Abracadabra proposes wind-down as MIM stablecoin falls to $0.04
DeFi & Yields ·
Governance vote to liquidate the once-$6 billion DeFi protocol comes amid allegations that treasury funds were extracted before the collapse was announced.
Abracadabra has put forward a proposal for "an orderly wind down" of its operations, citing a string of security incidents that leave its stablecoin Magic Internet Money with "no viable path back to parity." According to the proposal, the protocol has 22 million MIM in outstanding supply against just $900,000 of "actionable backing," pricing the supposedly dollar-pegged token at $0.04. The governance vote, set to close Wednesday evening, had received only two votes at last check: 100 million SPELL in favor and 0.5 million against.
The wind-down follows years of security failures. Launched in 2021, Abracadabra lost roughly $1 billion of TVL in 2022 when the DegenBox leverage mechanism tied to UST collapsed, and its reputation was further damaged by the unmasking of a project-linked figure as a longtime fraudster the same year. More recently, hacks in January 2024, March 2025 and October 2025 stripped $6.5 million, $13 million and $1.7 million respectively, leaving $21 million in total bad debt.
Trading Strategy co-founder Mikko Ohtamaa has called the move "treasury looting," pointing to a June governance proposal that transferred asset stewardship to a group "led by Anubis," which passed unopposed with only two votes cast. Ohtamaa has flagged treasury sales of MIM on Curve on June 8 and 11 that reportedly netted sellers about $0.5 million while the peg was already breaking, followed by an $8 million-plus transfer the following month to a Binance deposit address and an unlabelled wallet.
MIM has been depegged since June, despite an early-July promise from the project's X account of a roadmap to restore the peg and improve protocol health — the account has not posted since. The wind-down proposal does not address the disputed transfers or factor them into redemption calculations; it values outstanding MIM strictly against the remaining "actionable" collateral, stating there is "no way to repeg MIM" and no prospect of the protocol functioning or growing again.
What remains unresolved is whether the flagged transfers will face any separate accounting or recovery effort, and how the final vote tally will affect the wind-down's approval. The episode adds to a broader pattern of DeFi governance shutdowns, with Balancer's DAO separately voting to dissolve under BIP-928 after a $129 million exploit.