DAO Maker Fallout: Victims Accuse Platform of Failing to Reimburse Hacked Funds in Alleged Cover-Up

The DAO Maker fundraising platform, distinct from MakerDAO, plans to raise funds for Web3 projects in 2024. However, victims of a 2021 hack allege that they haven't received compensation despite promises of reimbursement. DeFi researcher SOMA Analytics claims DAO Maker canceled the reimbursement plan through a proposal, using its token supply to ensure the vote's outcome. The proposal was allegedly deleted to conceal the team's failure to compensate victims. DAO Maker is unrelated to MakerDAO and has not responded to Cointelegraph's request for comment.

DAO Maker Fallout: Victims Accuse Platform of Failing to Reimburse Hacked Funds Amid Allegations of Cover-Up

In the realm of decentralized finance (DeFi), the DAO Maker crypto fundraising platform has come under fire from victims of a 2021 hack who allege that they have yet to be compensated for their losses, despite promises of reimbursement from the project's development team. Victims contend that the hack, which resulted in the theft of approximately $7 million in user funds, occurred due to the negligence of DAO Maker's developers, and that the platform is therefore liable for the losses.

In the aftermath of the August 2021 exploit, DAO Maker acknowledged that the private key compromise was the cause of the breach. The platform initially vowed to compensate investors with an immediate airdrop of 500 USD Coin (USDC) per person, followed by the distribution of an "IOU token" called USDR, which would become redeemable for DAO tokens at prevailing prices within a year.

However, victims of the hack claim that USDR redemptions were never allowed, leaving them with uncompensated losses. DeFi researcher SOMA Analytics has unearthed evidence suggesting that DAO Maker forced through a proposal with its governing body to cancel the reimbursement plan, leveraging its substantial token supply to ensure the vote's outcome. The researcher alleges that the proposal was subsequently deleted in an apparent attempt to conceal the project's failure to fulfill its compensation commitments.

Speaking with Cointelegraph, several victims described their experiences. "Red Drac," a Telegram user who lost $2,000 in the hack, explained that after receiving the initial 500 USDT airdrop, they were promised 1,500 USDR tokens, which ultimately proved to be worthless due to the lack of redemption options.

Zztelecom, another Telegram user, recounted a similar story, stating that they purchased 10,000 USDR tokens with the expectation of redeeming them for $10,000 worth of DAO. However, the tokens never became redeemable and are now effectively worthless on the secondary market.

SOMA Analytics has presented compelling evidence of a potential cover-up by the DAO Maker team. The researcher claims that the team created a proposal to abandon the USDR redemption process, which was passed and then subsequently deleted from the Snapshot webpage. The proposal allegedly received support from a small number of wallets that cast a disproportionate number of votes, indicating potential manipulation by the team.

DAO Maker's victims acknowledge that the USDR token allows them to gain DAO Power, which enhances their chances of participating in token offerings they find attractive. However, they argue that the team has effectively rendered the tokens worthless by denying redemption options and making DAO Power non-transferable.

Despite the victims' allegations and the findings of SOMA Analytics, DAO Maker has not publicly responded to the accusations. The platform continues to provide fundraising services to Web3 startups, and its DAO token maintains a market cap of approximately $153 million, placing it among the top 400 cryptocurrencies.

The case of DAO Maker serves as a cautionary tale about the risks associated with DeFi and the importance of holding projects accountable for their actions. Victims of the hack have expressed frustration and anger over their uncompensated losses, while the lack of transparency and communication from DAO Maker has further eroded trust in the platform. As the DeFi ecosystem continues to evolve and attract new participants, it is crucial that these platforms prioritize transparency, accountability, and the protection of user funds.