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Bitcoin Foundation: Where did all the Money Go?

Posted by4 years ago

Bitcoin Foundation: Where did all the Money Go?

This week Charles Hoskinson posted a thoughtful post on the Bitcoin Foundation and his idea that an audit would help the organization break from the past.

I'm happy to support an audit provided someone can lead it and do the work involved and/ or support the costs of one.

I do remain skeptical of the value of an audit. We all know that a lot of money was wasted and lost - I detail the basics of the 2014 spending below -- it is unlikely worse than imagined as all the funds are essentially gone. I don't think much can be done about past mistakes, the people involved are no longer with the organization.

Also this week, someone on an anti-Bitcoin sub posted this data from the 990 forms and was afraid it would be censored if posted on r/Bitcoin.

I'm happy to post it for them, minus the color commentary and a couple of minor factual inaccuracies.

They also implied that some people would want to not have this information brought to light. I'm more than glad to. I don't defend these financial decisions as I had nothing to do with them. I also had thought the 2014 990 form with this was posted once completed this summer. At that time we were going through a website and server change and I was also recovering from a car accident, so if it was posted it wasn't in the proper place. For not having the 990 form posted in the correct section a few months back , that's on me and I'm sorry.

The bigger matter is the financials themselves.

I don't defend these financials, I certainly don't apologize for them or attempt to justify them. I had nothing whatsoever to do with these decisions.

As you can see the spending / loss was caused by:

  1. a large drop in Bitcoin value costing millions of dollars - the peak foundation assets were calculated based on a Bitcoin price in the $800 range -- so, had they simply held those coins it would have seen the $6-7 million fall to $2 million or so

  2. ridiculously wasteful and reckless spending

  3. reasonable and legitimate expenses such as Gavin and dev salaries

I have not been presented any evidence of any theft, criminal act or similar wrongdoing but would be happy to pay a bounty of at least 10% for anyone with information and evidence of any such act leading to recovery of any funds which were misappropriated or stolen. Those who imply that there is any wrongdoing at the foundation now or by those involved now should come forward with evidence or at least a solid and specific accusation. If presented with any such evidence I would work to have justice done.

It seems strange that so many make an effort to tie those involved now to the sins of the past.

This is the point of a turnaround; to take what an organization has and make it as useful as possible. Many people think that the change in management and new focus, combined with a new mission statement can help the organization to help Bitcoin more.

I wish that the foundation hadn't had so many problems. I did think it was worthwhile to try to help the organization.

Here are the finances:


Gavin Andresen: $147k. Chief Scientist. Salary down from $209k (salary was higher in 2013 as it was pegged to BTCUSD)

Jodie Brady: $141k. COO of the Foundation, who also served as CFO at CoinLab (Peter Vessenes' affiliate company).

Jon Matonis: $137.5k through "THE HOLE OF ROY LLC". Salary up from $31k. Jon Matonis acted as Executive Director up to October 2014.

Patrick Murck: $115k. Executive Director of the Foundation (as of November 2014). Salary up from $57k.


"LOCAL PRODUCER" was paid $790k to host Bitcoin 2014 in Amsterdam.

Apple Fundraising Consultants were also paid $123k for activities related to the aforementioned conference.

THEPOLICYCOUNCILCOM INC as the Foundation's 'Global Policy Counsel', paid $114k for about 9 months of work in 2014.

And the breakdown of the functional expenses, oh, so many expenses: Office Expenses: $39k up from $8k in 2013.

Information Technology: $158k up from $67k

Travel: $159k up from $69k

Occupancy: $18k up from $7k.

Accounting: $50.5k up from $9.1k.

Legal fees: $220k up from $161k.

Other: $653k, consisting of:

Professional services: $307k

Public relations: $93k

Executive Directory Compensation: $137.5k

Professional event expenses: $115k

Other salaries and wages: $471k up from $72k

Revenues : Membership dues: $335k down from $358k Conference revenue: $584k up from $337k At the end of 2014 not much was left: $366k.


The beginning of 2015 still had many expenses similar to the above. At the time I came aboard those costs reduced dramatically. There were still high outstanding legal and accounting bills as well as the bitnodes funding and funding and other previous obligations that were paid.

Current spending is in the $8k / mo range

Current expenses:

Board salaries: $0

Executive Director salary: $0

All reimbursements for travel: in the range of $3000 - primarily for three speakers airfare and hotel (me, Gavin and Andreas) to DevCore, $600 in pizza for the attendees etc.

Aside from one economy flight to DevCore and the hotel I have personally not been reimbursed for any travel. I have paid some costs from my own credit card for web hosting etc which were also reimbursed - this is also a small amount, perhaps in the $2000 range

Current salaries include one part time bookkeeper and one almost full time ops director.

I'd love any feedback about what the organization can do to break from the past. We could close, sure. I'm not convinced that is what's best for Bitcoin and 8/10 top voted candidates from the last four elections don't think that's what the members want. What else can an organization do to move forward?

EDIT: BTW, here is the mission statement posted a couple weeks back by the new board - IMHO it's more productive to focus on this than the past

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level 1
25 points · 4 years ago · edited 4 years ago

There should be an audit.

I've pursued this for almost 2 years and here Matonis made it sound like it was only the falling price of Bitcoin and they were the victim.

Matonis blamed the falling price of Bitcoin almost entirely. Someone is not being honest and I think they have a reason.

My Question:

What happened to the 5800 bitcoin you explicitly mention here: At the bottom of page 7 of the bitcoin foundation meeting minutes and why should anyone consider you anything but a thief?

Quote - formatting added:

There is no funny business and the story is not much different than the majority of companies maintaining their books in bitcoin during that time period. This is important so I want to answer.

I assume you are referring to $4.6m amount on page 7. This topic was recently covered in depth by Bailey Reutzel for American Banker/PaymentsSource but I will reiterate here (apologies if it doesn't match up exactly). Additionally, this would all be outlined in similar form on the required IRS 990 Form.

I don't have exact financial statements in front of me now, but here are some basic points to consider:

a. $4.6m based on March 2nd, 2014 valuation ~$673/BTC because books completed up until that time (of course, if you go back to December 2013, the BTC price was even higher);

b. average Bitcoin Foundation expenses for 2014 of approximately $150k per month;

c. ~90% of assets maintained in BTC as determined by board of directors;

d. Foundation raised in nominal terms approx. $500-650k in membership dues and donations during its existence (price appreciation got us to where we were at the time);

e. January 1, 2015 exchange rate ~$264/BTC Since my last day on the board of the foundation was December 31st, 2014, that is where my confidential access would terminate.

How were the funds allocated is your question, so please allow me to explain (rough ball-park approximation for your benefit because the dates are not exact):

$4.6m (BTC asset valuation on March 2, 2014)

-$1.5m (10-month foundation burn rate at avg $150k/mo)

-$2.5m (approx. foreign exchange loss from BTC assets during period)

=$0.6m (balance remaining at Bitcoin Foundation on January 1, 2015)

Just adding your numbers to Travel Expenses puts use over $1.6M. The rest after that totals $2M. That basically accounts for what Matonis called "foreign exchange loss"

This needs dragged out into the sunlight and kicked around in the dirt for everyone to see. These people need to be held accountable and the this community needs to stop letting scammers and scoundrels run off with our money.

level 2
9 points · 4 years ago

Ran out of someone else money. Matonis salary is a joke. Vessenes is a conman.

level 2
Peter Todd - Bitcoin Expert
10 points · 4 years ago

Where do you suggest the money come from to do that audit?

I'm no accounting expert, but IIRC the foundation has something like $10k left, which sounds too small to pay for a proper audit.

level 2
0 points · 4 years ago

You sound like someone who would like to hear about r/dashpay :p

level 2
Original Poster-1 points · 4 years ago

Not clear what you are saying with this post

level 1
8 points · 4 years ago

Bruce, I have a huge amount of respect for yourself and appreciate the good things that the foundation have done in the past, including lobbying efforts and representing bitcoins best interests during senate inquiries, paying devs and holding conferences.

... and then there's the (jailable) bad stuff.

I observe you frequently distance yourself from the "old management", but there is no denying that in the eyes of the public and media The Bitcoin Foundation is The Bitcoin Foundation. The skin of the old entity is the same as the new even if the muscles and bones inside have changed.

I believe the reason you'll hear many asking you to shut down the Foundation is because the stench of tainted rotting flesh will continue to smell until the corpse is buried. (apologies for the imagery)

"The Bitcoin Foundation" does not have such a good reputation to justify hanging on to the name.

How about starting a new organisation or resurrecting your Bitcoin Association?

level 2
Original Poster3 points · 4 years ago · edited 4 years ago


level 1
7 points · 4 years ago · edited 4 years ago

There was some girl paid over 100k and her accomplishment was primarily organising 1 conference. She started some ecommerce business totaly unrelated to bitcoin now. Can't remember the details now, anybody know more? Some of the salaries and expenses people paid themselves was basically robbery, even if technically legal. That's my take on it.

level 1
5 points · 4 years ago

What actual work has been done by these people receiving 150k salary?

level 2
Original Poster3 points · 4 years ago

No idea other than the devs.

level 1
5 points · 4 years ago · edited 4 years ago

What about that one girl that does the PR? What a waste of money. Here she is, Jinyoung Lee Englund,Director and Communication for Bitcoin Foundation:

level 2
3 points · 4 years ago · edited 4 years ago

I'd love to know how much she got paid and what did she really get done. It seems bitcoin foundation was just easy money for some.

level 2
Original Poster1 point · 4 years ago

She is not with the foundation and hasn't been since 3 hours after I volunteered

level 1
13 points · 4 years ago

Just let that poor horse DIE already...

level 1
9 points · 4 years ago

Good on you, Bruce. /u/changetip $35

level 2
2 points · 4 years ago

Whoa.. Biggest tip I've seen in a year haha good stuff!

level 2
Original Poster3 points · 4 years ago

Wow, thanks, I'll pay it forward

level 2
0 points · 4 years ago

bruce_fenton received a tip for 81,229 bits ($35.00).


what is ^^ChangeTip?

level 1
3 points · 4 years ago

Metaphorical hookers and blow, or maybe even the real thing, who knows. 150k traveling expenses, 100-150k salaries. LOL. Why does this thing still even exist. Abolish this "foundation".

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Created Sep 9, 2010