The chief executive of Composable Finance has strongly refuted allegations of legal wrongdoing in its decentralized finance (DeFi) infrastructure platform, which was being aired by the company’s former chief technology officer, Karel Kubat.
In a February 20 Twitter post, now-former Composable Finance CTO Karel Kubat announced that he had stepped on below the signature. He also launched a series of accusations directed at his former company and its CEO.
In Kubat’s post, the CTO said he is resigning because the company has not provided financial statements to him or the community and because he does not have an overview of the company’s financial health.
However, he said he suspects CEO Omar Zaki, who has been legally barred from raising money for companies, was involved in raising Series A funds for the company in violation of a cease and desist order from the US Securities and Exchange Commission.
Kubat said that he too suspects Zaki’s role in the alleged rug extraction project, Bribery, was “much larger than he publicly stated.”
answering Upon Kubat’s resignation, Zaki took to Twitter Spaces for an AMA (Ask Me Anything) on February 20, in which he strongly denied all allegations. He claimed that all of the company’s actions, to the best of his knowledge, were done in full compliance with the law.
1/ We are sorry to announce that Composable Finance has parted ways with our former CTO.
While this naturally raises questions and concerns, our team is committed to addressing these questions and alleviating any concerns.
— Composable Finance (@ComposableFin) February 20, 2023
In response to allegations of a lack of financial transparency at the company, Zaki asserted that the company is private and cannot disclose financial information publicly.
However, “we remain very confident that we have enough resources, people and the technology to really execute our strategies. […] There is nothing here that worries me or should worry the public,” he said.
Zaki also denied violating any SEC orders, stating that the Series A fundraising was conducted entirely offshore and complied with the laws of the countries where it took place. Zaki stated that the company retained legal counsel to ensure that no laws were being broken, explaining:
“Those allegations are incorrect, Series A was designed as an offshore sale of utility tokens and we had outside advice on the offer. […] He had made it very clear that all composables offers were made with sufficient legal advice.”
Regarding the claim that Composable was involved in the Bribe project, Zaki flatly stated “we had no part in the Bribe project”.
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Composable Finance is the developer of a cross-chain bridging and messaging protocol. In February 2022, he raised over $100 million through a parachute auction at Polka Dot. Ten days after the fundraiser, prominent blockchain detective ZachXBT successfully tricked the company’s CEO, known as “0xbrainjar”, revealing that the CEO is Omar Zaki.
In an agreement dated April 1, 2019, the SEC accused Zaki from “repeatedly [misleading] Investors in the Fund on Assets Managed, Fund Performance, and Fund Administration,” during his tenure as an executive at Warp Finance and Force DAO. As part of the deal, Zaki was prohibited from raising money for investors in the US.
However, the SEC’s action was a civil cease and desist order, and it is understood that Zaki was not convicted of violating any criminal law.
ZachXBT too accused Zaki of being involved with Bribery, an alleged scam, in the past.
