Lead to Legal Actions
In a closing note, Gaevoy iterated that his public statements would be the last attempt at resolution.
4. Message
I’ll finish this thread with the last and public attempt at the resolution asking Near Foundation to complete the redemption. However if NF continues to be unreasonable about this situation, we are fully committed to switching into a full-time adversarial mode.…
— wishful cynic (@EvgenyGaevoy) November 7, 2023
Highlighting the lack of integrity, accountability, and clarity from both NF and Aurora Labs, he expressed Wintermute’s readiness to take legal steps.
3. Summary
To reiterate, I see this situation very clearly as:
– NF committed to backstop USN and earmarked money for it
– Aurora accepted the redemption in August (and only last week backtracked on it)
– NF decided they have the power to keep the $11M to themselves instead of…— wishful cynic (@EvgenyGaevoy) November 7, 2023
The CEO’s shocking disclosure embeds the call for resolution and indicates the lack of corporate responsibility and transparency in the broader crypto and blockchain industry.
Wintermute is also reaching out to other firms that might have been impacted by NF to collectively come forward and take legal actions if their call for redemption continues to be ignored.
A Stringent Policies to Strengthen Transparency
Wintermute headlock with well-known players like NF and Aurora Labs highlights concerns regarding transparency within the cryptocurrency market.
The platform’s dedication to transparency and industry ethics is clear as it confronts this complex situation with substantial evidence. However, more occurrences could cause a decline in trust in the broader market.
The latest saga between the JPEX exchange and Hong Kong is a good example. The platform falsely reported trading and investment services, which were advertised by influencers.
JPEX, once a prominent cryptocurrency exchange in Hong Kong, quietly conducted its operations without a license in Hong Kong’s financial hub. pic.twitter.com/qBvBXoDEoO
— AML Watcher (@AmlWatcher) November 8, 2023
This scandal has resulted in an alleged loss of $154 million and has caused over 40% of investors to shun the crypto market due to loss of funds, lack of trust, and customer protection.
