We have noticed you are using an ad blocker
To continue providing news and award winning journalism, we rely on advertising revenue.
To continue reading, please turn off your ad blocker or whitelist us.
The chief scientist of the Bitcoin Foundation and one of the organisation's founding members, Gavin Andresen, has spoken out about fellow founding members Charlie Shrem and Mark Karpeles, calling their actions "a huge black eye" to the foundation and the cryptocurrency industry.
Gavin Andresen formed the Bitcoin Foundation with Karpeles, Shrem, and three others in 2012 and it soon became the leading advocacy organisation for bitcoin.
In early 2014 Karpeles was forced to resign from the non-profit organisation after overseeing the collapse of the world's largest bitcoin exchange MtGox, which resulted in the loss of millions of dollars worth of customers' bitcoins.
At around the same time, Shrem was indicted on accusations of money laundering in relation to the online black marketplace Silk Road. He is currently serving a two year sentence after pleading guilty to the charges.
Speaking to IBTimes UK at DevCore London, Andresen revealed that the damage caused by the pair resulted in discussions with government regulators being terminated and many of the foundation's projects being cancelled.
"We didn't have enough money to support all the projects we planned last year because, frankly, two of our board members had to resign in disgrace," Andresen said.
"That was a huge, deplorable, terrible hit to the foundation - a huge black eye. If I could go back in time, both of those people would not be on the foundation board.
"It was very damaging. Membership revenue went down and there was a lot of trust we lost. That combined with the huge decline in the bitcoin price made it impossible for the foundation to continue doing all the things it was doing at the beginning of last year.
"It was a huge blow to the foundation's reputation. [Fellow founding member] Patrick Murck had been talking to government regulators and then when a board member for the organisation was indicted for money laundering these conversations just stopped."
Earlier in April, a newly elected board member described the Bitcoin Foundation as "effectively bankrupt" - however, these claims have been refuted by the foundation.
In a blogpost titled The Truth About the Bitcoin Foundation, Olivier Janssens blamed "ridiculous spending" and "poorly thought out decisions" for the organisation's dire financial situation and criticised it for its lack of transparency.
In response to these claims, Andresen told IBTimes UK that he believed more transparency was needed, but the reason for dropping certain projects was primarily a result of its damaged reputation and the falling price of bitcoin.
The Bitcoin Foundation is now focussed on what it calls "core development", having dropped education, outreach, and public policy efforts. This has resulted in it operating on what has been described by one former employee as a "skeletal staff" after the majority of the team resigned.
In reaction to criticism from some within the cryptocurrency community, the Bitcoin Foundation defended its decision to streamline as a logical one.
"It couldn't be clearer. We've found our true calling," a blogpost read. "Our members are signalling that its time to return to our roots and that is to focus on funding the ongoing core development to build out the critical infrastructure that serves as the foundation of this brand new digital ecosystem."