David Schwartz Blasts Bonk Incident... "Amounts to Corporate Fraud"

▲ BONK, Fund Outflow/AI Generated Image

Regarding the incident where $20 million from the Bonk (BONK) treasury was transferred to an external wallet after an official governance vote, Ripple's honorary Chief Technology Officer David Schwartz directly stated, "This amounts to corporate fraud." He argued that merely following smart contract rules does not exempt participants from criminal and civil liability.

According to crypto media outlet U.Today on July 7 (local time), Schwartz referred to the incident where BonkDAO lost assets worth $20 million, stating that an official vote does not absolve participants of legal responsibility. He explained that in matters of shared asset distribution, national courts do not recognize the logic that "code is law," and from a legal perspective, this incident constitutes corporate fraud.

The incident emerged when 4.42 trillion BONK were transferred from the Solana (SOL) blockchain-based BONK treasury via official proposal BIP 76. It was not a hacking incident where a smart contract was breached. The perpetrator acquired approximately 1% of BONK's total supply by spending about $4.4 million on Binance and Bybit, then submitted a proposal on the Realms platform to send 4.42 trillion BONK from the treasury to an external address.

Out of 18,500 eligible wallets, only 7 actually participated in the vote. One wallet deposited tokens 25 hours before the vote ended, securing 99.9% of the total voting power and meeting the quorum. Ultimately, assets equivalent to 5% of BONK's total circulating supply were transferred to the perpetrator's wallet.

Schwartz stated, "If you and I are doing business together without establishing a separate legal entity, even if we agreed that you could cast more votes than me, you cannot convert joint funds into personal funds." He added, "The moment you vote on joint funds, you automatically incur a fiduciary duty under the law." He further explained that if a DAO is not registered as a legal entity like a Limited Liability Company (LLC), it is treated as a general partnership under common law, and participants who voted in favor of a malicious proposal violated their fiduciary duty to other holders. Schwartz emphasized that courts only assess economic damages, stating, "There are no meme coin exceptions."

BonkDAO has officially reported the asset outflow to law enforcement agencies. BonkDAO, along with the Solana Foundation and centralized exchanges, is working to track and block the transferred assets.

[Article Summary]

-4.42 trillion BONK were transferred from the BonkDAO treasury to an external wallet following an official governance vote.

-Out of 18,500 eligible wallets, only 7 participated, and one wallet secured 99.9% of the total voting power.

-Ripple's honorary CTO David Schwartz argued that even if smart contract rules were followed, converting joint assets into personal funds constitutes corporate fraud.

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