Yet, with hindsight, the event arguably caused ripples that are still being felt today. Losses incurred were covered through additional capital costs - squeezing the reserves, margins, and safety nets of participants. We take a brief look at the BadgerDAO hack and how it could be connected to recent market events.
The Hack**
In late November 2021, over 500 wallets approved the phishing approval, which was run at random intervals to avoid detection.
None of the stolen user funds have been recovered even though they have been identified. Nor has any address been sanctioned in relation to the hack (they are tagged in Hoptrail’s databases). BadgerDAO is currently exploring a user fund reimbursement plan, which will be voted on via the native governance token BADGER. More to come on this.
The Big Fish**
Eventually the move paid off; Celsius approved the unlimited spend request on BadgerDAO’s front-end and $51 million of crypto belonging to Celsius disappeared.
This reportedly included uncollateralised loans and investing deposits in perpetual swaps which had no expiry date. These instruments allegedly increased Celsius’ vulnerability to market-wide sell-offs, the likes of which we’ve seen recently. Moreover, Celsius’ tardiness in converting its $50 million ICO funds to fiat led to a halving of those proceeds as the market declined in 2019.
A series of poor decisions**
So BadgerDAO, a hitherto forgotten episode in Celsius’ history, was an undoubted “misstep” - a human error - in a wider series of missteps. Did it reinforce a change in internal decision making at Celsius which exacerbated current issues? Time will tell.
A full profile on The Badger DAO exploit, Celsius, and other crypto entities and events, is available in Risktrail, our crypto compliance and regulatory risk platform. Risktrail is currently in beta testing. Get in touch to find out more.