In that scenario, Chandrasekera says that "technically the recipient is supposed to pay income tax based on the market value of the coins at the time of receipt, but if he or she returns the funds, there's no reason to report the income."īut Chandrasekera also makes clear that no one has to return the funds. Users who were mistakenly awarded extra tokens could voluntarily return the funds.
#DEFI COINS PRICE SOFTWARE#
If you received a large sum from this error and decide to keep it, that would be considered income," explained Shehan Chandrasekera, a CPA and head of tax strategy at crypto tax software company CoinTracker.io.
#DEFI COINS PRICE CODE#
" Section 61 of the IRS code defines income very broadly.
He was quick to walk back his Thursday evening tweet, saying it "was a bone-headed tweet/approach."Īnd then there's the threat related to the mistaken reward being reported to the IRS.
"Doxxing their customers is about the worst thing a crypto company can do from a PR perspective," Mati Greenspan, portfolio manager and Quantum Economics founder, told CNBC.Īnd it seems unlikely Leshner would pursue that route. But there is also nothing to keep them from holding their mistaken reward and risk being "doxxed."ĭoxxing someone means making public what is considered private information about an individual, which in the cryptocurrency world is tantamount to committing a cardinal sin. This user could return the funds and hold onto the $2.9 million "white-hat" tip. Threats lack teethĪs a hypothetical, let's take the account holder who was accidentally gifted $29 million in comp tokens in error. Gupta told CNBC that this entire pool of tokens - worth about $90.1 million, as of the time of publication - has already been handed out. "The impact is bounded, at worst, 280,000 COMP tokens," Leshner wrote. The Compound chief tweeted that the Comptroller contract address "contains a limited quantity of COMP."
Leshner made clear, however, that there is a cap to the carnage. The list of comp token millionaires goes on.įor users accustomed to providing their crypto to borrowers at a set interest rate, which is typically a single-digit APY, the erroneous and sizable rewards were certainly a nice change of pace. Another claimed that they received 70 million comp tokens into their account, or about $20.8 million at the time of their post. Soon after Leshner's tweet about the bug, $29 million worth of comp tokens were claimed in one transaction. Protocol users en masse began reporting massive windfalls. Gupta, a core developer at decentralized crypto exchange SushiSwap, said in a tweet that the entire episode could be blamed on a "one-letter bug" in the code.Ĭompound made clear that no supplied or borrowed funds were at risk, but that did little to soften the blow. "There are no admin controls or community tools to disable the COMP distribution any changes to the protocol require a 7-day governance process to make their way into production," he added, indicating that no fix could take effect for a week. "The new Comptroller contract contains a bug, causing some users to receive far too much COMP," explained Leshner in a tweet. But soon after implementation, it was clear that something had gone seriously wrong. On Wednesday, Compound rolled out what should have been a pretty standard upgrade. DeFi protocols such as Compound are designed to recreate traditional financial systems such as banks and exchanges using blockchains enriched with self-executing smart contracts.
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