Bitcoin Foundation Divided Over Controversial Restructuring Proposal

The Bitcoin Foundation board of directors is currently divided on a proposal that would see it split into two separate entities.

AccessTimeIconApr 7, 2015 at 3:04 a.m. UTC
Updated Apr 10, 2024 at 2:59 a.m. UTC
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Bitcoin Foundation
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Less than six months after the Bitcoin Foundation announced its intention to focus solely on core development, it is once again at a financial and existential crossroads that finds the future of the trade organization shrouded in uncertainty.

Though much about the situation remains obscured by argument, current board members, core developers and the group’s interim executive director Patrick Murck agree that, at the very least, the Bitcoin Foundation will no longer be best positioned to continue financing bitcoin development in current form.

At issue, however, is the present state of the organization’s finances, the actions that have been taken by an outspoken board member to alert the public of the issue and how the group could move forward given the level of distrust among key members.

First prompted by a 4th April post, the recent debate was triggered by board member Olivier Janssens, who called the Bitcoin Foundation “effectively bankrupt” and encouraged readers “not to fall for” attempts by the organization to control the message regarding its balance sheet.

Janssens wrote:

”The lesson for all of us in bitcoin is to never put any trust in a centralized organization again that wanted to represent bitcoin or the core development of bitcoin.”

Though greeted with enthusiasm on social media forums, Murck indicated his belief that this weekend’s post, and the conflict that ensued, undermines the organisation’s viable business operations. These include its recently launched conference series effort DevCore, which he suggested could now be unable to garner sponsorships due to in-fighting.

Murck told CoinDesk that though he had already planned to step down as interim executive director, he will be volunteering his time toward the role until such time as the board of directors elected a new appointee to the position.

Janssens had previously campaigned on a platform that was openly critical of the organisation’s approach to transparency and past conduct, having launched efforts to replace the foundation with innovations such as the decentralised crowdfunding platform Lighthouse.

A promotional body

One path forward has so far been put forward by Murck, who outlined a proposal to pivot the foundation toward becoming a more general interest and advocacy group in a board meeting on 17th March, though this has not been without contention.

According to a newly released proposal dated 5th March provided to CoinDesk by the Bitcoin Foundation, the group envisions splitting into two separate entities charged with supporting bitcoin core development and promoting bitcoin more broadly, respectively.

"To continue funding an engineering team within the Foundation, we will need a significant infusion of cash or potentially be insolvement in ~8 weeks," the proposal reads.

Murck told CoinDesk that he believes such a pivot would be a practical business idea due the concerns donors have expressed about the foundation being responsible for bitcoin development.

Notably, the proposal suggests that the IRS may be reconsidering the group's status as a 501(c)6 organization due its support for the bitcoin protocol. Murck indicated that the measure will need to be approved by a majority board vote.

Need for a new entity

Murck also spoke about the foundation's need to break off its core development business due to feedback from the community.

An insurmountable issue that arose, according to Murck, is the structure of the foundation itself, which must change its board members after two-year terms.

“[Donors] were concerned that the foundation was structurally broken, that if they gave money, then two months from now, the board would just suddenly change its mind and do something completely different. That wasn’t something that we could solve,” Murck said.

The proposal calls for Murck and Andresen to take the lead on funding the new core development entity, which aims to raise $2m in seed capital. However, Murck suggested that current in-fighting at the organisation has so far prohibited any action on this front.

Murck suggested that such criticisms were larger than single board members, though recently elected individual members Jim Harper and Janssens both considered themselves to be change candidates who were critical of this mission.

Debate ignited

It seems that, as of now, key members within the Bitcoin Foundation are taking sides based on how the situation has so far been handled.

Murck, along with other Bitcoin Foundation members, have accused Janssens of spinning a situation that was soon-to-be announced to his own advantage, a charge that he denies on the basis of transparency being a key aspect of his election mandate.

The Bitcoin Foundation has said that the organisation’s annual financials were to be released this week, along with an announcement about the proposed pivot. Still, the interpretation of these planned events remains contentious on ideological lines.

“Their biggest argument will probably be that I released ‘prematurely’ and they would tell the truth in due time, because this would allow the organization to survive. I felt that was deceptive and dishonest,” Janssens told CoinDesk. “Basically that means they were hiding the truth from their members to be able to survive.”

As to whether Janssens may have violated any fiduciary duties to act in the best interest of the foundation, Janssens has found an ally in Harper.

“A board member gets to participate in setting the direction of the foundation, and we came to the board with a view of what the foundation is supposed to do and how the foundation is supposed to do it and holding that view doesn’t violate our duty of care to the board,” Harper said in an interview.

Harper previously served as the foundation’s general counsel through November 2014, when he was laid off amid an initial wave of staff cuts.

The Bitcoin Foundation declined to provide information related to its current staff levels.

Board gridlock

Already, Janssens and Harper paint a picture of deep divisions at the Foundation, with Harper questioning if a proposal to shift the direction of the organization was formally heard as suggested.

“Patrick put forward a number of documents and there was some discussion among members around some things. But I wasn’t satisfied that there was a proposal put forth,” Harper said.

Harper called this disagreement an example of the “ad-hoc” nature by which foundation business is being conducted, suggesting that the Bitcoin Foundation is currently behaving in a way that is inconsistent with non-profit board norms.

Both Harper and Janssens indicate that their proposal to publish meeting minutes, with certain sensitive materials redacted, was “largely ignored”, something both said have contributed to frustrations.

Conversely, Murck alleges that Janssens has been unwilling to offer proactive solutions to the challenges at hand. In particular, he struck back against the claim that the foundation had fired most of its staff as “not truthful”.

“Saying that the foundation is bankrupt is totally wrong. Saying that the foundation over the long run this isn’t sustainable, that’s a different thing,” he added.

Core development cut off

Regardless of Murck’s proposal, core developers supported financially in full or in part by the foundation, including Gavin Andresen, Wladimir van der Laan, Cory Fields and Sergio Lerner, may be already seeking funding elsewhere for their work.

Speaking to CoinDesk, Andresen indicated that he is no longer on the foundation’s payroll as of 1st April, but that he remains a part of the organisation as an advisor and volunteer.

As for paths forward, Andresen indicated that both he and the other former staff developers would seek to “not get too distracted” by what he characterized as “drama”.

However, he provided some comment that suggested core development may be being used as a political football in a larger debate.

“I will say that it is nice so many people are concerned about how Wladimir and Cory and I will make a living, but in the end it is up to us, individually, to decide what is best. Sometimes it feels like ‘the bitcoin community’ expects to micro-manage our professional lives ‘for the good of bitcoin’, but that isn't how open-source projects work,” he continued.

Core developer Jeff Garzik provided his support for this viewpoint in statements, suggesting that bitcoin development should be funded in a decentralised manner by private companies.

“People – not just Olivier – want to create some anointed organization for anointed individuals when it doesn't really work that way,” the developer, who works full time at BitPay, added. “Decentralized, open-source development means many people at many organizations.”

Other board members including venture capitalist Brock Pierce; BTC China CEO Bobby Lee; BitPay account manager Elizabeth Ploshay and Ribbit Capital’s Micky Malka were unresponsive to press requests or offered no comment for the report.

Chess image via Shutterstock


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