October 18, 2021
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0Users of the Blockchain Platform Received $90 Million by Mistake
The cryptocurrency platform Compound mistakenly distributed tokens worth $90 million to its users. The founder of the platform, Robert Leshner, asked for everything to be returned. Otherwise, he said he would turn over information to the IRS. He announced it on Twitter.
He demanded the return of unreasonably high remuneration and threatened to hand over details of the transactions of unscrupulous users to the IRS tax authorities.
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What is Compound?
Compound is an Ethereum-based money market protocol that allows users to earn interest or borrow assets against collateral. Lenders can provide assets to the Compound liquidity pool and start earning compound interest, while interest rates are automatically dictated by supply and demand.
COMP is an application management token automatically distributed among those who invest in the platform, make loans there, or fulfill their credit obligations. In addition, it allows clients to vote for platform changes and influence interest rates.
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What happened?
According to the project’s founder, Robert Leshner, the incident happened due to the recent update of the DeFi Compound Finance interest rate protocol — it contained an error that left some users with an unusual number of COMP tokens as a reward for making a loan.
“A few hours ago, the smart contract update came into force, which distributed tokens between users. The problem is that it contained an error and some users received more COMP cryptocurrencies than they needed,” Leshner wrote.
It is noted that the error was contained in Proposition 62, which entered into force recently. Its task was to recalculate the distribution of COMP between liquidity providers and borrowers based on the coefficients established by corporate governance, in contrast to the previous 50/50 share division model that was used.
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The result of the mistake
The founder of Compound wrote a message on Twitter, where he threatened to inform the IRS about those who received millions of dollars due to an error and did not return the funds. Many users agreed with Robert’s decision because they would have to pay taxes on the tokens received.
Others criticized the founder of the blockchain platform for the threats and claimed that in case of intervention by the IRS, Leshner would receive back only 40% of the erroneous payments.
According to the developers, the Compound team does not have any platform controls since it is in the hands of the community. Leshner clarified that to make a refund of all funds, a vote among users is necessary. Assuming a positive result from this process, the refund would still take at least a week.
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