It’s just another day in the Wild West of cryptocurrency markets.
Users of the blockchain startup Compound got an unusual surprise. Millions of dollars worth of COMP tokens, rewards for crypto mining, were mistakenly given out Wednesday night — and the exchange is now groveling and threatening for its money back.
A decentralized finance or “DeFi” protocol like Compound allows investors to trade directly with each other. Cryptocurrency exchanges, in contrast, are businesses that facilitate the exchange of assets for other kinds of assets, like trading cryptos for fiat currencies.
According to public records, the equivalent of around $90.1 million was given out in total. One user couldn’t believe their luck, ending up with 70 million COMP tokens, worth around $20 million. “What’s going on here?” they tweeted.
Now, of course, Compound is desperate.
“If you received a large, incorrect amount of COMP from the Compound protocol error: Please return it,” Robert Leshner, founder of Compound Labs, tweeted Thursday night.
Leshner also gave out a stern warning.
“Keep 10 percent as a white-hat,” he added in the tweet. “Otherwise, it’s being reported as income to the IRS, and most of you are doxxed.”
The founder seems to have had a change of heart after making the threat, though.
“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,” he wrote in a follow-up tweet. “That’s on me.”
“I appreciate your ridicule and support,” Leshner added.
The founder basically had his finger on the self-destruct button by threatening to unmask users.
“Doxxing their customers is about the worst thing a crypto company can do from a PR perspective,” Mati Greenspan, portfolio manager and Quantum Economics founder, told CNBC.
Surprisingly, users have given back their money before when another money market called Alchemix had a similar incident, mistakenly giving out $4.8 million.
“Almost everyone who got the extra rewards refunded the extra,” blockchain security researcher Mudit Gupta told CNBC. “This makes me optimistic that people will refund most of COMP tokens, as well, but you can never be sure,” he said.
More on cryptos: El Salvador Officially Starts Mining Bitcoin Using Power From an Actual Volcano
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