How to lose 2.5M$ of your users’ funds

4 min readMar 2, 2020


cover it up, and get away with it. Brought to you by the SNX team.

On 26th of December the Synthetics project froze trading on the synth MKR pairs, sMKR and iMKR, on its platform. This was a result of spot MKR market paper thin liquidity, being taken over by traders.
Which has lead to SNX holders transferring ~10K ETH of value to the initiators of the takeover.
Not the accounting, nor the impact, of that takeover has been made public.
And that is about to change…

Let’s start with the facts;
1. The MKR spot markets were influenced.
2. SNX holders lost ~10,000 ETH.

Accounting summary

3. This has been going on for a period of almost a month.
4. Synthetics team have made an attempt to cover it up, successfully so far.

I will prove the above facts in the data that follows.

  1. The system worked as follows;
    I. Buy sMKR on Synthetics.
    II. Buy MKR on the spot market, on Bitfinex, Kucoin and Uniswap, raising the price.
    III. Wait for the oracle price update on Synthetics.
    IV. Sell sMKR for iMKR, the short position on MKR, on Synthetics.
    V. Sell MKR on the spot markets, lowering the price.
    VI. Wait for the oracle price update on Synthetics.
    VII. Return to step I, and start over.
Price action on 25th of December

This can be visible on the 15 minute chart on Bitfinex.

2. An accounting;

Addresses, and gains in sMKR over the period.

The above table accounts for the synthetic MKR, sMKR, gained over the period, per address.
For example, the 0x21c…. address, has gained sMKR over 4 different periods.

All data is available on chain, to make searching and copy-pasting, addresses can be found here:

All the above accounting data can be verified, on chain. Feel free and do so.


As a result the traders gained ~3K sMKR.
Which means that ~10K ETH, worth of value, was transferred to them from the Synthetics holders.

3. Duration:
The oldest tx of this nature is by 0xfbabbaaaad540477fcb64412b74bd2b73907cb99
which can be dated back to November 30.
and the last dated to December 26.

4. As compared to on chain data, which leaves little room for interpretation, the actions of the team are a bit more open to that.

I will make an attempt to provide a case for my view that the team has shown incompetence, malice or both.

Bear with me.
On Dec 23rd i made an attempt to reach out to various team members on the Synthetics discord and informing them of something abnormal happening. After noticing a strange behaviour pattern by

Incompetence, malice or both;

  1. This operation continued for 26 days, going unnoticed, though being a very significant volume outlier on the platform.
  2. There was no urgency in analysing the impact of the operation, and stopping it, when bringing it to the attention of the team on the 23rd of Dec.
  3. There was no public disclosure of the impact of this operation, or a postmortem.
  4. Team’s official response to the impact of the operation, was stated as “50K$”.
  5. There was not attempt to recover the funds from these traders.
  6. There was no accountability by the team towards the SNX holders, who took the loss over this event.

All the above are facts.

Full disclosure;

I was the biggest force trading against the traders on the spot markets, for profit, making the operation much more costly to them.
And i copy traded the traders in the last 2 days this was happening.
Making a profit, and having an incentive for this operation to continue.
I also dislike the practices taken by Synthetics, and have been vocal about it in the Defi community in the past.

Now to the speculation part, as i have no way of proving the below statements, and know i might be wrong.


I speculate this was an inside job, and i might be wrong, having no way of proving these claims other my own common sense.

The reason for that is what the traders did, after the synth MKR pairs were frozen. Which was, stay in the system.
Synthetics have had a history where they alter the system to combat people using it not as intended.

So if i were one of the traders, i would not have provided the team an opportunity to retaliate. By exiting the platform.
The traders continued to trade other pairs on the platform till this day.
That’s quite risky move, without having any certainty the rules wont be changed against them.
Which if it was an inside job, you wouldn't have to worry about any rule changes.