A significant misstep in the cryptocurrency space occurred when a long-term holder of Cardano (ADA) inadvertently converted $6.9 million worth of ADA into an obscure stablecoin, resulting in a staggering loss exceeding $6 million. This unfortunate event was first brought to light by blockchain investigator ZachXBT.
The incident involved the swap of 14.4 million ADA tokens for 847,695 units of the US dollar-backed Anzens (USDA) stablecoin. The transaction took place on Sunday, leading to a loss of approximately $6.05 million for the investor. The Cardano wallet address, identified as “addr…4×534,” had been inactive since September 13, 2020, before executing a test transaction of 4,437 ADA for a different stablecoin, identified only by the ticker USD, just moments before the major swap.
This case underscores the critical importance of trading within liquid cryptocurrency pools, especially for large transactions that can drastically shift market prices. Following the swap, the price of USDA surged to nearly $1.26 before retreating to approximately $1.04, according to data from CoinGecko.
It remains unclear whether the trader intended to purchase the little-known stablecoin, which has a market capitalization of only $10.6 million. Blockchain analysis suggests that this was the holder”s first interaction with the USDA stablecoin.
Such “fat-finger” trades can have notable impacts on market dynamics. A recent example includes Paxos, which mistakenly minted 300 trillion units of the PayPal USD (PYUSD) stablecoin before swiftly burning the entire amount approximately 22 minutes later.
As the cryptocurrency market evolves, this incident serves as a stark reminder to traders to exercise caution, particularly when dealing with trades in pools that lack sufficient liquidity. The ramifications of poor execution could lead to devastating financial losses, as seen in this unfortunate case.
