Show Posts
Lauda
And, secondarily, MinerJones and Blazed, although their involvement is unclear, and the accusation against them may be more along the lines of "why aren't you doing anything about Lauda?"
The accusation:
Despite being hired as fiduciaries, the escrows are acting in their own best interests during a dispute, have taken escrowed money for themselves, and refuse all calls for accountability and transparency. A significant amount of money is missing from the officially stated escrow balances, which do not reconcile with the initial deposits and authorized distributions, and there has no accounting for those missing funds. Lauda has unilaterally changed the terms of the escrow fees from 2% to 10% to her own benefit and to the detriment of investors.
Amount in question:
Between 300-900 BTC of the ~3050 BTC collected2,6 into the escrow accounts are unaccounted for as of this post's timestamp.
Background:
There is currently a dispute between the founders of the NVO DEX project that started last year. The NVO project thread is here: https://bitcointalk.org/index.php?topic=1917456.0
The escrows for the NVO crowdsale were and continue to be1:
Lauda, MinerJones, and Blazed
The specifics of the dispute between the founders is immaterial to the actions of the escrows. It's sufficient to say that the project looks nothing like what was promised in the crowdsale, and a supermajority of token holders, as well as both remaining founders, have asked for the refund process to begin.
The dispute has resulted in two major factions, one following the former CEO, and the other following the former CTO. There is another significant faction that follows neither, which is, from a practical standpoint, unanimous in calling for a refund.
Even with the near unanimous calls for a refund, escrows have decided on taking a weighted vote to determine their next action, although the stated terms and options of the vote are continually changing.
The former CEO controls the original official Slack channel, a secondary Slack channel that was created in an unsuccessful attempt to assert control of the community before it could split, the original Subreddit (https://reddit.com/r/NVO), and a Telegram channel (https://t.me/joinchat/AAAAAEaDtGZfFucHogPU8w). All former CEO-controlled channels are heavily censored. Most activity happens in Telegram, where questions that don't make the former CEO look good are deleted immediately, and the poster is kicked from the channel.
The former CTO has stated a desire not to manipulate any voting and refuses to contol any specific channel. His supporters, among others, are using a Discord channel (https://discord.gg/UxAhxA6) to freely discuss what happens in the channels controlled by the former CEO. Many posters who are kicked from the former CEO's channels end up in the Discord, which is not heavily censored.
Additional claims and supporting statements:
Lauda is the only escrow talking at all, and she's really only in one place, the Telegram channel controlled by the former CEO. She refuses transparency in the refund process, citing a simple unwillingness to cooperate.
Escrow distribution
- Background:
- As per the terms of the crowdsale, four milestones were set1. At the first three milestones, 30% of the collected funds were to be split 50/50 between the former CEO and the former CTO, at a rate of 15% each. At the last milestone, the remaining 10% would be split 50/50 at a rate of 5% to each party.
- The first milestone was automatically met at the close of the crowdsale. The former CEO received 15% of the escrowed funds, and the former CTO declined his own distribution on an immediate basis.3
- The second milestone was met as observed and agreed to by the escrows, and another 15% was distributed to the former CEO. The former CTO again declined his own distribution.3
- The project founders then became estranged, and so far additional undisputed claims about the escrow arrangement have been made by the former CTO.
- The current claims about escrow fuckery which have so far gone undisputed:
- The original terms of the escrow was 2% of the collected funds, amounting to 60 BTC to be retained by the escrows for their services. Lauda has since unilaterally declared the escrow fee to be 10%, removing up to 300 BTC from the refund pool for her own gain.
- The undistributed 30% that was supposed to go to the former CTO was retained by the escrows, and is not included in the refund pool
- The escrows placed escrowed funds into a Bittrex account owned by the former CTO of the project, for the purposes of speculative trading with escrowed funds. Everyone is now locked out of that account because the escrows changed the Bittrex account password and cannot recover it.
- In coordination with the former CEO, Lauda has decided on a "buyback" scheme, which ensures not all investors will be refunded. Instead of issuing an airdrop of BTC to all token holders, her plan is to require positive action from all token holders in order for them to receive a refund, with no indication as to what will happen to any unclaimed funds. Based on the coordination between herself and the former CEO, it is unclear if Lauda and the others will retain the unclaimed funds for themselves, send them to the former CEO, or if a portion of the unclaimed funds will eventually be distributed to the former CEO in exchange for his support of this scheme while they retain the rest.
Coordination with one side of the dispute, "picking sides" with project management
As with any escrow service, Lauda and her team are responsible for acting impartially and fairly at all times, and in the case of a fundraising dispute, they must act in the best interest of investors at all times. When the dispute between the founders first came to light, Lauda correctly froze all funds available to her, but has since coordinated with the former CEO to concoct the voting scheme, and to decide on the terms of a vote, which at one time included an option to only refund money to accounts that know about the conflict, despite clear communication only taking place with the token holders who are present in a CEO-controlled communications channel.
Missing funds
Several coin forks, including the BCH fork, happened while funds were in escrow. The escrows pocketed that money and are not adding those funds to the refund pool.5 A fiduciary is not entitled to take client funds that are under their control.
Out of 3,055 BTC raised at the crowdsale2, only about 30% has been distributed.3 An exact number is not available, as the escrows refuse to provide it. 560-600 BTC was distributed to the former CEO, and 75-100 BTC was distributed to the former CTO, so conservatively there should still be ~2300 BTC in escrow, not accounting for altcoin depreciation. The publicly stated refundable balance is ~1400 BTC.4 There is no accounting for the discrepancy, so until such time as a full accounting can take place, the funds can only be assumed to be missing.
Additional items
Lauda has publicly stated in the Telegram "hire an accountant if you want to audit me", followed by a statement that she would refuse to cooperate with such an audit if one were to take place.
Lauda has stated the escrow fees are now 10% of the total amount raised, which is, perhaps not coincidentally, almost the same amount as what is unaccounted for. It is unclear if she is acting alone on this change or if she is acting with the cooperation of the former CEO.
This isn't just a dispute about an escrow service. This is a breach of fiduciary duty. In many reasonably legislated jurisdictions, and most certainly in most unreasonably legislated ones, conviction of this type of activity would mean the fat portion of a decade in prison, if not considerably more due to the amount of money in question.
Note: this post will be updated to reflect any changes of fact, such as any possible future release of a 3rd party audit, if and when those changes become known. It will also be updated with specific evidence, such as links to posts, as they are obtained. If you have specific screenshots or links to posts that either prove or disprove any portion of this post, please reply below.
Footnotes
1. See the first post of the NVO project thread
2. Official crowdsale amount raised
3. 30% distribution claim by Ton, former CEO
4. 1400 BTC remaining in escrow questioned by Ton, former CEO
5. Lauda's policy on taking custodial funds. First post, under "policies"
6. Original deposit address 354jirex7gkFxMiNmN45SxyMxSUsdGcrsf, see first post in NVO thread
