|THE FINAL DAYS OF THE BITCOIN FOUNDATION?|
Aruba, January 4, 2016 - With support dwindling, funds almost depleted, and ex-board members under criminal investigation, bitcoin’s pioneering advocacy group is a symbol for the digital currency’s growing pains.
Bruce Fenton, executive director at the Bitcoin Foundation, opened its Dec. 15 board meeting with a sense of urgency: “We need additional funds if we wish to retain employees.” The numbers didn’t look good. In two years, the foundation had seen at least $7 million evaporate. As of Nov. 30, its total assets stood at $12,553.06.
To sustain the Bitcoin Foundation’s operations, which have included lobbying, putting on conferences, and providing technical support for the digital currency, Fenton urged the group to find ways to raise money quickly. They considered cold-calling ex-members, and Fenton said he’s working on marketing materials for prospective donors to explain the organization’s purpose. “There is no material saying what the foundation does,” he said.
Eventually, Jim Harper, a board member and senior fellow at Cato Institute, a think tank, interjected. He questioned whether the foundation was offering its members enough value to warrant its existence, according to minutes released on Dec. 21 from the meeting. “Asking for money is just throwing money away,” Harper said. Olivier Janssens, another director, suggested that the organization may not be “fixable.”
The Bitcoin Foundation has become a symbol of the challenges facing the digital asset it was designed to steward. While advocates have promoted bitcoin as a global, decentralized currency for the Internet age, it’s proved to be more volatile than many penny stocks. Its role in money laundering and other illegal activity is a constant source of questions, and the price fluctuates with each regulatory clampdown or criminal investigation. In November 2013, it reached a high of $1,137 before falling to $183 in January 2015 following a slew of problems, including the collapse of Mt. Gox, once the world’s largest bitcoin exchange.Beyond financial trouble, two former Bitcoin Foundation board members have been charged with crimes. Mark Karpelès, former chief executive officer of Mt. Gox, was arrested in Tokyo and charged with embezzlement in September. Charlie Shrem, former vice chairman of the Bitcoin Foundation, resigned before pleading guilty to helping launder money for transactions through the illicit online marketplace Silk Road. He’s currently serving two years in a federal prison.
Several people still involved with the Bitcoin Foundation said the wounds may never heal. “I don't know if the foundation has a future,” Gavin Andresen, a former board member who now holds the title of chief scientist, wrote in an e-mail. “It is very difficult to regain trust once trust has been lost, and the illegal behavior of two of the foundation's former board members destroyed a lot of trust.”
When the Bitcoin Foundation was formed in 2012, the group was intended to give legitimacy to a relatively unknown technology. By the end of that year, bitcoin traded at about $13. The organization grew almost in lockstep with the popularity of bitcoin. Comprising pioneering coders and entrepreneurs behind the digital currency, the Bitcoin Foundation would soon become a familiar face in Washington, spreading the gospel of bitcoin around the world.