Umami Finance CEO Dumps All Tokens After Week-long Drama, Leaving Crypto Hopefuls Stranded
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The price of decentralized finance (DeFi) protocol Umami Finance’s original token fell by almost 50% in the last 24 hours due to changes in the mechanism of the original UMAMI token, leading to consternation among members of the community.
DeFi, short for decentralized finance, relies on smart contracts instead of intermediaries to provide users with financial services, such as lending and borrowing.
According to messages on social forum Discord seen by CoinDesk, an Umami developer said team members had resigned from Umami Labs LLC, but that the move was to push Umami “back toward decentralization and a DAO structure.”
“The CEO has dumped all his tokens via his address here, 0x21dF3E7371A58eB0e2248F1362eB5fa01fC9B34F,” the developer said. The owner of the wallet address appears to have traded UMAMI holdings for hundreds of thousands of dollars, blockchain data on Etherscan shows.
Abritrum-based UMAMI was trading at $11 in European hours on Thursday, down from Wednesday’s high of $22. That’s down over 90% from a record high of $162 in December 2021.
Umami designed itself as an institutional DeFi player with yield products tailored for financial institutions. The products included low-risk strategies that offer relatively better rewards than those offered by highly regulated centralized financial platforms.
These returns were supposed to be offered on deposits of bitcoin (BTC), ether (ETH) and USD Coin (USDC).
However, Umami temporarily halted all payouts to token holders in early February, citing regulatory concerns, messages in Umami’s Discord channel show. This caused some discourse among community members, who said the product appears to be doing the opposite of what it previously told potential token investors.
Umami operated similarly to a traditional company while offering a DeFi product. The team members were known, operating expenses were published monthly publicly and it claimed to operate in “full compliance with jurisdictional rules in all markets,” according to technical documents.
Meanwhile, Umami developers said the protocol’s own assets remained secure and had control over signatories who would obey the guidelines of the Umami DAO and its token holders
“The team plans to move forward with a DAO structure and release vaults as planned with the Umami token that has the same revenue requirements as promised,” the developer wrote on Discord, saying the code required to run and operate Umami remained in control of the DAO .
“Next step: Make a proposal to the Umami DAO that deploys the Umami team (minus the Ex-CEO) with guidance from the DAO to move forward with Umami and launch Vault,” the developer added.
But some Crypto Twitter users reported withdrawal problems from European morning hours on Thursday.
