On Thursday, OlympusDAO was sued in the United States District Court for the District of Connecticut. According to the lawsuit, the project’s co-founders defrauded an early investor, Jason Liang, of approximately $20 million.
The lawsuit was filed by Jason who claims to have lost around nearly 4 million in OHM tokens at that time, which is worth $20 million now.
The co-founders of this DAO, named “Apollo” and “Zeus” have managed to remain anonymous until now. The lawsuit however claims that a Connecticut resident is the identity behind “Apollo”.
Jason says that he agreed to promote OlympusDAO and paid $50,000 in DAI in exchange for 4 million pOHM. pOHM is a precursor to OHM. Investors could later exchange 1 OHM for 1 DAI and 1 pOHM.
According to the lawsuit, as soon as Jason started selling some of his pOHM tokens the Olympus team left him with inoperable smart contracts. Jason could no longer redeem his pOHM for OHM.
The ability of DAO makers to meddle with smart contracts in this manner undermines the decentralization feature of the project.
Joseph B. Evans, attorney for Liang, said, “There is a completely legal and legitimate way to run a DAO. This isn’t it. It appears that certain organizations still believe they can avoid liability if their founders and promoters hide behind screen names, social media handles and fictitious entities. My client provided much needed start-up capital to Olympus, and he is entitled to share in its success.”
The lawsuit also claims that the founders have remained anonymous to evade responsibility. The identity of “Apollo” was found by doing a reverse lookup on the phone number from which Apollo had contacted Jason.
OlympusDAO has been a controversial platform since its launch. The platform’s token OHM is currently priced at $28. It was $1300 in October.
The project’s unique operational mechanism ensured that the investors gained high returns. Investors were encouraged to hold, buy, and stake OHM. Selling OHM tokens, like Jason, was frowned upon.
Anonymous founders could lead to more problems than solutions. WonderlandDAO, a spinoff of OlympusDAO, almost shut down when it was discovered that one of the founders was a convicted felon, and responsible for one of the largest crypto scams of QuadrigaCX.
