An advertisement of Bitcoin, one of the cryptocurrencies, is displayed on a building in Hong Kong, on Nov. 18, 2021.
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  • A DAO lost $470,000 this week after one individual amassed enough tokens to take control of the group's treasury.
  • Build Finance DAO said Monday it has been the "target of a hostile governance takeover."
  • DAOs, or decentralized autonomous organizations, are loosely formed groups with no central authority.

A decentralized autonomous organization lost $470,000 this week after one individual amassed enough tokens to take control of the group's treasury.

Build Finance DAO said Monday it has been the "target of a hostile governance takeover" in which a "malicious actor" has taken over its token contract. 

Estimates by The Block put the total value the individual gained at 160 ETH or around $470,000.

DAOs are loosely formed groups with no central authority. Members abide by contracts that lay out the foundational rules. Should they wish to change anything, they must vote on it as a collective.

Build Finance, according to its official Discord channel, is a "decentralized venture builder" dedicated to producing companies that it will fund with its BUILD token. The DAO was formed around September 2020 and started with 100,000 tokens. But based on the Discord channel, the DAO did not have many updates throughout the past months. 

Indications of the takeover began on February 9 when a proposal by Suho.eth was put forward, basically enabling them to mint tokens unilaterally. The moderator urged token holders to vote against the proposal, causing it to fail.

But the next day, the individual tried again by sending their tokens to a separate wallet and succeeded. The individual used the supply of tokens to garner enough votes to gain full control of the treasury.  

Build Finance DAO warned investors against buying any of their tokens, according to the organization's statement on Twitter.

"As things stand, the attacker has full control of the governance contract, minting keys and treasury. The DAO no longer has control over any part of the key infrastructure," it said. "Do not buy BUILD tokens on any platform."

The group continued: "It is with deep regret that we have to inform the community of this total and irrecoverable loss of BUILD DAO treasury assets through the deeds of one malicious actor," they added.

Beyond BUILD tokens, the treasury of the organization as of August 2021 was comprised of six types of tokens, including METRIC and DAI, that together were worth around $522,536.

"As a byproduct of the DAO structure, the attacker was able to gain access to 130,000 METRIC tokens that were contained within the BUILD DAO treasury ...  This extreme supply shock has caused a large fall in the spot price of the METRIC token," the group said, adding that the individual does not have control of any parts of the METRIC token.

 

Read the original article on Business Insider