Compound Foundation Exposed for Misappropriating 8.42 Million DAI to Manipulate Governance Votes

TechFlow: On September 28, disclosures by Compound community member ugurmersin revealed that the Compound Foundation is suspected of violating the strict restrictions of the previous Proposal 536. The proposal originally entrusted 8.42 million DAI from the decentralized autonomous organization (DAO) treasury to the foundation, explicitly stipulating that the funds could only be used to support protocol operations, strictly prohibiting discretionary trading or speculation, and forbidding their use to fund the foundation’s own operations.

On-chain records show that the funds were transferred to an exchange and swapped for 344,780 COMP tokens, then delegated to a voting address controlled by the foundation itself. Fifty-eight minutes before the voting deadlines for Proposals 580 and 582, the relevant tokens were transferred and participated in the vote, directly pushing the transfer of nearly all DAO funds under the control of the Treasury Management Committee (TMC)—with the foundation listed as one of its signers—and facilitating the approval of a $52 million Version 4 (V4) plan favorable to the foundation.

The disclosure points out that the foundation allocated resources to itself using DAO-owned tokens without authorization, and multiple parties involved are suspected of misleading the public during this period by continuing to refer to the assets as “liquid” DAI despite having already been converted into COMP. All proposals, forum activities, and on-chain records related to this incident have currently been preserved as backups.