AzukiDAO vote to reclaim $40 million worth of ETH raises doubts among holders

• AzukiDao’s governance token (BEAN) was exploited due to a contract vulnerability by two hackers.
• The hack took place hours after the 74-member DAO voted on hiring a lawyer to sue the Azuki founder to recover $40 million worth of ETH.
• The authenticity of both the founder and the AzukiDAO have been questioned, though, as the governance token BEAN is only three days old.

The NFT market, which has been out of the limelight for some time now, gained some attention over the weekend. The reason behind this was a collection named Elemental which led to the people who minted the NFTs to form a new decentralized autonomous organization (DAO), create a new governance token and plan to sue the founder of the collection - all in three days.

AzukiDAO - Scammer scamming scammer?

AzukiDAO has been making headlines for two different reasons. The first was the DAO voting to hire a lawyer and suing the founder of the controversial NFT collection Elemental. The second for its governance token being exploited.

The DAO, which voted on the proposal in the past day, stated that they intend to file a lawsuit against the founder “Zagabond” for allegedly rugging multiple projects. The same anonymous “Zagabond” also created the Elemental NFTs, which were minted for 20,000 ETH worth around $40 million but appeared to just be the profile pictures of original Azuki holders.

This voting was conducted using a governance token called “BEAN,” which itself fell victim to an exploit. Two hackers exploited a contract vulnerability and managed to make a profit of about 35 ETH.

In response to this hack, the Azuki DAO, through their Twitter account, stated,

“Yes, and then we close the claiming window and decide to make a proposal that transfer all the tokens to the DAO treasury, and then we will elect the muti-sign contributor from the community.

It is to be noted, however, that the tweets came from an account whose ownership could not be independently verified. 

The more interesting development is the fact that the AzukiDAO proposal, which passed successfully, received 40% of its votes from one single account. The token used for the voting too was only created three days ago. According to the founder of the Nifty Finance protocol, most of the Azuki holders, too, had not heard of the 74-member DAO before.

This raised concerns that the group is either a fake group or has been created with malicious intent, particularly to gain 20,000 ETH back from “Zagabond”. FXStreet could not verify the authenticity of the DAO at the time of writing. 

The potential explanation behind this is either a time crunch that led to the hasty formation of the DAO and token, to reclaim the $40 million ETH. Or that scammers are potentially scamming another scammer. Further development would reveal the truth behind the matter.