The Compound Foundation faces allegations of misusing protocol reserves to influence governance votes. A community member claimed that 8.42 million DAI from deprecated V2 reserves were converted into 344,780 COMP tokens. This transfer was originally authorized by Proposal 536 in February 2026, which mandated that funds remain DAO-owned.
Data from Bitquery confirmed that these tokens were delegated to a Foundation-controlled address 58 minutes before the voting deadlines for Proposals 580 and 582. Both proposals passed, including a measure to launch a 52 million dollar V4 protocol initiative and another to transfer treasury assets to the Treasury Management Committee.
The Foundation denied misappropriating assets, asserting that the funds remained under DAO ownership throughout the process. However, the timing of the token delegation has raised concerns regarding potential conflicts of interest, as the Foundation holds signing authority over both the reserve multisig wallet and the Treasury Management Committee.
The controversy has cast doubt on the legitimacy of the recent governance votes. Critics argue that the ability to convert large amounts of DAI into voting tokens shortly before deadlines challenges the decentralized nature of the protocol. The situation remains unresolved as the community examines the impact on the upcoming V4 rollout.
