Secret Network validator to discontinue network support amid leadership dispute.

A major validator of the Secret Network announced it would discontinue network support. Smart Stake will shut down its nodes on February 21, 2023.

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 project provides staking services on several platforms and blockchains, including Crypto.com, Polygon, Cosmos, Casper and a number of others.

Among the reasons for disabling the Secret Network nodes at Smart Stake were the complexity and cost of validator operations, as well as “recent events”.

On January 28, SCRT Labs allocated $400 million to support the Secret Network ecosystem under the Shockwave initiative.

According to Zyskind, the organisation conducts opaque financial activities accompanied by misallocation of funds. He recalled the incident of the fund losing $250,000 in assets, and pointed to the sale of the native SCRT token “for a substantial amount of dollars” at the end of 2021. The majority of these proceeds were cashed out by Beyr as dividends, noted the head of SCRT Labs.

“This action was not disclosed in any financial reports provided to the community by the fund, which Thor had repeatedly presented as a nonprofit organisation. In particular, the Q4 2021 report shows an inflow of cash of around $4 million for SF, but does not mention this withdrawal,” said Zyskind.

He also pointed to the potential for other financial improprieties such as the fund’s open loan to the bankrupt Alameda Research. He said this information had not been disclosed.

Zyskind proposed rebooting SF as an organisation transparently governed by the community and answerable to it.

Beir, in response, presented his version of events. He stated that in December 2021 he “discovered the possibility of an off-exchange sale” of tokens belonging to the fund’s team. The proceeds of $2.625 million were distributed as dividends.

“This information can be verified in our 2021 tax returns, which had previously been audited by Labs,” he emphasised.

The internal conflict within the project had a modest impact on the SCRT price — the token fell 1.6% over the week. The price hovered around $0.78, more than 92% below the October 2021 peak of $10.38. Beir says he sold the coins at $7.

In January 2022, SCRT Labs allocated $400 million to support the Secret Network ecosystem under the Shockwave initiative.

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