Fascinating buzz is circulating in the cryptosphere around Ardana Labs, a firm that promised an innovative stablecoin platform for the Cardano network. Adopting the alias “Ardana,” it lured investors into a web of sharp speculation anchored on the idea of minting fiat-pegged stablecoins, such as the U.S. dollar-based token known as dUSD. This anticipated venture raked in a whopping $10 million in 2021. However, it severely capsized, and abruptly, in November 2022. The underlying reasons were described as “funding and project timeline uncertainty.”
Now, imagine the heartbreak of those who, under the cold hand of the so-called “crypto winter” of 2022, blamed the failure and loss on the notorious bear market. The dreadful twist came via new findings from Web3 risk-management platform, Xerberus. It shed light on a formidable Pandora’s Box, showing that Ardana’s debacle might have stemmed from woefully poor financial management, rather than merely lack of funds.
As per the Xerberus findings, Ardana’s top executives supposedly transferred approximately 80% of the project’s funds to a personal wallet. Offloading most of the reserves in a covert fashion, however, doesn’t quite sum up the catastrophe. Apparently, they then engaged in a series of ill-fated crypto investments, leading to roughly a $4 million loss and ultimately, the project’s downfall.
Let’s rewind a bit to October 2021, the zenith of Ardana’s fame. Having amassed $10 million from big-name investment firms such as CFund, Three Arrows Capital (3AC), and Ascensive Assets, the scheme was all the rage among investors. The hopes were high that Ardana’s upcoming token, DANA, could reward the market with hyperbolic gains. The optimism was further fueled when, the following month, the ambitious team announced a partnership with Near Protocol to bridge Cardano and Near. Istically, none of this worked out, and the venture’s closure was met with scarce skepticism, seen against the backdrop of the simultaneous collapse of ACT and bankruptcy of 3AC.
However, the conclusive wager in this grand scheme fell on Ardana Labs’ perilously risky asset management practices. The theory was reinforced with a $1 million transaction from 3AC spotted in Ardana Labs’ Ethereum wallet, used for the DANA initial coin offering (ICO).
The funds were successively moved into other wallets through various steps, ultimately culminating in bad trades. As per Xerberus, $1.82 million USDC remains unscathed, but about $4 million has been lost to regrettable trades.
All this paints an emphatic picture of the inherent risk in new-age Web3 startups, particularly ones lacking a functioning product. It’s a sobering reminder to delve deeply into a project’s on-chain behavior before investing your hard-earned money. After all, the modern realm of investing is as risky as they come, requiring a cautious tread between the enticing narratives of astronomical gains and the eventual meltdown of not-so-fortunate ventures.
Source: Cointelegraph
