Connect with us

Published

on

About $90.1 million has mistakenly gone out to users of popular DeFi staking protocol Compound after an upgrade gone epically wrong. Now, the founder is making a plea — and issuing a few threats — to incentivize the voluntary return of the platform’s crypto tokens.

“If you received a large, incorrect amount of COMP from the Compound protocol error: Please return it,” Robert Leshner, founder of Compound Labs, tweeted late Thursday.

“Keep 10% as a white-hat. Otherwise, it’s being reported as income to the IRS, and most of you are doxxed,” continued the tweet.

The price of Compound’s native token, COMP, initially plunged nearly 13% in a day on news of the bug, but it’s since gained back ground.

Whether reward recipients choose to return many millions of dollars to the platform remains to be seen, though if history is any indication, it is certainly possible.

“Alchemix [another decentralized finance, or DeFi, protocol] had a similar incident a few months back where they gave out more rewards than intended,” blockchain security researcher Mudit Gupta told CNBC. “Almost everyone who got the extra rewards refunded the extra.”

What is different here is that the Alchemix exchange lost just $4.8 million.

But Gupta remains hopeful.

“This makes me optimistic that people will refund most of COMP tokens, as well, but you can never be sure,” he said.

What went wrong

DeFi protocols like Compound are designed to recreate traditional financial systems such as banks and exchanges using blockchains enriched with self-executing smart contracts.

On Wednesday, Compound rolled out what should have been a pretty standard upgrade. But soon after implementation, it was clear that something had gone seriously wrong.

“The new Comptroller contract contains a bug, causing some users to receive far too much COMP,” explained Leshner in a tweet.

“There are no admin controls or community tools to disable the COMP distribution; any changes to the protocol require a 7-day governance process to make their way into production,” he added, indicating that no fix could take effect for seven days.

Gupta, a core developer at decentralized crypto exchange SushiSwap, said in a tweet that the entire episode could be blamed on a “one-letter bug” in the code.

Compound made clear that no supplied or borrowed funds were at risk, but that did little to soften the blow.

Protocol users en masse began reporting massive windfalls. Soon after Leshner’s tweet about the bug, $29 million worth of COMP tokens were claimed in one transaction. Another claimed that they received 70 million COMP tokens into their account, or about $20.8 million at the time of their post.

The list of COMP token millionaires goes on.

For users accustomed to providing their crypto to borrowers at a set interest rate, which is typically a single-digit APY, the erroneous and sizable rewards were certainly a nice change in pace.

Leshner made clear, however, that there is a cap to the carnage. The Compound chief tweeted that the Comptroller contract address “contains a limited quantity of COMP.”

“The impact is bounded, at worst, 280,000 COMP tokens,” Leshner wrote. Gupta told CNBC that this entire pool of tokens — worth about $90.1 million, as of the time of publication — has already been handed out.

Threats lack teeth

Newly-minted COMP token millionaires now have a few options.

Bitcoin developer Ben Carman points out that it isn’t really possible for the platform to reclaim the money.

“They shouldn’t be able to recall the money without rolling back the chain,” explained Carman. “They’d have to purposefully 51% attack the chain to get rid of some blocks.”

So, it is up to a user’s discretion to decide next steps.

As a hypothetical, let’s take the account holder who was accidentally gifted $29 million in COMP tokens in error. This user could return the funds and hold onto the $2.9 million “white-hat” tip. But there is also nothing to keep them from holding their mistaken reward and risk being “doxxed.”

Doxxing someone means making public what is considered private information about an individual, which in the cryptosphere, is tantamount to committing a cardinal sin.

Doxxing their customers is about the worst thing a crypto company can do from a PR perspective,” Mati Greenspan, portfolio manager and Quantum Economics founder, told CNBC.

And it seems unlikely Leshner would pursue that route. He was quick to walk back his Thursday evening tweet, saying that, it “was a bone-headed tweet/approach.”

And then there’s the threat related to the mistaken reward being reported to the IRS.

Section 61 of the IRS code defines income very broadly. If you received a large sum from this error and decide to keep it, that would be considered income,” explained Shehan Chandrasekera, a CPA and head of tax strategy at crypto tax software company CoinTracker.io.

Users who were mistakenly awarded extra tokens could voluntarily return the funds. In that scenario, Chandrasekera says that “technically the recipient is supposed to pay income tax based on the market value of the coins at the time of receipt, but if he or she returns the funds, there’s no reason to report the income.”

But Chandrasekera also makes clear that no one has to return the funds. If their reward is reported to the IRS, they would simply be subject to income taxes on that amount.

So that $29 million COMP token winner stands to take the most home in a scenario where they just pay up to Uncle Sam, rather than pay it back to Compound.

But as Greenspan points out, how things play out with this bug is almost entirely beside the point. “The bigger issue is – can it happen again?” he said.

Compound is the world’s fifth-largest DeFi protocol with a total value locked of $9.65 billion, according to DeFi Llama, which provides ranking and metrics for DeFi protocols.

“The protocol can easily absorb a loss of $90 million and a lot of it will likely be returned, but the larger issue would be if people lose confidence in the system’s ability to function properly,” said Greenspan.

Continue Reading

Technology

U.S. lifts chip software curbs on China amid trade truce, Synopsys says

Published

on

By

U.S. lifts chip software curbs on China amid trade truce, Synopsys says

Synopsys logo is seen displayed on a smartphone with the flag of China in the background.

Sopa Images | Lightrocket | Getty Images

The U.S. government has rescinded its export restrictions on chip design software to China, U.S.-based Synopsys announced Thursday. 

“Synopsys is working to restore access to the recently restricted products in China,” it said in a statement

The U.S. had reportedly told several chip design software companies, including Synopsys, in May that they were required to obtain licenses before exporting goods, such as software and chemicals for semiconductors, to China. 

The U.S. Commerce Department did not immediately respond to a request for comment from CNBC.

The news comes after China signaled last week that they are making progress on a trade truce with the U.S. and confirmed conditional agreements to resume some exchanges of rare earths and advanced technology.

Continue Reading

Technology

Datadog stock jumps 10% on tech company’s inclusion in S&P 500 index

Published

on

By

Datadog stock jumps 10% on tech company’s inclusion in S&P 500 index

The Datadog stand is being displayed on day one of the AWS Summit Seoul 2024 at the COEX Convention and Exhibition Center in Seoul, South Korea, on May 16, 2024.

Chris Jung | Nurphoto | Getty Images

Datadog shares were up 10% in extended trading on Wednesday after S&P Global said the monitoring software provider will replace Juniper Networks in the S&P 500 U.S. stock index.

S&P Global is making the change effective before the beginning of trading on July 9, according to a statement.

Computer server maker Hewlett Packard Enterprise, also a constituent of the index, said earlier on Wednesday that it had completed its acquisition of Juniper, which makes data center networking hardware. HPE disclosed in a filing that it paid $13.4 billion to Juniper shareholders.

Over the weekend, the two companies reached a settlement with the U.S. Justice Department, which had sued in opposition to the deal. As part of the settlement, HPE agreed to divest its global Instant On campus and branch business.

While tech already makes up an outsized portion of the S&P 500, the index has has been continuously lifting its exposure as the industry expands into more areas of society.

DoorDash was the latest tech company to join during the last rebalancing in March. Cloud software vendor Workday was added in December, and that was preceded earlier in 2024 with the additions of Palantir, Dell, CrowdStrike, GoDaddy and Super Micro Computer.

Stocks often rally when they’re added to a major index, as fund managers need to rebalance their portfolios to reflect the changes.

New York-based Datadog went public in 2019. The company generated $24.6 million in net income on $761.6 million in revenue in the first quarter of 2025, according to a statement. Competitors include Cisco, which bought Splunk last year, as well as Elastic and cloud infrastructure providers such as Amazon and Microsoft.

Datadog has underperformed the broader tech sector so far this year. The stock was down 5.5% as of Wednesday’s close, while the Nasdaq was up 5.6%. Still, with a market cap of $46.6 billion, Datadog’s valuation is significantly higher than the median for that index.

— CNBC’s Ari Levy contributed to this report.

CNBC: Datadog CEO Olivier Pomel on the cloud computing outlook

Datadog CEO Olivier Pomel on the cloud computing outlook

Continue Reading

Technology

Ether and related stocks gain amid the latest crypto craze: Tokenization

Published

on

By

Ether and related stocks gain amid the latest crypto craze: Tokenization

A representation of cryptocurrency Ethereum is placed on a PC motherboard in this illustration taken on June 16, 2023.

Dado Ruvic | Reuters

Stocks tied to the price of ether, better known as ETH, were higher on Wednesday, reflecting renewed enthusiasm for the crypto asset amid a surge of interest in stablecoins and tokenization.

BitMine Immersion Technologies, a bitcoin miner that announced plans this week to make ETH its primary treasury reserve asset, jumped about 20%. It’s gained more than 1,000% since the announcement. Betting platform SharpLink Gaming, which has also initiated an ETH treasury strategy, added more than 11%. Bit Digital, which last week exited bitcoin mining to focus on its ETH treasury and staking plans, jumped more than 6%.

“We’re finally at the point where real use cases are emerging, and stablecoins have been the first version of that at scale but they’re going to open the door to a much bigger story around tokenizing other assets and using digital assets in new ways,” Devin Ryan, head of financial technology research at Citizens.

On Tuesday, as bitcoin ETFs snapped a 15-day streak of inflows, ether ETFs saw $40 million in inflows led by BlackRock’s iShares Ethereum Trust. ETH ETFs came back to life in June after much concern that they were becoming zombie funds.

The price of the coin itself was last higher by 5%, according to Coin Metrics, though it’s still down 24% this year.

Ethereum has been struggling with an identity crisis fueled by uncertainty about the network’s value proposition, weaker revenue since its last big technical upgrade and increasing competition from Solana. Market volatility, driven by geopolitical uncertainty this year, has not helped.

The Ethereum network’s smart contracts capability makes it a prominent platform for the tokenization of traditional assets, which includes U.S. dollar-pegged stablecoins. Fundstrat’s Tom Lee this week called Ethereum “the backbone and architecture” of stablecoins. Both Tether (USDT) and Circle‘s USD Coin (USDC) are issued on the network.

Fundstrat's Tom Lee on being named chairman of BitMine Immersion Technologies

BlackRock’s tokenized money market fund (known as BUIDL, which stands for USD Institutional Digital Liquidity Fund) also launched on Ethereum last year before expanding to other blockchain networks.

Tokenization is the process of issuing digital representations on a blockchain network of publicly traded securities, real world assets or any other form of value. Holders of tokenized assets don’t have outright ownership of the assets themselves.

The latest wave of interest in ETH-related assets follows an announcement by Robinhood this week that it will enable trading of tokenized U.S. stocks and ETFs across Europe, after a groundswell of interest in stablecoins throughout June following Circle’s IPO and the Senate passage of its proposed stablecoin bill, the GENIUS Act.

Ether, which turns 10 years old at the end of July, is sitting about 75% off its all-time high.

Don’t miss these cryptocurrency insights from CNBC Pro:

Continue Reading

Trending