The controversy surrounding decentralized finance (DeFi) continues to escalate. Fund management firm K3 Capital claims it will take legal action against the stablecoin protocol Elixir, accusing the protocol of being a coordinated fraudulent scheme led by its founder Philip Forte, with assistance from Caleb of Stream Finance.
K3: Elixir Misappropriation of Funds, Open Fraud
K3 pointed out that Elixir publicly claims its product is a basis trading strategy, but in reality, it has lent $68 million to Stream Finance, effectively turning into a tokenized fund-of-funds with completely different risk attributes.
Furthermore, Elixir treats lenders as junior capital and claims that Stream holds about 90% of the deUSD supply (approximately $75 million). K3 states that this claim is inaccurate because Stream has borrowed stablecoins using deUSD as collateral in multiple money markets, and its actual holdings are far below the official figure.
K3: Elixir offers preferential treatment to redeeming holders while ignoring the $68 million asset gap.
K3 criticizes Elixir for allowing existing deUSD holders to exchange dollar assets at a 1:1 ratio while completely ignoring the $68 million gap on its balance sheet, resulting in actual losses being borne by lenders in the lending market instead of Stream.
K3 estimates based on on-chain data indicate that Stream's actual net exposure to deUSD is only about $11.34 million, far less than the borrowed amount. This means that Stream may not be able to fully repay the loan, and the losses will ultimately be borne by lenders across multiple DeFi lending markets.
K3 Capital's Simeon stated that Philip Forte did not respond to K3 Capital's messages after the incident and does not intend to address the issue with Euler. Therefore, they will hire the best lawyers in the U.S. to sue Elixir, and Simeon has also begun collecting Philip's personal information.
This article claims that Elixir is a scam! K3 Capital angrily accuses deUSD of misappropriating funds and openly lying, demanding that the founder be sent to prison. First appeared in Chain News ABMedia.