ParaSpace Hit by Large Wave of NFT Withdrawals Amidst Internal Crisis

The non-fungible token (NFT) market is still going through its ups and downs, and the latest news regarding ParaSpace is not helping it at all.

ParaSpace, a popular NFT lending project, has been rocked by internal disputes, which have led to a large wave of withdrawals. On May 10, 138 BAKC, 591 MAYC, 278 Otherdeed, 264 BAYC, 72 Meebits, and other NFTs worth about $35 million were withdrawn from ParaSpace, along with $30 million worth of ERC-20 Tokens.

Source: Dune Analytics

As AZCoin News recently reported, more than a dozen employees, including the COO and CBO, took control of the project’s official Twitter handle and tried to fight back against the CEO. They also deleted the CEO’s authority in the protocol and accused him of having exclusive control over the money and not providing financial data. The internal disputes have raised serious questions about ParaSpace’s future, and the value of the affected NFTs and ERC-20 Tokens has been negatively impacted.

In response to these allegations, ParaSpace released a statement via its official Twitter handle, admitting that user funds had not been fully returned to the protocol after a hack on March 18, 2023. The statement revealed that over 50% of the funds remained unreturned, which has left a hole in the protocol treasury. The statement also revealed that funds were being administered by an EOA wallet unrelated to ParaSpace Insurance, and outflows had been made to various unknown wallets, as well as CEXs and Circle redemptions.

The situation has sparked concerns among users and investors about the security and reliability of ParaSpace. The project’s reputation has been severely damaged, and many are now worried about the safety of their funds. The current crisis at ParaSpace underscores the need for transparency and effective communication between team members, users, and investors. It is essential that NFT and ERC-20 Token projects maintain high standards of governance and transparency to build and maintain trust.

It remains to be seen how the internal disputes at ParaSpace will be resolved, but it is clear that the project will face further scrutiny from regulators and the wider crypto community. The NFT and crypto industries are still evolving, and projects need to be vigilant and transparent to succeed in the long run.

In conclusion, ParaSpace’s internal crisis highlights the importance of strong governance and transparency in NFT and ERC-20 Token projects. The market needs to be built on trust, and it is up to projects to maintain this trust by being open and honest about their operations. As the industry continues to grow, it is vital that projects take these issues seriously and work hard to address any concerns that arise.

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