Composable Finance Allegedly Run By Fraudster Omar Zaki
Composable Finance's head of product, 0xbrainjar, is alleged to be fraudster Omar Zaki. In 2019, the SEC accused Zaki of "misleading investors in financing an unregistered hedge fund."
0xbrainjar and Composable Finance
On February 18, self-described "on-chain sleuth" @zachxbt doxxed 0xbrainjar, the Head of Product at Composable Finance. According to @zachxbt, 0xbrainjar is actually the fraudster Omar Zaki. This Morning On Chain has not been able to verify this information.
Composable Finance (LAYR) is a cross-chain crypto on the Polkadot (DOT) network with $32M in total value locked. The project won a Polkadot parachain slot at auction, using a crowdloan to raise 6M DOT, worth about $110M. Composable Finance's canary network, Picasso (PICA), has a limited product line operating on Kusama (KSM).
In 2019, the SEC accused Omar Zaki of "misleading investors in financing an unregistered hedge fund" that he ran as an undergraduate at Yale. According to the SEC, Zaki and his business partner created "investor prospectuses with false trading history, investment returns and management teams."
Zaki paid a $25k fine to settle with the SEC without admitting fault. His lawyer was a white collar defense specialist who defended Tesla and Elon Musk during the federal investigation of Musk's tweets in 2018. Zaki is believed to be legally barred from working in investments until later this year. It is entirely possible that Zaki merely took a youthful risk and has not defrauded anyone since college.
What Allegedly Happens to Zaki's Projects
0xbrainjar is the Head of Product at Composable Finance. If @zachxbt is correct in his assertion that 0xbrainjar is actually Omar Zaki, then Composable Finance may be in trouble. Zaki is tied to two crypto projects that were hacked and then died.
Warp Finance was a decentralized finance (DeFi) project run by Zaki and an anonymous team. In 2020, Warp was hacked for $8M; the project went dark soon thereafter. @zachxbt believes Composable Finance and the Picasso Network have the same team as Warp Finance.
Force DAO (FORCE) was a decentralized autonomous organization (DAO) run by Zaki and an anonymous team. In April 2021, Force DAO was hacked, losing $367k. The hacker returned the funds, but the FORCE token's value dropped 95%. According to blockchain security researcher Mudit Gupta, the Force DAO hack used a Solidity contract bug that is "well known." Gupta believes "it's almost certain that no security expert has reviewed [Force DAO's] contracts." Force DAO's developers and social media have been silent since November 2021.
@zachxbt believes all of 0xbrainjar's projects used the same auditor, although this seems to be less supported than his other claims. The auditor is a defunct auditing firm owned by German company Advanced Blockchain AG (ISIN: DE000A0M93V6). Advanced Blockchain AG appears to have invested in multiple 0xbrainjar projects, including a public investment in Composable Finance. Additionally, @zachxbt believes 0xbrainjar "holds a senior position" at Advanced Blockchain AG that is not shared with the public.
As the story develops, there is still no public evidence that 0xbrainjar is Omar Zaki. It is still possible that 0xbrainjar and Omar Zaki are different people. This is in contrast to the TIME Wonderland scandal in which Wonderland's public face, Daniele Sestagalli, admitted he knew his co-executive, 0xSifu, was actually QuadrigaCX co-founder and exit scammer Michael Patryn.