Justice Department investigating Saber Labs founders over Solana-based projects: sources

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The US Department of Justice is investigating the two brothers behind the Solana Saber Labs stablecoin exchange, 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 network of 11 pseudonymous identities to create an ecosystem of nested financial products that counted crypto deposits two to three times by passing tokens between them. Their efforts spurred a key growth metric for Solana of multi-billion dollars at the peak of the 2021 crypto bull market and, according to Ian, boosted the price of SOL, the native token of the Solana network.

The metric to optimize for summer 2021 was [total value locked (TVL)], wrote Ian in a never-published blog post obtained by CoinDesk. TVL can only count if the protocols are built separately, so I devised a scheme to maximize Solanas TVL: I would build protocols that stack on top of each other, so that a dollar can be counted multiple times.

Investigators are searching the web for information on crypto projects that revolved around Saber, one of the people said. This 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 built entirely by a few people, it doesn’t feel as authentic, Ian wrote. I wanted to give the impression that a lot of people were relying on our protocol rather than shipping 20+ disjoint [sic] programs as one person.

A whiteboard at the Solana hacker house in Miami in April 2022 featured a

The Macalinao brothers and the Justice Department did not respond to requests for comment.

Read more: Master of Anons: How a crypto developer rigged a DeFi ecosystem

The CoinDesks report on the brothers’ gamification of their TVL projects prompted industry statistics service DefiLlama to change the way it presents the popular metric.

Following the CoinDesks report, the Macalinao brothers scuttled their plans to move Saber to the Aptos blockchain. They left their crypto venture capital firm, Protagonist VC. And they transferred control of some of their projects built under a pseudonym to Marinade, another Solana-based DeFi protocol.

Saber, the stablecoin exchange and keystone of the DeFi brothers’ ecosystem, continues to operate: its website reported processing $4.4 million in trading volume in the past 24 hours at the time. of publishing. Ian has worked to maintain this infrastructure of projects, although the Sabers Discord server, where users can ask questions and get updates, has been largely abandoned.

Sunny and Cashio, two projects whose tokens stagnated, are basically dead. Their Discord servers are full of angry messages from users asking where the developers went.

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