IOTA AS and the IOTA Foundation
TL;DR: A handful of people in the IOTA Foundation decided to tamper with the ledger to move verifiable IOTA AS custody tokens to their possession. Without a word of communication to IOTA AS, they elected to move the dormant iotas held in custody, thus leaving the entity in an impossible legal and logistical position. All while misleading the community and several of its own team members. IOTA AS is the presumed responsible entity for the “ICO” of IOTA, and this action renders the company’s presumed responsibilities impossible by definition. The IOTA Foundation has not assumed any legal responsibility for future claimers; setting an arbitrary date of “6 weeks” forces IOTA AS to take legal action to protect itself and collaborate to the fullest extent with the law on behalf of the rightful owners of these iotas.
How did the IOTA AS tokens come to be?
When IOTA’s crowdfund was held back in 2015, we put all iotas in existence for sale. No pre-mine, no airdrops, nothing. There was a clause in the ToS stating that you had to claim your iotas within 90 days, and we further iterated this on the forum where the crowdfund took place. We expected everyone to claim. ~99% did. 1% was leftover to linger in custody pending legal regulation wrt. to crypto crowdfunding and moratorium periods, for which there was no precedent at the time.
The remainder of the iotas came from leftover reclaims in 2016 and 2017. The responsibility for these tokens is a lot more ambiguous due to the IOTA Foundation being established at the time.
Why is IOTA AS forced to take legal action against the IOTA Foundation?
As the organization that created and sold the iotas, IOTA AS is the presumed responsible party by all potential claimers in the future. The IOTA Foundation has actively informed claimers to reach out to IOTA AS to solve their claims for months. If IOTA AS no longer has custody of these tokens, it is naturally impossible for IOTA AS to assist anyone in claiming anything, and if the Foundation’s treasury proposal is acted upon there will in fact be nothing to claim for these people. The arbitrary 6-week claiming limit proposed does not resolve this problem, as recently as yesterday morning, before the Chrysalis update, a new person reached out to IOTA AS regarding claims. I informed IOTA Foundation’s community manager Antonio Nardella about this and gave him a new e-mail address to point these people to. These are not only reclaimed claims from 2017, but also ICO claimers from 2015. With the 2021 crypto-boom a lot of people who forgot about their iotas have remembered them. Here is an example from last week
How the hell did we get here?
The IOTA AS tokens were consolidated in 2018, previously being held in custody by Dominik Schiener. ~13 Ti sent to Sergey Ivancheglo, the remainder to be held in custody by IOTA AS. At the end of 2019, I gave the green light to move forward with Chrysalis and abandon the direction Sergey had kept the IOTA project stagnant on. As most community members will remember, this caused him to lash out. In early 2020 this led to his incredulous threats and attempted blackmail to hand him the custody iotas so that he could dump the market. Fortunately, those were not in his possession. IOTA could move forward and the market did not get dumped, which would have bankrupted the IOTA Foundation at the time. At the time there was consensus in the Board and Supervisory Board that if those tokens were ever released from their limbo state, it was obvious that IOTA AS had full discretion over their fate as it had created them in the first place.
The Trinity Hack (what actually happened to the victims?)
Less than a month after the infamous ‘CFB debacle’, the Foundation was yet again scrambling to solve a major problem: the official wallet had an exploit that allowed an attacker to siphon funds. Again the IOTA Foundation’s runway was shrinking by the minute as a consequence of the scandal. In one of several emergency meetings with the Supervisory Board, I suggested that Dominik and I as the biggest holders of IOTA in the Foundation step in to compensate the victims, thus shielding the Foundation’s runway. Dominik declined. After some contemplation, I agreed to do it on my own, potentially utilizing the custody tokens of IOTA AS if it could be solved in a legally sound way. The Foundation rejoiced, at least we could make the victims of the hack whole. This we worked on with IF’s legal department up until my departure.
Here is where the story becomes appalling. When I departed from the IOTA Foundation I was removed instantly from the private Discord channel where we had gathered all the victims and they were informed that IF would find another solution, not requiring me or IOTA AS tokens in the process. 2 of the victims contacted me 2 months later informing me that the IOTA Foundation actively lied to them and defamed me in the process. Rather than make them whole, the IOTA Foundation lied directly to the victims claiming our statements of reimbursing the victims were ‘not sanctioned’. Instead of calling out the Foundation for its disrespectful behavior towards the victims and its defamation and lies about me, I chose to bite my tongue and cheer the organization on to not impede the momentum we were finally gaining again.
Why was this not resolved between IOTA AS and IOTA Foundation?
IOTA AS was never informed. There has been zero communication from the IOTA Foundation to IOTA AS and numerous prior agreements that IOTA AS indeed shall hold custody of said tokens. Active censorship was the IF Board’s strategy with my departure, the trinity hack and this latest move as witnessed yesterday with my removal from the Discord prior to this stunt. As the chairman of non-profit IF, Dominik setup a for-profit for his girlfriend, hired the company and it runs IOTA’s PR and communications. This external entity knew about this plan before veteran IOTA Foundation members. As witnessed in my departure from the Board, the opaqueness of the IOTA Foundation does not allow the truth to come out, instead shaping a false narrative. Since the strategy by the Foundation is to sway the community by distractions and promises of free iotas that don’t belong to them, the truth has to come out this way.
Are you now against IOTA or the IOTA Foundation?
Of course not. This is IOTA AS’ arm being forced and has nothing to do with me. IOTA AS can not retain responsibility for something that no longer exists. I am completely confident that the IOTA technology will succeed. However, the leadership of the IOTA Foundation has proven questionable in several instances, which has caused yet another easily-avoidable drama. Despite numerous instances of grave injustice and drama over the years, I have never stopped championing for IOTA publicly and professionally. No less than 5 days ago I had a good conversation with Holger Köther about partnerships for IOTA in the making. I have bit my tongue to ensure that my personal grievances with a handful of people in IF’s leadership don’t affect IOTA’s growth. However, this is not personal, this is legal and IOTA AS’ hand is forced, as any entity would be in the same situation.
There is no money, so no, this is not about the money.
It’s been more than 6 years since the very first pieces of what would become IOTA was put in place. In that time I have never taken a salary, I invested all my personal capital into making IOTA succeed and still hold more IOTA than any other individual. IOTA has never been about money. IOTA has gone up and down 10–30–50–100x multiple times over the years, it has never affected my actions.
In fact, there is no money, unlike what CFB believes these iotas are not currently an asset in IOTA AS. It is a legal responsibility, IOTA AS is merely a custodian.
What happens now?
I only see two realistic outcomes: either the IOTA Foundation immediately reverts this treasury-fork proposal and limits its self-inducing damage on IOTA, or a messy legal battle and probable investigation(s) of the Foundation seem inevitable. Unfortunately, I doubt the latter will be isolated to the IOTA AS tokens. I believe it’s very likely that this will cascade into all actions by Board members dating back to the Foundations origins wrt. “Big Deal”, Advisory tokens, Hack Victims, impromptu compensation contracts, etc., etc. All transactions and ink trace back to Dominik Schiener personally. These activities have been presumed valid on good faith; that faith is now gone. It’s just sad through and through to witness. After years of hard work by the team at IF and volunteers in the community, it is unfair. I feel bad for those who will be affected by this mindless act.
What should happen to the tokens?
a) The original crowdfund tokens has to remain with IOTA AS to cover potential future claimers.
b) The reclaim tokens should be available at least until Coordicide, after which the priority must be to make the Trinity Hack victims whole as promised.
