DAO Maker Accused of Unfulfilled Compensation Promises from 2021 Hack Amidst New Fundraising Plans
Summary:
DAO Maker, a crypto fundraising platform, aims to raise substantial funds for new Web3 projects in 2024, amidst unresolved complaints about unpaid compensation from a 2021 hack. Victims claim they were never recompensed despite DAO Maker's promise to do so. DAO Maker earlier had acknowledged the hack occurred due to a compromised private key. The company pledged to reimburse the losses with a 500 USD Coin (USDC) airdrop and promised to pay the remaining compensation through an IOU token called USDR within a year. However, victims insist that the USDR redemptions have not yet been fulfilled. Allegations also include a claim that DAO Maker manipulated a vote within its governance body to cancel the compensation plan.
DAO Maker, a blockchain-based fundraising platform specializing in Web3 technology, plans to raise immense funding for new projects in 2024. Yet, those victimized in its previous August 2021 cyberattack argue that they were never compensated for their incurred losses. They claim that the DAO Maker development team had pledged a full compensation for them. They also contend that DAO Maker is responsible for the hack, which stemmed from a compromised private key due to developers' negligence. The August 2021 exploit led to the theft of around $7 million in user funds. The team later confirmed the hack was due to a breached private key.
The team had previously agreed to compensate investors with a USDC airdrop and a future payback via a token named "USDR", which could be converted into DAO coins within a year. However, victims maintain their USDR redemptions have yet to be granted and their remaining losses have yet to be compensated.
In fact, a decentralized finance analyst, SOMA Analytics, claims that DAO Maker manipulated a vote within its governance body to terminate the compensation plan. The allegation infers that this done by leveraging their extensive token supply to ensure an outcome in their favor.
DAO Maker, headquartered in Prague, operates independently from the similarly named protocol, MakerDAO.
As a pioneer for tech startups, DAO Maker focuses on funding upcoming Web3 protocols steered by decentralized autonomous organizations (DAOs). Their official website reports a userbase exceeding 200,000 KYC-approved users.
Following the 2021 cyberattack, where the USDC contracts were found vulnerable, the DAO Maker team admitted that the hack transpired due to a malicious employment of a wallet with administrative access.
Subsequently, they unveiled a compensation strategy for its investors. This encompassed an immediate USDC airdrop and subsequent compensation through an IOU token called USDR, exchangeable for DAO coins within a year.
Hack victims shared with Cointelegraph that this USDR redemption was never realized. In light of this, a secondary market for the tokens had emerged selling at a fraction of the prescribed value. The liquidity pool was eventually shut down leaving those with USDR tokens with no route to convert their holdings.
DeFi researcher SOMA Analytics also alleges a cover-up by the DAO Maker team regarding the abandonment of the USDR redemption process. SOMA claims a proposal by DAO Maker to dismiss the USDR redemption was passed and then deleted from its Snapshot webpage in a suspected effort to hide their failure to reimburse victims.
Regardless of these discrepancies, the DAO token reportedly has a market cap of $153 million, ranking among the top 400 cryptocurrencies according to CoinMarketCap.
Published At
4/23/2024 4:00:00 PM
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