Block.one’s EOS VC has staked its money through partnerships with other investors, including Novogratz’s Galaxy Digital company, Asia-based investors Michael Cao and Winnie Liu, London-based fund SVK Crypto and Germany’s FinLab. The former Hong Kong employee says this was a way to outsource the task to these partners, rather than spend time looking for companies that use the technology underlying EOS, which the employee Blumer says is considered “a distraction”.
“In the crypto world, people using EOS are small businesses,” they say. “Brendan wasn’t really interested in doing these little VC deals.”
Crunchbase data and Block.one’s own press releases show that Block.one has injected approximately $675 million into the partnerships. But the whereabouts of some of the funds are unclear: $50 million invested in a partnership with TomorrowBC — a company run by Derek Rundell, a director of Eric Schmidt’s TomorrowVentures — has not been used as of 2022, barring a $750,000 investment in crypto trading startup LogosBlock , according to PitchBook data. Rundell and Schmidt did not respond to multiple requests for comment.
Following the ENF’s ultimatum, Blumer and Pierce flew to Canada on November 10 to meet La Rose. In a blog post, La Rose says he kept asking for a portion of the ICO proceeds to be given to the ENF, but his requests were “quickly turned down each time.”
Just before the meeting, Block.one had transferred some 45 million EOS tokens (worth $216 million at the time) to Pierce, in exchange for his stake in Block.one. On Twitter, Pierce suggested saving EOS by launching an investment company called Helios, which would be endowed with the newly acquired tokens. “I am no longer a [Block.one] shareholder, which means I have no restrictions,” Pierce told WIRED in November. “I am free at this point to do whatever I think is necessary for the ecosystem. †
However, his status soon became an issue during the negotiations. Most of the tokens used to buy out Pierce were still in possession. “The network believed those tokens were theirs, and Block.one believed they were theirs,” says La Rose.
After weeks of futile negotiations, EOS’ block producers enforced a script on December 7 that halted the vesting of Block.one’s tokens, including those sold to Pierce, effectively blocking his buyout. . Prior to the decision, Pierce told WIRED that such a move would “have a very negative impact on trust” within the EOS ecosystem, so he expected it to be called off.
La Rose says Pierce didn’t make the final decision right. “He was clearly not happy,” he says. “He was angry. He made death threats against me.” In an interview he did with blockchain news website Bywire News in late December, Pierce, who wore a fedora at a Puerto Rican club while disco music blared in the background, said he didn’t remember making threats, but apologized if he did.
“On Block.one’s side, the separation was very clear,” says La Rose. “They don’t have to worry about the network anymore, which they didn’t really care about much and that cost them time.” Larimer and other senior developers have now resumed work on EOS code, under ENF. The foundation has announced grants for companies that make apps for the network.
The launch of Bullish is Block.one’s biggest coup, according to La Rose. “They essentially get away with $9 billion,” he says. “And they did it in a legal way.”
On Feb. 10, a post on ENF’s Medium page announced that it had hired a law firm to “hold Block.one accountable for its past actions and broken promises.” An accompanying tweet from La Rose hammered home the concept. “Reviewing ALL possible legal remedies to claim $4.1 billion in damages,” it read. “Let’s do this together! #4BillionDAO is coming.”
“We are victims,” says La Rose. “The community is reclaiming the chain for itself.”
Additional reporting by Greg Barber
