Founder of dYdX, Antonio Juliano, has asserted that a deliberate attack is responsible for the $9 million insurance claim made by the decentralized exchange (DEX). On November 17, dYdX was compelled to tap into its insurance fund to cover losses stemming from user liquidations. According to Juliano, this targeted attack affected both the decentralized exchange and the Yearn.Finance token (YFI).

As outlined by the dYdX team on X (previously Twitter), the v3 insurance fund was utilized “to address deficiencies in liquidation processes in the YFI market.” The YFI token experienced a 43% drop on November 17, following a remarkable 170% surge in the preceding weeks. The sudden price plummet raised suspicions in the crypto community, with concerns of a potential exit scam.

The attack reportedly focused on long positions in YFI tokens on the exchange, resulting in the liquidation of positions valued at nearly $38 million. Juliano is of the opinion that market manipulation orchestrated the trading losses impacting dYdX and the substantial decline in YFI:

“This was evidently a targeted attack against dYdX, involving market manipulation of the entire $YFI market. We are conducting an investigation in collaboration with several partners and will share our findings transparently.”

According to Juliano, the v3 insurance fund still maintains $13.5 million, and user funds remained unaffected by the incident. He stated on X, “Even though no user funds were affected, we will also be conducting a thorough review of our risk parameters and making appropriate changes to both v3 and potentially the dYdX Chain software if necessary.”

The lucrative trade resulted in the erasure of over $300 million in market capitalization from the YFI token, prompting the community to speculate about a potential insider job in the YFI market. Some users asserted that 50% of the YFI token supply was held in 10 wallets controlled by developers. However, Etherscan data indicates that some of these holders are crypto exchange wallets.