Struggled NFTfi platform ParaSpace has failed to regain investor confidence after a highly publicized civil war earlier this year. ParaSpace’s total value locked (TVL) on its platform remains down 64% from his May peak and hasn’t recovered since “CEO drama.”
The investigation has revealed troubling new details about the company and its chaotic operations, raising big questions about the person in charge and CEO Yubo Luan.
The Paraspace Rebellion Fails
Earlier this year, NFTfi lending platform ParaSpace erupted in a highly public civil war over mismanagement of user funds.
The controversy centered on $5 million stolen by the protocol’s exploit in March and what happened to that money after it was recovered and returned to the protocol.
In May, 19 Paraspace team members, including Jay Yao (CBO) and Thomas Schmidt (COO), accused the company’s CEO, Yubo Luang, of holding funds and not returning them.
Disgruntled employees initially tried to oust Luan from both his position and power, but the CEO eventually succeeded in regaining full ownership of the platform. However, many questions about the business deal between ParaSpace and Yubo Ruan remain unanswered.
ParaSpace continues to limp after ‘CEO drama’
At its peak in late April and early May, ParaSpace held $225.6 million worth of investor capital. After the rebellion, tagged as “CEO Drama” by DefiLlama, the project failed to regain its former high status.
Analysis of total value is locked (TVL) The graph reveals that disputes are taking a toll.
ParaSpace continues to decline significantly from its May peak. (Source: DefiLlama)
By May 13, the total amount locked in ParaSpace had dropped from a high of over $200 million to just $83.6 million. As of 12:45 UTC on Friday, July 28, total value locked (TVL) stood at $81.28 million, down 64% from its peak.
The Inconsistent Story of Yubo Luan
One of the more puzzling aspects of the war between Yubo Luang and the team that attacked him is the shift in positions of team members Jay Yao and Thomas Schmidt.
As Yao and Schmidt say, the two enjoyed the high status of co-founders of the company. After the mutiny, Yubo Luang claimed that the two were never more than consultants.
On May 10th, Luan twitter “Two former consultants, Thomas Schmidt and Jay Yao, have illegally obtained control of one of the protocol’s multisig and social media accounts. We did this by falsely promoting ourselves as founders/shareholders of @ParaSpace_NFT.”
But as recently as March, Yubo Luang openly introduced Yao and Schmidt as co-founders to business partners.
Yubo Ruan introduces Jay Yao as “Co-Founder Jay”.
So the immediate question is, if Mr. Yao and Mr. Schmidt are neither shareholders nor co-founders of Paraspace, why did Mr. Ruan openly bring up such a name?
Was it true when Mr. Luan told investors and business partners that Mr. Schmidt and Mr. Yao were co-founders, or when he told the Paraspace community that the two were merely consultants? was true? If neither statement is correct, someone must have been misinformed.
Mr. Luan was the spokesperson for the ‘inserted’ claim
Mr. Luan’s position may have changed over time, but Mr. Yao and Mr. Schmidt are consistent.
Meanwhile, Luan and Paraspace vehemently denied the allegations to reporters. After the CEO drama ended, a Paraspace “publicist” contacted several news outlets asking them to issue a “correction” regarding, among other things, the positions of Yao and Schmidt.
“Yubo has never embezzled. The whole problem is setup. Jay [Yao] and thomas [Schmidt] I am not a shareholder or co-founder of ParaSpace. Their actions have nothing to do with Paraspace,” the spokesperson said.
A spokeswoman who spoke on condition of anonymity was certain that Yubo Luan “never embezzled,” but sources also suffered from the same amnesia as Luan regarding the positions of Yao and Schmidt.
As with many things in ParaSpace, digging deeper only raises more questions rather than clarity.
Another Ruaned NFT Platform
One of the more annoying aspects of ParaSpace is the sickening déjà vu surrounding the protocol. Specifically, ParaSpace isn’t the first to lose millions of dollars on Ruan’s NFT lending platform.
Yubo Ruan previously entered the NFT lending sector in June 2022 with the OMNI protocol. Less than a month after he launched, the project was stolen from him by a flash loan attack of $1.4 million.
In July, Luang permanently shut down the OMNI protocol. A month later, ParaSpace made his first commit to Github. From November to his December of 2022, over $1 million in funds were transferred from his OMNI wallet to his ParaSpace-related wallets (yubo.eth, 0x909, ruanyubo.eth).
(Source: Breadcrumb.app)
ParaSpace is now being introduced as a new NFT lending platform, but it’s pretty much the same codebase as the old OMNI that was previously exploited. The wallet is filled with funds siphoned from OMNI. Once ParaSpace launched, history repeated itself with the platform being abused in March 2023.
Continuing Confusion with OMNI/ParaSpace
One of the ongoing issues with Yubo Ruan’s efforts related to ParaSpace is the number of contradictory statements Ruan makes about them.
The status between OMNI, ParaSpace and various other organizations under Luan’s control seems to be changing favorably in whatever way the current situation calls for.
For example, in March Ruan claimed that ParaSpace “has not received any capital from investors as an independent entity,” which includes Sequoia, Founders Fund, Coinbase Ventures, Polychain Capital, Lightspeed, Pantera, Slow, Blockchain capital as an investor.
Yubo Ruan said that Parallel Technology Holdings has merged with Parallel Finance. ParaSpace, but strangely enough, Parallel Finance was in operation five months before Parallel Technology Holdings existed.
Ruan said ParaSpace is independent of Parallel Finance, but the two appear to be intricately intertwined on an operational and financial level. For example, investors listed on the ParaSpace website are roughly the same group of investors in parallel finance.
In each case, why the confusion? Given the many contradictions and inconsistencies in ParaSpace, there are many reasons to be careful when dealing with this struggling lending platform. It seems so.
In cryptocurrency, one lesson is often learned over and over again. If his CEO of a company can’t understand even the most basic facts about his company, for whatever reason, it’s unlikely to do any good.
Another fine dirt fell under the carpet
The recent crisis that hit ParaSpace shows how badly management can affect a company. July 17th, ParaSpace users florida manes took to Twitter to reveal how a bug in the protocol liquidation feature caused huge losses to both assets and funds (including the Bored Ape NFT). FloridaMan.eth’s article caused a stir on social media, and other users expressed similar complaints about his ParaSpace.
To make matters worse, FloridaMan.eth also revealed how the bug bounty claim was denied because ParaSpace knew about the exploit before it happened.
To be clear, Paraspace was aware of this “bug” long before I publicly disclosed it, and has refused to fix it or suspend payment to users. pic.twitter.com/DL8dTHvLuU
—FloridaMan.eth 🍊 (@votefloridaman) July 16, 2023
This only added to the distrust and anger of FloridaMan.eth. He said“Recommended for liquidated people” [on ParaSpace] Reconsider the circumstances surrounding them. ”
upon July 25thFloridaMan.eth, ParaSpace took to Twitter to participate in a joint Spaces AMA, declaring that the situation has been resolved to the satisfaction of all parties.
“Neither the story behind my tweet nor the public disclosure of that story was ever intended to discredit ParaSpace or the people who work at ParaSpace,” FloridaMan.eth said.
Without elaborating on the specifics of the resolution, he added that “questions and doubts have been cleared.”
Ruan continued, “Sometimes we don’t have the best communication and there may be misunderstandings, but we are here to help and solve problems.”
