Validators Drop Support for Secret Network Amid Transparency Controversy
SmartStake, a validator within the Cosmos ecosystem, has announced it will shut down its nodes following controversy surrounding Secret Foundation founder Tor Bair's alleged personal gain.
Validators Drop Support for Secret Network Over Transparency Issues
SmartStake highlighted that concerns about the transparency of the Secret Foundation and founder Tor Bair were key reasons for ending their collaboration. Additional factors include operational complexities with SCRT (the native token of Secret Network) and the costs and efforts incurred by validators.
PSA for @SecretNetwork delegates of Smart Stake:
— Smart Stake (@SmartStake) January 29, 2023
Smart Stake will be shutting down its Secret validator on 21st Feb. Please redelegate to another validator.
Reasons: 1) Complex/stressful validator operations on $SCRT 2) Cost/effort of validator ops 3) recent events
NotionalDAO, another Cosmos validator, has also echoed SmartStake’s decision, stating it will cease operating its node.
Rewind to January 27, when Guy Zyskind, founder and CEO of Secret Labs, raised several questions about the past activities of the Secret Foundation and Tor Bair on the Secret Network governance forum. Zyskind accused the foundation of secretly selling a large amount of SCRT, valued at approximately $4 million, with a significant portion reportedly withdrawn by Tor Bair without disclosing it to the community.
Zyskind also leveled allegations about the foundation mishandling an OTC sale transaction, resulting in a $250,000 loss, and an open loan to the bankrupt Alameda investment fund.
In his post, Zyskind called for restructuring the foundation into a nonprofit, returning all current funds to the community, and establishing a new fund under new leadership, along with annual funding requests for the chain with a transparent budget.
In response to Zyskind’s allegations, Bair stated:
“These accusations are false. We previously disclosed the SCRT sale, and it is available on this forum.”
Bair explained that the withdrawals were part of his salary, revealing he received 375,000 SCRT and a dividend worth $2.625 million.
“This information can be verified in the 2021 tax records, which were reviewed by Secret Labs and previously disclosed to them.”
Regarding the departure of validators, Secret Network commented that it is not impacted by the exit of these validators and extended best wishes to them with any blockchain they choose to support.
At the time of writing, SCRT is trading at $0.75, up 24.3% for January 2023.
1D Chart of SCRT/USDT on Binance as of 2:05 PM, January 31, 2023
