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Validators shut down as Secret Network struggles with leadership

SmartStake, a significant validator in the Cosmos ecosystem, has indicated that it would shut down its nodes in the aftermath of allegations about the Secret Foundation’s founder, Tor Bair, personally profiting.

The validator claimed “complex/stressful validator operations… cost/effort of validator operations… recent events” as reasons for discontinuing service. Smartstake went on to say

“Please note that the shutdown will be graceful and there will be no slashing for any of the delegates.”

NotionalDAO, another Cosmos validator, has confirmed that “NotionalDAO will not be putting up its node again, in solidarity with SmartStake,” according to CEO Jacob Gadikian.

On January 27, the charges against Bair were made public through the foundation’s governance forum. Guy Zyskind, the founder of Secret Labs, made the claims public in a statement.

Zyskind revealed that the “Secret Foundation sold a significant number of USD worth of SCRT.” Furthermore, “Tor payed out a substantial chunk of these funds… as a dividend.” These acts were not revealed to the public, and over $4 million was removed in Q4 2021 alone.

Zyskind’s solution was to disband the Secret Organization by redistributing stakes to the community and reorganising a new foundation under new leadership. The new entity would “keep a public and audited activity…[and]… deliver annual financing proposals to the chain with a defined budget, milestones, and demands.”

The message concluded with Zyskind looking forward to the future of Secret Network.

“As a final note, we’d like to say that while we raise and acknowledge these concerns, we are at the same time very optimistic about the future.

The Secret community is well-equipped to address the necessary changes, and this restructuring will help the platform reach new heights as we work towards our Secret 2.0 vision. “

Bair also stated at the same governance meeting that the withdrawals were only a portion of his vested tokens. The Secret Foundation’s founder stated that he began getting a salary in 2021 and that “a fraction of my tokens” will vest in December.

He went on to say that he performed a “OTC sale of SCRT tokens,” changing the tokens to USD and depositing the stablecoins with the foundation to be used to pay him a dividend. He also stated that he possessed 375,000 SCRT in vested tokens and got a payout of $2.625 million.

“This information is verifiable in our 2021 tax filings, which have been previously reviewed by Labs, and I have previously disclosed this information to them.”

Bair appears to have thrown his hat into the ring when he stated that “the time has come for change,” despite the fact that he has “communicated individually and publicly on several times about my desire to be a part of that transformation.”

Bair responded directly to Zyskind’s charges, saying:

“This allegation is false. We’ve previously published our disclosure on that event, which is available on this forum.”

A dispute raged on in the comments and on Twitter over whether the community feels there has been malpractice or whether people are more worried that Bair appears to have sold the top for more than $7.

Secret Networks, SCRT is currently selling at $0.80, over 90% lower than Bair’s purchase price.

 

 

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