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.”

 

Stellar Network Stayed 'Safe and Consistent' During Downtime: Report

The Stellar network “halted” for over an hour due to an “inability to reach consensus”, the distributed ledger technology (DLT)-based platform’s developers confirmed on May 16, 2019.

However, an official blog post published by the Stellar Development Foundation (SDF) clarified that the “ledger state” managed to stay “safe and consistent” across the DLT-enabled cryptocurrency network.

150,000 Daily Users, Over 3 Million Accounts

There are reportedly 150,000 users, on average, that conduct transactions on the Stellar network, the platform’s development team claimed. More than 3 million Stellar accounts have been created, the Foundation’s blog stated.

While an outage “like this is highly undesirable”, the SDF acknowledged, it also mentioned that user funds on the Stellar network remained safe. Moreover, “no one’s balances were confused by a fork,” the SDF clarified.

The SDF also claimed that the Stellar network is healthy and functioning properly. According to the developers of the Stellar platform, the “key takeaways” from the technical difficulties recently experienced indicate that there were no issues with Stellar’s blockchain consensus mechanism.

Per the developers, a “temporary halt” for a platform like Stellar is “preferable to the permanent confusion of a fork.” However, lessons learned from the recent outage suggest that Stellar “needs better tooling around uptime”, the Foundation wrote.

Giving Priority To “Consistency And Partition Resilience Over Liveliness”

Additionally, the platform requires “better status monitoring for validators, and it needs to be easier to restart a validator after it goes down,” Stellar’s development team mentioned.

Going on to address claims that the Stellar network has become increasingly centralized, the Foundation claims:

Ironically, the opposite is true. Stellar has added many new nodes recently. In retrospect, some new nodes took on too much consensus responsibility too soon. We need better community standards around maintenance timings, quorumset building, and validator configuration.

Moreover, one of Stellar’s “fundamental design choices” is to give priority to “consistency and partition resilience over liveness.” This means that “when faced with consensus uncertainty, the Stellar Consensus Protocol (SCP) prefers to halt” instead of running in a state which may be inconsistent.

Stellar’s developers believe that financial institutions “prefer downtime over inconsistent data,” and that this is why many of them are building solutions on Stellar, and not other blockchains which prefer to operate regardless of whether the system state is inconsistent.

Commenting on the recent halt of the Stellar network, Ripple’s chief cryptographer, David Schwartz remarked:

Schwartz, an electrical engineering graduate from the University of Houston, thinks the recent downtime experienced by the Stellar network shows that “if the validator topology of a live network does break, the network can fail safely and humans can negotiate a topology change to resume safely in a reasonable time.”

Per Schwartz, Ripple’s technology is also based on similar design principles which “don't make forward progress unless we can have very, very high confidence that it is safe to make forward progress.”