The U.S. Department of Justice is investigating the two brothers behind Solana stablecoin exchange Saber Labs, Ian and Dylan Macalinao, according to two people familiar with the matter.
The investigation follows CoinDesk’s August report that the Macalinao brothers used a web of 11 pseudonymous identities to build an ecosystem of interlocking financial products that double- and triple-counted crypto deposits by passing tokens among themselves. Their efforts added billions of dollars to a key growth metric for Solana during the peak of the 2021 crypto bull market and, according to Ian, boosted the price of SOL, the Solana network’s native token.
“The metric for summer 2021 optimization was [total value locked (TVL)]’ Ian wrote in a never-published blog post provided to CoinDesk. “TVL can only count if logs are made separately, so I devised a scheme to maximize Solana’s TVL: I would create logs that would be stacked on top of each other, so a dollar could be counted multiple times.”
Investigators are scouring the internet for information on crypto projects orbiting Saber, one of the people said. These include the decentralized finance (DeFi) yield-farming app Sunny Aggregator, as well as Cashio, a stablecoin project that lost millions of dollars in a hack in March. Ian secretly wrote the code for both projects using pseudonymous identities.
“When an ecosystem is built entirely by a few people, it doesn’t look as authentic,” Ian wrote. “I wanted to make it look like a lot of people were building on our protocol instead of sending 20+ disjoint dates [sic] programs as one person.”
A whiteboard at the Solana hacker’s home in Miami in April 2022 showed a
The Macalinao brothers and the Justice Department did not respond to requests for comment.
Read more: Master of Anons: How a Crypto Developer Faked a DeFi Ecosystem
CoinDesk’s report on the brothers’ gamification of their projects’ TVL prompted industry statistics service DefiLlama to change how it depicts the popular metric.
According to CoinDesk’s report, the Macalinao brothers scrapped their plans to move Saber to the Aptos blockchain. They exited their crypto venture capital firm, Protagonist VC. And they transferred control of some of their pseudonymously built projects to Marinade, another Solana-based DeFi protocol.
Saber, the stablecoin exchange and cornerstone of the brothers’ DeFi ecosystem, is still operational: its site reported $4.4 million in trading volume over the past 24 hours at press time. Ian has worked to maintain the infrastructure of this project, although Saber’s Discord server, where users can ask questions and get updates, has been largely abandoned.
Sunny and Cashio, two projects whose tokens have flattened, are as good as dead. Their Discord servers are full of angry messages from users asking where the developers have gone.
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