If you feel that Avraham Eisenberg has stolen from you, it is recommended to file a complaint with the following regulatory bodies: - FTC: https://reportfraud.ftc.gov/#/ - FBI: https://www.ic3.gov/Home/ComplaintChoice - SEC: https://www.sec.gov/tcr - CFTC: https://www.cftc.gov/complaint - New York State Department of Financial Services https://myportal.dfs.ny.gov/web/guest-applications/consumer-complaint?hn=1&forward=new Summary: Avraham Mayer Eisenberg is a New York resident, who during the period of December 2021 to April 2022 defrauded ~6,000 FortressDAO (FORT) investors https://discord.gg/7xnFkU3PSN https://twitter.com/FortressDAO out of millions of dollars through the following actions. He conned $14M of investor treasury funds into his solely owned and controlled US-Dollar pegged cryptocurrency stablecoin project FUSD, and succeeded in keeping $7M of it for himself. He did this by pitching FortressDAO investors a stablecoin project FortressUSD (FUSD), without disclosing that this project would be solely controlled and owned by himself. After creation of FUSD, he converted the entire treasury into FUSD and thereby conned the community out of their funds. After the community raised hell on twitter about this, he decided to offer back as little of the funds as possible so that people would be satisfied. At the time of this writing (April 8 2022), he has distributed back $7M and has kept $7M for himself. This document will outline some of the actions taken by Avraham that can hopefully serve as a basis for investigation. More recap of the story: https://twitter.com/valuekingdom33/status/1491089936128552960 1) Misleading Investors #1: FortressUSD (FUSD) was pitched as a FortressDAO owned project, but was actually owned and controlled by Avraham. There was no mention made during the FUSD funding proposal on Dec 12th that this project would be wholly owned and controlled by Avraham, in fact the opposite was implied: https://snapshot.org/#/fortressdao.eth/proposal/0xa20a28d29aad5aa461891a59e981a7e91422 ef39aa88bd15b74bba2269cae59a sFORT holders approved funding FUSD with $75k as an expenditure for FortressDAO, and not as a loan or an investment to FUSD, which means FortressDAO was implied to be the owner of FUSD, and that FUSD was not a separate project. Later it was revealed that FUSD was actually not owned by FortressDAO as sFORT holders were led to believe, but was owned and controlled by Avraham. After FUSD was created, on Jan 25th during a volatile time in the market, $6M of treasury funds were converted out of MIM (another USD stablecoin) into FUSD. This was not voted on or approved by sFORT holders. Since this occurred and the MIM assets were now controlled by FUSD/Avraham, this ownership he felt allowed him to take the MIM assets and use them for his own purposes. People were clearly not aware of either FUSD being owned by Avraham, and they were not happy with the FortressDAO treasury being invested in FUSD as evidenced by the questions asked during the AMA on Jan 26th: https://fortressdao.medium.com/fortress-ama-january-2022-5561e5710c7a 2) Illegality of FUSD and FortressDAO ownership by Avraham - Avraham Mayer Eisenberg is a New York state resident. In New York state in order to operate a virtual currency you need a bitlicense. https://govt.westlaw.com/nycrr/Document/I85908c6b253711e598dbff5462aa3db3?viewType=Ful lText&originationContext=documenttoc&transitionType=CategoryPageItem&contextData=(sc.De fault)&bhcp=1 It was checked with the superintendents office, and he does not posses this license. https://www.dfs.ny.gov/contact_us/main In spite of this, he created a US dollar-pegged stable coin (FortressUSD or FUSD for short). He is the sole owner, controller, and deployer of this project and the contracts. He is also currently the sole owner, controller, and deployer of FortressDAO contracts. 3) Insider Trading/Unfair Trade Practices: He dilutes holders down to nothing through minting. When Avraham built the FUSD project, he left an important bit of information out: he included a loophole that allowed him to print extra FUSD tokens. The FUSD tokens were originally meant to be backed 1:1 with stablecoins like MIM/USDC, and this would ensure that FUSD had value. However, when there is a loop that allows him to deposit FUSD and withdraw FUSD, he can double his holding on each deposit. It's this loophole that he's used to print 180M FUSD tokens out of thin air. If that only affected the FUSD project, it would be fine, but he's been using that to mint FORT tokens and deposit the printed FUSD into the FORT treasury in the place of the real treasury funds. Bonds involve creating new tokens, where the user pays a fair price to get them, but they do usually get a small discount on the current market price. In most DAO projects it's meant to be done a few percentage points below the market price. Bonds should never be available when the market price is below backing because it dilutes holders. Avraham knows this - he has discussed it in an AMA ( https://www.youtube.com/watch?v=0caqHfaqo6o). With the printed FUSD tokens, he's able to completely exploit users with the bonds feature. On February 6th, with the market price at $7-8 and the backing at $15, he opened up just 1 of the bond types, FUSD. He then proceeded to reduce the bond price down $6, $4.50, $3, $1.50 and with it the price tanked. In the process, he minted 50,000 FORT tokens. When he finished getting his tokens he turned off the bond feature. Following that, he experienced a lot of backlash and then he further let emotions take over... on the 7th of February, he opened the bond again at $1.50. Only this time, he used 1M FUSD to bond 700,000 FORT tokens. This is from a supply that should have been around 1.05M. This gave him about 40% of the new total token supply and nothing was stopping him from minting more. This means that even if he proceeded with the redemption, he would have kept about half the treasury ($7M) including his other tokens. He printed the FUSD out of thin air, and used it to acquire $7M in real assets. https://debank.com/profile/0x57e04786e231af3343562c062e0d058f25dace9e/history 4) Misleading Investors #2: Failure to follow governance documents that dictate sFORT holders rights to direct treasury investment and other decisions There are governing documents on the FortressDAO website that dictate the rights that sFORT (staked FORT) holders have. Namely, sFORT holders can vote on proposals, and the directors of FortressDAO have to uphold these proposals. In numerous cases he has been in conflict with said documents and proposals, for his own personal gain, and to the detriment of sFORT holders. He has also outright refused to follow passed governance proposals. https://docs.fortressdao.finance/protocol-internals/glossary https://fortressdao.medium.com/announcing-fortress-dao-a-decentralized-reserve-currency-guar ding-and-growing-your-wealth-5f4fdd717370 Example #1 of not following community proposals: Adding Cory to the multisignature treasury. One of the FortressDAO team members (Imago) left the project abruptly during the turmoil that Avraham created. Upon his leaving, he removed himself as a signer on the treasury multisign. By doing so, the treasury was left with a requirement for all 3 out of 3 remaining signers to sign any treasury actions. This is not secure, because if anything were to happen to any of these members, the treasury would effectively be lost forever. As a solution, the community proposed and approved adding a trusted developer and community member Cory to the multisign. This was passed on February 10th with 99% support. Avraham refuses to approve this, leaving the treasury unsecure. The other two members of the multisign have signed, and as of February 13 2022 is still awaiting Avraham’s approval: Example #2 of not following community proposals: Comprehensive Community proposal to swap treasury out of FUSD and back into real assets, and remove Avraham from the leadership and multisign positions. As a result of the leadership team failing to pass appropriate governance proposals that reflected the wishes of sFORT holders, the holders themselves wrote a governance proposal. This is a legitimate proposal that appropriately links the right contracts (wsfort and sfort). There is no stated requirement in the governing documents of FORT, medium articles, or official discord announcement that establish a minimum quorum for snapshot votes. Regardless there was a quorum set of 200K votes needed for this vote to pass. This proposal was unanimously 100% approved by sFORT holders reaching 245K votes in agreement, with only one wallet voting against: Avraham himself. (0x57e04786e231af3343562c062e0d058f25dace9e). https://snapshot.org/#/softrug.eth/proposal/0x3e04cf9e715c480fda2777edad87fa2bb1c5ac5dbd 6b959dd4af5a55bf385c41 This proposal stipulated the following: BONDING: Fortress DAO is fundamentally against bond mints under backing. Bonding mints are to be disabled immediately. The bonding key is to be transferred out of Avraham Eisenberg’s possession and into the Fortress DAO multisig treasury contract. All bond mints under backing purchased by Avraham Eisenberg, the owner of the bonding key, are to be burned when claimable. FUSD: Fortress DAO hereby declares immediate disassociation with FUSD. FUSD has engaged in criminal activity jeopardizing the legitimacy of Fortress DAO. Fortress DAO does not authorize the holding of any fusd or sfusd tokens. Fusd and sfusd tokens held in treasury are to be immediately converted to usdc.e at the same rate to which they were received (e.g. 1 sfort for 1 usdc.e) TREASURY: We exercise our voting rights on the allocation of treasury funds through the following: - We do not approve of any treasury funds in the single signature personal wallets of Avraham Eisenburg, including certain funds transferred to Coinbase. All treasury positions are to be immediately liquidated within 24 hours following the passing of this proposal, converted to usdc.e (or equivalent), and transferred from the single signature personal wallets of Avraham Eisenburg into a newly commissioned Fortress treasury multisig wallet. - A newly commissioned Fortress DAO treasury multisig wallet will be set up. Signatories on this new wallet will be approved by the community in a follow up proposal. - Within 5 days of the passing of this proposal, treasury funds are to be used for redemption. GOVERNANCE: We hereby vote Avraham Eisenberg off of Fortress DAO. His criminal activities have jeopardized the legitimacy this project and resulted in significant financial harm to Fortress DAO and its members. Upon passing of this proposal, we declare that Avraham Eisenberg remove himself from the project after completing the actions described in above in this proposal. We authorize Xibumi to work with Avraham in good faith on facilitating the actions described above. In exchange for leaving this project, we authorize a payment of 1 fusd to Avraham for his time. LEGAL: We are aware that due to Avraham Eisenberg being doxed, personal information is widely available on Avraham and his family. We state clearly that Fortress DAO does not condone physical harm, threats, blackmail, or stalking (or anything like it). However, in light of recent actions by Avraham Eisenberg, we affirm our right to pursue legal action through the justice system. More information will be forthcoming on ways to participate. Avraham has refused to follow the actions in this passed proposal. The reason that he has given for ignoring these proposals is that the community is threatening and blackmailing him, and that invalidates the proposals. 5) Generally more bad behavior #1: Offering redemption for sFORT back to real assets as an OTC trade, but that sFORT holders need to waive their legal rights to get access to this: https://forms.gle/ip7WZUC7KtDojymF6 6) Generally more bad behavior #2: Offering redemption for sFORT to another real asset (wMEMO), but selling this asset to sFORT holders at above market value. Avraham bought wMEMO with FORT treasury funds, and then sells that same wMEMO back to FORT holders at a big markup, and accumulating that FORT in his personal project FUSD. "if you have $10,000 in Fort backing value, you will get $10,000 in wMEMO backing value" Put another way in a simplified example: He is buying 1,000 of wMEMO at $10 market price ($10,000 market value), and then saying ok here's 666 wMEMO back ($6666 market value), since the fair backing of wMEMO is 50% higher. 7) Acting against FORT holders: In both of the deals above presented to FORT holders, these are deals where FUSD is purchasing FORT from FORT holders. It is important to note that during a typical redemption process, the treasury uses investor funds to buy back the FORT tokens, and then burns the FORT tokens. That is not happening in this case. In this case, Avraham’s entity FUSD is purchasing FORT tokens at a price that he decides, and then keeping those FORT tokens in the FUSD entity. Not only that, but the funds in FUSD that are being used to purchase FORT are actually the original investors’ treasury funds to begin with. So Avraham is using FORT investors’ own funds, to buy FORT tokens, and then keeping those FORT tokens inside FUSD for his own personal gain. 8) Insider Trading: In the 24 hours before Avraham announced the details behind the option to sell FORT for wMEMO to FUSD on Feb 14 2022, he purchased all the FORT in the LP that was below the equivalent value of this deal, effectively arbitraging for profit against other FORT holders using his own planned announcement. 9) Generally more bad behavior #3:Threatening doxxing and legal action against those who are “blackmailing” him. The blackmail in this case is investors passing governance proposals that stipulate they want the treasury out of FUSD and they do want Avraham as the leader. 10) Generally more bad behavior #4: Doesn’t believe FORT holders who obtained FORT below backing deserve redemption, and is actively working to ensure they don’t get redemption. Important to note that he has been the largest buyer of FORT under backing, is offering FORT holders various deals to buy more under backing (with their own treasury funds), and has also fraudulently minted tokens out of thin air below backing (see #3).