The chief executive officer of cryptocurrency exchange Kraken, Jesse Powell, has criticized projects in the decentralized finance (DeFi) sector over the failure of several projects to audit their code ahead of launch.
Powell’s tweet came in the wake of the $24 million exploit on DeFi lending protocol Harvest Finance. In a tweet, Powell asked “Defi Scams” to stop “expecting exchange to bail you out,” rejecting their “attempt at externalizing” the costs of their unaudited and uninsured launches in the nascent space. He wrote:
I will not accept your attempt at externalizing the cost of your hasty, reckless rollout. Invest in audits, insurance and please DYOR. Taking your losses is the only way to enlightenment.
Powell’s words came after the Harvest finance exploit, but come in the wake of a trend of DeFi projects suffering from exploits or planning exit scams to keep investors’ funds. As CoinDesk reports, in September gaming protocol Eminence finance suffered a $15 million exploit while still in testing, while later that month SushiSwap suffered a blow after its pseudonymous creator Chef Nome made off with the development fund, causing the price of the SUSHI token to crash.
While Chef Nomi did return the funds later on, that same month DeFi lending protocol bZx fell victim to a third exploit this year, after attackers stole funds from its wallets using flash loans – loans taken out and repaid in the same transaction.
On top of the exploits, last month a DeFi project called YFDEX.Finance allegedly pulled an exit scam, making off with $20 million worth of investors’ funds merely two days after launch. EOS-based DeFi project Emerald Mine also pulled an exit scam last month, making off with $2.5 million of investors’ funds.
Despite the setbacks, interest in the DeFi space continues to grow, with the total value locked in it hitting a $12.6 billion this month, before dropping to $11.2 billion after Harvest Finance was exploited. It’s worth noting its growth has slowed down significantly over the last few weeks.
Featured image via Pixabay.