How a Crypto Developer Faked a DeFi Ecosystem

The chief architect of Solana's once mighty stablecoin exchange Saber hid behind anonymous developer accounts to pump billions of dollars into his DeFi empire, a CoinDesk investigation has found. From the story: Something about Sunny Aggregator felt off-kilter to the cryptocurrency user known as Saint Eclectic. Sunny was the newest decentralized finance (DeFi) app to hit Solana during that blockchain's scorching bull run last summer, when its native token jumped fivefold. Sunny was barely two weeks old by early September, but billions of dollars in crypto were flooding this yield farm. Still, Saint and others had questions: Who was behind Sunny? Why was its developer, one "Surya Khosla," pseudonymous? Was its codebase audited? Would users' cash be safe? "There was no indication of who Surya was," Saint recalled recently, "so many users didn't feel comfortable" putting their crypto in. Their suspicions proved prescient.

CoinDesk has learned who Surya was: Ian Macalinao, the chief architect of Saber, a stablecoin exchange built on top of Solana. In turn, he built Sunny Aggregator on top of Saber. And that's just the top of the pile. Coding as 11 purportedly independent developers, Ian, a 20-something computer wiz from Texas, created a vast web of interlocking DeFi protocols that projected billions of dollars of double-counted value onto the Saber ecosystem. That temporarily inflated the total value locked (TVL) on Solana, as the network was racing toward its zenith last November. The DeFi faithful regard TVL as a barometer for on-chain activity. "I devised a scheme to maximize Solana's TVL: I would build protocols that stack on top of each other, such that a dollar could be counted several times," Ian wrote in a never-published blog post reviewed by CoinDesk. The blog post was prepared on March 26, three days after Cashio, one of Ian's secretly built protocols, lost $52 million in a hack. People close to the matter confirmed the draft's authenticity.

IOW

[rgmoore]

In other words, we have more evidence that DeFi is just one scam layered on top of the next. The only thing that's surprising here is that somebody actually tracked down the details of the scam rather than trying to bury it.

Re:IOW

[tlhIngan]

In other words, we have more evidence that DeFi is just one scam layered on top of the next.

What did you expect? DeFi is Deregulated Finance, despite everyone claiming it's supposed to mean something else.

There's a reason the regulations exist in the first place.

There is actually a purpose to true DeFi

[rsilvergun]

an incredibly stupid, childish and foolish purpose, but a purpose nontheless.

DeFi means using algorithms and computer code instead of people and institutions to manage financial transactions, most commonly loans. In a perfect world it would mean instead of pooling money into banks for financial services and then regulating those banks with governments you'd have a computer system with open source code that set up the rules and regulations. Nobody would own that system and anyone could fork it if they di

"DeFi" = "Deregulated Finance"

[Anonymous Coward]

Also, the De in "DeFi" means Decentralized

Don't let the crypto bros fool you: "DeFi" means "Deregulated Finance", not "decentralized" as they're trying to pass it off.

The crypto bros all want to wrestle control away from governments and the 'big banks' (just like they're trying to do with "Web3" vs. all tech companies), under a system in which they set the rules ("code is law") and do it without any oversight, and hence no accountability whatsoever. Why else do you think they're all throwing a fit whenever the specter of regulation comes up (you k

Is this a crime? If not, it should be

[davidwr]

I am not a lawyer, but this sort of financial deception smells an awful lot like criminal fraud. If it's not, it should be.

Texas Penal Code SS 32.32

[raymorris]

The summary states this individual is in Texas. Section 32.32 of the Texas Penal Code states:

--
A person commits an offense if he intentionally or knowingly makes a materially false or misleading written statement to obtain property or credit
--

Don't be distracted by the "or credit" part - in statutes "or" means the same as it does in programming languages - either money OR credit. He obtained money, so it applies.

--
(c) An offense under this section is: ...
(3) a Class A misdemeanor if the value of the property or the amount of credit is $750 or more but less than $2,500;

(4) a state jail felony if the value of the property or the amount of credit is $2,500 or more but less than $30,000;

(5) a felony of the third degree if the value of the property or the amount of credit is $30,000 or more but less than $150,000;

(6) a felony of the second degree if the value of the property or the amount of credit is $150,000 or more but less than
$300,000; or

(7) a felony of the first degree if the value of the property or the amount of credit is $300,000 or more.
__

ADDITIONALLY, section 32 provides a separate offense with greater penalties if he defrauded elderly or disabled people, where the standard is whether he was "reckless" as to whether or not any of the victims were disabled or elderly.

There are probably several other crimes that apply.

Gotta love the ending

[DarkOx]

Start out working on something that handles financial transaction in a new -at-least-to-you language. I am totally sure that won't lead to any bad assumptions and security problems...

The entire DeFi industry is one giant group of monkeys slinging poo at each other.

Oh no!

[splutty]

Anyway...

Again..

[Malays2 bowman]

This is why real serious business will not be done with cryptocurrency. No big firm is going to put their trust into a system run by people who go by hacker names, and certainly not people who pull sneaky shit like in TFS.

Also take off that damn ('clever' hacker phrase) t-shirt, put on a suit and tie, and be professional for once in your life. As it is, no firm is going to take you cryptoclowns seriously.

Re:

[DarkOx]

and certainly not people who pull sneaky shit like in TFS.

I am not sure that is the problem you think it is. At least in the sense that its not what will keep people from taking DeFi seriously. That is the kind of thing that happens literally everywhere its basic human nature.

There is an old saying "be careful what you measure you'll get more of it." Just look at Wells Fargo and the whole opening accounts for customers they never asked for scandal thing. It does not have to be a single guy masterminding some scheme to game the system, the small fish will figure

CryptoBS redefines yet another word

[arQon]

"Prescient"?!

Being suspicious of cryptocurrency - and arguably, of "stable" (hahaha) coins especially - isn't "prescient", it's, well, "scient". It's common knowledge roughly on par with knowing how to tie your own shoelaces. Apparently I may be prescient too: I suspected last night that the sun would rise this morning, and guess what? It did! It's like I'm *psychic* or something!

Even withOUT the "from zero to supposedly billions of dollars of imaginary money in two weeks" aspect, we're at the point now wh