ParaSpace's founder Yubo Ruan 'misappropriated' ETH from project

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ParaSpace's founder Yubo Ruan 'misappropriated' ETH from project

The NFT market's downturn has resulted in scandal, with one of the sector's major lending protocols being retaliated against.

Users of ParaSpace, a collateralized lending protocol, withdrew over $36M worth of NFTs on May 10 because of allegations of embezzlement against the project's CEO. It still has more than $80M in NFT deposits.

Yubo Ruan, whose LinkedIn page marks him as ParaSpace's founder, didn't fully return the ETH that belonged to the Project's users, a post in the ParaSpace Discord alleges. BlockSec, a security firm, provided the funds, preventing an attack on the lending protocol by preemptively carrying it out in March.

The recovered ETH was sent to the ParaSpace wallet allegedly controlled by Ruan. A document issued by the ParaSpace team alleges that Ruan, along with the relevant blockchain transactions, misappropriated nearly half of the assets.

The incident highlighted a dynamic often seen in the crypto space, in which control over different components of a project is spread out among team members. Social media sites, websites, and crypto wallets are among the items listed in the e-commerce site listing. Disparities between the actions of different units tend to occur when disputes arise.

The ParaSpace team alleges that Ruan has sent money from that wallet to other unknown addresses, centralized exchanges, and Circle, the creator of the USDC stablecoin. The team also said, and provided a transaction as proof, that Ruan is supplying ETH to ParaSpace to earn interest from the very users who are owed the ETH.

Ruan, who did not respond to The Defiant's requests for comment on Twitter, has countered on the social media site, saying that he has followed a scheduled disbursement of the funds. Ruan alleges that the Twitter account of the lending protocol has been co-opted by Thomas Schmidt and Jay Yao, both senior members of the ParaSpace team. The team's members, including Schmidt and Yao, are among the team's names in the discord post laying out the allegations against Ruan.

On May 10, the project reached an unprecedented level of daily active users at 1,501, as people withdrew their assets from the platform amid the turmoil.