Ethereum Co-Founder Faces Legal Trouble Over DeFi Scam Allegations
Ethereum, the second-largest cryptocurrency by market capitalization, is known for its decentralized applications (DApps) and smart contracts that enable various use cases such as decentralized finance (DeFi) and non-fungible tokens (NFTs). However, not all DApps are legitimate, and some of them may be scams that exploit the trust and enthusiasm of crypto investors.
One of the most notorious examples of such scams is Squid Game, a DeFi project that claimed to be inspired by the popular Netflix series of the same name. The project promised high returns for staking its native token, SQUID, which surged more than 75,000% in a week. However, on Nov. 1, the project’s website and social media accounts disappeared, and the token’s price crashed to zero, leaving investors with no way to withdraw their funds. According to some estimates, the Squid Game scam may have cost investors more than $3 million.
What makes this case even more controversial is the alleged involvement of Vitalik Buterin, the co-founder of Ethereum and one of the most influential figures in the crypto space. According to a report by TechStory, Buterin is facing legal scrutiny for endorsing Squid Game and other fraudulent DeFi projects on his Twitter account. The report claims that Buterin posted tweets praising Squid Game and other similar projects, such as Tiger King and Squid Game 2, which also turned out to be scams.
The report cites a lawsuit filed by a group of investors who claim to have lost money due to Buterin’s tweets. The lawsuit accuses Buterin of violating the Securities Act of 1933 and the Securities Exchange Act of 1934, as well as engaging in fraud, negligence, and unjust enrichment. The plaintiffs are seeking compensatory and punitive damages, as well as an injunction to prevent Buterin from promoting any more DeFi projects.
Buterin has not publicly commented on the allegations, and his Twitter account has been inactive since Oct. 31. However, some crypto experts and enthusiasts have expressed doubts about the authenticity of the report and the lawsuit, suggesting that they may be part of a smear campaign against Buterin and Ethereum. They point out that the report does not provide any evidence or sources to back up its claims, and that the lawsuit does not appear on any official court records. They also note that Buterin is known for his integrity and philanthropy, and that he has donated millions of dollars worth of crypto to various causes, such as COVID-19 relief, animal welfare, and blockchain research.
Regardless of the truth behind the allegations, the Squid Game saga serves as a reminder of the risks and challenges that the crypto industry faces, especially in the fast-growing and largely unregulated DeFi sector. Investors should always do their own research and due diligence before putting their money into any crypto project, and be wary of any promises that sound too good to be true. As the old saying goes, if it looks like a squid, swims like a squid, and quacks like a squid, it’s probably a scam.
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