PiggyBank Admits LAB Token Manipulation Caused User Losses, Vows Compensation

PiggyBank disclosed a flawed basis trading strategy involving LAB tokens that resulted in significant user losses, pledging to make affected investors whole. The protocol invested $100,000 (2% of assets) in locked LAB tokens via OTC channels while hedging with perpetual shorts—a move that backfired when the token faced extreme market manipulation and negative funding rates.

The locked LAB position now shows a 13x paper gain at $1.35 million, but remains excluded from NAV calculations until August 14 unlock. This exclusion triggered immediate drawdowns: 15% for USDC vaults, 12% on SPYx, and 9% on JitoSOL.

On-chain sleuth ZachXBT had previously flagged LAB as a "retail extraction" scheme in May, citing opaque OTC deals and unilateral actions by developers. The warning went unheeded as PiggyBank proceeded with the ill-fated trade.