At the beginning, the theft of 3.6 million ETH of The DAO was self-directed and self-acted, and ETH Fang Foundation was reported by the "predecessor".

Original | Odaily Planet Daily

Author | 0xAyA

Solana’s offense is on the rise, and ETH looks helpless. No, recently, ETH Fang has ushered in another “accusation crisis”.

ETH has faced many perilous moments, the most thrilling of which was The DAO, a hack that nearly destroyed the entire community. Eventually, the pro- and anti-rollback sides stopped arguing after the fork was completed, and everything seemed to be settled.

But just recently, a former member of the foundation broke out, pointing out that the DAO incident was planned by members of the foundation.

The ETH of 7 years ago

Let’s take a brief look at history. DAO, or Decentralized Autonomous Organization, was first proposed by V God. DAOs rely on smart contracts to run on the blockchain and have no legal entity, which we can understand as a “decentralized company”.

The DAO, on the other hand, is a crowdfunding project initiated by blockchain company Slock.it.

Slock.it is a company that combines blockchain with the Internet of Things. In the beginning, they just wanted to use ETH Fang to develop their “Sharing Network for All”. As the development progressed, they found that the decentralized sharing economy was promising. They presented the concept and vision at Devcon 1 in London, and to their surprise, the project received an overwhelming response. Thus, the DAO project was born.

In The DAO project, token holders have a lot of power – the use of the project’s funds is voted on by token holders, and proposals are supported by smart contracts.

On April 30, 2016, The DAO project began crowdfunding. The DAO, the project’s token, was crowdfunded for 28 days and raised more than 12 million ETH in total, accounting for almost 14% of the total number of ETH at that time, with a current price of more than $150 million.

On June 12 of the same year, Stephan Tual, one of the main designers behind The DAO, claimed that they had discovered a “recursive call vulnerability” in the software.

On June 17, hackers exploited a recursive vulnerability in The DAO’s code to keep separating assets from The DAO’s pool, and then hackers exploited the second vulnerability in The DAO to avoid the destruction of the separated assets, and carried out more than 200 attacks, stealing a total of 3.6 million ETH, more than one-third of the total number of ETH raised by the project.

Under normal circumstances, The DAO’s assets will be destroyed after they are separated. However, the hacker transferred the stolen assets of The DAO to other accounts before the call ended, avoiding being destroyed. Thankfully, it’s because of this “bad” code that hackers can’t take the ETH away. Because the code stipulates that it will take 28 days for withdrawals to be made, this gives the community enough time to research countermeasures for hackers to exploit these two vulnerabilities.

Eventually, after community discussions, it was decided to fork ETH. The fork formed two chains, the original chain that did not change the fact of coin theft by hackers became the ETC, and the chain that erased the fact of coin theft became the new ETH, each representing a different community consensus.

7 years later “whistleblower” by his predecessor

Steven Nerayoff, a former legal counsel and consultant at the ETH Foundation, said in a recent blog interview that V used to live with him in New York and work in his rented office. On his blog, he ETH Place’s DAO hack was the work of insiders, claiming that TruthLabs found evidence that the ETH Foundation and Slock.it were behind the infamous The DAO hack, arguing that ETH Workshop has become a system influenced by a handful of developers, regulators, and investors, acting contrary to the community’s intentions.

At the same time, Nerayoff also named former SEC executive Bill Hinman, pointing out the potential impact of Hinman’s personal financial conflict on the SEC v. Ripple case.

Since then, an X user has pulled up a GitHub article alleging that Swiss SA Bity may have collaborated with other organizations operating under the name “White Hat Group” or “Robin Hood Group” and was responsible for the theft of The DAO, which still holds about 7, 000, 000 ETH coins, and that the “White Hat Group” was organized by Alex Van De Sande of the ETH Fang Foundation.

Interestingly, Steven Nerayoff was charged with criminal racketeering by the U.S. Department of Justice in 2019, and his personal credibility was hit. A New York judge dismissed the charge in May 2023 and cleared his charges.

Whether Nerayoff’s allegations are true or false? We don’t know for the time being, and an official response is awaited, but at least the accuser’s remarks have brought ETH a glimmer of attention in this bull market in their own absence?