Filecoin Foundation launches Chinese legal inquiry into STFIL incident
Filecoin Foundation, a nonprofit that promotes the development of Web3 storage protocol Filecoin, “has a lawyer in China” and is investigating the reported detention of Filecoin Liquid Staking (STFIL) team members, according to an April 13 social media post from foundation senior fellow Danny O’Brien.
Withdrawals from the STFIL protocol stopped working in early April after a developer wallet made several unscheduled upgrades and moved $23 million worth of Filecoin (FIL) tokens to an address whose owner is unknown. On April 8, the STFIL team announced that core technical members was detained by local Chinese police and that the mysterious upgrades and transfers had occurred during these detentions. This announcement left many users of STFIL wondering how they could recover funds.
In the post, O’Brien stated that “FF has a lawyer in China who has been looking into the incident,” adding that the foundation has “high confidence” that members of the STFIL team are in police custody. The foundation has not been able to confirm whether the police possess the funds, but they expect to know this information in “upwards of a week.” The foundation plans to allow its attorney to represent all staking providers and leasers in any court proceedings related to the incident.
O’Brien promised to share more information once the plan's details are finalized. He also asked staking providers who lost funds to provide contact details through a Google Doc or Slack Channel set up for this purpose.
Source: Filecoin Foundation senior fellow Danny O’Brien .Filecoin is a decentralized storage protocol that allows PC owners to rent out their hard disk space to users with data storage needs. It requires storage providers to provide FIL tokens as collateral to guarantee that they store data per their agreements.
FIL holders can lend out their tokens to the storage providers, in which case they earn a portion of the fees collected. This process is called “FIL staking.”
STFIL is a protocol that pools FIL tokens and stakes them through a network of trusted storage providers. When users deposit FIL into the STFIL protocol, they receive STFIL tokens in exchange. When the protocol is functioning correctly, these STFIL tokens can be redeemed for their underlying deposited FIL plus accumulated staking rewards. However, this redemption process stopped functioning in April, after the unauthorized upgrades and transfers were made.
Related: What is Filecoin and How Does it Work?
STFIL is not the only Web3 protocol to encounter criminal legal action in China. Users of the Multichain cross-chain bridging platform saw more than $1.5 billion of their crypto frozen after Chinese police arrested the protocol’s development team. The funds have still not been recovered.
Fantom Protocol, one of the biggest depositors to Multichain, filed for bankruptcy in March in an attempt to pursue at least some of the lost Multichain funds through litigation. According to Fantom co-founder Andre Cronje, it may take “years” for investors to obtain a court order that can force police to hand over the funds .
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
You may also like
MARA's stock jumps after raising $1 billion via convertible notes to buy more bitcoin
MARA Holdings announced the successful closing of its $1 billion offering of 0% convertible senior notes due 2030.The bitcoin miner plans to allocate around $199 million of the proceeds to repurchase $212 million in principal of its existing convertible notes due 2026. The remaining funds will be used to acquire more bitcoin.
Gold loses luster as institutional demand fuels bitcoin price surge, analysts say
Bitcoin’s 46% surge over the past month, contrasted with gold’s 3% decline, highlights a shifting investor preference toward alternative store-of-value assets, analysts say.Derivatives traders are buying up bitcoin call options ahead of Trump’s inauguration, signaling strong bullish sentiment for the beginning of 2024.
SEC is 'engaging' Solana ETF applicants: report
SEC “engaging” on Solana ETF applications, sparking optimism for potential approval in 2025.VanEck, 21Shares, and Bitwise lead Solana ETF filings amid pro-crypto White House hopes.SOL token rises 4.6% to $247.91, bolstered by Solana’s strong DeFi ecosystem and demand.
Shiba Inu Developer Says SHIB Is No Longer a Memcoin