Cryptocurrency Site Accidentally Donated $ 90 Million And Cannot Get It Back
Compound, an online cryptocurrency marketplace, experienced a technical glitch on Wednesday that led to millions of dollars in the company’s holdings being sent to random users.
The problem, a bug in a routine update fix, delivered $ 89 million to user accounts before it was detected and closed.
Robert Leshner, the founder of Compound, was quick to urge users via Twitter to return the money. However, after it was not received, it threatens reporting recipients to the IRS and making their identities public – a controversial threat, given the generally anonymous nature of cryptocurrency trading. Leshner later returned comments, calling them “nuts” and offering other means of compensation.
The problem sent the money in the form of COMP tokens, which are earned by interacting with the market, usually by lending or borrowing cryptocurrency. COMP works as a sort of shareholder vote, and people who have more of it can help determine the platform’s procedures. More classically, it can be exchanged for dollars; the selling price is currently around $ 300, up from over $ 500 in early September.
In a maintenance Along with CBS, Leshner said the COMP that had been accidentally distributed was reserved for future users, describing it as similar to “an endowment for the protocol, to keep it running for hundreds of years.”
Surprisingly, the COMP fiasco isn’t the only high-profile accidental giveaway in recent months. Alchemix, a different lending platform, mistakenly forgave nearly $ 5 million in loans in June; in May, BlockFi, yet another platform, accidentally gave up $ 10 million.
While the cryptocurrency markets have seen some high-profile mistakes, regular banks are not immune to them either. In 2020, Citigroup accidentally sent $ 900 million on behalf of cosmetics company Revlon and, after a legal battle, was told that she could not legally demand reimbursement.
In theory, however, the funds involved in the Citigroup-Revlon incident were overseen by the courts, and the transfer could were overturned if a judge had decided it should be. For cryptocurrency trading, such an exemption does not exist; it is not possible for anyone except the new owners of the tokens to return them. While this is appealing to some, it also creates a “Wild West” situation in which legal regulations are unclear or non-existent.
Yet, as a result of Leshner’s requests, around $ 36 million in COMP tokens had been voluntarily returned from Tuesday.
Trevor Filseth is a current affairs and foreign affairs writer for the National interest.