back to article Plot to defeat crypto meltdown: Solend votes to seize, liquidate whale account

Decentralized finance lending platform Solend tried to fend off the effects of the crypto meltdown at the weekend when 97.5 percent of its users voted to give it emergency powers to liquidate its largest customer account. A second vote held today reversed the first. Despite our efforts, we've been unable to get the whale to …

  1. Steve K

    Reinsurance spiral....?

    This is getting to resemble the Lloyds (of London) reinsurance spiral crisis from the 1980s/1990s (for those of us old enough to remember that).

    It turned out that a lot of insurance was (in the end) reinsured with many of the original insurance when all of the intermediate contracts were factored out.

    One large adverse event/failure and the whole spiral unwinds catastrophically...

    This led to greater regulation/oversight/disclosure for good reason, some of which was that relatively unsophisticated "Names" (private individuals) made loads of money in the good times, but when it all went wrong, they were on the hook for liquidity/claims etc. and many lost everything.

    Everything old is new again.

    1. Ian Johnston Silver badge

      Re: Reinsurance spiral....?

      The big problem stat Lloyds, as I recall, was that they recruited a huge number of new names and stuck them with ruinous asbestos reinsurance deals, so many of them made huge losses without every having had the good times at all.

      Basically the sort of dirty dealing which in the crypto world they call "Tuesday".

    2. that one in the corner Silver badge

      Re: Reinsurance spiral....?

      But will we see any of the Crypto-Names riding a Penny Farthing around the streets in protest to the crypto-shenanigans?

      (that picture, and a total lack of empathy for their "plight", being what I most remember about the Lloyds crisis)

    3. This post has been deleted by its author

  2. theOtherJT Silver badge

    "we've been unable to get the whale to reduce their risk, or even get in contact with them"

    How can this be legal? How on earth can you have a customer with hundreds of millions invested in your platform and not even be able to communicate with them? That statement alone would convince me that this is a disaster waiting to happen - if any more convincing were required.

    1. Ian Johnston Silver badge

      Re: "we've been unable to get the whale to reduce their risk, or even get in contact with them"

      And what sort of person invests hundreds of millions (admittedly in funny money worth perhaps three decryption keys and a small box of crystallised fruit in the real) in an organisation which by design has no headquarters, no legal staff, no compliance staff and only a few pseudonymous contacts about whom nothing can be known.

      Because you can see the code, they say, and the code is all that matters. Yeah. That's working beautifully.

    2. Snowy Silver badge

      Re: "we've been unable to get the whale to reduce their risk, or even get in contact with them"

      Not only did they "invest" $107 million they took out $108 million in loans and now they can not contact them!

      Looks to me they have used them to cash out, they should not expect to get repaid.

      1. Wellyboot Silver badge

        Re: "we've been unable to get the whale to reduce their risk, or even get in contact with them"

        Anon investor puts $100m+ cash into funny money trading outfit and uses the credit to buy funny money pegged to the $.

        Can anyone else smell the washing powder?

      2. Charlie Clark Silver badge

        Re: "we've been unable to get the whale to reduce their risk, or even get in contact with them"

        Then the lender is the problem.

      3. sniperpaddy

        Re: "we've been unable to get the whale to reduce their risk, or even get in contact with them"

        State level loan scam? Smells like N. Korea.

        1. Michael Wojcik Silver badge

          Re: "we've been unable to get the whale to reduce their risk, or even get in contact with them"

          It's not impossible, but it's really hard to tell (even with the advances that have been made in de-anonymization of cryptocurrencies and related tech). Thanks to the 2021 bubble, even many individual investors ended up with notional hundreds of millions of dollars' worth of cryptocurrencies. So this could be J. Random Dude.

    3. M.V. Lipvig Silver badge

      Re: "we've been unable to get the whale to reduce their risk, or even get in contact with them"

      I have a different question - how can a group of smaller investors have a say in whether the whale liquidates? That would be akin to other customers of your investing company deciding that you should be forced to liquidate your account at a loss because you own more shares than them. It's nobody else's business who owns how much of this. If you have a problem with one guy owning 98 percent of a crypto, YOU need to be the one that gets out.

      1. John Brown (no body) Silver badge

        Re: "we've been unable to get the whale to reduce their risk, or even get in contact with them"

        Not only that, but the proposed "solution" of "The OTC trade Solend would perform on behalf of the whale would involve selling to a specific buyer at an agreed upon price." seem to indicate simpley swapping one "whale" for another "whale", albeit one they "know" and can communicate with.

    4. Potemkine! Silver badge

      Re: "we've been unable to get the whale to reduce their risk, or even get in contact with them"

      And what are the odds this is a cybercrook?

    5. Abominator

      Re: "we've been unable to get the whale to reduce their risk, or even get in contact with them"

      Try contacting the crypto overloads at these projects. Good luck.

      Seems fine to me that someone holding can keep themselves to themselves without being hassled.

  3. Ian Johnston Silver badge

    And yet again - it happens time after time - all these opponents of centralisation and believers in code alone suddenly want centralised action as soon as tits start heading upwards. Coo. It's almost as if a century and more of developing regulation in financial services has been for more than the fun of exercising power.

    Still, with Bitcoin at less than a third of its peak value and heading rapidly downwards, I think we sane people are going to get a lot of fun out of crypto over the next weeks and months.

    1. bigtimehustler

      Very true, but it's hit really bad lows in the past. Lots of people will buy and hope for the next climb.

  4. Killfalcon Silver badge

    I feel it appropriate to note that "SOL" usually stands for Sh*t Outta Luck...

    1. chivo243 Silver badge

      So I lendo you come cash... still looks like SOL and not So i .... A fool and his money are either A) out partying, or (B soon parted...

    2. This post has been deleted by its author

  5. elwe

    Now why would you want to deposit a lot of crypto coins and then take an almost equal sized loan of crypto coins? Except for the obvious money laundering of course. What is the betting the FBI are watching the deposited tokens because they are stolen and the whale has cashed out the loan, out of view of the FBI, with no intention to return and repay/reclaim...

    1. Joe W Silver badge

      Put in a fiver in crypto -

      and lend five and a penny

      convert fiver to $(crypto)


      At some point take the pennies and run. You do not need 100M in the bank to pull this off in an unregulated and intransparent market, I guess.

    2. Charlie Clark Silver badge

      Well, if things are as they are reported – that the deposit can not be used to secure the load – then your quids in!

      Fuckwits running the platform scam should have written better T & Cs, otherwise the seizure is illegal.

    3. Ian 55

      Because you realise that the coins you put in are shit, but the coins that they will let take out are - in comparison - almost as good as real dollars.

      You would have big problems - especially now - selling that much of the shitcoin for dollars, but converting what they took out will be much, much easier.

      This was never a loan as far as the whale was concerned, this was cashing out with a vengeance.

      The real world equivalent would be somewhere that let you hire a new Lamborghini by just leaving them with ten junkers that the hire company reckons are worth twice as much... and nothing else, including no proof of identity or driving licence. That Lambo ain't coming back

      1. Mark 65

        Doesn't seem like a loan to me, more of an arbitrage. It's like swapping $100m of <3rd world currency> for USD. You have a good idea of which one will go to shit

  6. Filippo Silver badge

    I thought the whole point of crypto money was that takeover by a centralised authority would be technically impossible?

    If that is not true, then what's the point? Yeah, I can come up with a whole set of snarky answers too, but, seriously, if there is a central authority that can seize control of my wallet, then what's the benefit compared to a bank account? Is it just anonymity?

    1. Anonymous Coward
      Anonymous Coward

      It's also the best way to get rid of all that pesky oil and coal lying around, at least until we find a use for it!

      1. Korev Silver badge

        And don't forget we can keep everyone warm in winter too

    2. G Mac

      No no you have it all wrong:

      It wasn't the centralised authority that made the decision - it was a democracy (with whatever quorum) that decided to 'liquidate' somebody else's account (and who didn't vote).

      Now, doesn't that make you feel a whole lot better?

      1. John Brown (no body) Silver badge

        So, basically you are saying everyone gets a vote and afterwards everyone has to abide by the result of a majority decision? That sounds soooo....un-American :-)

    3. doublelayer Silver badge

      Some cryptocurrencies were implemented to prevent a central authority, at least without a lot of expensive and difficult work. This is not a cryptocurrency. It's a platform that works with them, and they did not want to prevent centralized control because they've realized that the average users, the ones with lots of money and the gullibility not to figure out what they're doing with it, would not be happy with something nobody can control. Either that or they had their own plan to run off with the money, but I think this case is option 1.

      Some people really want a decentralized financial system and understand the risks involved when cryptocurrencies implement it. A lot of other people really don't want that because they want the benefits of externally-controlled financial systems but trust cryptocurrency anyway because they didn't bother to learn how it works. They may have assumed that it works like stocks or similar investments (which many of them also didn't bother to understand but there are some safety systems set up by central authorities which can come to their aid). Many of those people are going to lose their money, and most of them will probably be surprised when they learn that the lack of an authority means they've got no way to recover it.

      1. Filippo Silver badge

        Good explanation, thanks!

      2. Charlie Clark Silver badge

        So the platform wants to offer some kind of centralised control over supposedly decentralised assets? Sounds like marketing bullshit or west coast pipe dream.

        1. doublelayer Silver badge

          Not necessarily. You can have centralized control at one level without having it all the way down. This is not that much more complicated than an early bank that took deposits of gold. The bank couldn't make gold and couldn't protect you if the price of gold changed, but it could make loans from your gold and make transfers easier. This example is not just a bank and isn't run like one, but it too could create a platform that functions. It's also worth considering while processing this example that a lot of early banks failed; just making a centralized platform is no guarantee that it will be done successfully, but it is possible and has been accomplished before.

      3. yetanotheraoc Silver badge

        "Some cryptocurrencies were implemented to prevent a central authority..."

        And here I thought they were implemented out of altruism for the small investor and furthering libertarian principles for all.

    4. MrDamage Silver badge

      SOL, isn't a centralised authority (like the US Fed), but instead is more like an independent bank based in the Cayman Islands. While the US Fed wouldn't be able to seize your funds, the bank itself would be more than willing to bleed you dry in order to save itself.

  7. Anonymous Coward
    Anonymous Coward


    I object to the Whale metaphore (I'm quite svelte actually) and will sue on that ground, as there is only £3.50 at risk in real money!

    The whole situation and this reply is a joke!

    1. Matthew "The Worst Writer on the Internet" Saroff

      Re: Grrr!

      I think that the metaphor is not about the aquatic mammal, but rather Bruno Iksil, the former City trader known as the “London Whale”, who lost over $6 billion a decade ago.

      That being said, I'm popping some popcorn and watching the show.

    2. martinusher Silver badge

      Re: Grrr!

      "Whale" is a term used by dubious investment consultants to describe a customer that's got a lot of money then sense. It should be thought of in a Moby Dick sense, a giant floating blob of money waiting to be picked up and picked over. The way things are supposed to go is that this customer's hard assets (e.g. money) is invested for them in dubious paper (which is obviously going to make them fabulously rich). For a fee, of course.

      In this case the whalers appear to have been taken as the whale seems to have used some not so spiffy securities as collateral for borrowing somewhat harder ones. Oops.

      Its nice to see the players being played for a change even if ultimately its the little guy and gal who's going to end up broke. (Heads, they win. Tails, you lose.)

      1. Prst. V.Jeltz Silver badge

        Re: Grrr!

        "Whale" is a term used by dubious investment consultants to describe a customer that's got a lot of money then sense.

        Its also a term used by phishing type scammers when they stop trawling and concentrate all their efforts on hooking one big target.

        its telling that this platform is using the term and about to "liquidate" their biggest customer

        1. Killfalcon Silver badge

          Re: Grrr!

          It's used similarly in live-service, free-to-play, and mobile videogaming - there are plenty of game companies out there kept solvent by a handful of whales throwing 5-figure sums at pixels.

          1. Michael Wojcik Silver badge

            Re: Grrr!

            And by casinos for customers who drop a lot of cash, and so on.

      2. John Brown (no body) Silver badge

        Re: Grrr!

        "In this case the whalers appear to have been taken as the whale seems to have used some not so spiffy securities as collateral for borrowing somewhat harder ones. Oops."

        Excellent point. And who's to say this anonymous "whale" hasn't used that tied-to-the-US$ "harder" crypto and done the same but this time borrowed actual hard cash using that as the collateral?

      3. Snowy Silver badge

        Re: Grrr!

        Whale is also used for someone who spends a lot of free to play games.

  8. Howard Sway Silver badge

    One coin one vote

    In the first vote, 97.5% of voters voted to harpoon the whale.

    However, in the second vote, the whale voted, and it had 1 million out of 1.15 million votes or 86.9% because of how much of this shit they owned, leaving the small guys shipwrecked and all at sea.

    It's like Moby Dick but with even bigger idiots. And a voting whale.

    1. Anonymous Coward
      Anonymous Coward

      Re: One coin one vote

      Isn't governance based on stake size what sunk another crypto group? A user borrowed enough tokens to force thru a proposal that benefited them and hurt everybody else.

      The users quickly discovered they had not created a democracy, but an oligarchy.

      1. Michael Wojcik Silver badge

        Re: One coin one vote

        Oh yeah. Just search for "flash loan" on web3isgoinggreat if you want some representative examples. (Not all the flash-loan attacks involve increasing stake for a voting takeover, but some do.)

        Those suffering a schadenfreude deficit may want to head over to web3isgoinggreat occasionally for more like this story, by the way. It's generally pretty horrortaining.

    2. chivo243 Silver badge

      Re: One coin one vote

      So, I'm guessing it's a Ship of Fools!

      Yes, I'm going, but I've been dying to use that one!

  9. Pascal Monett Silver badge

    "emergency powers to liquidate its largest customer account"

    I'm sorry, but if I had €100 million in the bank, and suddenly found out that the bank's other customers had voted to liquidate my account, I would be pissed to the extreme.

    As noted, it's hilarious to watch all these "decentralize" zealots suddenly rush to centralize when their feet go cold.

    I love fireworks.

    1. Ian 55

      Re: "emergency powers to liquidate its largest customer account"

      You would be pissed, but in this case the whale dumped a load of what they saw - rightly - as shit and were allowed to borrow - in comparison - gold.

      They were never going to want to repay the 'loan'.

      The only reason they might object to the shit being sold privately is that it won't completely crash the price in the way that trying to sell the shit publicly would do: virtually all of the project's non-shitcoins have gone and they were never going to come back.

  10. Anonymous Coward


    DeFi was created by people who thought they had a way to make money off cryptocurrencies without any risk.

    DeFi makes crypto seem sane by comparison.

    1. katrinab Silver badge

      Re: DeFi

      Basically, it is Split Capital Investment Trusts, or Collateralised Debt Obligations on a Blockchain.

      Or a ReREMIC (Recapitalisation of Real Estate Mortgage Investment Conduits).

      These were the problems that blockchain was supposed to solve, not re-implement.

      1. Michael Wojcik Silver badge

        Re: DeFi

        Hell, some of the DeFi platforms and other cryptocurrency outgrowths (cryptocurrency exchanges and funds, DeFi insurers, NFTs, ...) make CDOs look almost sensible. I mean, at least with CDOs you could roughly gauge your exposure by what tranche you were in and what sort of diversity might be in the underlying securities. And even doomed mortgages have some real estate backing them, even if it's overvalued.

        Many of the cryptocurrency enthusiasts seem to be not so different from the Sovereign Citizen true believers, in that they live in a fantasy world where recording things has magical power, and nothing more is necessary to win any argument. But I suppose that's not surprising – that's hardly the only point of resemblance.

  11. DS999 Silver badge

    These are the arbitrage scams I was talking about in another article

    Put in $107 million, borrow $108 million, that's $1 million to them and they don't care what happens next which is why they can't reach them. This would be illegal in several ways if they had tried it in regulated securities market.

    1. breakfast Silver badge

      Re: These are the arbitrage scams I was talking about in another article

      There really is something to the saying about the crypto markets doing a speed run of the history of financial fraud and the reasons for regulated financial markets...

      1. yetanotheraoc Silver badge

        Re: These are the arbitrage scams I was talking about in another article

        Quote: And sometimes, the best argument for a regulated market is an unregulated market. -- Nicolas Retsinas

  12. Anonymous Coward
    Anonymous Coward


    I'm gonna have to create a fukwitcoin.

    1. Claptrap314 Silver badge

      Re: Bandwagon

      I'm pretty certain that's what Dogecoin was supposed to be...

    2. Killfalcon Silver badge

      Re: Bandwagon

      Someone already made Ponzicoin.

      No, really.

  13. Potemkine! Silver badge

    We definitively need a 'popcorn' icon *crunch, crunch*

  14. Anonymous Coward
    Anonymous Coward


    Shit Outta Luck?

    Rather apt given the devastation happening in the crypto markets.

POST COMMENT House rules

Not a member of The Register? Create a new account here.

  • Enter your comment

  • Add an icon

Anonymous cowards cannot choose their icon

Other stories you might like