Secret Blockchain Suffers Departures as Foundation Head's $2M-Plus Dividend Sparks Outcry

Secret Network, a privacy-focused blockchain, has seen a growing number of validators halt their services, after the head of an affiliated foundation took out more than $2 million in dividends and an upgrade led to technical problems.

At least four primary validators claim to have discontinued services, including the intelligent issue, royal nodes, azul collection and domerium laboratories.

The pattern might cause problems for the secret network if others follow.

Smart Stake was the latest company to stop validating Secret Network, posting a tweet over the weekend that cited “recent events” as a main reason for leaving.

Late last week, Guy Zyskind, Secret Network’s founder, who leads the development of the network’s core technology as the CEO of SCRT Labs, alleged on a project forum that the Secret Foundation’s founder, Tor Bair, made an undisclosed sale of foundation funds and directed some of the proceeds to himself as a kind of dividend payment.

"Secret foundation sold a significant amount of scrt dollars," zyskind wrote in the post. The project’s SCRT tokens have a market capitalization around $124 million, according to CoinMarketCap. "Tor cashed a large part of these products (to the best of our understanding, a figure at the bottom in the middle of seven digits) as a dividend."

Zyskind went on to say, "There are potentially other financial irregularities not reported, such as a loan opened to Alameda or one of its affiliates by the Secret Foundation. To our knowledge, none of the reports have disclosed the loan or its default to the community." Alameda refers to Alameda Research, the bankrupt crypto trading firm that was embroiled in the collapse of Sam Bankman-Fried’s FTX crypto exchange.

Zyskind recommended that the Secret Foundation be reinstated as an organization "which functions as advertised, and as a Secret greatness network deserves."

Foundation head claims he was owed

The Secret Foundation was set up to provide grant funding and other resources to projects that run within the Secret Network ecosystem, but it started to face heightened scrutiny last year after revelations that it was incorporated as a for-profit entity despite previously representing itself as a nonprofit. That led to calls from the Secret community for greater transparency surrounding the foundation’s operations and its use of community funds.

Bair defended himself in his own forum post, which he published an hour after Zyskind’s. In the position, Bair alleged that the foundation chips withdrawn were owed to him as part of his acquisition program.

"Rather than paying my chips by December 2021, I converted my portion of chips into dollars at an over-the-counter price and the secret foundation distributed these funds as a dividend," bair wrote. Otc is the quoted price. 'The value of the chips acquired was 375,000 scrt. 'The value of the chips acquired was 375,000 SCRT.

The dividend payout amount was $2.625 million, the over-the-counter price of $7 multiplied by the chips acquired."

Neither Zyskind nor Bair responded immediately to requests for comment.

'Problematic' upgrade

Neither Zyskind nor Bair responded immediately to the feedback requests. Update 'Issue'. "many projects have all sorts of problems and they navigate through difficult times and get over it," a representative of the intelligent stake wrote in a message to coindesk. The secret network community raises good issues. The Secret Network community raises good issues.

We still have confidence in most of the main team members."

“recently, an update of the intel firmware was mandatory but problematic for many validators in time, and it has been quite stressful for a lot of validators," said Smart Stake. “Recently, An Intel firmware upgrade was mandatory, but problematic for many validators to complete in a timely manner, This has created quite a stressful time for many validators," said Smart Stake.

AzulDomeriumKingnodes all halted their Secret validator operations prior to the most recent Secret Foundation controversy. Domerium, as the intelligent issue, cited problems with managing a recent update.

Azul said he was concentrating on the "applying layer" of the chain. Kingnodes identified issues with the cost-effectiveness of validators.

The validator departures are the latest sign of trouble for the Secret Network, which in November disclosed that it was forced to patch a critical security vulnerability that could have been used to decrypt private user transaction data.