Robert Leshner, the founder of decentralized finance (DeFi) protocol Compound, pleaded and threatened its users both at the same time to give back the COMP tokens that were erroneously sent to them due to a bug in the contract.
As we reported, just over $90 million was mistakenly sent to some Compound users after an upgrade in the form of a new Comptroller contract found to be containing a bug.
Late on Thursday, Leshner tweeted out his response in which he first requested people to return 90% of the funds and keep the rest.
However, the second portion of his tweet raised many eyebrows in the crypto community as it was in complete opposition to DeFi’s ethos. Leshner threatened to report those who don’t send back the money to the Internal Revenue Service (IRS).
“Section 61 of the IRS code defines income very broadly. If you received a large sum from this error and decide to keep it, that would be considered income,” explained Shehan Chandrasekera, head of the tax strategy at crypto tax software company CoinTracker.io.
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
The community wasn’t happy with Leshner’s response, obviously, with one Aave enthusiast saying, “Imagine you can have any DeFi credibility when: Giving orders, snitching, no problem with doxx and giving threats all in one tweet.”
Meanwhile, @scupytrooples of DeFi protocol Alchemix and VC firm eGirl Capital advised Compound founder to “Make a portal on the website for returns, log them, reward returners, ask nicely,” while noting that “This got us 55% of our alETH back from our incident.”
A few hours after his original Tweet, Leshner backtracked as he realized the fault in his approach, saying,
“I’m trying to do anything I can to help the community get some of its COMP back, and this was a bone-headed tweet / approach. That’s on me. Luckily, the community is much bigger, and smarter, than just me. I appreciate your ridicule and support.”
In non-related news, their long-term legal counsel, Jake Chervinksy, has decided to step away from Compound Finance to work on another project, which he says he will announce after he takes the month of October off.
1/ Some personal news: after 2.5 amazing years, yesterday was my last day at @compoundfinance
I'm taking October off, then starting a new challenge (stay tuned)
— Jake Chervinsky (@jchervinsky) October 1, 2021
The price of COMP tokens initially plunged about 12% after the news of the bug, and the subsequent mistake has since gained some ground and is currently trading at $324.78, up 122% YTD.