ParaSpace team clashes with CEO over alleged whereabouts of protocol funds

Protocol developers demand that CEO and CTO Yubo Ruan step down, while Ruan has accused the development team of an “illegal takeover.”

On May 10, nonfungible tokens (NFT) financialization protocol ParaSpace published several alleged irregularities tying its CEO, founder, and CTO Yubo Ruan to the mismanagement of funds equaling 2,909 Ether (ETH) recovered through a white-hat interception that occurred on March 18. Ruan denied any wrongdoing, writing: “manufacturing claims with the intent to take over and force me to step down as CEO. This is highly problematic and the legal team has taken action.”

Dear ParaSpace Community,

TL;DR: There have been no malicious acts from the team. All funds are safe from Yubo, the protocol is under the full control of the team, and we have the financial means to ensure the stability of the platform.

Today, we are sharing information brought… pic.twitter.com/58M3U1uLwv

— ParaSpace (@ParaSpace_NFT) May 10, 2023

On or around March 18, ParaSpace suffered a price-slippage exploit that was quickly resolved. Around the same time, blockchain security firm BlockSec intercepted the hack. It moved 2,909 ETH from the protocol before malicious actors could obtain the funds and subsequently returned the assets to ParaSpace staff.

According to Paraspace, Ruan had “exclusive control and management” of a portion of protocol funds returned by BlockSec. Developers subsequently allege that a portion of the 2,909 ETH believed to be in control by Ruan had “not been fully returned to protocol, with initially over 50% unreturned, leaving a hole in the protocol treasury.” The development team also alleges that these assets had “outflown to various unknown wallets as well as out to CEXs and Circle redemptions,” totaling $1 million.

“As a result, the team has come together, secured the protocol’s multi-sig, and removed Yubo as well as any addresses not directly controlled by the team.”

ParaSpace, through its official Twitter account, calls for Ruan to “step down from his roles as CEO and CTO.”

On the other hand, Ruan alleges that two former ParaSpace consultants, Thomas Schmidt and Jay Yao, who are currently stated as the protocol’s COO and CBO, respectively, “have illegally obtained control of one of the protocol’s multisig and social media accounts” through misrepresentation. Ruan said that upon receipt of rescued funds from BlockSec, a structured redeposit procedure was agreed to and scheduled in phases “by myself, Thomas, Jay, and other key engineering stakeholders.” The CEO wrote:

“To date, following the schedule, all of the hacker’s debt has been deposited back into the hacker account. The residual amount has already been paid back in full according to schedule. The mischaracterization by them is absurd, and I have nothing to hide.”

Cointelegraph has not independently verified the allegations brought forth by either of the two parties. ParaSpace stated that “our top priority is to address this situation swiftly and effectively.” Meanwhile, Ruan wrote, “please be aware of the legal ramifications behind these illegal takeovers action.”

Contributors at @ParaSpace_NFT ,

I write to make you aware of a pressing matter concerning our company. Two former consultants, Thomas Schmidt, and Jay Yao, have illegally obtained control of one of the protocol’s multisig and social media accounts. They did so by contacting key…

— Yubo Ruan (@yuboruan) May 10, 2023