It was a pretty dramatic week in NFT lending.
ParaSpace, one of the largest NFT lending protocols on Ethereum, is in the midst of an internal struggle. On one hand, two of the co-founders and the marketing team have accused its CEO/CTO Yubo Ruan of embezzling treasury funds — and they have produced various on-chain records to support their case.
On the other hand, Yubo claims that this is plot by several team members to remove him from the CEO position and take over the company, using fabricated stories and controlling the social media accounts.
Who are the losers here? The protocol and its users, of course. This internal infighting has caused lenders and borrowers to flee for safety, fearing that the protocol could shut down or user funds are lost. There has been a net outflow of >$45M worth of assets since the news broke.
It’s unfortunate that one of the best protocols in the space is experiencing this struggle. No matter what the outcome/truth is, trust has been lost. ParaSpace’s reputation has taken a big hit and its going to be difficult for it to earn it back.