PiggyBank reveals LAB token manipulation caused user losses, pledges compensation - Cryptopolitan

Crypto Insight Summary: * PiggyBank, a DeFi yield protocol, disclosed that a $100,000 basis trade involving locked LAB tokens left its USDC vault facing a 15% drawdown after alleged market manipulation broke the hedge. * On-chain investigator ZachXBT had flagged LAB weeks earlier for 95%+ insider supply control, opaque OTC deals, and unilateral vesting changes. * The locked LAB position is currently valued at roughly $1.35 million but cannot be sold until August 14, and PiggyBank has pledged compensation without specifying amounts or timelines. **PiggyBank, a DeFi yield protocol, has admitted that a basis trading strategy involving LAB tokens ended up costing depositors after market manipulation broke the trade. The protocol now expects a roughly 15% drawdown in its USDC vault, with smaller declines in its SPYx and JitoSOL products.** A drawdown report by the project was released on June 10 explaining how the trade went wrong. Per a [June 6 post on X](https://x.com/piggybank_fi/status/2063227763134279983) from PiggyBank’s verified account, the protocol invested around $100,000, about 2% of its total assets at the time, in a basis trading strategy that involved purchasing LOCKED LAB tokens at a discounted price through an OTC channel and opening a perpetual short as a hedge. According to the report, LAB then faced “violent manipulation,” thin liquidity, and deeply negative funding rates that made maintaining the short “economically irrational.” PiggyBank closed the hedge to limit further losses. The locked LAB position is currently valued at roughly $1.35 million using market prices, more than 13x the entry, but PiggyBank has excluded it from net asset value calculations until the first unlock on August 14 because the tokens cannot yet be sold. The exclusion is what produced the immediate ~15% drawdown on the USDC vault, ~12% on SPYx, and ~9% on JitoSOL. The token launched through a Token Generation Event in October 2025. Crypto Insight Analysis: Direction: Bearish LAB / Neutral DeFi Impact: Minor Impact Horizon: Short-term (1-3 days) Reasoning: LAB token manipulation causes loss of trust and liquidity issues, but impact is contained to specific protocol.