Community Members Disclose That the Compound Foundation Misappropriated Version 2 DAI Reserves

Compound Foundation is facing an allegation that 8.42 million DAI from the Compound v2 DAI reserve were used outside their stated purpose after community member ugurmersin disclosed the claim on September 28, as reported by BlockBeats.

Proposal 536 set limits

ugurmersin said Proposal 536 in February placed the 8.42 million DAI with the Foundation under specific conditions. The funds were meant only for protocol operations, were prohibited from speculative trading, remained owned by the DAO, and could not be used for the Foundation’s own expenses.

On-chain records tie DAI to COMP voting power

On-chain records cited by ugurmersin show the funds were moved to an exchange and converted into about 344,800 COMP. The COMP was then delegated to the Foundation’s voting address about 58 minutes before the deadlines of Proposals 580 and 582.

According to the disclosure, that voting position helped push nearly all DAO funds into TMC and supported a roughly $52,000,000 V4 proposal that ugurmersin described as favorable to the Foundation. During the same period, multiple parties still publicly characterized the funds as liquidity DAI, he said.

Response and next steps

Compound Foundation had not responded to the allegation. The disclosure raises a governance question for DAO members: whether treasury funds placed under Proposal 536 were used within their stated limits, and whether the resulting COMP delegation affected Proposals 580, 582 and the V4 proposal.