Nostra Suffers $3.5 Million Loss Due to Price Manipulation in Starknet Money Market
Nostra, a company that operates a Starknet money market, has suffered a significant loss due to price manipulation. On September 17 at 9:28 a.m. ET (13:28 UTC), Nostra disclosed an incident in which one account borrowed various major cryptocurrencies against inadequate collateral.
The account, backed by Nostra's (NSTR) token, had its reported value surge from less than one cent to nearly $100 due to a thin market. This price response was used for collateral valuation despite NSTR's limited liquidity, and it would have been rejected by at least three price sources.
Nostra has paused all activities, including deposits, borrowing, withdrawals, and liquidations, while it reconciles the affected pools and pursues recovery. A significant portion of the borrowed assets, approximately $1.92 million, has already moved to Ethereum, including 234.57 ETH and around 1.3 million DAI.
The incident highlights the risks associated with using market prices from illiquid assets to determine borrowing limits.