If someone accidentally deposited millions of dollars into your bank account, what are the chances you would return it? What if the person that sent it to you asked really nicely?© Photo: OZAN KOSE/AFP (Getty Images)
This is the predicament that users of the popular decentralized finance (DeFI) staking protocol Compound are currently faced with. In recent days, the platform accidentally deposited arbitrary amounts of crypto into the accounts of some users. The total pay-out, which was delivered via a bug in a company update, now stands at approximately $89 million. As a result, the platform’s CEO and founder, Robert Leshner, is begging for the money back.
Leshner took to Twitter on Thursday to plead with users to return the mistakenly distributed millions, even suggesting that those who returned the funds could “keep 10%” as a reward for doing the right thing. If users don’t return the money, Leshner threatened, it would be “reported as income to the IRS, and most of you are doxxed.”
If you received a large, incorrect amount of COMP from the Compound protocol error:
Please return it to the Compound Timelock (0x6d903f6003cca6255D85CcA4D3B5E5146dC33925). Keep 10% as a white-hat.
Otherwise, it’s being reported as income to the IRS, and most of you are doxxed.— Robert Leshner (@rleshner) October 1, 2021
Compound is a crypto lending platform, allowing both investors and borrowers to exchange assets without the traditional services of a bank. Such platforms have been characterized as risky—given the lack of regulatory safeguards that pad traditional banking services—and this recent episode seems to show why.https://products.gobankingrates.com/pub/4676bc08-11ad-4872-8fef-ffbda36ebb37?targeting[keyword]=news-tech
The money was apparently unleashed via a mistake in what was supposed to be a standard upgrade to Compound’s smart contract (such contracts are used to facilitate crypto transactions). Instead, the alleged flaw caused certain users to be flooded with “far too much” COMP—the platform’s native crypto token. One person, for instance, claims they were gifted approximately $20 million in COMP in one go.
Platforms like Compound have been through this sort of thing before. In May, crypto lender BlockFi accidentally sent out approximately $20 million in Bitcoin to its users and subsequently begged for it back. Not long afterward, another lender, Alechemix, suffered a similar problem.
Leshner subsequently backtracked on his threat to dox users who wouldn’t return funds—calling the idea “bone-headed.” That was probably a smart move, since doxxing is largely considered a huge betrayal in the crypto community, given the industry’s ethos of privacy, anonymity, and security.
As financial experts who talked to CNBC seem to imply, there is no legal requirement for the recipients of the payout to give it back.
Interestingly, a decent amount of users seem to be going along with the CEO’s request to return funds, as Leshner can be seen thanking various individuals on Twitter:
Thank you 0x2e4a for returning COMP to the community 🙏— Robert Leshner (@rleshner) October 1, 2021
Yes, 0x2e4a, good sir, I too salute you. If some person sent me $20 million, my first order of business would be to skip all the way to the nearest ATM—or the nearest crypto exchange, as it were. We reached out to Compound for comment on this whole situation and will update our story if they respond.