The Bitcoin Foundation (TBF) is enduring a member exodus following the election of one-time Disney star and Bitcoin entrepreneur Brock Pierce as its latest director.
According to Reuters, the organization's push for widespread adoption of cryptocurrency Bitcoin has caused mutiny in the Bitcoin Foundation's camp, and at least 10 members have resigned over the new director's appointment.
The nonprofit is the closest Bitcoin has to a regulatory body. The organization uses the slogan "Freeing people to transact on their own terms," and the group's aim is to standardize, protect, and promote the use of Bitcoin worldwide. TBF is also involved in lobbying as authorities grapple with ways to control the cryptocurrency.
However, Bitcoin has received less than positive press this year. The once-dominant Bitcoin exchange on the Web, Mt. Gox, shut unexpectedly in February. The founder and CEO Mark Kapeles said the exchange had been hit by cyberattacks that caused Mt. Gox to go bankrupt, leaving thousands of investors out of pocket. Following the closure of Mt. Gox, a number of other exchanges have closed, and both Russia and China have closed the accounts of Bitcoin traders, which has severely hampered the integration of Bitcoin as a legitimate currency.
The resignation of so many members of the Bitcoin Foundation is unlikely to help matters. Within the foundation's forum, members cite a number of reasons for their departures, including Brock Pierce being associated with alleged pedophilia, detailed in lawsuits from Pierce's first company — the bankrupt Digital Entertainment Network — where, former employees claim, drugs were issued and Pierce pressured minors for sex.
Pierce denied these allegations, which first came to light in 2000.
One member, Patrick Alexander, writes:
This is not the direction this foundation needs to take. The foundation members need to emulate very high moral values and ethics in business and in personal dealings, especially as it involves money. So far, the track record of prominent Bitcoin Foundation members has been abysmal. I know that most foundation members are probably swell people and are not like this. However, the acts of a few have overshadowed us all unfortunately.
I no longer want to be associated with these people.
Complaints made by TBF members go beyond the case. It appears that doubt cast on Pierce's character also proved to be a catalyst for highlighting other problems within the organization, including a lack of transparency, meeting data and no "good character" vetting process for future board candidates. Another member commented:
The board has made repeated hollow promises about transparency. It's been a year, and the only transparency the foundation has created has been the illusion of transparency at the expense of the forum using members by turning their private communications public overnight and zero transparency on the board itself. There are no financials. There are no minutes. There is no record of how board members are voting — and which ones are even participating.
Bitcoin Foundation General Counsel Patrick Murck said TBF accounts for over 1,500 members, and while "democracy is messy sometimes," suggestions to make future board elections better are welcomed.
Pierce was elected by the group's industry members who pay higher fees. He was considered for one of two positions vacated by Kapeles, who is undergoing questioning following the closure of Mt. Gox, and Charlie Shrem, who has been charged with conspiring to launder money in connection to the Silk Road marketplace, now closed by US authorities.