HectorDAO, a decentralized autonomous organization, has submitted a Chapter 15 bankruptcy filing in the United States, citing several market crashes and cyberattacks that depleted the community’s funds.
Interpath Advisory, an appointed firm specializing in bankruptcy management and reorganization, disclosed in the June17 filing that HectorDAO’s financial situation was primarily impacted by three factors: the Terra network’s collapse in May 2022 Multichain protocol’s failure, and a hack on HectorDAO’s treasury.
The filing also mentioned ongoing investigations whether the $2.7 million funds drain from HectorDAO due to a January 16 hack was an inside job orchestrated former treasury managers of the DAO.
HectorDAO’s tumultuous past began with Terra ecosystem collapse in 2022, resulting in substantial losses amounting to $16.4 million for its treasury assets. Despite this setback, HectorDAO operated as usual until July17th of 2023.
On July 15th of that year, members faced a decision: either move the organization to another blockchain and rebrand or liquidate all assets and cease operations. Subsequently, an overwhelming majority (83%) voted to liquid per HIP-42 vote.
Following this decision came a $2.7 million exploit right before asset distribution among investors could take place. Allegations made against management for negligence or potential involvement in the hack. The community then demanded control entrusted to Interpath Advisory as a neutral party.
Chapter 15 bankruptcies allow or those with international investors to undergo bankruptcy proceedings within U.S courts without restructuring debts.