Secret Network validator shuts down nodes after leadership turmoil

Published at: Jan. 30, 2023

A major validator for the privacy smart contract layer-1 blockchain Secret Network has announced that it will no longer provide nodes and support for the network.

On Jan. 29, major validator Smart Stake announced that it would be shutting down its Secret Network validator nodes on Feb. 21.

Smart Stake cited “complex/stressful validator operations, cost/effort of validator ops, and recent events,” as reasons for withdrawing its services.

Smart Stake is a staking and validator service provider that supports several networks including Crypto.com, Polygon, Cosmos, and until recently Secret Network.

PSA for @SecretNetwork delegates of Smart Stake:Smart Stake will be shutting down its Secret validator on 21st Feb. Please redelegate to another validator.Reasons: 1) Complex/stressful validator operations on $SCRT 2) Cost/effort of validator ops 3) recent events

— Smart Stake (@SmartStake) January 29, 2023

The move comes amid revelations by Secret Labs founder, Guy Zyskind, regarding the Secret Foundation’s financial transparency.

On Jan. 28, Zyskind made public allegations that the Foundation and its founder and CEO, Tor Bair, “sold a substantial amount of USD worth of SCRT,” —  the native token for the Secret Network — in late 2021.

“Tor cashed out a significant portion of these proceeds,” he alleged.

Zyskind also mentioned a $4 million inflow for the Foundation in its Q4, 2021 report but no mention of the withdrawal.

“This action was not disclosed in any financial reports provided to the community by the Foundation, which was introduced by Tor as a non-profit organization on several occasions.”

Looking forward to resuming writing math proofs and bad code after all the @SecretNetwork drama

— Guy Zyskind (@GuyZys) January 29, 2023

Bair however provided his version of events on the Secret governance forum on the same day. He stated that the withdrawals were part of his share of vested tokens.

“Instead of paying out my vested tokens in December 2021, I converted my vested portion of tokens to USD at the OTC price and Secret Foundation distributed these funds as a dividend.”

He added that “this information is verifiable in our 2021 tax filings, which have been previously reviewed by Labs, and I have previously disclosed this information to them.”

The ongoing internal leadership conflict has rattled at least one network validator provider and the ecosystem’s community.

Related: Secret Network resolves network vulnerability following white hat disclosure

SCRT prices have remained immune from the internal imbroglio, consolidating around the $0.80 level for the past week. However, the token is down 92% from its October 2021 all-time high of $10.38, and way down from Bair’s $7 sale price.

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