Tensions Rise as SushiSwap Labels Lido Finance’s Actions as ‘Theft’ in Ongoing Dispute

In a recent incident that occurred on April 9, SushiSwap fell victim to a hacking attack, resulting in a loss of $3.3 million. Fortunately, due to timely detection, the exchange successfully prevented the hacker from dispersing the assets. However, upon further investigation, it was discovered that 100 ETH stolen during the attack had been transferred to Lido Finance’s staking protocol. Specifically, 60 ETH found its way into a staking vault, while the remaining 40 ETH ended up in LidoDAO, which SushiSwap sought to recover.

Responding to the DEX’s request, Lido initiated a vote on May 4 to decide whether to return the 40 ETH. The proposal received agreement from 44 million votes, constituting 67% of the ballots. However, it failed to pass as it did not reach the required threshold of 50 million votes.

On May 18, LidoDAO launched a second proposal, set to conclude on May 25. Unfortunately, the current situation looks grim, with even fewer votes compared to the previous attempt, and a significant portion of participants opting to leave the funds untouched within Lido.

As a result, the likelihood of SushiSwap recovering the 40 ETH from Lido appears increasingly slim, fueling the growing tension between the two DeFi projects. CEO of SushiSwap, Jared Grey, recently voiced his concerns, suggesting that Lido’s actions can be seen as nothing short of “theft.” In a tweet, he emphasized the importance of supporting users and unequivocally condemned the morality of not returning stolen funds.

Grey further pointed out that in similar situations, SushiSwap has made efforts to make affected users whole and collaborated with third parties to return stolen funds. However, in this case, personalities associated with Lido have argued that the project has no obligation or authority to return the funds, effectively endorsing the distribution of stolen assets among multiple LidoDAO participants.

In response to the allegations made by SushiSwap, Lido contends that the DEX is too hasty in placing blame solely on the protocol. A representative of Lido stated, “We feel like we have done everything we could to help SushiSwap against the legal threats, which is a situation that they’ve mishandled in a series of mistakes and carelessness. They have taken a skewed stance and publicly broadcasted it on Twitter, which is truly disappointing.”

Another noteworthy detail is that the exploited wallet, sifuvision.eth, belonged to 0xSifu, a figure associated with the failed DeFi project Wonderland. It was later revealed that this individual is the former CEO of the Canadian-based cryptocurrency exchange Quadriga, known for its infamous collapse in 2019.

The dispute between SushiSwap and Lido Finance highlights the complexities and challenges surrounding the recovery of stolen funds in the decentralized finance space. As the second proposal’s deadline approaches, the DeFi community eagerly awaits the outcome, hoping for an amicable resolution that prioritizes the interests of affected users.

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