At IOTA, the launch of Upgrade Chrysalis technically went off without a hitch. But a proposal from the IOTA Foundation on how to deal with certain large balances understandably infuriates co-founder David Sønstebø.
Actually, the IOTA Foundation had expected positive press for the day after the big upgrade Chrysalis. But in the midst of this optimism burst a Twitter message from IOTA co-founder David Sønstebø. In it, he announces a “very dirty and long legal war” that will involve “everything from IOTA’s past.” What’s going on at IOTA again, observers are asking.
Today should have been a celebration for the IOTA project and community, instead we are currently witness to what will unfortunately be a very dirty and lengthy legal battle, which will also include everything in IOTA's past. It's truly sad to witness how self-sabotaging this is.
— David Sønstebø (@DavidSonstebo) April 28, 2021
What is the renewed power struggle at IOTA about?
The founders of IOTA have been at odds for quite some time. This was initially expressed after the departure of CFB Sergey Ivancheglo in early 2020 by the latter bringing lawyers against David Sønstebø. It quickly became clear that millions of dollars in IOTA were at stake, from the startup phase but never claimed by early investors. “Unclaimed tokens” is the name given to these holdings in IOTA. Until now, it was assumed that only Sønstebø personally had access to these IOTA, 65 million Ti are said to be worth well over 100 million euros at current prices.
David Sønstebø was kicked out of the IOTA Foundation against his will in December 2020, but behaved conspicuously quiet afterwards. In recent days and weeks, Sønstebø had even stirred the advertising drum for IOTA again via Twitter. Since yesterday, this has abruptly come to an end and Sønstebø sees a “tragedy” ahead for IOTA. The reason for this can be found in a surprising announcement of the IOTA Foundation from yesterday, in which it addresses the topic of “unclaimed tokens” very innocently at first glance.
Without even mentioning the names CFB or Sønstebø and Sums, the IOTA Foundation simply talks about it being time to decide on these “unclaimed tokens”. To this we must know that in reality this also means: the IOTA Foundation has apparently frozen the addresses in question and will not allow any automatic transfer from them to the new IOTA 1.5. This means that Sønstebø has lost access to the reserves. Such a handling of old balances under IOTA 1.0 had not been announced by the IOTA Foundation at any time in the public information about Chrysalis. This makes it clear why Sønstebø’s hat is popping off.
What does the IOTA Foundation have in mind regarding the “unclaimed tokens”?
Wordily, the IOTA Foundation is promoting transferring the “unclaimed tokens” to a new account that would operate under “IOTA Community Treasury” after a yet-to-be-organized vote in mid-June. Other crypto projects such as Polkadot (DOT) have had good experiences with such reserves, the use of which is decided by the community.
If this proposal does not find a majority, there will be a hard fork at IOTA, according to the IOTA Foundation. This would split the Tanglenet into two incompatible versions. IOTA 1.5 would then have the support of the IOTA Foundation and also carry the most capital. The alternative IOTA would then be called IOTA Alternative Solution aka IOTA AS. Sounds logical, but can also be interpreted as an attempt at blackmail. Because IOTA assets under AS are likely to lose value rapidly, the foundation is reminiscent of such situations as with Ethereum Classic and Bitcoin SV, which separated from their origins through hard forks.
IOTA foundation with poisoned proposal on “unclaimed tokens”
Per Twitter, not only the well-known IOTA critic Hund sees the IOTA Foundation’s approach to “unclaimed tokens” as a silent theft – and Hund’s first goal was always to bring Sønstebø down. Others also recall the iron principle for cryptocurrencies: “Your passwords (keys), your credits.” This is overturned with IOTA Foundation’s method if the “unclaimed tokens” are funneled into a community treasury. IOTA can organize this because a central coordinator in Tanglenet still allows intervention in transactions – and behind the coordinator is the IOTA Foundation. IOTA AS as a supposed alternative is witless, as this would foreseeably cause values to decay rapidly.
What’s next for IOTA?
Sønstebø writes that he will soon publish a comprehensive statement on the events surrounding the “unclaimed tokens”. Then it will be the turn of the German authorities and the lawyers of the IOTA Foundation, Sønstebø says. As a reminder, the IOTA Foundation is recognized as a non-profit and is based in Berlin. Sønstebø is still likely to have detailed knowledge and evidence of how this actually really went down in 2015/16 with the initial funding of IOTA and the company firm Jinn Labs before that. Even if many in the IOTA community are basically of the opinion that the “unclaimed tokens” from that time are actually morally not entitled to any individual, this could look different from a legal point of view. After all, there may be a reason why the IOTA Foundation downplayed the issue for years and never really wanted to resolve it. The unique opportunity to basically create facts about the “unclaimed tokens” through Chrysalis aka IOTA 1.5 has now been technologically seized by the IOTA Foundation.
Conclusion: IOTA – the never-ending dispute about money and power
You don’t have to be a friend of Sønstebø at all to understand his outrage and consequent ruckus. He writes himself that yesterday should have been a day of celebration for IOTA because of the long-awaited technical progress with Chrysalis. But what the IOTA Foundation instigated there yesterday in parallel could also be called expropriation. By the way, the blog post of the IOTA Foundation about the “unclaimed tokens” is not signed by anyone’s name, which is absolutely unusual there. But those who know their way around IOTA also know: without the okay of IOTA co-founder Dominik Schiener, the push would not have been published. Schiener has de facto unrestricted power at the IOTA Foundation after the departure of Sønstebø and CFB. At IOTA, power struggles, backbiting and the quarrel about money are once again in the public eye, while the developers should be thanked for getting IOTA 1.5 up and running.
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