Original article: "An article summarizing the whole story of ParaSpace's "internal fighting""

Author: Azuma

On the afternoon of May 10, many KOLs issued articles to warn of conflicts within the NFT lending protocol ParaSpace team and suggested that users withdraw their funds as soon as possible. The matter quickly fermented in the community, and a large number of users withdrew their funds from ParaSpace out of panic despite the high gas prices.

In order to understand the whole story and calm the panic in the community, Odaily Planet Daily specially invited Yubo, the founder of ParaSpace, to conduct a Twitter Space live broadcast. In the live broadcast, Yubo admitted that there were indeed some differences with the previous marketing team because the specific cooperation method had not been finalized, but there was absolutely no misappropriation of user assets. The FUD surrounding ParaSpace this time was driven by the marketing team that had differences with it, intending to force itself to "abdicate" by guiding public opinion through false information.

Shortly after Twitter Space was conducted, Jay, the chief business officer representing the ParaSpace marketing team, also took to the stage and accused Yubo of misappropriating user assets and being out of touch for 30 hours. He also claimed that the ParaSpace team had jointly kicked Yubo out of the list of multi-signatories of the agreement.

Both parties have their own opinions. In order to clarify the ins and outs of the whole incident, Odaily Planet Daily has simply sorted out the differences and opinions of both parties. For details, you can listen to the live broadcast recording.

Core controversy 1: The mystery of misappropriation of user funds

During the live broadcast, Jay directly accused Yubo of embezzling user funds and posted a PDF document containing the on-chain transaction data of an EOA address (0x909e36b512ed45250fdff513523119d825647695) controlled by Yubo.

At the same time, Jay also posted a long tweet signed by more than ten employees through the official Twitter account of ParaSpace (Yubo said that the account was controlled by Jay), which mentioned several major doubts about the address flow:

First, the user funds returned to the address by BlockSec were not fully returned to the protocol, resulting in a funding gap in the protocol Treasury. Second, the address is an EOA wallet with the domain names ruanyubo.eth and paraspaceinsurance.eth (actually redirected to yubo.eth). In addition, the address has transaction records that are not related to ParaSpace Insurance (insurance premiums, the business mentioned in the second domain name) and flowed out to yubo.eth. Third, since the hack, approximately more than $1,000,000 in funds in the address have flowed to various addresses (including CEX addresses), and some can be traced back to Circle redemption operations.

Odaily Planet Daily Note: Background: In March this year, ParaSpace was attacked by hackers, but the security company BlockSec prevented it in time and rescued 2,900 ETH of funds. BlockSec then returned the funds to ParaSpace by transferring them to the address starting with 0x909.

In response to Jay's accusations, Yubo responded with the following points:

The address starting with 0x909 is actually ParaSpace's daily operating wallet. For efficiency reasons, the current address is indeed an EOA address controlled by him, but there are plans to upgrade the address to multi-signature. The reason why the funds returned by BlockSec were not fully returned to the agreement is that the debt gap of the agreement is based on the US dollar, and BlockSec returned ETH, so it was chosen to combine market changes and gradually sell and fill the debt gap of the agreement at a frequency of one or two weeks. The gap was as high as about 5.7 million US dollars at its largest, and now there is only about 700,000 US dollars left, and the repayment plan has been communicated with the team before. As for the multiple small transfers, they are actually normal expenses such as salary transactions and GAS returns for ParaSpace employees, and relevant records can be provided for these.

Odaily Planet Daily Note: Shortly after Twitter Space ended, Yubo tweeted that it had repaid the last $700,000 and filled the debt gap. In addition, it will release a complete post-mortem analysis of each transaction in the next 48 hours.

Core controversy 2: The mystery of seizing power and control, who has the final say in the agreement now?

In addition to the disagreement over fund flows, Jay also stated in a live broadcast and tweet that in order to protect the security of ParaSpace, the multi-signature member group has kicked Yubo out of the list of signatories of the protocol's multi-signature address.

Yubo refuted this by saying that the multi-signature address of the ParaSpace protocol currently has 5 signatories, one of whom is Jay’s “confidant” Thomas Schmidt (whose position is COO and also signed the long push mentioned above), and the remaining 4 people are 3 technicians and 1 is a researcher based in the United States. These 4 people have signed formal labor agreements with ParaSpace as formal employees. At present, lawyers have communicated with these employees, and they have also realized that they have been deceived by Jay and others and are willing to cooperate with Yubo’s follow-up work. In short, Yubo said that the agreement is actually still under his control.

The two sides then engaged in a heated debate around this issue, but to the outside world, the current control cannot be fully confirmed.

Are user funds safe?

Based on the statements of Yubo and Jay, the main contradictions regarding funds in this incident are concentrated on the flow of the address starting with 0x909. Except for the repayment part of BlockSec, the user funds are not affected. With the filling of the last debt gap of 700,000, it means that in theory the funds belonging to the user have been fully replenished.

Considering that ParaSpace's contract has been audited by multiple institutions (although it has still been stolen by hackers), and that Yubo and Jay are fighting over control of the project but both hope to continue to lead the subsequent development and operation of the project, in theory, user funds are safe.

As for how the incident will develop in the future, Odaily Planet Daily will continue to follow up and report on it, so please stay tuned.