DeFi Bug Accidentally Gives $90 Million To Users (cnbc.com) 54
phalse phace writes: Robert Leshner, the founder of Compound Labs, just sent out a tweet pleading its users to return the $90.1 million in COMP tokens it accidentally deposited to user accounts.
Users of the popular DeFi staking protocol received the platform's crypto tokens after a system upgrade went epically wrong. As an incentive, Leshner told users to "keep 10% as a white-hat. Otherwise, it's being reported as income to the IRS, and most of you are doxxed."
In another tweet Leshner explains what happened: "A few hours ago, Proposal 62 went into effect, updating the Comptroller contract, which distributes COMP to users of the protocol. The new Comptroller contract contains a bug, causing some users to receive far too much COMP. All supplied assets, borrowed assets, and positions are completely unaffected. Users don't have to worry about their funds; the only risk is that you (or another user) receives an unfairly large quantity of COMP."
Users of the popular DeFi staking protocol received the platform's crypto tokens after a system upgrade went epically wrong. As an incentive, Leshner told users to "keep 10% as a white-hat. Otherwise, it's being reported as income to the IRS, and most of you are doxxed."
In another tweet Leshner explains what happened: "A few hours ago, Proposal 62 went into effect, updating the Comptroller contract, which distributes COMP to users of the protocol. The new Comptroller contract contains a bug, causing some users to receive far too much COMP. All supplied assets, borrowed assets, and positions are completely unaffected. Users don't have to worry about their funds; the only risk is that you (or another user) receives an unfairly large quantity of COMP."
Ahahaha (Score:4, Insightful)
âDoxxing their customers is about the worst thing a crypto company can do from a PR perspective,â Mati Greenspan, portfolio manager and Quantum Economics founder, told CNBC.
No shit.
Re:Ahahaha (Score:5, Insightful)
Nobody will ever work with this guy again. Maybe except the IRS.
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That was what I came here to post, as soon as I read this - ha ha ha ha ha ha ha ha ha!!!
(adding text because Slashdot seems to think laughter is "ascii art" - it looks for "ha ha" but can't identify swastikas)
Please or I'll kick your ass. He "apologized" (Score:4, Informative)
He's asking people to please kindly return the money; that makes sense. Then in the very next sentence threatening them. Bad move, Robert.
Of course, he just gave away $90 million on accident, so he's probably in a panic. Our brains don't work so well in panic state.
Apparently he realized that was dumb, because he followed up with:
--
Robert Leshner
@rleshner
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.
--
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It's probably worth about 90 cents by now anyway.
Re: Please or I'll kick your ass. He "apologized" (Score:2)
It's not a threat, it's a legal requirement.
They are required to report those funds earnings because they are over a specific limit.
Welcome to the fun zone
Try to reinvent the wheel. (Score:2)
-It is cute that they are trying to create another stock market.
pay the tax (Score:3, Funny)
Does uncle sam accept COMP? asking for a friend.
What an idiot (Score:2)
Not everyone lives in the U.S.A, you stupid dumbass.
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Also, shouldn't they already be reporting it as income to the IRS?
Re:What an idiot (Score:4, Informative)
Yes, they should. The IRS rule is income derived from any source [irs.gov]. If you have income, you are to report it. Don't feel like reporting it? Wait until the IRS finds out and you can then pay the original tax, plus fines and penalties which can equate to orders of magnitude more than just paying the tax.
Section 61 of the Internal Revenue Code defines gross income as all income from whatever source derived. Section 1.61-1(a) of the Income Tax Regulations provides that gross income includes income realized in any form, whether in money, property, or services. Gross income includes an undeniable accession to wealth, clearly realized, over which a taxpayer has complete dominion. Commissioner v.Glenshaw Glass, 348 U.S. 426 (1955).
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Wait until the IRS finds out and you can then pay the original tax,
LOL. With all the funding cuts to the IRS enforcement division [propublica.org] that conservatives have pushed, this is highly unlikely--unless you're an absolute idiot and broadcast that you're not paying. Or a poor, the Republican made sure that the IRS can audit the poors (via the Earned Income Tax Credit).
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I believe they may increase funding, but unfortunately I believe that increased funding will be used to harass people that can't afford lawyers and accountants to make the numbers add up.
Instead of wasting X agents on one single person, that likely has better staffing that are paid more, to attempt to get some coin out of him, just use those same agents and shake down people that can't fight back. They will get more in taxes this way for sure.
If they really cared or wanted to stick it to the rich, they woul
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What value should they be reporting to the IRS?
The full amount? What if the customer returns all of the misgotten gains?
Zero? What if the customer keeps the misgotten gains?
Responsibly, he's waiting to see what the customers do before reporting his losses as the customer's income.
Re: What an idiot (Score:2)
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And not everyone is an American was my original point. I'm Canadian, I don't give a fuck about the IRS and they can go fuck themselves.
Best thing in Cryptocurrency history (Score:3)
Maybe over time, cryptocurrency glitches can work as a wealth redistribution system. It's not ideal that it was redistributed to idiot cryptobros who really deserved to LOSE money in this case, but it's still good. We're talking at least several lifetime incomes up to almost high-end fighter jet money if you keep the whole amount. And once you have a few million, you can hire accountants to set up hacks for your local tax system to let you keep way more than you should, if you'd like.
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A lottery, but for smart people? (Score:3)
It struck me that opening accounts on every DeFi system in existence and just waiting for buttcoins to appear in them due to an accident so you can liquidate them quickly may be the smart person's alternative to playing the lottery. The cost is infinitesimal in comparison and so is the effort of checking for "winnings."
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If you are willing to do the Know Your Customer bit, Coinbase will give small amounts of crypto for watching videos. Low effort/cost if you just want to sit on some crypto. You can also swap whatever coins/tokens you get for other ones (at a profit if you plan). So you might get COMP but you can swap for BTC (or lots of other things) if you want.
Re: A lottery, but for smart people? (Score:2)
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Nah, making an NFT of your poop or starting your own crypto than rug-pulling is the real thinking man's lotto. You could also rip-off the punks idea. That works pretty well too, but the lotto aspect is that you need art that goes viral and/or a story to spin around it. If you've got a kid, exploit that little rug-rat and say he did the coding. Crypto people love a good prodigy story, because a lot of them think they're under-achieving prodigies.
Empty threat? (Score:3)
Sounds like an empty threat to me. I don't know WTF COMP is or how it works but generally speaking -
If you accidentally transfer money or property to someone they are usually obligated to return it. IE someone wires the wrong account (you) payment for something, bank error in your favor etc. Usually you can't just say 'you screwed up sucks to be you' and keep the funds. The law usually is not on your side there.
So this guy saying he's going to report you to the IRS sounds like bullshit to me. If he knew who got the property and had enough contact information for the IRS to consider it actionable; he file legal actions against the people who don't return it and recover the property. My guess is he ain't got shit as far as any idea who go what; and the proof of anything he has is his own tech toys don't work, and he's a fuckup who lost a ton of $$$.
Not that I am suggesting people don't do the honorable thing an return what isn't really theirs, and also to file taxes truthfuly and pay the tax owed - just saying no a piker when you see one
Re: Empty threat? (Score:2)
No, a DeFi is very well regulated. Itâ(TM)s a contract basically. And if you execute the contract (do the work) you are entitled to the proceeds. If someone contracts with you to do a job for $900, and you do it, they canâ(TM)t turn around and say it was a typo and they really meant $90.
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If you accidentally transfer money or property to someone they are usually obligated to return it. IE someone wires the wrong account (you) payment for something, bank error in your favor etc. Usually you can't just say 'you screwed up sucks to be you' and keep the funds.
There was a Planet Money episode [npr.org] on exactly this recently. Turns out it's not a legal thing, but simply a conventions thing.
The summary is worth reading:
Last year, Citibank accidentally sent $900 million to lenders of the makeup company, Revlon. Mistaken payments happen all the time in finance, and it's sort of understood that the thing to do is send it back. And that's what everyone thought would happen — except the lenders wouldn't do it. And then a surprising court ruling said that the lenders could keep it.
Re:Empty threat? (Score:4, Informative)
The Citibank thing wasn't just some random money sent to the wrong person.
It was money that Citibank actually owed. They accidentally paid off the entire loan, down to the penny, instead of making the regular scheduled payments.
Big difference.
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The court said the lenders could keep it because Citibank actually DID owe them the money!
That was like you borrowed $20 from Bill and said you'd get him next week. On Thursday you hand Bill a $20 and say "here's that cash I owed you". On Friday you go to Bill and say "hey I gave you $20, but that was really for Tim, can I have it back?" Bill says "um you owed me $20 that was repayment and we never said you could not or would not pay early; I don't want to lend you my $20 again!"
Its not the same.
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If you accidentally overpay your mortgage the bank would return it anyway, less the amount you were obligated to pay.
The banks actually want you to pay slowly, because that's how they earn interest. Some mortgage contracts actually forbid or cap overpayments.
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What do they mean by "otherwise..."??? (Score:3)
This is phrased as if it is some kind of threat, except if you live in the USA, you *always* have to report your income to the IRS.
I mean, if the users aren't lawfully allowed to keep the money, then the company should report it as stolen, and let the chips fall where they may for users who do not voluntarily return it.
Otherwise, how is saying that it would be reported to the IRS as income supposed to be any kind of actual threat? People win lotteries and have to pay taxes on those amounts too, but they still get to keep most of whatever they won. Honestly, if they are legally allowed to keep it,, and that is their inclination, threatening to report it as income to the IRS isn't exactly a threat when that is what a person who was following the law was going to have done anyways.
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I'm sure the phrase "under the table" originated from somewhere. Oh like say from people who "always" declare their income.
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"We made a mistake; you help us fix it, and we'll pay you 10%," sounds like an offer of employment
No.. if a company pays you more than they legally owe you due to an error or omission, Or for example someone erroneously deposited money into your bank account instead of the party they were attempting to pay, etc, then you would be obligated to return the excess, or else possibly be sued over unjust enrichment.
Re: 10% isn't income? (Score:1)
In this case it is literally a contract that if you execute this we will give you money, they just made a typo in the contract. There is nowhere that says you executing a contract can be unilaterally changed when they find out they made a mistake.
Not employment; still income (Score:2)
They aren't asking users to work for them to help fix the problem. You don't become an employee of the company.
It's still income. If you get money other than by exchanging it for other money, it's income. Whether by employment, gift, investment, speculation, or any other means.
Popular now (Score:2)
Users of the popular DeFi staking protocol
Never heard of it before, but I am sure it just got real popular real quick among some of its users.
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Popular among a miniscule portion of the world's population. Popularity is almost always relative to the context it is being presented.
I'd gladly pay taxes on free money (Score:2)
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Keep 10% and give 90% to the tax man out of spite. You can "donate" your excess payments to the US Treasury, I forget exactly how to do it because I'd never do such a foolish thing, but I do recall that it is an option.
test environment (Score:2)
No test environment? No staging?
Fuck it, we'll do it live.
This is a threat?? (Score:3)
>Otherwise, it's being reported as income to the IRS, and most of you are doxxed.
Send me lots of free money unasked, then threaten to let me keep it and report it as income? Ok, sure, I'll pay the 30% tax on whatever it is to be able to keep the other 70%. No problem. :handshake:
.., it's being reported as income to the IRS .. (Score:2)
So he is admitting that he is basically playing an important role in tax evasion of customers and that his business is built onto that.
Next Question:
What will the IRS do with that information?
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Yep he came just short of saying the quiet part out loud didn't he.
I doubt the IRS will do much with this information because its no exactly a secret that the pie chart of crypto currency uses dominated by ponzi_and_naked_speculation/laundering/tax evasion; even if you put everything else into a catch all category like 'other' it will be a tiny sliver.
Well it's 2021, what do you expect? (Score:2)
I mean yes, cryptocurrencies had noble goals, but 10 years ago, reality showed that those goals could not be reached. There are simple feed-back loops that will turn your system more and more centralized. Once you can make more "money" by investing more "money", the money will always become more and more concentrated.
So within those 10 years most people who have a clue about cryptocurrencies and are benevolent have left that system. What is left are the idiots and the fraudsters. Often, like in this case, i