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Nima Capital’s 9m SYN token dump ignites VC rug pull fears

nima-capitals-9m-syn-token-dump-ignites-vc-rug-pull-fears
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Nima Capital’s 9m SYN token dump ignites VC rug pull fears

Nima Capital, a family office involved in crypto investments, is facing accusations of initiating a rug pull with the grant tokens of their partner, the cross-chain bridge platform Synapse.

On Sept. 5, the decentralized finance (DeFi) cross-chain bridge Synapse witnessed a sharp decline in the value of its native token (SYN) following the sudden removal of nearly 9 million SYN tokens and the withdrawal of all stablecoin liquidity from the bridge by an unidentified liquidity provider.

Synapse’s official X account swiftly responded to the incident, confirming the liquidity rug but reassuring users that there had been no security breach on the Synapse bridge. The focus soon shifted to identifying the unknown liquidity provider responsible for this drastic action.

Investigations revealed that the liquidity provider in question was linked to Nima Capital, a long-standing capital partner of Synapse. The venture capital firm had previously agreed with Synapse, securing a grant from the project in exchange for providing $40 million in liquidity in SYN tokens.

According to data from Etherscan, the liquidity provider who dumped the SYN tokens had received a substantial amount of 10 million SYN (equivalent to $3.4 million) from the “Synapse: Executor 2” wallet on April 5. Notably, the wallet currently has a zero balance of SYN tokens.

This incident has raised eyebrows as Nima Capital allegedly violated the terms of the governance proposal agreed upon, which was supposed to last for eight more months. Adding fuel to the fire, the venture capital firm’s website became inaccessible, and their X account (formerly known on Twitter) was locked, effectively disappearing from the online sphere.

This series of events has led many to label it as a “VC rug,” a term commonly used to describe scams in the DeFi sector where project creators or developers abruptly withdraw their support, often after the project’s native token achieves a specific price point. It is worth noting that such actions are typically not associated with venture capital firms, making this case particularly unusual.

The repercussions of this event were felt strongly in the market, with SYN’s price plunging by over 20%, hitting a multi-week low of $0.30. However, it rebounded slightly, stabilizing above $0.35 later in the day.

This incident serves as a reminder of the vulnerabilities within DeFi bridges, which, despite facilitating easier interoperability between various protocols, have become a favored target for exploiters.

Unfortunately, this is not an isolated incident, as numerous significant DeFi hacks have occurred on these cross-chain bridge protocols.