U.S government launches probe of Saber Labs over Solana

Adeniyi Odukoya
U.S Department of justice set to investigate Saber Labs founders.
U.S government launches probe of Saber Labs over Solana

The U.S. Department of Justice has begun investigating two brothers behind Solana stablecoin exchange Saber Labs Ian and Dylan Macalinao, as reported by Coindesk. The investigation centres around the brothers’ incorporation of diverse false identities to carry out erroneous crypto gain. 

In an extensive cover of the allegation saddled on Saber Labs founders, the brothers had created roughly 11 different identities across the internet in their pursuit to “build an ecosystem of interlocking financial products that double and triple-counted crypto deposits by passing tokens between themselves.”

Nonetheless, Solana did enjoy a massive increase in key growth metrics as it raked in billions of dollars in 2021 and, according to Ian, juiced the price of SOL, the native token of the Solana network.

“The metric to optimize for in Summer 2021 was [total value locked (TVL)],” Ian wrote in a never-published blog post obtained 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.”

U.S government launches probe of Saber Labs over Solana
More details about Saber Labs discrepancies on the Solana project

One of the sources stated that investigators are looking for information on the web of crypto projects that orbited Saber. Sunny Aggregator, a decentralized finance (DeFi) yield-farming tool, and Cashio, a stablecoin startup that suffered a March hack and lost millions of dollars, are examples of this. Ian used fictitious identities to write the code for both projects in secrecy.

Read Also: Crypto payments platform Wyre set to shut down

Last year, one of the most significant financial crimes in history happened in the crypto sector. FTX fraud occurred when many least expected; it was a fallow period, the bearish pull had flustered traders, and there was no asylum to run to for coverage from the anguishing losses. That case lingered for as long as possible. It led to the collapse of several promising crypto tech startups. 

U.S Department of Justice probing Solana stablecoin exchange, Saber Labs

There is another, and the American authorities have decided not to let this run off their hook. The authorities are investigating another possible financial crime that might affect the market condition.

Ian and Dylan would reportedly create unreal, virtual identities that would “double and triple’ count crypto deposits by “passing tokens between themselves.” Coindesk also successfully accessed an unpublished blog by Ian Macalinao indicating, “The metric to optimize for in Summer 2021 was total [total value locked (TVL)],” according to the report.  

Read Also: Coinbase to lay off 950 members of its workforce

On the other hand, investigators look into Sabers’ different crypto initiatives. These include the Defi app Sunny Aggregator and the stablecoin project Cashio, which was hacked in March and lost millions of dollars.

Ian allegedly used similar fictitious identities to write both codes. “An ecosystem does not look as authentic if a small number of individuals entirely constructs it,” he said. Instead of releasing 20+ disparate apps as a single individual, I wanted to make it appear like many people were building on our protocol, the author continued.

U.S Department of Justice probing Solana stablecoin exchange, Saber Labs

As we advance, many investors and traders will hope the investigation does not damage the recovering crypto sector so much. The trauma from witnessing the FTX saga and Bankman’s selfish decoy might kill every sort of optimism in some users’ minds. The year is as new as spring tucked into a fresh morning sunset. The prayer of many crypto investors coming into the year is that the market stays free from all sorts of terrible and disheartening allegations. 


Technext Newsletter

Get the best of Africa’s daily tech to your inbox – first thing every morning.
Join the community now!

Technext Newsletter

Get the best of Africa’s daily tech to your inbox – first thing every morning.
Join the community now!