Polygon’s Deal: Paying DraftKings Millions for Failed Validator

Polygon’s Deal: Paying DraftKings Millions for Failed Validator

Polygon's DraftKings deal raises preferential treatment concerns, KyberSwap hacker demands company control, Circle denies financing claims.

Welcome to the final edition Datawallet Daily for the week. Here are the top stories moving markets in the last 24 hours:

Polygon’s Deal: Paying DraftKings Millions for Failed Validator

Polygon’s secret deal with DraftKings to run a network validator on the Polygon blockchain has raised concerns about preferential treatment and failed performance. DraftKings, receiving millions in MATIC from Polygon, failed to maintain its validator’s performance and was removed from the network. This undisclosed financial setup allowed DraftKings to profit substantially while failing its responsibilities. 

The arrangement, not publicly revealed, exemplifies undisclosed agreements between Web3 companies and mainstream brands. Despite charging a 100% commission on its delegated stake, DraftKings’ validator, once among the largest due to Polygon’s support, underperformed and was eventually removed, impacting the reward distribution among other stakers in the ecosystem.

KyberSwap Hacker Seeks Full Control of Kyber Company

The hacker responsible for the $46-million KyberSwap exploit has issued a set of extraordinary demands, seeking complete executive control over the Kyber company. In a striking move, the hacker demands all company assets, including KyberDAO’s governance mechanism, corporate documents, shares, and equity. They propose to buy out existing executives at a fair price, promising to double staff salaries and provide severance packages with benefits for those choosing to leave. The hacker assures tokenholders of increased value and offers liquidity providers a 50% rebate on their losses. 

These conditions must be met by Dec. 10, or the offer will be withdrawn, with threats of nullification if any agents contact them regarding their trades on Kyber.

Circle Denies Connections to Terrorist Financing and Justin Sun

Circle, a stablecoin issuer, has publicly refuted allegations of illicit financing and connections to Tron founder Justin Sun. In a blog post, Circle’s Chief Strategy Officer, Dante Disparte, addressed U.S. Senators Elizabeth Warren and Sherrod Brown, dismissing claims made by the Campaign for Accountability. 

Disparte emphasized that Circle does not facilitate or finance activities for groups like Hamas, and it terminated services to Sun and his associated entities in February 2023. The letter clarified that only $160 in USDC was transferred among implicated wallets, none of which were sourced from Circle. This response aims to reaffirm Circle’s commitment to ethical practices and regulatory compliance.

Celsius Allows Withdrawals for Eligible Crypto Users

Celsius, the cryptocurrency lending platform that filed for bankruptcy in July 2022, has begun allowing certain users to withdraw funds. Following approval of its reorganization plan, Celsius has opened withdrawals for participants in its custody program falling under “Class 6A General Custody Claims” and “Class 6B Withdrawable Custody Claims,” with a deadline set for February 28, 2024. Eligible customers can retrieve 72.5% of their cryptocurrency holdings, minus transaction fees. 

However, those opposing the reorganization plan are excluded, with their assets to be managed by a litigation administrator. This development is part of Celsius’s ongoing efforts to navigate bankruptcy proceedings and legal challenges from regulatory bodies, including a settled $4.7 billion lawsuit with the FTC and ongoing criminal charges against CEO Alex Mashinsky.

Other breaking news

Wrapping up

Wrapping up today’s issue: Polygon faces scrutiny for allegedly giving DraftKings validator preferential treatment, a concerning sign for network validators. Kyber Network grapples with a major crisis as a hacker demands full control of the project; the team is unlikely to comply, potentially leading to a significant $46 million loss. In other news, Circle refutes any links to terrorist financing and Justin Sun amidst increasing regulatory attention on stablecoin issuers. On a positive note, Celsius has started allowing withdrawals for eligible crypto users.