The CEO of Composable Finance strongly denied allegations of legal violations in the decentralized finance infrastructure (DeFi) platform, aired by the company’s former CTO Karel Kubat.
In a Twitter post on February 20, former Composable Finance CTO Karel Kubat announced that he had step up down from the company. He also issued several accusations aimed at the former company and its CEO.
In Kubat’s post, the CTO said he resigned because the company had not provided financial statements to him or the public and because he did not have a picture of the company’s financial health.
But he said he was suspicious of CEO Omar Zaki, who is not prohibited from raising money for the company join in raising Series A funds for the company in violation of the cease-and-desist mandate of the US Securities and Exchange Commission.
Kubat said the same suspect Zaki’s role in the alleged carpet-pulling scheme, Bribe, was “bigger than what was publicly stated.”
react to withdraw from Kubat, Zaki took to Twitter Spaces for an AMA (Ask Me Anything) on February 20, where he denied all the allegations. He claimed that all the actions of the company to the best of his knowledge were done in full accordance with the law.
1/ We are sorry to announce that Composable Finance has parted ways with our former CTO.
While this will naturally lead to questions and concerns, our team is committed to addressing these questions and resolving any issues.
– Composable Finance (@ComposableFin) February 20, 2023
In response to allegations of a lack of financial transparency at the company, Zaki said the company is private and cannot release financial information publicly.
However, “we remain confident that we have sufficient resources, personnel and technology to implement our strategy. […] there is nothing here that causes concern or should cause public concern,” he said.
Zaki also denied violating an order from the SEC, stating that the Series A fundraising was done offshore and complied with the laws of the countries in which it was conducted. Zaki stated that the company has legal counsel to ensure that no laws are violated, as he explained:
“The allegations are untrue, the A series is designed as an offshore utility token sale and we have an external board advising on the offering. […] I have made it very clear that all composable sacrifices are made with reasonable legal counsel”
As for the claim that Composable was involved in the Bribery project, Zaki categorically said “we have no part in the Bribery project.”
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Composable Finance is a developer of cross-chain bridging and messaging protocols. In February 2022, it raised more than $100 million through a parachain auction on Polka Dot. Ten days after the fundraiser, noted blockchain sleuth ZachXBT successfully doxxed the company’s CEO, known as “0xbrainjar,” announcing that CEO Omar Zaki.
In the April 1, 2019 settlement, the SEC accused Zaki of “repeatedly [misleading] investors in the Fund regarding assets under management, fund performance, and fund management,” in his role as an executive for Warp Finance and Force DAO. As part of the settlement, Zaki is prohibited from raising money for investors in the U.S.
However, the SEC’s action is a civil order, and Zaki is understood not to have been convicted of any criminal offenses.
ZachXBT too charged Zaki has been involved in Bribe, an alleged fraud scam, in the past.