The NEM Foundation, a community-funded nonprofit established to promote the NEM blockchain, is planning layoffs across its entire 150-person staff in the wake of severe budget cuts and ahead of an imminent restructuring, CoinDesk has learned.
The newly elected president of the NEM Foundation, Alex Tinsman, told CoinDesk Wednesday the Singapore-based NEM Foundation now intends to submit a funding request to the NEM community fund for 160 million tokens (worth roughly $7.5 million), money that would be used to rescue the organization.
NEM tokens are listed under the XEM ticker with a circulating supply of 9 billion, according to CoinMarketCap. At press time, XEM is the world’s 18th largest cryptocurrency by market capitalization.
“Basically we realized we had a month to operate, due to the mismanagement of the previous governance council,” Tinsman, who took over the non-profit in January, said in an interview.
As a result, the foundation’s 202 members – people who undergo identity checks and pay an annual $50 membership fee – will be asked to vote on the funding request in February after it's published on Thursday. The number of layoffs will be determined by how much funding the community approves, Tinsman said.
NEM's XEM token launched in 2015 under the guidance of former foundation president Lon Wong. The cryptocurrency is primarily used for transaction and service fees on the NEM blockchain. The full launch of the platform’s native engine software, called Catapult, is scheduled for later this year. In the meantime, NEM pilot projects have often focused on use cases such as voting.
Indeed, Tinsman herself was elected in a process that used NEM’s platform.
Tinsman said the foundation spent roughly 80 million XEM between December 2017 and January 2019, primarily on marketing. (Wong did not respond to requests for comment about the foundation's spending.)
“We’ve reduced marketing activities because it doesn’t make sense to market a product [Catapult] that isn’t out yet,” Tinsman said.
According to a longtime NEM user, a developer who asked to stay anonymous because he worked directly with departed leadership, Wong faltered when he used his visibility at the foundation to promote “sketchy” initial coin offerings such as Ecobit and ProximaX.
The ProximaX token sale reportedly raised more than $33 million in 2018 and the company’s website lists Wong as the CEO. The anonymous developer said “the community felt this was a breach of faith,” adding there is still a great deal of work to be done in order to encourage developers like himself to actually use the blockchain.
“There’s not a whole lot of people working on this platform. Even though it's easy, the community isn’t really there unless you go to Japan,” the developer said. “We need more developer traction on this platform.”
Tinsman, a former communications executive at the foundation before 148 registered members elected her to lead the nonprofit, is embarking on a much more disciplined roadmap for 2019.
She said teams will be given specific budgets and required to perform more open-source documentation of their progress making tools for the NEM ecosystem.
“The community will also be voting on these [funding requests] and which ones we should be moving forward with,” she said.
Tinsman further plans to monetize the foundation’s activities in 2019, including enterprise training and affiliate marketing, to reduce the nonprofit’s reliance on community grants.
She described the restructuring as a “positive step,” adding:
NEM conference booth image via the NEM Foundation.
UPDATE (31, January 15:00 UTC): The headline for this article has been updated to more accurately describe the NEM Foundation's financial situation. It is running low on cash, but that does not necessarily mean it will seek bankruptcy protection from creditors.
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is an award-winning media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. In November 2023, CoinDesk was acquired by Bullish group, owner of Bullish, a regulated, institutional digital assets exchange. Bullish group is majority owned by Block.one; both groups have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary, and an editorial committee, chaired by a former editor-in-chief of The Wall Street Journal, is being formed to support journalistic integrity.