The CEO of Composable Finance has vigorously refuted allegations of legal improprieties made by the decentralized finance infrastructure platform’s former chief technology officer, Karel Kubat.
Kubat announced in a Feb. 20 tweet that he had stepped down from the firm while leveling a number of accusations at his former company and its CEO.
Kubat said that he was resigning because the firm had not provided financial statements to him or the community and because he had no overview of the company’s financial health.
However Kubat said he suspects that CEO Omar Zaki, who has been legally barred from raising money for companies, was involved in the raising of Series A funds for the company in violation of a cease-and-desist mandate from the United States Securities and Exchange Commission.
Kubat also said that he also suspects Zaki’s role in the alleged rug-pull project, Bribe, was “much greater than he publicly stated.”
Responding to Kubat’s resignation, Zaki took to Twitter Spaces for an AMA (Ask Me Anything) on Feb. 20, in which he vigorously denied all of the accusations. He claimed that all of the company’s actions to his knowledge were done in full accordance with the law.
1/ We’re sorry to announce that Composable Finance has parted ways with our former CTO.— Composable Finance (@ComposableFin) February 20, 2023
While this naturally prompts questions and concerns, our team is committed to addressing these questions and alleviating any concerns.
In response to claims of a lack of financial transparency at the company, Zaki stated that the company is private and cannot publicly release financial information.
However, “we remain super confident that we have sufficient resources, personnel, and the tech to actually execute upon our strategies […] there is nothing here that causes me concern or should cause the public concern," he said.
Zaki also denied violating any orders from the SEC, stating that the Series A fundraiser was done completely offshore and was compliant with laws in the countries where it took place. Zaki stated that the company retained legal counsel to ensure that no laws were broken, explaining:
“Those allegations are incorrect, the Series A was designed as an offshore sale of utility tokens and we had outside council advising on the offering […] I had made very clear that all offerings of Composable were conducted with sufficient legal counsel.”
As for the claim that Composable was involved with the Bribe project, Zaki stated flatly “we had no part in the Bribe project.”
Related: Mutant Ape creator arrested for alleged “fraud”
Composable Finance is the developer of a cross-chain bridging and messaging protocol. In February 2022, it raised over $100 million through a parachain auction on Polkadot. Ten days after the fundraise, noted blockchain sleuth ZachXBT successfully doxxed the company’s CEO, known as “0xbrainjar,” revealing that he was Zaki.
In an April 1, 2019 settlement, the SEC accused Zaki of “repeatedly [misleading] investors in the Fund about assets under management, fund performance, and fund management,” during his role as an executive for Warp Finance and Force DAO. As part of the settlement, Zaki was barred from raising money from investors in the U.S.
However, the SEC action was a civil cease-and-desist order, and Zaki is understood to have not been convicted of violating any criminal laws.
ZachXBT also last year accused Zaki of being involved with Bribe, an alleged rug-pull scam.