In a recent interview former backend developer for Mycelium, Daniel Drawisz, has detailed his reasons for leaving the company. Daniel cites deceptive sale terms and conditions and misuse of ICO funds as his primary motivation for leaving the company, including shockingly the financing of a vacation to Spain for the development team.
Mycelium Conducted an ICO Crowdfund Last Year, Claiming in Their Press Material That Money Was Needed to Support Future Updates
Mycelium, formerly Mycelium Wallet, is a wallet provider that claims its development team has been working together since before bitcoin’s inception. Mycelium is incorporated in Cyprus and has released a number of bitcoin wallet-related products to the market.
Mycelium conducted an ICO crowdfund last year, claiming in their press material that money was needed to support future updates, in addition to wanting to afford their customers the opportunity to become stakeholders in the company. The press release also claimed that the Mycelium “team has been working untiringly to make Mycelium into a very functional, reliable product, serving the needs of both beginners and professional bitcoiners; now we are ready to bring Mycelium to the next level”. The ICO saw the distribution of only 5% of the company’s ownership to token holders.
Daniel Krawisz, a Former Backend Developer, Quit Mycelium After Claiming to Witness the Misappropriation of the Raised Funds
Towards the end of the crowd sale press release, there is an obscure disclaimer stating that “We think we have found the best solution to be legally compliant, but legal does not always mean right, or true, or secure, or honest. Personally, I would not even bother with trying to get all the papers and legal documents for this, instead just trusting the blockchain records for this much more and waiting for the first precedent protecting the rights written in the blockchain. A public promise to make something is still considered an obligation to do so, and this is exactly what I am doing here. Just to assure you that this crowd sale is legally sound, we have gone through all the necessary internal legal procedures to make this happen”. This confused, juridically meaningless clause should have been seen as a major red flag by potential investors.
Daniel Krawisz, a former backend developer, quit Mycelium after claiming to witness the misappropriation of the raised funds. “One of the first things they did when they sold these tokens is they kind of bought a vacation in [Spain] for all of the developers,” said Krawisz. “It was literally like a vacation because nobody did any work there. This is kind of why I decided to leave the company. I didn’t like that they were selling tokens in the first place, and then I didn’t like that they were immediately spending the money on a vacation.”
Krawisz also paraphrased some comments that were shared with him by a “higher-up” employee at Mycelium whilst on vacation in Spain. “These lawyers, you know, when we talk about making [a] token sale, they tell us, ‘This is illegal; you are going to jail.’ These lawyers, they believe everything needs to go by a template, and we wanted to do something new.” Daniel found this very disconcerting, stating “I just thought it was so weird that he was like joking about lawyers saying that they were going to go to jail for this.”
Daniel Krawisz also described the terms of the crowd sale as intentionally misleading and ambiguous, designed to conceal the fact that much of the funds raised were to be diverted towards costs such as ‘employee salaries’, and other costs that would be expected to have been absorbed by the company.
Although Mycelium has issued statements disputing Krawisz’s allegations, the recounted story does not look good for the company. With regards to the alleged vacation, Mycelium Community Manager Dmitry Murashchik states “We had a company retreat [or] get together to strategize, yes.” “We all live around the world, and the boss wanted to get us all together to strategize on how we should go forward, believing that this is best done in person. [Spain] was chosen because that’s where he was at the time, and it was the closest location to all but one or two of our devs, since most live in Europe and one was on vacation in Spain already. Only two employees had to be flown in from overseas.”
With allegations of mishandling funds against Mycelium, accusations that BAT’s ICO constituted the illegal distribution of unlicensed securities, and authorities examining the possibility that the Ethereum foundation may have acted in violation of conflict of interest laws in their handling of the DAO fiasco, it appears increasingly likely that we will eventually see a crackdown on ICO presales.
Do you think greater regulatory oversight for ICOs will be an inevitability? Share your thoughts below!
Images courtesy of Shutterstock & Mycelium
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