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Xerberus, a UK-based Web3 risk management and platform, recently released an investigative report on Ardana Labs, a failed stablecoin platform for the blockchain which at its peak attracted over $10 million in investments sometime in 2021.
According to the on Ardana, the project abruptly shuttered in November 2022, citing funding and project timeline uncertainties. While some attributed this to the broader challenges faced during the crypto winter of 2022, the investigation highlights several factors which point to extraneous reasons for its downfall.
In the report, Xerberus alleges that Ardana executives, including CEO Ryan Motovu, siphoned off 80% of the project's funds into a personal wallet, subsequently making poor crypto investments that resulted in approximately $4 million in losses.
gained prominence sometime in 2021, securing $10 million from investors, including venture capital firms , (3AC), and . The project's backers and successful fundraising efforts fueled optimism around its token, DANA.
Despite partnerships and pledges, Ardana never launched its stablecoin platform or bridge. The project was terminated in November 2022, supposedly due to funding difficulties exacerbated by the broader crypto market challenges. However, Xerberus' analysis suggests that questionable asset management practices played a more significant role.
According to Xerberus, the used by Ardana Labs for its initial coin offering (ICO) in November 2021. They discovered links to this address on Tokensoft's ICO platform. Notably, Xerberus identified a $1 million transaction from 3AC to this address when 3AC had just invested in Ardana.
The trail continued with a $1,747 deposit in September 2021, shortly after Ardana's fundraising began. Subsequently, the account received substantial USD Coin (USDC) transfers.
Approximately $3.2 million of stablecoins were routed from the fundraiser wallet to a "Target Wallet" through a series of intermediate steps. The funds were converted into CVX tokens, with transactions conducted via . Eventually, these funds reached what Xerberus alleges was an "Old Address" of Ardana founder Motovu.
The Old Address swiftly transferred these funds to the Target Wallet, which was used for risky cryptocurrency investments, leading to substantial losses.
Involvement of CeFi Exchanges
Xerberus also asserts that $4 million was funneled through centralized exchanges, including Kraken, Coinbase, and Gate.io, before reaching the Target Wallet. While identifying transactions beyond this point became challenging, Xerberus used various techniques to trace the funds.
For example, they noted that funds deposited in Kraken often used the same address for both incoming and outgoing transactions when transfers occurred quickly. In other cases, the exchanges combined deposits with other users' tokens, making it harder to track specific actions.
Spending and Liquidation
Approximately $1.82 million of Ardana's funds were spent on development costs, including salaries. An identified wallet address showed payments that matched this amount.
Xerberus' analysis reveals that nearly $4 million of the Target Wallet's token balance was lost due to poor trades. These losses were incurred on decentralized exchanges like PancakeSwap, Uniswap, SushiSwap, and GMX. Xerberus noted changes in Ardana's on-chain behavior in March 2022, with assets being liquidated through DEXs. This continued until November 2022, aligning with the project's closure announcement. These liquidated funds still reside in the treasury wallet.
Disclaimer: This article is provided for informational purposes only and does not constitute financial, investment, or legal advice.