Court-appointed insolvency firm takes over HectorDAO after $2.7M hack

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Insolvency consultancy firm Interpath Limited has “taken full custody” of the Hector decentralized autonomous organization (Hector DAO) treasury as of February 21. The company, also known as “Interpath Advisory,” has likewise taken control of the HectorDAO social media channels, which it intends to use to communicate with investors going forward, according to announcements on the protocol’s Telegram channel that were posted on Feb. 19 and 21.

HectorDAO was hacked for $2.7 million in January in what analysts have described as either a private key compromise or the work of a rogue developer. Since that time, some of the DAO’s investors have blamed the development team and argued that its assets should be put into the hands of a neutral third-party, which appears to be happening at the time of publication.

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Interpath Advisory announcement. Source: Hector Network – Announcements, Telegram.

According to the Feb. 19 announcement, “Mr Drury and and Mr Pretlove both of Interpath (BVI) Limited […] were appointed by the Virgin Islands High Court (Commercial Division), Eastern Caribbean Supreme Court as joint and several interim receivers (the Receivers) over all of the assets held by or on behalf of Hector DAO.”

The British Virgin Islands Financial Services Commission lists Interpath as a currently regulated entity and insolvency practitioner, implying that the funds are being turned over to professional liquidators and will no longer be custodied by the HectorDAO team.

The announcement also stated that Interpath has taken control of the protocol’s social media channels. “The Receivers have control of the communication channels of Hector Network and will provide more information as to the next steps and how Tokenholders can contact the Receivers to discuss any concerns and all aspects of their appointment,” the announcement stated. Before this announcement, the most recent post to the channel had been on Jan. 2, prior to the $2.7 million hack.

In addition, the post stated that Interpath will conduct an investigation into the January hack and attempt to recover investors’ funds.

Cointelegraph reached out to Interpath Limited through email to confirm the authenticity of the post. In response, the company’s director, James Drury, stated that the message was posted by him personally. 

According to the second announcement, which was posted on Feb. 21, The Receivers have now “taken full custody of the Treasury assets which have been moved to a new secure wallet.” The old wallet that previously held the funds has also been taken over, and all previous signers have been removed from this multisignature wallet. In addition, “none [of the old signers] are involved in the new wallet,” it stated, implying that the HectorDAO team can no longer authorize transfers from the Treasury.

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The firm is authorized by the court to identify, collect, and preserve HectorDAO assets, but it does not yet have the authority to distribute them. To distribute the funds, Interpath will need to gain “final approval” from the court, the post stated.

In another incident last July, HectorDAO lost over $8 million when some of its bridged tokens on Fantom depegged from their Ethereum collateral. This was ultimately caused by the $1.5 billion Multichain exploit, which forced the Multichan Fantom bridge to close down on July 14. That same month, the DAO voted to liquidate its Treasury and return funds to investors. As of publication, most of the funds have still not been distributed.