Angry Azuki Elementals Holders Unite to Demand $39 Million Refund, Lose Thousands More in Subsequent Hack

A group of disgruntled Azuki NFT holders who banded together to demand a refund of over $38 million from the project’s team for “scamming” holders, found itself even further in the red on Monday when the DAO it was using to coordinate its actions was exploited for tens of thousands of dollars. 

The group, Azuki DAO, was formed last week in response to the controversial launch of Azuki Elementals, a spin-off NFT project from the creators of the original blue chip Azuki NFT collection. While the Azuki Elementals drop was initially deemed a massive, market-defying success—the 20,000 piece project sold out in 15 minutes, generating $38 million in revenue for Azuki creator Chiru Labs—it soon after was widely condemned by holders for appearing almost identical to the original Azuki collection. 

Azuki Elementals originally sold for 2 ETH a piece (about $3,800 at the time); the project’s floor price has already plummeted to .878 ETH, or just over $1,723 at writing. 

In response to the controversy, a group of 74 self-professed “diamond Azuki holders,” who claim to have collectively invested millions of dollars in the project, formed the Azuki DAO to coordinate a retaliation against Chiru Labs for “blatantly scamming” the Azuki community. In doing so, however, the group ended up exposing itself to further financial loss. 

On Monday, shortly after the group’s membership overwhelmingly voted both to hire a lawyer to sue pseudonymous Azuki founder Zagabond, and to demand that Chiru Labs refund its $38 million Elementals payday back to the Azuki community, two hackers exploited a flaw in the Azuki DAO claiming contract and managed to steal 35 ETH, or $68,659 at writing, from the DAO in the process, Azuki DAO confirmed with Decrypt.

The blip hasn’t appeared to dampen the organization’s zeal, however. Azuki DAO has resolved the contract’s vulnerability and is currently, so it says, consulting with a team of lawyers from Legal DAO—a Web3 legal collective—to determine how best to pursue legal action against Zagabond for allegedly rug pulling holders both with the Elementals collection and other past endeavors. 

The DAO also plans to consult lawyers on how best to compel Chiru Labs to return the tens of millions of dollars in profit the company reaped from the Azuki Elementals drop. While Azuki DAO’s membership isn’t certain it will recover those funds, it’s nonetheless quite confident that a bit of applied pressure will push Chiru Labs to see things their way. 

“We will convince them to do the right thing,” an Azuki DAO representative told Decrypt. “It’s like forcing them to act positively.”

Decrypt reached out to Chiru Labs to ask if the company plans to indulge Azuki DAO’s demands, but did immediately receive a response. 

Some other Azuki holders, meanwhile, have condemned Azuki DAO’s actions, saying the relatively small group of collectors does not speak for the wishes of the broader Azuki community.