Dear Mr. Devyatkin, @Alexey Devyatkin The Hardware wallet
This message is written because none of the contractual requirements and our requests have been complied with, and the entity that granted the funds retains the full right to question and scrutinize the use of the funds provided. This letter serves as formal demand from the 1inch DAO regarding your repeated failures to meet your contractual obligations under the 1inch Hardware Wallet production completion proposal and the associated agreements (collectively, the “Contracts”), which include:
Proposal [1IP-30] (approved by the DAO on June 12, 2023)
We reiterate that, as the state that provided the funding, we have the right—and indeed the obligation—to inquire about, verify, and ensure that every dollar is spent in accordance with the approved budget and project objectives.
Below, we outline the specific overdue deliverables, ongoing transparency issues, required clarifications regarding a recent trip to Dubai.
- OVERDUE DELIVERABLES & NON-COMPLIANCE
- Technical Report & Deliverables Transfer
Under clause (e) of the DAO’s termination resolution ([1IP-62]) issued on September 26, 2024, you were required to submit a “technically precise and extensive report” by October 20, 2024. This report should detail all source code files, documentation, materials, instructions, and the current development/testing status of the Hardware Wallet project.
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As of today, you have not submitted this report, leaving it more than 120 days overdue.
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Product Delivery
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You committed to making the product available for sale by Q4 2023 (assumed deadline: December 31, 2023).
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The project remains incomplete and, as of today, more than 410 days overdue.
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Financial Reporting
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You have not provided comprehensive financial records detailing how the USD 2 million in grant funding has been allocated and spent and how it relates to your milestones.
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This lack of transparency raises serious questions regarding the proper stewardship of community resources.
- FUND ALLOCATION AND SPENDING OBLIGATIONS
Under the terms of the Contracts, you were obligated to:
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Exclusively allocate the granted funds to hardware and software development, manufacturing setup, technical performance tests, security audits, and other essential expenses tied directly to delivering a fully functional 1inch Hardware Wallet.
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Operate with diligence and in accordance with industry standards, ensuring the timely and faithful execution of all milestones.
Your failure to meet these obligations—and the absence of detailed financial reports—constitutes a material breach of your agreements with the DAO.
- SOURCE OF FUNDING OF REBRANDED “ERA WALLET”
Public posts indicate that you and your team have been actively conducting strategic sessions—such as the “strategic session” in Dubai on or around February 4, 2025—as well as executing a rebranding under the name ERA Wallet and continuing development efforts under this new identity. Given that the funds allocated by the 1inch DAO to you have not been returned, as demanded multiple times, we have significant and justified concerns regarding the potential misallocation of these resources to finance activities unrelated to the original purpose for which they were provided.
Our concerns are compounded by our direct insight into the team’s previous operations and funding structure, which gives us substantial reason to question where the financial resources for these recent initiatives could originate, other than from the DAO’s allocation. Without clear transparency, there is a legitimate and pressing fear that DAO funds are being diverted to support a rebranded project rather than returned to DAO.
We hereby request a detailed and transparent accounting to confirm that no portion of the DAO’s funds has been used to finance these activities. Specifically, we require:
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Financial Segregation
- Clear, evidenced and verifiable financial statements confirming that the funds provided by the DAO remain unspent.
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Source of Funding for ERA Wallet Activities
- A declaration of the funding sources used for the rebranding, strategic sessions, and ongoing development under ERA Wallet.
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Supporting documentation demonstrating that these activities were financed independently and not with DAO resources.
- NEW DEMANDS AND EXPLANATIONS REQUIRED
Within 7 calendar days from receipt of this letter, you must provide the following:
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Technical Report
- The overdue report detailing every source code file, document, and material related to the Hardware Wallet, including its current development/testing status.
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Detailed Fund Allocation and Expenditure Report
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A comprehensive financial report itemizing every expenditure made from the USD 2 million funding. This report must include all receipts, invoices, and transaction records.
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Explain in detail how the funds were intended to be spent according to the approved budget and how they were actually allocated and used.
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Clarify whether any funds were used for unauthorized purposes, such as investments in high-risk assets that are not aligned with the project’s objectives.
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Unauthorized Expenditures
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Clarify whether any resources have been spent on:
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Gifts or incentives for yourself or employees,
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Travel expenses (including flights, accommodations, meals, etc.),
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Entertainment or hospitality costs,
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Any other non-project-related expenditures and those not related to employees.
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Provide complete documentation and justification for any such expenditures.
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Personal Compensation and Remuneration Details
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Specify how much salary or other forms of remuneration you have paid yourself or any affiliated parties, including detailed payment records (dates, amounts, receipts, or invoices).
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Explain the methodology used to determine your salary or other personal remunerations from the project funds and justification why this salary is this specific number.
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State the exact sum you have spent on your salary from the moment the grant was provided.
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Indicate whether the project delays affected your salary (e.g., if you reduced your salary to allocate more funds to development) or if you continue to benefit fully from the funds regardless of the project’s results.
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Indicate whether you have increased your salary from the moment you received
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Overall Compliance with Contracts
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Describe precisely how you were supposed to spend the funds according to the Proposal [1IP-30].
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Confirm that all expenditures were aligned with the deliverables and milestones set forth in the Contracts.
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Explain any deviations from the approved budget or intended expenditure plan, including adjustments made without the explicit consent of the DAO.
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SOURCE OF FUNDING OF REBRANDED “ERA WALLET”
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Provide clear, evidenced and verifiable financial statements confirming that the funds provided by the DAO remain unspent.
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A declaration of the funding sources used for the rebranding, strategic sessions, and ongoing development under ERA Wallet and supporting documentation demonstrating that these activities were financed independently and not with DAO resources.
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Funding Information and Additional Funding Attempts
- Indicate whether, as per your proposal, you have attempted—or are planning to attempt—to attract any additional funding from sources other than 1inch DAO, 1inch Foundation, or any related entities.
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Explain if such attempts were successful, and provide details of any additional funding received or commitments made.
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Clarification on “90% Ready” Claim
- On September 20, 2024, you stated that “90% of the Proposal work has been completed. It has been four months. Please explain in detail why the product is still undelivered and significantly delayed despite this high percentage.
5. WITHOUT PREJUDICE
This request is made without prejudice to our rights to seek all available civil and criminal remedies. Should you choose not to respond to this request or fail to provide satisfactory documentation and explanations, we will be compelled to demand the immediate return of the USD 2 million in grant funding and pursue all necessary actions to settle all outstanding matters.
6. CONCLUSION
Your repeated delays, lack of transparency, and apparent mismanagement of funds—including the alleged use of resources for the purposes of the “ERA Wallet” rebranding, strategic sessions, and other related activitiesn—have further eroded the trust placed in you by the DAO. We insist on receiving the detailed documentation and explanations requested above within 7 calendar days from the receipt of this message
We look forward to your prompt and complete response.