Today in Crypto: Durbin, Warren Question Fidelity

Solana-based returns protocol Nirvana Finance has been hit by a $3.5 million exploit that used flash loans to manipulate and drain liquidity.

Flash loans are a popular way for attackers to obtain funds to exploit decentralized finance (DeFi) systems. The price of the original ANA token fell more than 80% in the hours following the attack, according to a CoinDesk report on Thursday (July 28).

In addition, the NIRV stablecoin lost its peg to the US dollar, falling to 8 cents at the time, per CoinGecko data. Nirvana allowed users to earn annual returns of more than 100% on locked assets by creating and destroying tokens based on user needs.

There was reportedly more than $3.5 million in ANA locked on the docket before the attack.

Meanwhile, liquidators overseeing the shutdown of Three Arrows Capital may consider making the founders clean up the entire fiasco, Bloomberg reported.

So far, the founders have provided only “quite selective and piecemeal disclosures” about the fund’s assets. However, lawyers want to force them to supply more information.

“The founders have not made themselves available for any discussions or interviews with the liquidators whether formal or informal,” attorney Adam Goldberg told bankruptcy judge Martin Glenn in a hearing held remotely Thursday. “They continue to hide their whereabouts.”

In other news, U.S. Senate Majority Whip Dick Durbin (D-Ill.) and U.S. Senators Elizabeth Warren (D-Mass.) and Tina Smith (D-Minn.) are investigating a decision by Fidelity Investments to allow 401(k) plan sponsors to offer plan participants exposure to bitcoin.

Fidelity is one of the largest 401(k) providers, according to a press release Tuesday (July 26). The senators are looking into why Fidelity would allow exposure to bitcoin, as it seemed “bad for one of the leading names in the financial world to support the use of such a volatile, illiquid and speculative asset in 401(k) plans – which are meant to be retirement savings defined by consistent contributions and steady returns over time.”

Finally, Bloomberg reported that Trung Nguyen, the CEO of the game Axie Infinity, allegedly moved a large amount of tokens before a much-publicized hack earlier this year.

Axie’s operations mainly depended on players’ ability to trade and earn crypto-tokens that had financial value – players had holdings that represented large savings.

According to the report, a digital wallet belonging to Nguyen made a “large transaction” of around $3 million of the AXS token Axie Infinity was bragging about, and moved it to Binance instead. Parent company Sky Mavis confirmed Nguyen controlled the wallet.

The reason, according to a spokeswoman, was that Nguyen was working to shore up the company’s finances during the crisis, and was trying to do so in a way that was not obvious to the wider market.

For all PYMNTS crypto coverage, subscribe to the daily Crypto newsletter.