Justin Sun accused of masterminding a ‘governance attack’ on Compound

Home » Justin Sun accused of masterminding a ‘governance attack’ on Compound

TRON’s co-founder and billionaire Justin Sun has been accused of attempting a ‘governance attack’ on the lending protocol Compound, by the GFX Labs’ governance division.

In a dramatic development, Justin Sun, the co-founder of TRON (TRX), has landed himself in a fresh controversy, having been accused of leading a ‘governance attack’ on Compound (COMP), the popular Ethereum-based DeFi (decentralised finance) lending protocol. As per crypto products company GFX Labs’ governance division, Justin Sun recently leveraged a large capital investment to manipulate Compound’s on-chain governance.

On Thursday, Feb 3, GFX Labs tweeted Ethereum’s on-chain data to highlight that Sun’s crypto wallet had borrowed 99,000 COMP tokens worth more than $13 million, and later sent 102,000 of them to Binance.

The company again tweeted on Friday, Feb 4 about a wallet address that received COMP tokens worth $9 million from Binance, and then went on to propose addition of TrueUSD (TUSD) as an acceptable collateral on the Compound platform. The proposal intends to enable Compound users to avail loans on the platform, against their holdings in TUSD.

Why so suspicious?!

Although it’s impossible to tie the TUSD proposal address to Justin Sun, according to PaperImperium, a GFX Labs contributor, the pattern reminds of a similar transaction that occurred during stablecoin issuer MakerDAO’s governance vote in January. S/he said, “Justin borrowed a large amount of MKR from Aave. Presumably this was to vote on a poll to create a TUSD-DAI Peg Stability Module. After it was noticed, he returned the MKR before voting.”

Justin Sun also happens to be the Asia markets adviser for TUSD, and a 2020 blog post on its website had mentioned that TUSD will be switching over to an Asian consortium which will work alongside TRON for development of TUSD on TRON, Ethereum and other blockchains.

Compound CEO defends Sun

It’s worth noting that most DeFi protocols are token-weighted, and while taking out a loan this way to manipulate a proposal may seem like a ‘governance attack,’ there aren’t any explicit restrictions on such activities.

Sun later responded to GFX Labs’ tweets stating that he was already in discussions with the Compound team regarding the loan, and that the concerned proposal had been well-discussed for around 6 months.

Compound’s CEO Robert Leshner too came in Sun’s defence via a series of tweets. He stressed that the proposal wasn’t malicious in any way as it won’t cause any drainage of the user funds or bring harm to the lending protocol in any way. In fact, Leshner went on to applaud Sun and his team for moving the proposal into the voting stage.

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