Across Protocol DAO Accused of Misusing $23 Million in Funds

Across Protocol DAO, a decentralized autonomous organization, is facing allegations of misusing $23 million in funds. The accusations were made by Ogle, the pseudonymous founder of layer 1 project Glue and an onchain sleuth, who claimed that the founders of Across Protocol manipulated DAO votes to fund their for-profit company, Risk Labs. Ogle described the project as a "DAO in name only," suggesting that it does not operate as a true decentralized organization.

Hart Lambur, the founder of both Risk Labs and Across Protocol, denied the allegations. He stated that Risk Labs is a Cayman Islands-based nonprofit with no shareholders and operates under fiduciary obligations. Lambur shared a certificate of incorporation to support his claim, asserting that if the funds were misused, the directors, including himself, could be sued.

The nonprofit status of Risk Labs has been called into question. While the company's certificate of incorporation describes it as a "foundation company," law firm Harneys explained that such firms can have any purpose, whether commercial, charitable, or private. Cointelegraph was unable to verify Risk Labs' claimed nonprofit status, as its name was not included in the list of registered nonprofit organizations. Cayman Islands-based foundations are generally regarded as "ownerless" entities and are not permitted to pay dividends. However, for-profit foundation companies in the Cayman Islands allow distributions to beneficiaries rather than to shareholders.

Ogle alleged that the co-founders and insiders of Across/Risk orchestrated governance proposals to secretly subvert the democratic process of the DAO and extract approximately $23 million from the treasury. The first DAO proposal, approved two years ago, saw 13.1 million worth of tokenholders voting in favor, approving the proposal with over 97% of the vote. The second DAO proposal, a year later, saw Risk Labs ask the DAO for 50 million ACX tokens for "retroactive funding." Ogle claimed that the team's votes were crucial for the proposal to reach quorum and pass. He also noted that the proposal did not guarantee the money would be used for Across, and there were no formal agreements between the two companies. Onchain analysis revealed that many Risk Labs team members covertly approved the proposal, with the second-largest voting wallet initially funded by Hart Lambur.

Lambur denied the accusations, stating that the token has been live for almost three years and team members have acquired it with their own funds. He confirmed that Chan voted for the proposal but denied the secret nature of the addresses used, noting that they are publicly disclosed and linked. Lambur described all allegations as "categorically untrue" and criticized Ogle for anonymity and potential conflicts of interest, highlighting Ogle's connections to competing projects like LayerZero and Stargate. Lambur also mentioned that Bryan Pellegrino, the founder of Stargate and LayerZero, retweeted Ogle's post almost immediately after it was posted.

This controversy highlights the challenges and complexities of decentralized governance and the potential for misuse of funds within DAOs. The allegations against Across Protocol DAO raise questions about the transparency and accountability of decentralized organizations and the need for robust governance mechanisms to prevent such incidents. The situation underscores the importance of independent verification and oversight in ensuring that DAOs operate in the best interests of their stakeholders.