Oyster Pearl’s Founder Steals $300,000: Responds, Calls Crypto a 'Ponzi'

Nuno Teodoro

The  founder and lead developer of Oyster Pearl (PRL), Bruno Block, has reportedly taken advantage of a breach in the token smart contract, allowing him to reopen the ICO and sell approximately $300,000 worth of PRL on the KuCoin exchange.

The situation was reported yesterday on Reddit. William Cordes, the CEO of Oyster Pearl, has also released an updated on the situation over Medium.

How it Happened

Although Oyster Pearl’s smart contract had already passed three separate audits, the CEO of Oyster Pearl was told by Bruno Block that the “directorship of the token contract had to remain open so that the peg could be adjusted over time”.

By keeping the directLock set to false on the contract, it allows the director to do anything he/she wants to at any time. And that according to the post, was exactly what happened. Bruno decided to reopen the ICO and re-issue new tokens, allowing him to buy 5000 PRL for 1 ETH. He then sent the new tokens, upward of 3 million PRL, to Kucoin and sold them until the Oyster Pearl’s team found out and requested the shut down of trading and withdrawals on KuCoin.

The team is inclined to believe that Bruno did this now in order to avoid the new Know Your Customer (KYC) policies that are scheduled for implementation on Kucoin on November 1st.

Perhaps the most fascinating aspect of the whole incident is the fact that no one from the Oyster Pearl’s team knows the real identity of Bruno Block.

“We are also interested in obtaining any information that folks may have around Bruno’s potential identity. Despite working alongside him for the last 10 months, Bruno has always maintained his anonymity. After I took over the CEO role, Bruno’s activity within the project dropped off sharply.” - William Cordes, CEO of Oyster Pearl

William has also stated that the team will be working hard to remedy the situation. He also assured investors that the team will, most likely, execute a contract swap on the block just prior to the incident. This means that it is possible that all 98.5 million PRL prior to the contract breach will be exchanged for a new token, PEARL, on a 1:1 ratio.

Recent Developments

Bruno Block has since released a statement a few hours ago over Telegram. He justified his actions by accusing the CFO Bill Cordes of insider trading and of ignoring his numerous requests to hire more developers. Bruno then went on to warn everyone that there is an imminent global financial collapse, while calling cryptocurrencies a ponzi scheme:

 

Go educate yourselves about what is happening with Tether. The entire crypto sphere is a giant Ponzi scheme. I warned all of you, multiple times, in private and public, and nobody listens. Ethereum is going back to $5, if you want to sell back to a greater fool then you will only find yourself to be that fool.

 

He promised to continue working on the Oyster Pearl project, expressing his wishes to only have the token listed on exchanges once the protocol is finished. He then declared that he might reveal his true identity in the upcoming days.

About Oyster Pearl

The Oyster Protocol system utilizes the IOTA Tangle to functions as a decentralized, fully-anonymous data storage system. The price of PRL has taken a nosedive, coming down to $0.20 on Monday and is now being traded at $0.035. The trading is still at a halt on many exchanges, including Kucoin - which is responsible for more than 90% of the total trading volume of PRL. The CEO William Cordes, however, maintains an optimistic outlook on the future of the project:

“Despite the losses, $300k only represents ~1.5% of our market cap prior to this all transpiring. While this is far from ideal, this will most definitely not be a deathknell for the project.”

 

Weekly Newsletter

Binance ‘Unknowingly’ Earns $775K via Staking, Set to Launch Huge XLM Giveaway

On Thursday (July 18), Binance, the world's largest cryptoasset exchange (by adjusted trading volume), made a rather interesting announcement: it had "unknowingly" earned 9.5 million Stellar Lumen (XLM) tokens through staking rewards, and it is going to give all of it away to all Binance users who maintain XLM balances between July 20 and September 1.

Binance explained via a blog post that in August 2018 the Binance team followed the advice of the Stellar Development Foundation "to change some parameters on both cold and hot wallets," which resulted in the exchange "unknowingly" earning staking rewards for its XLM holdings since 31 August 2018.

Then, this week, while the Binance team was considering the idea of adding support for XLM staking, it found out that Binance had earned around 9.5 million XLM tokens (each of which was worth approximately $0.08157 at the time). Binance notes that all "weekly staking rewards between then and now are documented on the blockchain." 

So, the team made two decisions:

  • add support for XLM staking to Binance.com; and
  • give away the aforementioned staking rewards to the Binance community (i.e. Binance users).

This is not the first time that Binance has added staking support to Binance.com. The exchange already "distributes NeoGas for NEO holders, Ontology Gas for Ontology holders, VTHO for VeChain holders, and BitTorrent tokens for TRON tokens."

Here is how this 9.5 million XLM giveaway is going to happen.

From July 20, Binance will support XLM staking. Between this date and September 1, Binance will take "daily snapshots" of XLM balances in Binance user accounts.

Then, on September 1, Binance will "tally average user XLM balances based on these snapshots," and process the distribution of staking rewards to these user accounts (that maintained XLM balances during the staking period). Furthermore, the roughly 9.5 million XLM tokens that Binance has unknowingly earned to date will be distributed as a bonus payment to all Binance users who jave maintained non-zero XLM balances since July 20. 

Binance says in its blog post that it estimates this "one-time distribution of 9,500,000 XLM shared proportionately among Binance users" to be worth "10 to 12 months of typical monthly rewards."

According to a support article published on July 18, here are the details of Binance's "Monthly XLM Staking Airdrop Program":

  • Binance will start these daily XLM balance snapshots at 00:00 (UTC) on 20 July 2019.
  • This is how Binance will calculate the XLM staking distribution:

XLM generated by each user = Total XLM staking rewards received by Binance * User XLM holdings ratio. User XLM holdings ratio = User XLM holdings / Total XLM staked by Binance.

  •  In order to qualify for XLM staking rewards, Binance users must have a balance of at least 10 XLM.
  • This initial distribution of XLM staking rewards will be calculated until 1 September 2019, "with the total amount distributed equal to the staking rewards accrued on holdings during the 43 day period."
  • These XLM staking rewards are calculated on a daily basis and are distributed monthly. 
  • XLM distrubutions will be "completed before the 5th of each month."

In other Binance news, another support article explained that Binance's Margin Trading platform has added support for two margin assets (EOS and LINK), three borrowable assets (BNB, EOS, and LINK), and three margin pairs (EOS/USDT, EOS/BTC, LINK/USDT, LINKBTC).

Binance's announcement about its 9.5 million XLM giveaway may have helped the XLM price. According to CryptoCompare, XLM is currently trading at $0.08914, up 7.96% in the past 24-hour period:

XLM-USD 24-Hour Chart on 18 July 2019.png

Featured Image Courtesy of Binance