EOS Was the World’s Most Hyped Blockchain. Its Fans Want It Back
Block.one’s EOS VC deployed its money through partnerships with other investors, including Novogratz’s Galaxy Digital firm, Asia-based investors Michael Cao and Winnie Liu, London-based fund SVK Crypto, and German firm FinLab. The former Hong Kong-based employee says this was a way to “outsource” the task to these partners, rather than spend time looking for companies using the technology that underpinned EOS, which according to the employee, Blumer regarded as “a distraction.”
“In the crypto space, people using EOS are small companies,” they say. “Brendan wasn’t really interested in doing these small VC deals.”
Crunchbase data and Block.one’s own press releases show that Block.one injected around $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 managing 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 reply to multiple requests for comment.
Following the ENF’s ultimatum, on November 10, Blumer and Pierce flew to Canada to meet La Rose. In a blog post, La Rose says that he kept asking for a part of the ICO proceeds to be given to the ENF, but his requests were “swiftly rejected 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 rescuing EOS through the launch of an investment firm called Helios, which would be endowed with the newly acquired tokens. “I’m no longer a [Block.one] shareholder, which means I don’t have any limitations,” Pierce told WIRED in November. “I’m free to do whatever I think is necessary for the ecosystem at this point. “
However, his status soon became a problem during negotiations. Most of the tokens used to buy out Pierce were still in the process of being vested. “The network believed that those tokens are theirs, and Block.one believed they’re theirs,” La Rose says.
Following weeks of futile negotiations, on December 7, EOS’s block producers enforced a script that stopped the vesting of Block.one’s tokens, including those that had been sold to Pierce, effectively blocking his buyout. Ahead of the decision, Pierce told WIRED that such a move would “have a very negative impact on trust” within the EOS ecosystem, and therefore he expected that it would be called off.
La Rose says Pierce did not take the eventual decision well. “Clearly he wasn’t happy,” he says. “He was pissed off. He made death threats against me.” In an interview he did in late December with blockchain news website Bywire News, Pierce, donning a fedora in a Puerto Rican club while disco music blasted in the background, said he did not recall making threats, but apologized if he did.
“From Block.one’s side the divorce was quite clean,” La Rose says. “They now no longer need to worry about the network, which they didn’t really care about and that was costing them time.” Larimer and other senior developers have now started working on EOS code again, under ENF. The foundation has announced grants for companies creating apps for the network.
The launch of Bullish, in La Rose’s opinion, is Block.one’s greatest coup. “They are essentially getting away with $9 billion,” he says. “And they did it in a legal way.”
On February 10, a post on ENF’s Medium page announced that it had hired a law firm with the goal of “holding Block.one accountable for its past actions and broken promises.” An accompanying tweet by La Rose hammered the concept home. “Review of ALL possible legal recourse to seek $4.1B in damages underway,” it read. “Let’s do this together! #4BillionDAO coming.”
“We’re victims,” La Rose says. “The community is reclaiming the chain for itself.”
Additional reporting by Greg Barber