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Dohrnii Labs, a learn-to-earn platform, has lodged a police report in the United Arab Emirates, accusing local crypto exchange Blynex of unauthorized token liquidation and failing to provide a promised loan.
According to a statement provided to Cointelegraph, Dohrnii Labs deposited 12,649.99 Dohrnii (DHN) tokens—worth over $500,000—into Blynex’s system. On March 23, the company used 8,650 of these tokens as collateral for a 30-day loan, expecting to receive 80,000 Tether’s USDT at a value of $1.00 each.
Dohrnii Labs alleges that Blynex never delivered the USDT. The company further claims that Blynex sold all 8,650 DHN tokens on Uniswap, obtaining 149,151 USDT, which led to a significant drop in the token's market value.
Efforts to withdraw the remaining 4,000 DHN tokens were reportedly unsuccessful.
Blynex, on the other hand, explained that the liquidation was part of its “automated risk management system.” Co-founder Mike Baskes told Cointelegraph that the system identified a high risk that the collateral would suffer further value loss if not immediately liquidated. He noted that due to limited liquidity—estimated at only $315,000 available for the DHN token at the time—the sale generated 145,000 USDT instead of the originally anticipated amount.
Baskes claimed the move was necessary to mitigate further financial losses. However, Dohrnii Labs disputes this explanation, labeling it “misleading” and alleging that the collateral was liquidated for nearly twice the loan’s value.
In reaction, Dohrnii Labs has filed a police report in the UAE and threatened legal action against Blynex. A representative for Dohrnii Labs told Cointelegraph that the report is only the beginning. The company is reaching out to local regulators—including VARA, ADGM, and others—and is coordinating with other affected projects to potentially initiate joint legal proceedings.