Not a happy Friday, Idiots.
I have been extremely outspoken about the illegitimacy of the Bitcoin Foundation’s current board of directors and the dire need for immediate changes. Only a swift and thorough overhaul of the Foundation’s leadership can preserve Bitcoin’s image with regulators, legislators and the general public. It is unacceptable that the current leadership has not already announced plans to exit gracefully from their positions of power, despite the glaring incompetence and negligence of Chairman Peter Vessenes and Executive Director Jon Matonis.
This must change. Now.
Behind the scenes this week, I solicited the input of dozens of leaders throughout the industry who represent many of the corporate sponsors and lifetime individual members of the Foundation. The individual response has been nearly unanimous: these gentlemen must go, immediately. However, the corporate response has been understandably tepid. Truly good and professional executives have been caught between a rock and a hard place: Vessenes and Matonis are obstinate individuals who will be hard to force from their positions, and a public battle will cause additional media backlash for Bitcoin, which will hurt these executives’ businesses.
I have no similar fiduciary obligations to maintain the peace.
Moreover, I believe that it is only with proactive measures that we can truly wipe the slate clean from Mt. Gox. Vessenes and Matonis are pioneers who deserve credit for their early work with the Bitcoin Foundation, but they have also outlived their usefulness in an industry that attempts to grow like the internet despite the inertia of the financial services community and the many regulatory and legislative roadblocks.
And for better or for worse, with all of its blue-chip sponsors and leading role to date in events such as the Senate Bitcoin hearings and NYDFS BitLicense hearings, the Foundation is the mouthpiece for the entire industry.
Peter Vessenes and Jon Matonis are not scapegoats. They are not innocent bystanders. And they are not ethically entitled to remain in their board seats through later this year.
On Monday, I plan to publish a full article which elaborates on these damning facts and much more:
1) The Foundation never once warned Bitcoin investors about keeping deposits in Mt. Gox, despite clear red flags dating back to at least April 2013. Nor did the Foundation craft or advocate for best practices such as technical transparency, deposit audits, or appropriate consumer protection disclosures. This was a colossal failure of leadership.
2) There is evidence that Bitcoin Foundation board members may have had direct access to Mark Karpeles which allowed them to personally deposit and withdraw funds from Mt. Gox, despite persistent delays for other customers.
3) There is a troubling and inappropriate overlap between Peter Vessenes’ staff at his private company, CoinLab, and the Bitcoin Foundation’s staff, which goes far beyond shared office space.
4) The current leadership has shown a stunning disregard for proper communications with its members. The importance of immediate resignations (rather than gradual) is highlighted by the Board’s secret plans to move the Foundation’s headquarters to London without input from members and sponsors.
5) Peter Vessenes has had a nine month conflict of interest regarding Mt. Gox given that his company CoinLab was involved in an active multi-million dollar lawsuit against Mark Karpeles and Mt. Gox, following a failed partnership. Both men remained on the board of directors, and the Foundation failed to draft adequate by-laws that would allow them to address situations such as this where directors had material conflicts, which would compromise their ability to act in the best interests of its members.
This egregious behavior and negligence may not be the worst of the information to come. I have been unable to reach representatives of the Foundation for comment on a myriad of other accounting issues related to the treatment of member donations.
At this week’s Texas Bitcoin Conference, I was fortified by near-unanimous agreement (and, at times, applause) that the current leadership must resign or be forced out of their positions on the Foundation. Yet I have also been warned that I am playing a dangerous game, with cunning and ruthless power brokers. I have been discouraged by corporate sponsors of the Foundation not to make a public stink which would be “counter-productive” and “irresponsible” for Bitcoin. Most would prefer to let the Mt. Gox scandal blow over, but I would rather wipe the slate clean definitively, blood or no.
To the chagrin of the less confrontational, I plan to attack. And in putting my personal and professional reputation on the line, I will attack ruthlessly, from the front, and (figuratively) shoot to kill.
By Monday, I expect that either: a) Vessenes and Matonis resign gracefully from the board of the Bitcoin Foundation, and announce that their terms will end on an accelerated schedule which coincides with the already scheduled elections in April, or b) the corporate sponsors of the Foundation publicly distance themselves from the organization and clarify that the Bitcoin Foundation no longer represents the true interests of its members.
Otherwise, by Monday at 3pm ET / 12pm PT, I will post my full expose of the unprofessionalism and negligence of the Bitcoin Foundation. (If I get hit by a bus this weekend, my lawyers will release it.)
In addition, and immediately upon publishing that expose, I plan to provide a collated and annotated document dump to Fortune and Wired to let them make their own professional judgments of the Bitcoin Foundation and our industry’s current leadership. (I am doing this for free, I might add.)
On Wednesday, I will share those same documents with the broader media community, including the Wall Street Journal, New York Times, the Verge, Forbes, the Associated Press and anyone else who asks, and begin lining up on-camera media interviews with CNBC, CBS, Fox News, Al Jazeera and others who have expressed interest in this story to date.
I assure you, I am ready to go nuclear. Because this is important.
Make no mistake: Peter and Jon will either step down from their leadership positions, or the corporate sponsors of the Foundation will quickly assemble and publicly distance themselves from the Foundation, writing off the organization as an illegitimate zombie entity. I am posting an open letter calling for their swift resignations on Reddit and on the Bitcoin Foundation’s own Forum.
I hope to eat my article, keep the documents that I have to myself (and likely prosecutors as I am likely to be subpoenaed), and redirect the focus of the Bitcoin community from scandal and frustration to that of progress and innovation.
To Peter, Jon and their supporters:
You have 72 hours.