Across Protocol DAO: Shocking $23M Fund Misuse Claims Ignite Governance Firestorm

The world of decentralized autonomous organizations (DAOs) thrives on transparency and community trust. Yet, a recent controversy has cast a shadow over Across Protocol DAO, with founders facing grave accusations of manipulating governance to funnel a staggering $23 million in tokens to an affiliated for-profit entity. This incident sparks crucial questions about the true nature of decentralization and the integrity of crypto projects.

What’s Behind the Across Protocol DAO Controversy?

At the heart of the matter lies a dispute involving Across Protocol, a prominent cross-chain bridge, and its founders. Pseudonymous onchain sleuth ‘Ogle’ ignited the debate on X, alleging that the founders secretly manipulated the DAO’s voting mechanisms. The core claim is that funds meant for the DAO’s treasury were diverted to Risk Labs, a company reportedly affiliated with the founders.

Ogle’s accusations paint a picture of ‘DAOs that are DAOs in name only,’ suggesting that despite the decentralized facade, centralized control might be at play. These claims highlight a persistent challenge within the decentralized space: ensuring genuine decentralization and preventing insider influence.

Unpacking Allegations of DAO Governance Manipulation

The specific allegations against Across Protocol’s founders revolve around two key DAO proposals:

• First Proposal (Two Years Ago): This proposal saw 13.1 million tokenholders vote in favor, approving it with over 97% of the vote. Ogle implies this was the beginning of the alleged scheme.
• Second Proposal (A Year Later): Risk Labs requested 50 million ACX tokens for ‘retroactive funding.’ Ogle claims that without the team’s votes, this proposal would not have reached quorum and therefore would not have passed. This suggests a concentrated effort by insiders to sway the outcome.

The 50 million ACX tokens involved in the second proposal were valued at over $22 million at the time of the accusations. Furthermore, Ogle asserts that there were no formal agreements guaranteeing the funds would be used specifically for Across Protocol, and onchain analysis reportedly shows Risk Labs team members covertly approving the proposal. A significant voting wallet, accounting for almost 14% of the total vote, was allegedly funded by Across co-founder Hart Lambur, raising questions about voting ethics in DAO governance.

The Heart of the Matter: Crypto Fund Misuse and Risk Labs

The central point of contention is whether the transfer of $23 million worth of tokens to Risk Labs constitutes crypto fund misuse. Hart Lambur, a founder of both Risk Labs and Across Protocol, has vehemently denied the claims. He states that Risk Labs is a Cayman Islands-based nonprofit, operating under fiduciary obligations, and has no shareholders. Lambur provided a certificate of incorporation to support his claim, stating, “If the funds are misused, you can sue the directors (me!).”

However, the definition of ‘nonprofit’ in the Cayman Islands context is complex. While Risk Labs is registered as a ‘foundation company,’ law firms like Harneys explain that such entities can serve commercial, charitable, or private purposes. Crypto News Insights was unable to independently verify Risk Labs’ nonprofit status on the registered nonprofit organizations list. Cayman Islands foundation companies generally do not pay dividends and are ‘ownerless,’ but legal firm Ogier notes they allow ‘distributions to beneficiaries, rather than to shareholders,’ which could still raise questions depending on the ‘beneficiaries.’

Cross-Chain Bridge Operations Under Scrutiny

Beyond the immediate financial allegations, this controversy puts the operational integrity of cross-chain bridge projects under a microscope. Across Protocol facilitates token transfers between different blockchains, a critical service in the fragmented crypto ecosystem. The trust placed in such infrastructure is paramount, and accusations of internal manipulation can erode confidence in the entire cross-chain bridge sector. This incident serves as a stark reminder of the need for robust, transparent, and truly decentralized governance mechanisms for projects handling significant user funds and bridging capabilities.

Risk Labs Denies Misuse Allegations

Lambur’s defense centers on several points:

• Token Acquisition: He asserts that the token has been live for nearly three years, and team members acquired tokens with their own funds.
• Voting Rights: Lambur states his team is free to buy tokens and vote privately in proposals, like any other DAO participant.
• Public Disclosure: He claims the addresses used for voting are publicly disclosed and linked, denying any secret nature.

Lambur also pointed to Ogle’s anonymity and connections to competing projects like LayerZero and Stargate, suggesting a potential conflict of interest behind the accusations. He noted Bryan Pellegrino, founder of Stargate and LayerZero, retweeted Ogle’s post almost immediately, adding another layer to the narrative.

The Broader Implications for Decentralized Governance

The Across Protocol DAO controversy underscores critical challenges facing decentralized governance models:

• Defining Decentralization: How truly decentralized are DAOs if insiders can allegedly sway votes or control significant voting power?
• Transparency vs. Privacy: The balance between team members’ rights to participate and the need for clear disclosure of large, influential voting blocs.
• Legal Ambiguity: The complexities of legal structures like ‘foundation companies’ in offshore jurisdictions and their actual ‘nonprofit’ status.
• Community Oversight: The ongoing need for vigilant community members and onchain sleuths to scrutinize transactions and proposals.

This incident is a call for greater scrutiny and more robust frameworks to ensure that DAOs live up to their promise of equitable, transparent, and truly decentralized decision-making.

Conclusion: A Critical Juncture for DAO Integrity

The allegations against Across Protocol DAO and its founders highlight a pivotal moment for the decentralized finance space. While Hart Lambur firmly denies any wrongdoing, the claims by Ogle raise legitimate questions about the mechanics of DAO governance, the interpretation of ‘nonprofit’ status, and the ethical lines founders must navigate. As the crypto industry matures, incidents like these serve as crucial learning opportunities, pushing for enhanced transparency, clearer legal definitions, and more resilient decentralized structures to protect community assets and uphold the core principles of blockchain technology. The outcome of this dispute will undoubtedly influence how future DAOs are perceived and governed, emphasizing the ongoing journey toward true decentralization.