The founder and CEO of the decentralized Compound protocol, Robert Leschner, tweeted earlier that users who mistakenly received large amounts of COMP tokens should return them to the Compound Timelock storage.
Everything would be fine, but this was not an ordinary request, but rather a direct threat to itself. At the same time, Leshner said that the identity of those who refused to return the funds ” will be disclosed to the US tax service,” while the creators of the project allegedly know the aforementioned information.
Recall that Compound is one of the most popular protocols in the decentralized finance industry. As written on the project’s website, it is “an algorithmic stand-alone interest rate protocol for developers that opens up a universe of financial applications.”
In fact, the platform allows you to borrow and lend cryptocurrency. Here is a table from the platform, which, among other things, shows the annual percentage yield for each asset.
DeFi industry scandals
A few days ago, the Compound Labs developers announced “unusual activity” within the protocol, during which 280 thousand project tokens under the ticker COMP were distributed among random users. At the moment, this is approximately $ 90 million at the current cryptocurrency exchange rate.
According to Leschner himself, the problem was a bug that appeared in the code of the Comptroller smart contract. After another update, he distributed too many coins to some users, and one of them even received 91 thousand COMP worth $ 29 million in one transaction.
A little later, Leschner posted a new tweet, which included the following phrase, which caused a storm of emotions in the comments. The developer’s reply is provided by Decrypt.
If you receive a large and incorrect amount of COMP tokens due to an error in the Compaund protocol, please return them to the protocol timelock. Save yourself 10 percent as a reward. Otherwise, these transactions will be reported to the IRS and the identity of most of you will be disclosed.
Julien Bouteloup, a member of the Curve Finance automated market maker development team, said Leschner’s comment “sounds like Compound is collecting personal data about its users and is willing to turn them in if they don’t return the money they earned at the casino.”
Leschner’s statement really sounded like this. He made it clear that earnings due to developers’ mistakes are unacceptable, and violators for some reason deserve punishment. Naturally, in this situation, one could find a smoother approach to their own users.
Other users have noticed that threats against their own customers are unlikely to end in something good. In addition, negative news seems to have affected the price of tokens, as it has dropped by almost 20 percent over the past two weeks and sagged noticeably over the past two days. However, this trend coincides with the behavior of Bitcoin, which still determines what is happening in the coin market. Accordingly, the reaction of investors could not be as sharp as it seems according to the schedule.
In the end, the CEO of Compound admitted that his line was “too harsh” and possibly unethical. In the meantime, the developers are already going to make the sent tokens by mistake useless, having held a vote on this matter soon. Most likely, they will be sent to an address that no one else has access to. This procedure is called burning in the world of cryptocurrencies.
Some projects buy back their own tokens for a certain part of the earned funds and burn them, thus reducing the supply of cryptocurrency in circulation and increasing the value of the remaining coins. Cryptocurrency exchanges do this. For example , representatives of Binance, FTX and the relatively new platform Woo X regularly burn tokens of their own projects.
We believe that this statement by the founder of the Compound platform was a mistake. In fact, in it, he reflected his attitude towards users of the project who would dare to violate Leschner’s instructions. Although in fact the situation arose due to a mistake by the developers, in this connection it is at least strange to blame users and threaten them. I would like to believe that in the future there will be fewer such incidents, and the anonymity of users will be important to all representatives of the blockchain community.