Decentralized exchange (DEX) dYdX was forced to use its insurance fund to cover $9 million in user liquidations on Nov. 17. According to dYdX founder Antonio Juliano, the losses resulted from a “targeted attack” against the exchange.

Based on reports from the dYdX team on X (formerly Twitter), the v3 insurance fund was used “to fill gaps on liquidations processes in the YFI market.” The Yearn.Finance (YFI) token dropped 43% on Nov. 17 after soaring over 170% in the previous weeks. The sudden price crash raised concerns within the crypto community about a possible exit scam.

The alleged attack targeted long positions in YFI tokens on the exchange, liquidating positions worth nearly $38 million. Juliano believes trading losses affecting dYdX, as well as the sharp decline in YFI, have been caused by market manipulation:

“This was pretty clearly a targeted attack against dYdX, including market manipulation of the entire $YFI market. We are investigating alongside several partners and will be transparent with what we discover.”

According to Juliano, the v3 insurance fund still holds $13.5 million, and users’ funds were not affected by the incident. “Even though no user funds were affected, we will also be conducting a thorough review of our risk parameters and making appropriate changes to both v3 and potentially the dYdX Chain software if necessary,” he noted on X.

The profitable trade wiped out over $300 million in market capitalization from the YFI token, leading the community to raise eyebrows about a possible insider job in the YFI market. Some users claimed that 50% of the YFI token supply was held in 10 wallets controlled by developers. However, Etherscan data suggests some of these holders are crypto exchange wallets.