PiggyBank Reports $579,000 Net Drawdown From Alleged LAB Basis Trade Manipulation

PiggyBank said it suffered an approximately $579,000 net drawdown on June 6 after a LAB token basis trade was hit by alleged market manipulation. According to ChainCatcher, the protocol said the loss was driven by a hedged position that became too costly to maintain as spot prices were kept above perpetual futures prices.

PiggyBank said it bought 142,800 locked LAB tokens in early May via an OTC intermediary for about $102,500 and opened a short perpetual position as a hedge. It said persistent spot-premium conditions pushed funding rates sharply negative, reaching an annualized -17,000%, which forced the short hedge to be closed and resulted in an estimated $476,000 loss.

The protocol said the locked LAB tokens are currently valued at about $1 million on the spot market, but due to poor liquidity and the lack of a hedge, it has excluded the position from its net asset value calculation.

PiggyBank said it will implement structural changes, including increasing transparency of on-chain mechanisms and making strategy logic and fund allocation publicly verifiable. It also said it will gradually phase out basis trading and funding-rate arbitrage strategies.

For compensation, PiggyBank said affected users will receive USDC based on actual losses. It said funding sources will include the NAV shortfall, future LAB sales after an unlock period it expects to run from August 14 to October 14, and 50% of future platform revenue. It added that all users recorded in the June 6 snapshot are eligible for compensation.