Lending platform Defi Money Market (DMM) — backed by Tim Draper’s Draper Venture Network — has had a difficult birth.
The Initial DEX Offering (IDO) has completed successfully, raising $6.5 million in 48 hours, but investors reported problems with completing transactions, a confusing interface or raised trust issues around the company’s background.
Separately Telegram scammers made off with $40,000 from users trying to buy — although DMM kindly made up for the lost tokens — and there were claims of privacy problems.
Despite the issues, DMM’s DMG token is currently trading at $0.87, over double the initial sale price of $0.36. DMG has also had the highest trading volume on Uniswap in the past 24 hours with $4.8 million being traded against Ether (ETH).
What is DMM?
The DMM project offers 6.25% interest rates on ETH, DAI, and USDC, backed by real world assets. According to the website, the assets are actually $8.8 million worth of cars owned by Finova Financial — the CEO of which is also a partner in DMM.
One independant cryptocurrency researcher claimed to have identified multiple instances where personal data was not properly redacted from records provided about DMM’s underlying assets.
Despite the project’s attempts to remove all private info, 18 of documents still have the Verification Code through which you can find additional information. The purchaser of these vehicle records is @FinovaFinancial. One of DMM’s partners is the CEO of this company. pic.twitter.com/zfbPvENE8g— Frank Topbottom (@FrankResearcher) June 24, 2020
A series of unfortunate events
The user complaints, Telegram scammers and vague air of chaos, emphasises the many similarities between the DeFi boom and the ICO boom in 2017,
Shortly after the sale started, Twitter users started complaining about swap errors, with one anonymous user reporting ETH being taken from their wallet despite seeing failed transactions and not receiving any DMG tokens:
“I tried to buy from the sale page, transaction failed through the ETH wrapping process. ETHs were taken from my account but i still have no DMM:ETH tokens in my balance. [..] Is there anyone I can get in touch with to send tx details and sort this out?”
An anonymous 4chan user shared their outrage on the “poorly run public sale” threatening legal action over the sale after losing money due to a confusing interface.
Scammers be scamming
DMM also revealed in a post that their Telegram channel had been infiltrated by “malicious actors” who scammed users out of $40,000 worth of ETH. However the team stated they had sent every victim the respective amount of DMG tokens they should have received.
DMM announced the closure of the sale stating the “funds raised will be used to grow the DMM ecosystem and bring even more revenue generating real world assets on-chain and into Defi”.