Key Highlights
- ZachXBT questioned PiggyBank after the platform disclosed losses linked to a $LAB token position.
- PiggyBank reported drawdowns of up to 15% across user vaults after excluding its locked $LAB holdings from NAV calculations.
- The move reignited concerns surrounding $LAB, a token ZachXBT previously investigated over alleged supply and transparency issues.
On-chain investigator ZachXBT has questioned DeFi yield platform PiggyBank’s risk management after the protocol disclosed significant losses tied to a $LAB token position, resulting in losses across several user vaults.
In an X post on Saturday, quoting his own earlier investigation into $LAB, ZachXBT wrote, “This little piggy went to the market and lost user assets gambling on blatant scam coins,” accompanied by screenshots of PiggyBank’s transparency update.
PiggyBank discloses details of the incident
In a detailed X post, PiggyBank stated that it had entered a $100,000 position (approximately 2% of its portfolio at the time) one month earlier as part of its mid-cap basis trade strategy. The trade involved purchasing locked $LAB tokens at a steep discount via a Tier-1 OTC desk and hedging the exposure with perpetual shorts.
However, “violent manipulation” and chaotic price swings on thin liquidity, combined with deeply negative funding rates, made maintaining the hedge unsustainable. The platform closed the short position to limit further downside, leaving it holding an illiquid $LAB bag now valued at $1.35 million.
As a result, PiggyBank excluded the locked $LAB position from its current Net Asset Value (NAV) calculations until the first unlock on August 14. This decision has triggered immediate drawdowns: approximately 15% on the USDC vault, 12% on SPYx, and 9% on JitoSOL.
“This is the fairest and most transparent way to let users manage their liquidity,” PiggyBank stated, adding that it plans to publish a detailed report next week.
The Crypto Times team has reached out to PiggyBank for comment on ZachXBT’s recent comments and the incident but had not received a response at the time of publication.
ZachXBT’s $LAB investigation
ZachXBT’s criticism references his extensive May 2026 investigation into $LAB, where he raised concerns about opaque OTC deals, unilateral vesting changes, unclear token distribution, and alleged insider control exceeding 95% of the supply.
The investigation alleged that the token, launched by founders associated with a questionable prior project, reached a $6B fully diluted valuation amid heavy market maker coordination and hidden supply mechanics, drawing sharp criticism as a textbook case of retail extraction on centralized exchanges.
His latest comments quickly gained traction, with community members piling on with memes and criticism. Several users noted the irony of a yield optimizer losing principal on a single high-risk bet.
There was no clear, consistent public breakdown of token allocation. Major trackers like CoinGecko, CoinMarketCap, and RootData reported conflicting circulating supply figures. The project’s own documentation provided virtually zero transparency on vesting schedules or allocations.
ZachXBT also called on major exchanges (Bitget, Binance, and Gate) to investigate, freeze suspicious funds, or delist the token to protect retail traders.
Ongoing risks in DeFi
PiggyBank markets itself as a yield platform offering extra returns on tokenized stocks and Solana-based assets. Its vaults had advertised strong APYs, making the sudden double-digit drawdowns particularly painful for depositors who expected relatively stable, hedged strategies.
The incident highlights the risks in DeFi where protocols pursue higher yields through basis trades and OTC deals in volatile mid-cap tokens. While PiggyBank described the position as within its strategy scope, the outcome underscores the dangers of illiquidity and manipulation in tokens with concentrated supply and questionable fundamentals.
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