Encryption unicorn, Blockstream, deep into serious fraud

 

This yearBitcoin pioneerAdam BackandOtherCreateYes Blockstream On several occasions, they have stood at the centre of public opinion in the encrypted community。

February, U.S. Department of Justice releasedEpsteinThe relevant documentation disclosed that Jeffrey Epstein had invested in Blockstream through the Joichi Ito related fund in 2014。

In April, The New York Times published an investigative report that will include Adam BackOne of the brightest and most powerful of the inventors of bitcoin。

MEANWHILE, THE BITCOIN TREASURY, WHICH HE IS PROMOTING, BSTR, IS PREPARING TO BE LISTED VIA SPAC。

However, new disputes soon emerged. Early this month, the investigation accountNatInfoSecThis post is part of our special coverage Syria Protests 2011Allegations that Blockstream may be raising billions of dollars from investors in the name of mining revenues, but there are doubts about the real mining and computing support, and the structures are of a Ponzi character。

The article is strongly worded, although some of the inferences are yet to be independently verified, but it raises a few questionsAnd it triggered a market re-examination of Blockstream。

PictureSource:Ri'm sorryi'm sorrytData

 

The chain of allegations: arithmetic, proceeds and disclosure of suspicions

1. Doubts of ability to calculate and pay

This is the strongest financial logic in the entire allegation. NatInfoSec states that to meet BMN obligations currently issued, Blockstream would need to operate more than 20 ETH/s, which would be 35 to 45 ETH/s if the contract buffer clause were to be included in the calculation. However, Blackstream's own dashboard shows that the current real capacity is only 15。

A mine of this size is supposed to appear in the network declaration records of ERCOT in Texas, the power purchase agreement for Quebec hydropower, customs import data for ASIC equipment, the calculation of the mine pool, and the chain coinbase signature。NatInfoSec states that it was unable to find evidence matching the size of the Blockstream paper in the above-mentioned open channels。

In NatInfoSec, it appears that if the mine output does not cover the obligation to pay, the investor must be asked where the BTC eventually came from. In particular, the article refers to the Substitute Performance BTC mechanism in the BMN2 clause, which allows Blockstream to fulfil its delivery obligations under the 48-month contract with the BTC of arbitrary origin, without prior notice, disclosure of origin and no ceiling。

THE ARTICLE ALSO STATED THAT BMN1 HAD MADE UP THE PAYMENT BY BUYING BTC ON THE OPEN MARKET. THIS HAS LED TO A FURTHER SHIFT IN THE CORE ISSUE OF BMN FROM “THE ADEQUACY OF THE REVENUES FROM MINING” TO “VALIDATION OF THE SOURCE OF PAYMENT”。

2. High returns and high-risk obligations

The article mentioned that Blockstream had issued various levels of related instruments through platforms such as STOKR, and that the rate of return had gradually risen from around 9.77 per cent to 18 per cent, with the latest tranche approaching 20 per cent。HoweverI don't knowThe partial maturity arrangement is not a direct repayment of principal but a new instrument rolled into higher proceeds. However, these statements require further verification of the original issuance documents。

IT IS WELL KNOWN THAT BITCOIN MINING IS A HIGHLY CYCLICAL INDUSTRY, WITH REAL-TIME FLUCTUATIONS IN THE PRICE OF MACHINES, GLOBAL COMPUTING, DIFFICULTY ADJUSTMENT, ELECTRICITY, BTC PRICESResultMiningIt's hardExternal commitment to static fixed earnings. About 20 per cent of fixed annualized earnings, in this industry context, require a clear source explanation from the issuer。

Chris Cook and disclosure issues

The most powerful part of the accusation is that it is not possible for the government to take actionIt's about Christopher William Cook。

NatInfoSec states that Cook was a leading director of the Blackstream mining operation and is currently Exacore CEO. ArticlesNoteExacorreYesRelevant operators separated from the Blackstream mining operationOtherAfter examining the U.S. Federal Court recordsFoundCook was sentenced in 2008 by the Federal Court for the Southern District of Florida to 41 months in federal prison for mail fraud, case No. 06-80187, for payment of approximately $18.5 million in compensation。

At the heart of the case was commercial credit fraud: goods valued at over $1.8 million were fraudulently obtained from over 30 retailers through the registration of several shell companies, false financial statements and bank information, and were subsequently resold。

The article states that this conviction was not recorded in any BMN distribution documents. In addition, Blockstream claimed in the marketing materials of STOKR platform that Cook "had served in NASA" but that its actual connection with NASA was only one student visit at the age of 18。

In addition, NatInfoSec provided further leads on Cook House, aircraft, yachts, Trump Media equity investments and a number of vendor litigations in recent years, accusing BMN of financial flows and governance risks。

4. BSTR/SPAC REFERENCE DISPUTE

NatInfoSec also tried to extend the BMN dispute to Bitcoin Standard Treasury CompanyI'm sorryABBREVIATIONS BSTRI'm not sureI don't know. The company is associated with Adam Back, and market information indicates that it is preparing to be listed via SPAC. NatInfoSec challenges that neither Cook ' s conviction record nor BMN ' s large potential liabilities appear in the SEC registration document, and challenges the BSTR governance structure, including Adam Back ' s agreement on behalf of both parties to the transaction, the existence of an equity relationship between the trustee Komainu and Blockstream。

However, this is the most easily refuted part of the entire allegation. The legal relationship, security structure and boundaries of responsibility between BMN, Blockstream, Exacore and BSTR are not clear at this time. There may be an issue of over-push if the relevant instrument is not secured by a group and does not enter the BSTR listed subject directly equates the BMN risk with the BSTR risk。

 

BitMEX cooling, community checking

On June 21BitMEX ResearchA commentary article was published to comb out the charges against NatInfoSec. BitMEX admits that Cook ' s criminal record is probably true and NatInfoSec identified the same person. BitMEX also expressed concern about the rate of return of close to 20 per cent, which required further explanation by the issuer。

However, in relation to several other allegations, BitMEX found that the evidence was insufficient or misleading. With respect to Cook's excursions not disclosed in the BSTR SEC document, BitMEX determined that Cook was not a BSTR director and that mining operations were not expected to be included in the listed subject, and therefore there was no mandatory disclosure obligation. With respect to whether BMN liabilities should be accounted for in BSTR, BitMEX considered that the BMN document contained no group guarantee clause and that the two were legally separate. Allegations of insufficient L-BTC collateral, BitMEXthenthe original quoted data is believed to be from a code error on the liquid.network website, which has been repaired and is now showing normal。

In addition, disputes continue to fertilize at the community level as well. Former Blockstream CSO, current Jan3 CEOSamson MowDefending BSTR narratives on X. In his view, the market should not be focused on short-term disputes, but should see more bitcoin traasury coming in. Mow claims that BSTR is about to enter the market with $1.5 billion and will be an important competitor on the BTC asset accumulation track。

But the opponents soon pulled the problem back to the BMN itself. In response, the famous Bitcoin commentator Matthew R. Kratter directly questioned whether Adam Back's so-called claud Mining Ponzi allegations would affect the start-up of BSTR. He then asked which of the ponds Blockstream was using, whether the outside world could verify the share of the ponds on that basis, and asked for a response to whether Cook background should be disclosed in the SEC document。

Arguments for further upgrading centred on the validation of arithmetic. Mow responded that the so-called claud Mining was not valid and that Blockstream was doing real mining using its own PPA and equipment. He also stated that he had personally processed a $50 million hardware order during his tenure in Blockstream and that serious investigators should look at the mine pool shares from Blockstream instead of ignoring PoW evidence。

However, the challenger did not accept this interpretation. The developer Chris Guida asks where the outside world can publicly verify calculations from Blockstream. In his view, mere knowledge of which ponds are used in the BMN file does not prove that the effective shares in these ponds are indeed from Blockstream, unless Blockstream or the pond publicly points out the relevant calculator sources。

This debate has condensed the core issue of BMN: it is not the only question whether Blockstream has real mining, but whether investors and outside observers can independently verify these calculations, returns and sources of payment。

 

BMN STILL AWAITING ANSWER: REAL ASSETS AND LIABILITY BOUNDARIES

ALTHOUGH THERE WAS A MARKED POLARIZATION IN THE COMMUNITY ' S PERCEPTION OF THE INCIDENT, THE BMN ITSELF WAS NOT DISPELLED. THE MARKET STILL LACKS SEVERAL KEY MESSAGES SURROUNDING THIS MINING INSTRUMENT。

FIRST, WHAT IS THE ACTUAL SCALE OF ISSUANCE, OUTSTANDING OBLIGATIONS AND LIABILITY BOUNDARIES OF BMN。The scale of authorized issuance, the actual size of issuance, the amount outstanding, the maturity structure and the associated guarantees are not the same. The market needs to know which of the main subjects is the risk of this mining instrument spilling over to Blockstream or other associated companies。

Second, whether or not the mine calculates to support the payment expectations。If the publicly visible location of the mine, the power contract, the size of the mine, the return from the mine and the historical output cannot be matched to the size of the issuance and the payment arrangements, the outside world naturally wonders whether the proceeds come from real mining or other sources of funding。

Third, close to 20% of the fixed proceeds are exactly where they come from。High returns per se do not amount to fraud, but in a strong-cyclical industry it must require greater transparency。

FOURTH, WHETHER THE BTC OR L-BTC PAID BY THE INVESTOR CAN BE VERIFIED。If BMN’s payments relate to L-BTC on the Liquid network, transparency on the chain, peg-out risk and proof of reserves will be a real concern for investors。

Fifth, what is the relationship between actual competence and benefit in Cook in BMN and Exacore。The importance of disclosure increases if it is central to the design of funds, mine assets or instruments。

These questions do not at this time provide direct evidence of fraud in Blockstream, but..ObjectiveLookI don't knowAs a mining paper product for investorsIts high premium yieldThere are more obvious risksI don't know. That makes..BMN ON ACTUAL SCALE, USE OF FUNDS, SOURCES OF PROCEEDS AND GOVERNANCE DISCLOSUREStillA lotYesSpace for further explanation。

As atSubmissionThe Blockstream official has yet to issue a systematic response to the dispute。