Wired walks decision makers through what is being called “biggest scandal in blockchain history.”
A summarized version of the story goes like this: Among all of the interests that brought them together, bitcoin and blockchain topped the list of couple Kathleen and Arthur Breitman. Problems didn’t pop up until Arthur “essentially consumed the entire Ethereum Blockchain,” an open software platform based on blockchain technology that enables developers to build and deploy decentralized applications.
Along the way, other initial coin offerings (ICOs) started appearing, and established new crowdfunding models. In order to capitalize on this, Arthur and Kathleen created Tezos, a “future-proof smart contract blockchain with a built-in consensus mechanism.” In July 2017, Tezos raised $232 million, and new employees were added to the board.
However, the way Tezos constructed its business attracted the attention of the Securities and Exchange Commission (SEC); the department “launched investigations into the partners and the company and requested they return all the Bitcoin and Ether they received.” Despite arguing that the earned bitcoin was due to donations, Arthur and Kathleen are now defendants in multiple class-action lawsuits from “those people who are looking for relief from some of the ICOs launched with Tezos.”
Takeaways for decision makers:
While this “horror story” of sorts isn’t over yet, decision makers can still use it as an example to take stock in the roles bitcoin and blockchain have on today’s businesses. Specifically, the Bretiman story tightens the lens on the security that is needed in order to conduct business with blockchain and bitcoin. For example, Bitcoin Exchange Guide suggests that most cryptocurrencies are scams; some investors and many banks consider the whole concept of both to be fraudulent.
Before a decision maker opts to include blockchain and bitcoin into their business, they should considering weighing how important it is to be a part of the bitcoin/blockchain craze; what value does it add to the company? Other considerations might include the readability of the cryptocurrency’s code; are there any holes? Is it easy for hackers to crack? Is the security team equipped to handle potential breaches?
In the meantime, decision makers might consider keeping tabs on the Tezos case, and see how it ends.
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