Cardano Wallet Loses $6 Million After Mistaken Stablecoin Swap

TLDR

• A Cardano wallet mistakenly lost $6 million in ADA tokens after swapping them for USDA stablecoins.
• The wallet had been inactive since September 2020, with the swap taking place on November 16.
• The swap involved 14.4 million ADA tokens, valued at $6.9 million, for 847,695 USDA stablecoins.
• A test transaction of 4,437 ADA occurred shortly before the large swap, raising questions about the error.
• The Cardano wallet had no previous record of owning USDA stablecoins before this incident.

A Cardano wallet that had been inactive for 5 years accidentally lost $6 million in ADA tokens. This loss occurred after a swap was made from a low-activity pool to a stablecoin. ZachXBT, a blockchain investigator, reported the incident on November 16.

The transaction involved 14.4 million ADA tokens, valued at $6.9 million, being exchanged for USDA stablecoins. A test swap of 4,437 ADA occurred shortly before the main transaction, further sparking confusion. This mistake underscores the importance of liquid pools when swapping large amounts of tokens.

Mistaken Swap to USDA Stablecoin Raises Questions

The Cardano wallet involved had remained dormant since September 13, 2020, before this event. At approximately 4:06 PM UTC on Sunday, a small test transaction of ADA for USDA took place. This was followed by the larger swap of 14.4 million ADA for 847,695 USDA stablecoins.

Sources confirmed that the user had not previously held any USDA stablecoins. The transaction raised doubts about whether the swap was intentional or an error. Despite this, the stablecoin’s market cap remains relatively small at $10.6 million.

Cardano Swap Causes USDA Price Fluctuation

Following the large transaction, the price of USDA spiked to $1.26 before falling to $1.04. Market observers noted the sudden price fluctuation, which reflected the impact of the transaction on the stablecoin. This event highlights the risks associated with swapping tokens in pools with low liquidity.

Analysts noted that mistakes like this can significantly affect the cryptocurrency market. The Cardano incident follows similar errors seen earlier this year, such as the minting and burning of $300 trillion PayPal USD. These occurrences illustrate the volatility and risks that come with handling large crypto transactions.

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