A report on Blockstream’s possible misappropriation of investor fund has been published on cashbleed.com. On the website, there are details on how the startup’s employees are enriching themselves by siphoning investor funds all in the name of “effective bonuses.” These bonuses are presented to company employees as a percentage of their payment but in BTC.
The facility is designed to ensure that BlockStream’s employees purchase the BTC at meager prices when compared to the values in the open market. The report actually suggests that the employees can access Bitcoin at costs as low as $350. The website that has laid this claim starts by saying that Blockstream “has created a sophisticated scheme to siphon millions of dollars worth of Bitcoin from company wallets into the personal wallets of its employees and founders.”
Greed Killing Blockstream
The writer goes on to say that this greed will be the end of Blockstream, noting that the startup cannot turn in profits to benefit its investors if the current conditions at the startup remain as is. Blockstream has investor assets worth $100 million raised from its supporters such as AXA, Mosaic Ventures, Khosla Ventures, and DG Lab Fund. However, instead of putting the funds into innovation, Blockstream stands accused of fraud perpetrated through bonuses. These bonuses have given the employees inflated salaries despite the startup making few waves than expected in blockchain innovation.
All the same, this is not the first time Blockstream is coming under heat. In his blog post at Bitcoin.com, David Shares, a writer and developer, did call out the company for their manipulative and dishonest behavior.
“It isn’t possible to improve liquidity while maintaining full decentralization and trustlessness. So Blockstream cheerfully compromises both of these prized features. It appoints a small group of trusted institutions to validate transactions and submit them to the main Bitcoin chain.”
Is There a Culture of Dishonesty?
He mentioned that while Blockstream did raise an impressive $100 million from the public, it had remained unaccountable to its investors about the usage of the resources entrusted to them. David further called for the crypto community to hold the company’s leadership in check.
Additionally, he goes on to say that since its public status in 2014, the company only released their sidechain four years later. They Blockstream Liquid sidechain would however only benefit private BTC exchanges. Blockstream has nevertheless been part of the Lightning Network development team working alongside ACINQ and Lightning Labs. The lighting Network allows users to make faster and cheaper bitcoin’s payments solving the Bitcoin’s blockchains low transaction speed problem.
David furthermore accuses Blockstream of playing “toxic and dirty” games on social media and working with spies to gather intelligence on the BTC community. The report also highlights Blockstream’s skewed hiring system, which could also be termed as illegal.
CashBleed notes that the BTC payouts have become “golden handcuffs” trapping employees in the startup due to the monetary benefits. The site makes it very clear that the Blockstream employees are reaping rewards they have not worked for because the company has not made itself a success as it promised its investor’s, years down the lane.
The website ends the article by pointing out that Blockstream is quickly depleting its Bitcoin reserves and will not survive a year in that state. The obvious thing the business will result to therefore to keep afloat is to seek more investment funds from the public:
“Unfortunately, we have received information to indicate the company does not intend to stop paying out BTC to its employees at extreme below market cost, even going so far as to recently launch a new scheme.”