From Mar-a-Lago to Coinbase, Dubious Claims Follow Doc.com Token Sales
A CoinDesk investigation reveals that health startup Doc.com has used overstated claims to gin up investor demand.
A health startup tied to a public cryptocurrency is using overstated language about some of its industry relationships and its affiliation with crypto exchange Coinbase as it seeks to sell tokens to investors, a CoinDesk investigation has found.
Mexico City-based Doc.com, which offers an app that provides healthcare and psychology consulting to underprivileged communities, also features a built-in wallet for the startup’s cryptocurrency, MTC. The venture-backed startup raised over $1.8 million in an initial coin offering (ICO) in 2018, then integrated MTC into its app in July of that year as part of a rewards program meant to incentivize users to sell their health data for tokens.
Yet, Doc.com has continued to sell its tokens – $49 million worth in total – even after its ICO at events like the Wall Street Conference at Donald Trump’s Mar-a-Lago resort in Florida, held on January 15. The startup said it plans to release these tokens in an airdrop to the public before April when the company switches to a proprietary blockchain called Lifechain.
At Mar-a-Lago, Charles Nader, CEO of Doc.com, pitched token investment opportunities to hedge fund representatives and family offices gathered to hear from notable entrepreneurs like Brock Pierce, showing a pitch deck that included at least two claims that have been substantially debunked by further CoinDesk inquiries.
Most notable is the inclusion of Mozilla CEO John Lilly and LinkedIn founder Reid Hoffman on a page of advisors and mentors.
Lilly told CoinDesk he doesn’t have any relationship with Doc.com, while Hoffman’s venture capital firm Greylock Partners told CoinDesk Hoffman has no formal advisory relationship with Doc.com, though Nader was a student of a Stanford course taught by him.
Positioned as a means to provide free healthcare to people who might otherwise be unable to access it, the Doc.com project has attracted interest from organizations like the United Nations Office on Drugs and Crime as well as private investors.
But the way the platform functions has raised questions about its token rewards and the security of its users’ health data.
Alex Gladstein, chief strategy officer at the Human Rights Foundation, told CoinDesk: “This project deserves a lot of scrutiny and has a lot of red flags.”
On Telegram and Instagram, Nader has also released vague statements about “support” from organizations like Coinbase and Forbes México, which refers to the company as Docademic in a recent cover story about the startup.
Yet in a private message to CoinDesk, Nader clarified there haven’t been any formal discussions about listing the token on Coinbase and that Doc.com is just a custody customer of the exchange. Being a custody customer of the exchange simply means the startup pays for Coinbase to support custody options for its assets.
Coinbase declined to issue a public comment for this story.
Further, on the company’s social media channels users have been actively discussing a potential listing on Coinbase, which Nader and his team have not responded to despite engaging directly with fans about numerous other topics.
Some market observers, such as Gladstein, believe Doc.com has come to encapsulate many of the ethical complexities involved with token sales, suggesting that the dynamics behind the 2017 crypto market boom haven’t faded along with the market itself.
Nader said MTC tokens can be used to buy access to healthcare data from more than 141,000 people who already downloaded the startup’s app. Users are said to be paid small amounts of MTC to anonymously release their healthcare data for resale.
Plus, Nader has also said his startup is partnering with the United Nations Office on Drugs and Crime to combat recidivism by expanding its free psychology consultations and other services to Kenya by April.
“We are planning to collaborate with Doc.com, with their new technology to be able to provide free healthcare in Africa,” Wambui Kahara, who serves as a United Nations Office on Drugs and Crime advisor in East Africa, told CoinDesk. “And also to be able to use research to inform governments and others on how to better prevent diseases.”
The UNODC did confirm Kahara's role at the organization but did not respond to a question about its work with Doc.com.
“We monetize that data and sell it to governments and pharmaceutical companies,” Nader told CoinDesk, adding that users can spend MTC on the app to pay for specialist services beyond the free, basic sessions.
Others in the non-profit community, however, are wary of such initiatives. For example, Gladstein of the Human Rights Foundation told CoinDesk he is deeply troubled by the structure of of Doc.com’s token economy.
“There are serious concerns about companies buying medical data from vulnerable populations,” Gladstein said in interview. “If the security model isn’t super strong, there’s potential for abuse.”
Gladstein went on to describe Doc.com as a hotbed of “red flags.” One such concern is that Doc.com has not yet published technical documentation for the upcoming Lifechain ecosystem on open source sites like GitHub.
Nader told CoinDesk there were plans to audit the code “at some point,” without specifying concrete plans with any firm or group.
Another “red flag” noted by Gladstein is that conversations in the company’s social channels are primarily focused on the startup itself and the asset’s trading potential, not app users.
Cryptocurrency promoter John McAfee is listed as one of the startup’s advisors and has been encouraging his Twitter followers to support MTC adoption since last February. One such tweet claimed the tokens could soon sell for $10 each, while another dubbed it the “King of Crypto” assets.
Spending a day with @officialjohnmcafee he gave me a commemorative Doc.com (Docademic) token made out of real gold. It’s worth about $20,000 USD. So proud of our services. Try our free basic healthcare services at Doc.com already in 24 countries and growing! Thousands of lives saved and positively transformed by @doc.comhealth @docemotions
The company’s pitch deck presented at Mar-A-Largo promised investors the likelihood Doc.com tokens would increase in value “is much higher” than bitcoin because the tokens “are used to view healthcare data and linked to real users in the platform that need it.”
Nader also told CoinDesk the value of this token would rise as “demand for the data goes up.” However, the Mexico City-based team isn’t concerned that U.S. regulators could see MTC as an unregistered security even though the company claims to have roughly 20,000 app downloads in Florida.
“It’s a utility token, it’s not a dividend,” Diaz told CoinDesk. “It’s a representation of the data that is being processed on the blockchain.”
Although it’s not clear that any users of the company’s app are posting comments about Doc.com on social media, there are some user reviews of the Doc.com mobile app. However, it’s hard to say how many of the user reviews related to the mobile app are genuine since many are anonymous. And in one instance, CoinDesk identified that Doc.com CTO Arturo Diaz left a positive user review of the app on Google Play without disclosing his involvement in the project.
Beyond technical infrastructure, the Human Rights Foundation’s Gladstein said that paying the participants in local fiat currency or bitcoin would alleviate some of his concerns about the token’s usability.
Otherwise, he said, users are trusting the startup to control this token’s inflation so they can actually afford to buy medical services with their token rewards, regardless of external trading.
While CTO Diaz says the new Lifechain system will offer some form of built-in inflation control, Gladstein said he was still “very concerned” that users may not “actually understand what is going on.”
Still, Doc.com believes it has answers to these questions.
The in-house blockchain system Lifechain, which Diaz said his team developed from scratch over the past few months, would be responsible for safeguarding the privacy and consent dynamics of selling users’ healthcare data.
“All the information that you put in the application is encrypted into our health records database,” Diaz said. “You cannot share information from patients without their consent. This [for enterprises] is mostly statistical data, like how many cases of flu happened around this area for males or females.”
So far, Diaz said he’s not familiar with concrete plans to run mining operations or nodes, which will purportedly be powered by proof-of-work, a system wherein any participants are responsible for contributing computing power to ensure record-keeping for the decentralized ecosystem.
“We’re going to look for whoever wants to be the main nodes,” Diaz said, adding that he assumes there is someone at Doc.com speaking to organizations about nodes and mining, because they don’t plan to run that aspect of the infrastructure themselves. “That [mining] is something that I don’t think we are going to get into right now.”
Nader said they are pursuing a relationship with a mining company, plus he believes other miners and node operators will organically rise up from the “community” on Telegram, Twitter and Reddit. But Nader also could not name any specific partners committed to helping run the network scheduled for imminent launch.
“This system is currently much more secure, transparent and vastly better than what is currently available,” he said. “Patients are even getting paid for their data, unlike almost all of the world’s healthcare system.”
“You don’t have to think about it as your data, you can think about it as macro data,” Naos Blockchain Capital co-founder Abraham Cobos Ramírez told CoinDesk. “We believe that Doc.com is one of the few crypto projects today with a social mission that already has a working prototype.”
Support from the United Nations, and the prospect of a future listing on Coinbase gave these Naos Blockchain Capital investors confidence in the lucrative potential of this startup’s crypto asset. And, thanks to Coinbase, institutional investors can now hold MTC with a regulator-approved custodial service.
Speaking to Doc.com’s global expansion beyond Latin America, Kahara said:
Update (Jan. 31, 13:40 UTC): Updated with additional information from the United Nations Office on Drugs and Crime.
Image of (left to right) billionaire Sandro Salsano, Doc.com CEO Charles Nader and Forbes Latin America Chairman Mariano Menéndez at Mar-a-Lago via Doc.com
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.
Learn more about Consensus 2024, CoinDesk’s longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.