Compound CEO Robert Leshner appeared in hot water after threatening to report users who received an incorrect amount of COMP tokens to the Internal Revenue Service (IRS).
Leshner claims that whoever profited off the error can keep a 10 percent share of the sum, but the rest has to be returned.
Due to a bug, the protocol’s users received “far too much” COMP after Compound upgraded its comptroller contract.
The botched distribution process made the token’s price record a double-digit drop.
Leshner has faced scolding criticism within the cryptocurrency community for mishandling the situation.
Popular crypto YouTuber Lark Davis tweeted that threatening to dox and report users was “a pretty damn bad strategy.”
Others ridiculed the decentralized finance project for running to the government as soon as things go south, which goes against the ethos of DeFi.
Some also echoed recent comments made by Securities and Exchange Chairman Gary Gensler about the centralization of decentralized finance.
Compound is the fifth largest DeFi protocol with $9.2 billion worth of total value locked, according to data provided by DeFi Pulse.