The U.S. Department of Justice is investigating the two brothers behind Solana stablecoin exchange Saber Labs, Ian and Dylan Macalinao, according to two people familiar with the matter.
The investigation follows CoinDesk’s August report that the Macalinao brothers used a web of 11 pseudonymous identities to build an ecosystem of interlocking financial products that double- and triple-counted crypto deposits by passing tokens between themselves. Their effort boosted a key growth metric for Solana by billions of dollars during the height of crypto’s 2021 bull market, 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.”
Investigators are seeking information on the web of crypto projects that orbited Saber, one of the people said. That includes decentralized-finance (DeFi) yield-farming app Sunny Aggregator as well as Cashio, a stablecoin project that lost millions of dollars in a March hack. Ian secretly wrote the code for both projects using pseudonymous identities.
“If an ecosystem is all built by a few people, it does not look as authentic,” Ian wrote. “I wanted to make it look like a lot of people were building on our protocol rather than ship 20+ disjoint [sic] programs as one person.”
The Macalinao brothers and the Justice Department didn't respond to requests for comment.
CoinDesk’s report on the brothers’ gamification of their projects’ TVL prompted industry stats service DefiLlama to change how it presents the popular metric.
In the wake of CoinDesk’s report the Macalinao brothers scuttled their plans to move Saber to the Aptos blockchain. They exited their crypto venture-capital firm, Protagonist VC. And they transferred control over some of their pseudonymously built projects to Marinade, another Solana-based DeFi protocol.
Saber, the stablecoin exchange and keystone of the brothers’ DeFi ecosystem, continues to operate: Its website reported handling $4.4 million in trading volume in the last 24 hours at press time. Ian has worked to maintain that project’s infrastructure, though Saber’s Discord server, where users can go to ask questions and get updates, is largely abandoned.
Sunny and Cashio, two projects whose tokens have flatlined, are all but dead. Their Discord servers are full of angry messages from users asking where the developers have gone.
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