On Wednesday, an online cryptocurrency marketplace or we can say compound suffered a technical problem that resulted in mistakenly transferred of millions of dollars to random clients from the company`s funds. Due to the technical glitch, an error in a daily update spot, an amount of $89 million was sent out to the users` accounts before it was recognized and corrected.
To ask the users to return the money compound`s founder Robert Leshner immediately encouraged users through social site Twitter. When encountered that his request is not accepted, Mr. Leshner gave the recipients threat of reporting them to the IRS and unleashing their identities publicly. As in cryptocurrency, trading nature is usually anonymous, thus this threat came out controversial. Realizing that, Mr. Leshner later walked back from his comments and offered other options of reward.
The malfunction forwarded the cash in the form of COMP coupons earned by interacting with the market—typically by lending or borrowing virtual currency. The role of COMP is sort of a shareholder vote, and ones who have higher number of it can participate in formulating the platform`s systems. More traditionally, it can be replaced for dollars; the trading price is at this time around $300, down from over $500 in early September.
“The COMP that was inadvertently circulated had been preserved for potential users, illustrating it as akin to “a grant for the protocol, to maintain it running for hundreds of years”, said Leshner in a talk with CBS.
Apart from COMP disaster, there are other high-profile incidents too which occurred in recent past. Another lending platform named Alchemix mistakenly pardoned approximately $5 million in credits in June; in May, BlockFi, yet one more platform, by mistake handed away $10 million.
In addition to the cryptocurrency platforms, commercial banks have also made high-profile errors. Last year, an amount of $900 million was sent by Citigroup to cosmetic company called Revlon mistakenly. After a trial in court, verdict ruled that it could not legitimately claim it in return.
In concept, though, the funds entangled in the Citigroup-Revlon case had supervision from the courts, and the settlement could have been move backward if a magistrate had chosen it should be. In cryptocurrency trading scenario, no such overrule exists. Only the new owners of the COMP tokens can return them if they want to. Though, this is alluring to few, it also establishes a “Wild West” state in which lawful regulations are ambiguous or imaginary.
Yet, subsequent compound founder`s appeals, about $36 million in COMP coupons had been willingly refunded as of Tuesday.