After questions of legality and ethics related to the ongoing decentralized finance (DeFi) problem – compound finance, whose users claimed millions in COMP Coin due to a bug – the founder is now retracting a controversial statement, while the community is once again questioning how decentralized DeFi really is.
As reported, Compound Finance adopted and executed a proposal on Wednesday, but soon reported “unusual activity.” Due to a bug in a smart contract, users could claim millions of COMP – with some USD 82m affected.
But then, on the night between Thursday and Friday (UTC time), Robert Leshner, founder of Compound Labs, tweeted a request that didn’t sit well with the crypto community.
If you receive a large, incorrect amount of COMP from the compound protocol ERROR: Please send it to the connection time lock. Keep 10% as white-hat,“ he said, adding: “Otherwise, it is reported as income to the [Internal Revenue Service (IRS)], and most of them are doxed.”
There has already been a lot of discussion about whether someone should return this money, or is it fair game, or whether the team should ask for it to be sent back at all – but now the community argued that the act of doxing is being used against these individuals, an act in itself highly questionable, though not illegal, in addition to the threats of reports to the US IRS.
Hours later, Leshner said he’s trying to do everything he can to “help the community get something back from their COMP, and that was a bone-headed tweet/approach,” adding:
“That’s up to me. Fortunately, the community is much bigger and smarter than just me. I appreciate your ridiculousness and support.”
Nevertheless, many again questioned the decentralization of DeFi. “Is it still “DeFi” when the founders dox them to the IRS,” asked ‘Dan Darkpill’, with one commenter simply replying “DOXFI.”
More users argued that it cannot be claimed that a project is DeFi if its creators can issue commands, Dox, threatening the community members. “Leshner is not setting a good example here. In Code we Trust also means we eat our own shit when shit happened,” said another.
Some questioned why such a big deal or threat is reported to the IRS, with Adam Cochran, partner at Cinneamhain Ventures, suggesting that this is likely because many people do not report taxes properly, which can lead to allegations of fraud.
Cochran also congratulated Leshner on “OWNING” and “learning” from his mistakes. The founder also received the backing of software developer and engineer Hudson Jameson, who said it was good for Leshner to go back on her IRS tweet. “Be sure to give grace and empathize with the incredible stress he and his team must be under,” he said. However, many other commentators disagreed, stating that Leshner’s reaction was to bring his community into submission.
I think this might be a fun moment for @rleshner to explain exactly what Compound Finance is doing with user data other than extorting threats of law enforcement action over their own shitty code.
- Bryce “Delta Actual” Weiner (@bryceweiner) October 1, 2021
At 9:13 UTC, COMP, ranked 68th in terms of market capitalization, traded at USD 322 and rose 9% in one day, reducing weekly losses to less than 14%.