In an official statement shared with Cointelegraph, Dohrnii Labs revealed that it deposited 12,649.99 Dohrnii (DHN) tokens, valued at over $500,000, with Blynex. On March 23, the company agreed to use 8,650 DHN tokens as collateral for a 30-day loan in exchange for 80,000 USDT. However, Dohrnii claims Blynex never delivered the USDT funds.

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Furthermore, Dohrnii alleges that Blynex liquidated the entire 8,650 DHN collateral on Uniswap, receiving 149,151 USDT. This liquidation reportedly caused a significant decline in the token’s market value. Dohrnii Labs also stated that they were unable to withdraw the remaining 4,000 DHN tokens from the exchange.

Blynex Defends Actions as Automated Risk Management

Mike Baskes, co-founder of Blynex, defended the exchange’s actions, claiming they were part of an “automated risk management system.” Baskes explained that their system detected a high risk of significant collateral devaluation, which triggered an immediate liquidation. He also pointed to the limited liquidity of DHN tokens, which he estimated to be around $315,000 at the time of the sale.

Despite these explanations, Dohrnii Labs argued that Blynex’s justification was misleading, emphasizing that the liquidated collateral was nearly double the loan value.

Legal Action in Progress Against Blynex

In response to the incident, Dohrnii Labs has initiated legal proceedings in the UAE and contacted local regulatory bodies such as VARA and ADGM. The company is also considering joint legal action alongside other affected projects.

Dohrnii Labs disclosed that Blynex later offered a settlement, including 80,000 USDT and the withdrawal of 4,000 DHN tokens, on the condition that all legal actions be dropped. Dohrnii Labs rejected this proposal, stating that user funds are not negotiable and the right to withdraw them should never be contingent upon legal agreements.

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