Solana
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The DOJ is investigating two brothers behind a solana stablecoin exchange over alleged fraud, CoinDesk reported.
The Macalinao brothers reportedly crafted 11 fake identities to triple-count crypto deposits to create a fake De-Fi ecosystem.
The crypto industry is under heavy scrutiny following the collapse of Sam Bankman-Fried’s FTX exchange.
The US Department of Justice is probing two brothers behind a solana stablecoin exchange that reportedly used 11 fake identities to triple-count deposits, according to CoinDesk.
The investigation follows CoinDesk’s earlier exposé in August which revealed the Macalinao brothers crafted a fake decentralized finance ecosystem by passing the triple-counted deposits between themselves. The allegedly fraudulent scheme was meant to increase a key metric for cryptocurrency Solana in 2021.
US authorities are looking into a web of crypto projects circulating Saber, per CoinDesk, including a De-Fi yield-farming app Sunny Aggregator and a stablecoin project Cashio that lost millions of dollars in a hack last March.
The DOJ and Saber Labs did not immediately respond to Insider’s request for comment.
“The metric to optimize for in Summer 2021 was [total value locked (TVL)]” Ian Macalinao wrote in an unpublished blog discovered by CoinDesk.
“TVL can only count if protocols are built separately, so I devised a scheme to maximize Solana’s TVL: I would build protocols that stack on top of each other, such that a dollar could be counted several times,” he added.
Meanwhile, Saber is still maintaining operations. According to its website, it’s processed $4.3 million in trading volume in the last 24 hours.
The crypto industry is facing turmoil and scrutiny following the collapse in November of Sam Bankman-Fried’s FTX, which has since led to a slew of money laundering and conspiracy charges.