A very peculiar transaction of more than 3,520 BTC – $330.7 million at current rates – was moved. This shift into the much more privacy-oriented coin Monero (XMR) has inspired some speculation that the hacker may be using derivatives to increase their profits. The conversion is probably due to a particularly nasty hack in which the money was stolen in the first place. This case underscores just how easily illicit market actors can be used to manipulate cryptocurrency markets.

This might not be a one-off event. For one, he explained that all these bad actors have inundated spot purchases to push the derivative needle. Knight started investing in Bitcoin in 2013 and was formerly a proprietary trader at a UK market-making firm.

The movement of such a large amount of Bitcoin into Monero is the first red flag signaling that the hacker didn’t just want Bitcoin. Specifically, Monero’s privacy features make it nearly impossible to trace transactions on the network, giving users more anonymity. This has made it an attractive vehicle for criminals seeking to launder ill-gotten gains. Second, stablecoins like USDT are much easier for law enforcement to freeze and confiscate, which may make Monero a more attractive option for criminals.

It gets a lot more complicated with the potential use of derivatives. In doing so, by opening leveraged positions in Monero derivatives, the hacker could further increase profits shorting XMR. XMR’s price skyrocketed by 45%. This alone should have only raised open interest to $24.2 million, but it went considerably higher than that. That means somebody, or somebodies, were already in the bag for XMR to the tune of $11 million. The bad actors grossed millions, even after accounting for their losses from cashing out Bitcoin through Monero. They’re still a few million dollars in the lead.

This is far from the first instance that cryptocurrency derivatives have been manipulated either. Earlier in 2024, a jury convicted Avi Eisenberg for manipulating MNGO prices on Mango Markets in 2022. He is looking at a possible 20-year prison term. The $114 million exploit consisted of Eisenberg borrowing assets while using collateral obtained through the hack. Just recently, a trader manipulated JELLY prices on decentralized exchange HyperLiquid.

That figure of $330.7 million does not consider any positions that may have been in DEXs.