A significant layer-1 privacy smart contract validator for the Secret Network has declared that it will stop offering nodes and support for the network consequent to an internal conflict in the network.
Major validator Smart Stake informed the Secret Network on January 29 that its validator nodes will shut down on February 21.
Smart Stake gave the following justifications for ceasing service: “complex/stressful validator operations, cost/effort of validator ops, and recent occurrences.”
This choice was made in response to disturbing information regarding Tor Bair, the man behind the Secret Foundation, who was found to have been siphoning off funds for his own use.
Several networks, including Crypto.com, Polygon, Cosmos, and—until recently—Secret Network, are supported by Smart Stake, a company that offers staking and validator services.
Another Cosmos validator, NotionalDAO, has concurred with SmartStake’s announcement, with CEO Jacob Gadikian stating that “NotionalDAO will not be bringing up its node again, in solidarity with SmartStake.”
Leadership Conflict
On January 27, allegations against Bair were made public through the governance forum of the foundation. The claims were made public in a statement that Secret Labs’ CEO Guy Zyskind released.
According to Zyskind, the Secret Foundation sold a significant amount of SCRT in USD, and Tor took a considerable chunk of these proceeds as his dividend. The statement further revealed that the community was not informed of these measures, and in Q4 2021 alone, around $4 million was withdrawn.
As a result, Zyskind recommended dissolving the Secret Organization, returning stakes to the community, and creating a new foundation with fresh management. The new company will keep an open and audited activity and it will also make annual financing requests to the chain with clear-cut budgets, milestones, and demands.
Speaking on the future of Secret Network, Zyskind revealed that the Secret community is prepared to handle the required changes, adding that the recommendation will help the platform achieve new heights as they move towards their Secret 2.0 vision.
Tor Bair’s part of the story
In a separate governance forum announcement, Bair stated that the withdrawals were merely a portion of his vested tokens. According to the founder of The Secret Foundation, he started receiving his salary in 2021 and he had vested a portion of his tokens by December 2021.
Furthermore, Tor revealed that he had carried out an “OTC sale of SCRT tokens,” converting the tokens into US dollars and keeping the stablecoins with the foundation to utilize for dividend payments to himself. He also claimed to have gotten a $2.625 million dividend and to have 375,000 SCRT in vested tokens. To support his claims, he stated that everything he said is verifiable in the foundation’s 2021 tax filings, which have been previously reviewed by Secret Labs, and he disclosed this information to them.
Although the turn of events has placed Bair in an uneasy position, he concurred that the moment has come for change and he also expressed his readiness to be part of that change process.
In response to Zyskind’s allegations, Tor Bair categorically denied them, stating that the foundation had previously published a disclosure on that event, which is available on the governance forum.
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