Agency warns investors of DeFi risks, legal situation
The Thai Digital Asset Association warned investors about the risks of investing in DeFi and clarified that the association cannot serve as an intermediary in a legal dispute after Genesis, a decentralised platform (DeFi) platform, claimed the association will act as an intermediary for the indemnification for any damage caused by fraud.
The statement was released yesterday after information regarding the conversation of the owner of Genesis appeared in a Telegram chatroom, claiming he would contact the association to serve as an intermediary for the indemnification of all damages.
It is the first statement issued by the cryptocurrency traders' association to warn traders after a fraud case occurred in Genesis developed by an anonymous developer at the end of June.
"Thai Digital Asset Association's main objective is to educate people about digital assets. It's not possible for us to act as an intermediary in such disputes and as an agent to receive any assets on behalf of a victim or any person who is alluded to in the case," said the association's statement.
The association said it is willing to give advice, coordinate with relevant government agencies and send representatives to help provide knowledge and understanding to the staff to make the process run smoothly.
"A DeFi platform is a new technology accompanied with risks that investors may not know. These are risks from smart contracts in which some errors could occur even if they are audited, risks from developers whose decisions may immediately change, and risks from a token impairment," the association said.
GEN, a governance token of Genesis, was dumped in June and generated a significant loss for token holders.
Some GEN stakeholders speculated that the price dumping may be related to well-known YouTuber and cryptocurrency influencer "Gor Game" encouraging people to buy and invest in the coin in a Telegram chatroom. His YouTube videos are mostly tutorials on how to invest in DeFi platforms.
These GEN token holders have traced data on the blockchain and found that the owners of some token wallets were exempt from trading fee while others were not. They found that the owners of these wallets had a high trading volume and trading activities with a digital wallet owned by the YouTuber.
They asked the influencer for clarification in a Telegram chatroom and a Clubhouse chatroom with over 2,000 listeners on July 2. The YouTuber admitted to owning the platform and said he will compensate for the losses, asking any victims who have received the compensation to not sue him.
Some token holders said they have filed complaints with the police in three provinces but haven't yet filed a complaint with the Economic Crime Suppression Division.
Some holders said they haven't notified the Securities and Exchange Commission (SEC) because they known DeFi platforms are not regulated under by the SEC.
“However, this doesn't mean that DeFi is a lawless territory. It's just difficult to prosecute fraudsters in the DeFi world. The investigators and prosecutors must be knowledgable both in finance and cryptocurrencies,” said lawyer and financial planner Pete Peerapat wrote on Facebook.
He wrote that although DeFi is not under the supervision of the regulator, the victims can take legal action against the perpetrators under the criminal law.