Avraham Eisenberg Accused of Stealing FortressDAO User Funds
Avraham Eisenberg, a self-proclaimed “digital art dealer” and a developer of Fortress DAO, a fork of Olympus DAO running on the Avalanche blockchain, is accused of stealing $14 million for the project’s treasury.
Eisenberg reportedly abused the project’s treasury redemption mechanism, intended to redistribute remaining funds to token holders when the DAO shut down operations.
“I believe, its doxed lead developer is actively abusing his powers to take as much money from it as he possibly can,” pseudonymous Twitter user the Value Kingdom said while referring to Eisenberg.
“Avraham Eisenberg, a doxed US citizen and the last remaining member of the fortress team, consolidated all the power and all the investors’ funds in his hands,” they added.
How Did Eisenberg Steal Funds?
It became clear that due to the utter incompetence of the management team, Fortress was a failed project, and people wanted out. It traded at 25% of its back value for weeks and the community felt that a redistribution of the treasury is needed.
Before the redemption was proposed the team converted half of the treasury’s stables (6m$) into FUSD, Eisenberg confiscated personal project’s tokens without any vote, approval, or even communication with the community, at the time when discord servers went down for a couple of hours, Value Kingdom said.
“The proposal for redemption was put shortly after on snapshot.org and was overwhelmingly approved (the second draft of it). The redemption process started and should’ve ended on 25.02. It involved all the remaining assets in the treasury to be converted into FUSD,” the user added.
Eisenberg had initially claimed that each FUSD issued is backed by the strong treasury, but he minted more than 190 million FUSD by posting FUSD as collateral for the minting. Most of it is in a contract, 10 million is in the strong treasury, but his wallet has 20 million.
“So what exactly happened and why team abandoned Avi? After the redemption process started, Avi singlehandedly allowed bonding with his project’s token, staked FUSD. He manually set the price for bonding at 7.5$, almost 40% under the backing price. Nobody bonded,” the Twitter user said.
Eisenberg reportedly continued to manually lower the price of the bond, and when he set it to $6, he linked $50,000 (in sFUSD) from his wallet. Fort’s price started to plummet, following the bond price he set, because there was no point in holding the asset when someone else can buy it cheaper.
“I’d say he extracted more than 10M$ from Fortress. Final redemption (btw still unfair) for holders was about 1M$ from 14M$, so only 7% went to holders, who did hold to the end. Looks like this money was used for mango exploit,” they concluded.
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