FTX-connected wallets made some ETH and stETH transfers between May and June, causing a depeg and eventually leading to the demise of several crypto projects. Peck Shield, a network focused on blockchain scans and security, recently posted a tweet uncovering three unknown wallets connected to the FTX exchange. According to Peck Shield, the three wallets were active between May and June moving some significant amounts of ETH and $stETH from different wallets.
When stETH/ETH dropped to $0.971 on May 13, 2022, “0x6b92” withdrew 15,000 stETH — worth $23.4 million — from FTX, swapped it for 14,300 ETH, and transferred it to FTX. Two other wallets would carry out similar transactions when the stETH/ETH peg widened to $0.955 on June 11, 2022.
Peckshield said wallets “0x1b23” and “0x2e85” cumulatively withdrew 49,000 stETH worth $66 million from FTX, swapped them for 42,000 ETH, and returned the funds to FTX. A director at Coinbase, Conor Grogan, tweeted that two wallets withdrew over $75 million stETH from FTX on June 8, 2022, and sold everything on the market.
This move triggered a series of events that eventually affected bankrupt crypto lender Celsius and crypto hedge fund Three Arrows Capital, according to Grogan. He pointed out that the stETH depeg “led to a significant stress in the market,” adding that the crypto lender halted withdrawals just four days after the event. “Alameda could have processed this trade OTC on behalf of Celsius or another big party.”
The previously unknown wallets became public after they sent ETH and stETH to the bankrupt exchange’s estate in January, according to Grogan. However, the motive behind the swaps remains unknown. Alameda took a seven-figure slippage on the trade, which raises questions as to why the savvy crypto trading firm will make such a move, according to Grogan.
When the stETH/ETH ratio fell to 0.971 on May 13, wallet 0x6b92 withdrew around 15k stETH for a total of $23.4 million. Consequently, this wallet converted the stETH back to the typical amount of ETH, which is around 14,300.
Wallets “0x1b23” and “0x2e85” later withdrew 49,000 stETH. According to Peck Shield, the two withdrew STETH worth $66 million. The wallets exchanged the stETH, yielding slightly more than 42,000 ETH.
Conor Grogan, head of product at Coinbase, has reported more information that suggests the withdrawals and exchanges of staked ETH and stETH were supposedly the main reason why certain notable crypto platforms, such as Three Arrows Capital and the Celsius network, failed.