Only in crypto can someone spend $14 million to buy something and end up crashing the price instead of increasing it in line with supply and demand.
Yet that’s what happened with Sushi where a holders vote decided that the $14 million worth of tokens sold by Chef Nomi should now be bought back.
The one that took over, Sam Bankman-Fried, obliged with a promising show so to unveil between 1 and 2 AM UTC yesterday.
Before the show began, the price was at around $2.4, having risen by 5% at that point. Will it double? Maybe $10. Can it reach $3 at least? Defo $3.5 to $4 they said.
So speculation went with the crypto space, for the first time unless we’re mistaken, to witness a live on-chain buyback of some 5% of the market cap.
Price rose, but only a little bit, reaching $2.5 and sometime nearing $2.6. Then 1AM came and price fell.
The buyback has not started, the audience was told as they watched the price fall with great puzzlment.
Is he buying sushi or is he selling them? Why it falling? When does buyback start? It was about half an hour later (1:36 AM UTC as pictured above) when a new address was revealed and the buyback began.
You can watch the action yourself with a purchase of 100 eth worth of sushi starting it off, then blocks of 500, 1,000 and finally 2,000.
That address has one funding from what looks like FTX, Bankman’s exchange, and two fundings from Bittrex.
When the buyback initially started price rose to briefly reach $2.7, with Bankman then pausing for some reason before moving to 2,000 blocks.
During those 2,000 blocks price fell and it never recovered so far. Dropping to $2.3 first where it briefly stayed before crashing further.
Curiously, what is probably a Bankman employee that goes by CTRL said before the buyback began that price would actually fall to $2.3.
“I said over a dozen times today in this Discord that the price would likely go DOWN,” CTRL said after the buyback had finished and after price had reached his $2.3.
How do you buy millions of something and end up lowering its price, many wondered. Apparently they blaming TWAP.
Time-weighted average price (TWAP) is the average price of a security over a specified time. Yes and, how does that lower price?
It doesn’t obviously unless they willingly manipulated the price downwards, which in this case amounts to the project leader basically reking his supporters.
As you might know Bankman took over in unclear circumstances in the middle of the migration of some $1 billion worth of assets with Bankman apparently speaking to Nomi in private before the keys were handed over.
So it isn’t quite his project and the buyback wasn’t with the project’s money either. That $14 million was meant to come from the Dev Fund address. Instead it came from what people are speculating is Bankman’s own address.
After the buyback some $13 million worth of sushi was sent to the above address from the one that bought them, with it unclear what happened to $1 million.
The above therefore showed there were some $24.9 million or so in sushi tokens and 38,000 eth. Now it shows this:
The eth have gone presumably with the consent of the 8 multi-sig holders. They go through a number of addresses and then end up at Bittrex.
So they ‘bought’ sushi while dumping the price and run away with the eth?
There were rumors during the buyback some other address was dumping in a seemingly coordinated fashion:
This address also seems to like Bittrex. So basically they crashed the price while pretending they buying with sushi now at $1.8, and in addition they also took the eth as well.
At least Chef Nomi run to eth. Whether rightly or wrongly, price was crashing at the time and he chickened out to a safer or a more stable asset.
While these guys have taken that nice asset for themselves, giving sushis a crashing asset instead.
Absolute classic. Only in crypto is a buyback very bad for the asset bought, well in this case. Binance does buybacks every quarter and there they have the expected result, price rises not crashes.
Here though, buying $13 million worth of something leads to a 27% drop with some $100 million wiped off sushi’s market cap.