Massive Ethereum Withdrawals Spark DeFi Turmoil – Justin Sun Suspected as the Whale Behind the Move
Over the past week, a staggering $1.7 billion worth of Ethereum (ETH) has been withdrawn from the decentralized finance (DeFi) protocol Aave, causing significant market disruption and volatility.
These large-scale withdrawals drastically reduced Aave’s liquidity, temporarily spiking borrowing rates above 10%. While this surge benefited users lending ETH on the platform, it spelled trouble for those using a popular leveraged strategy known as “looping.” Looping involves borrowing ETH at low rates and reinvesting it to maximize staking yields. The sudden rise in interest rates made this approach unprofitable, forcing many to unwind their positions and unstake their ETH.
The resulting rush to exit has overwhelmed the Ethereum network, with the withdrawal queue climbing to an all-time high. According to Beaconcha.in, more than 627,944 ETH—worth approximately $2.3 billion—is now waiting to be unstaked, a process expected to take around 11 days.
Aave developer Marc Zeller has linked these massive withdrawals to crypto billionaire and Tron founder Justin Sun. Zeller highlighted that Sun often moves large sums in and out of Aave and exhibits unpredictable behavior.
Data from Arkham Intelligence shows wallets tied to Sun have pulled out $646 million in ETH from Aave in just the past three days. An additional $455 million has reportedly been withdrawn by a wallet linked to HTX, the crypto exchange Sun advises. Despite the activity, Sun-related wallets still hold around $80 million in ETH on Aave. Sun has not responded to requests for comment.
