The Oyster Heist & PRL token status at Ethex

The apparent minting and subsequent selloff of PRL token from the creator has led to Ethex removing the PRL market from the Ethex Dapp for the time being.

What Happened

Yesterday, Oyster CEO Bill Cordes announced that around 3M PRL were minted and then sold on Kucoin for ETH and BTC. Apparently this was the action of the project founder and former CEO, an anonymous individual who is known as Bruno Block (so anonymous that the entire team is unaware of his true identity). Bruno himself has come out to claim responsibility and seems to describe it as an attempt to reassert control over the project. Ultimately this resulted in the market price tanking, and that seems to have been the objective.

… instead of him and his VC friends dumping on you, I dumped on him.

— Bruno Block

This is a blow to the project — one of the rare former ICO’s to have shipped a functioning decentralized technology on Ethereum. PRL has actually been one of my favorite useful tokens because of it’s clear demonstrable use case: decentralized storage. I wrote about my experience using it when Oyster Storage first came online, and since then I’ve used it as a more convenient alternative to things like Dropbox for certain things (like linking to PDF’s in Medium articles). This event basically demonstrates that useful tokens aren’t automatically immune to bad actors, theft, and ugly breakups.

What’s next for PRL

Oyster plans on replacing the current PRL token with a new version

We are still evaluating our options, but will most likely be executing a contract swap on the block just prior to this all happening (e.g. All 98.5 million PRL prior to the contract vulnerability will be exchanged on a 1:1 ratio to PEARL (or something to that effect)).

Bruno also indicated that he’s going to continue develop the project in an increasingly erratic series of posts about peak oil and fractional reserve banking. This culminated with the following as of 5:43 pm:

I believe in Oyster as a product, but I don’t believe there will be a future to host it. I will program it since the program is a promise from me, but don’t complain that Oyster isn’t running when a banana costs $5,000. Anyone here who has swiped a credit card or taken an interest-bearing loan has the blood of the incoming collapse on their hands. Billions of people will die… — Bruno Block. Yeah there’s more.

What Ethex has done, and can’t do

Because of all this, the usefulness/status of any PRL acquired after the “heist block” is in question. As a result (and at the request of Oyster team members), we removed the PRL market from the Ethex Dapp. You can still view the market at https://ethex.market/#PRL, but the interfaces to make and take orders are unavailable.

I want to take the opportunity to point out the differences between centralized and decentralized exchange.

We can’t lock up PRL by preventing withdrawal of funds from our exchange. In fact, there are no funds deposited at all. Users of Ethex always maintain control of their keys and funds. Ethex can’t cancel or otherwise alter any orders that were open at the time we removed PRL from the Ethex Dapp. For example, anybody with open orders could still cancel them with, say, etherscan’s “write contract” feature and Metamask even though our DApp UI can’t. While our company Ethex Software Inc is no longer encouraging or facilitating trading of this token via our Dapp (at least while the status is uncertain), this is separate from our decentralized protocol/smart contract. We’re technically unable to disable trading canceling, sending or interacting with Ethex smart contract.

Compare this to the results at Kucoin (the main exchange for PRL). As a centralized exchange, Kucoin has frozen all PRL, and users aren’t able to withdraw, transfer or otherwise access them. From Oysters point of view, this is a good thing. Naturally, many users who find their accounts frozen may disagree.