Allegations of illicit activities have surfaced surrounding the liquid staking protocol STFIL, as Chinese authorities reportedly launch an investigation into the project's developers. The probe comes amidst concerns over unusual fund transfers and unexpected protocol upgrades.

In a recent announcement on X, the STFIL team disclosed that core members of the protocol are currently under scrutiny by local Chinese law enforcement. While specific details regarding the investigation remain undisclosed, STFIL assured stakeholders that legal representation has been engaged to navigate the situation and provide support to those involved.

During the period of the team's detention last week, significant fund transfers in Filecoin (FIL) from the STFIL platform were directed to an external address of unknown origin. Additionally, the protocol experienced "abnormal, unscheduled upgrades," adding to the uncertainty surrounding the situation. Presently, the recipient of the transferred funds holds a substantial amount of over 2.5 million FIL, valued at approximately $23.3 million.

"Upon learning the above information, the team is actively seeking assistance. We hope that the community can help track this unknown address and discuss ways to protect the interests of stakeholders," stated the STFIL team.

STFIL occupies a prominent position as the second-largest protocol within the Filecoin ecosystem, boasting a substantial total value locked. According to data from DefiLlama, STFIL ranks just below GLIF, with nearly $40 million allocated in cryptocurrency. Launched in 2023, STFIL revolutionized Filecoin's liquid staking landscape, providing FIL token holders with opportunities to earn returns through liquid staking mechanisms.