The conflict between Dohrnii Labs and Blynex has escalated into a legal battle as Dohrnii Labs, a blockchain-based learn-to-earn platform, has filed a police report in the United Arab Emirates (UAE) against the crypto exchange Blynex.
The allegations center around an unauthorized liquidation of Dohrnii’s DHN tokens, which resulted in a significant financial loss for the company.
Promised Loan Trigger Conflict
According to Dohrnii Labs, Blynex failed to deliver a promised loan, illegally liquidated their collateral, and blocked access to their remaining tokens.
On March 23, Dohrnii Labs deposited 12,649.99 DHN tokens, valued at over $500,000, with Blynex.
The company claims it used 8,650 DHN tokens as collateral for a 30-day loan in exchange for 80,000 USDT.
However, Dohrnii Labs states that they never received the loan. Despite this, Blynex allegedly liquidated the collateral, selling it on Uniswap for 149,151 USDT, which caused a drop in DHN’s market value.
Furthermore, Dohrnii Labs has been unable to withdraw its remaining 4,000 DHN tokens, prompting them to take legal action.
Dohrnii Labs has made its stance clear, stating It demands the immediate return of its 4,000 DHN tokens and full reimbursement of the USDT generated from its collateral.
The company has also announced that it is contacting local regulators, including the Virtual Assets Regulatory Authority (VARA) and Abu Dhabi Global Market (ADGM), to escalate the matter.
Blynex’s Response: Claims of Risk Management
Blynex has responded to the accusations by asserting that the liquidation was part of their “automated risk management system.”
According to a statement, Co-founder Mike Baskes stated that their system identified a high-risk scenario in which the liquidity of the DHN token was too limited to sustain collateral in case of a market downturn.
He further claimed that when the liquidation occurred, Blynex only generated 145,000 USDT from the sale instead of the expected amount, reinforcing their decision to act swiftly.
Baskes explained that the available liquidity for DHN was approximately $315,000 at the time, making it difficult to sell the tokens without impacting the price.
The company insists that the decision to liquidate was made to prevent further losses.
Dohrnii Labs has refuted Blynex’s justification, labeling it as misleading. They argue that the liquidation was unnecessary since the collateral was nearly double the value of the loan that was never even issued.
According to Dohrnii Labs, Blynex’s actions were not about mitigating risk but rather an unjustified seizure of assets.
Blynex has reportedly attempted to settle the dispute by offering Dohrnii Labs 80,000 USDT and the release of 4,000 DHN tokens on the condition that all legal proceedings are dropped.
Dohrnii Labs has rejected this offer, stating that the 4,000 DHN tokens belong to their users and are not negotiable assets. They maintain that the right to withdraw these funds should not be up for discussion.
Vitalik Buterin’s Involvement and Market Impact
The Dohrnii Labs dispute with Blynex follows another significant event impacting DHN’s market performance as Ethereum co-founder Vitalik Buterin’s unexpected liquidation of DHN tokens he received for free.
In January 2025, Buterin was sent 10,000 DHN tokens without his consent. On March 18, Buterin sold 5,000 DHN tokens, netting 65 ETH (approximately $124,000).
His sale triggered a mass liquidation event, causing a “flash crash” in DHN’s price. In minutes, it dropped from $38.50 to $20.69, a staggering 50% decline. Despite a partial recovery to $39.75, the token remains down 11% for the week.
Dohrnii Labs has since proposed an over-the-counter (OTC) sale for Buterin’s remaining 5,000 DHN tokens to mitigate further market instability should he decide to sell the rest.
As of now, Blynex has yet to provide any official statements beyond their initial defense of the liquidation.
Meanwhile, Dohrnii Labs remains firm in its pursuit of legal recourse, seeking justice through regulatory channels and potentially collaborating with other affected parties for a joint lawsuit.
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