Mirror Protocol developers accused of covering up millions of dollars embezzlement

Close to putting its restructuring plan into practice, the Terra (LUNA) team faces yet another fraud charge. A user known as @FatManTerra has been denouncing alleged frauds that the developers would have applied. Now, he’s made new claims about the Terra protocol. But he also accused the Mirror Protocol.

Mirror Protocol developers covered up millions of dollars embezzlement

According to the user, the developers of the Mirror Protocol would have helped to cover up flaws that led to the theft of millions of dollars from LUNA.

Ever since the Terra fiasco exploded in early May, @FatManTerra has been raising suspicions about the inner workings of the Terra ecosystem.

@FatManTerra tweeted details of an investigation into the Mirror’s whale wallets. He suspects they have been actively trying to hide their influence by spreading MIR tokens.

“I have found evidence that this wallet and related wallets try very hard to make it appear that the governance of the MIR is not majority controlled by a single entity. They do this by splitting MIR between several new anonymous wallets,” he said.

One of these wallets is linked to Terraform Labs CEO Do Kwon through a Decentralized Autonomous Organization (DAO), for which he is a consultant.

Putting it all together, @FatManTerra suggests that this could point to big names in the Terra hierarchy manipulating governance and profiting as a result.

🧵👇 What if I told that Mirror Protocol, up until 18 days ago, was susceptible to the one of the most profitable exploits of all time, allowing an attacker to generate $4.3m from $10k in a single transaction? Here’s how I discovered this – by pure serendipity. 🧵👇

— FatMan (@FatManTerra) May 27, 2022

Mirror Protocol

Furthermore, the user revealed details of a Mirror Protocol exploit that was logged about 18 days ago. The date coincides with the time when UST lost its peg.

The bug in question is related to the blocking contract. Under normal circumstances, users block their guarantees. And, after a 14-day retention period, they can use an unlock function to release the collateral.

But, according to him, until the implosion of the UST, the code that governed the unlocking function did not have improved verification. And this allows an attacker to deliberately release funds.

Here is the address for your perusal. https://t.co/7L9aeE38TF I was able to map this address to a Terra wallet via bridge tracing, and it had some large and interesting transactions, so I decided to dig in. Here’s the Terra wallet. https://t.co/zAtn6GfVil (8/12)

— FatMan (@FatManTerra) May 27, 2022

@FatManTerra further claimed that the Mirror Protocol fixed the bug without informing the community that it existed. According to the user, attackers have exploited the bug hundreds of times since October 2021.

Furthermore, the community investigator by the name of PF92 said exploiters stole at least 88 million UST through this vulnerability.

@FatManTerra ended the tweets saying he doesn’t know who is responsible. But he assured that he will continue his investigation.