An unfolding saga

I’m sure by now everyone in the EOS community has heard about the EOS Network Foundation’s (ENF) plans to take Block.one to court for their actions and promises made to the community. However, it seems that not everyone is in agreement on whether this would be a good move by the ENF, especially at this point in time where EOS is on a strong rebuilding phase. But then again this “rebuilding phase” could be the perfect time to do this.

The EOS Network Foundation has a responsibility to the EOS network first and foremost, and by association that includes the network’s community as there would be no network without the community. At the present time that network is largely made up of individuals who participated in its token distribution event 4 years ago, many of whom were led to believe that the project would take on others in the industry in line to becoming a global leader in the blockchain space. A process which most believed would be funded with the money raised from the largest initial coin offering (ICO) to date.

*“The thesis behind our token sale was to take that capital that was normally used to create tokens and then divert it back to the developers that are spawning the next generation of innovation.”* – Brendan Blumer (Block.one CEO)

Before and during the token distribution event for EOS, Block.one were doing a lot of marketing and promotion of EOS, so much so that their efforts generated a record-breaking $4 billion in raised funds in a year. Soon after that the marketing and promotion of EOS started to diminish and the new focus quickly became in building their private company – Block.one, setting up offices in different countries and hiring top talent from all over the world many of whom knew little to nothing about blockchain nor would they be working on it.

Meanwhile the community was being made promises that this was in their best interest because a stronger Block.one means they’d be more effective in advancing the EOS network through various initiatives and products. Though in reality it seems the only instances where Block.one is effective is when they do something that’s going to be beneficial to them. We saw just how effectively they settled their case with the SEC.

Block.one broke records again when they bought the ‘voice.com’ domain for $30 million to build a social networking site which they claimed would be built on EOS to benefit its token holders. And although the large majority of the $1 billion distributed through EOS VC funds has not benefited the EOS community, those funds are still active investments in projects that are now building on other blockchains and could still provide profit for Block.one. A further $150 million was invested in Voice to fund its operations.

Voice has since pivoted from its initial intentions to be a social networking platform instead it is now an NFT platform, and there’s no mention of plans to ever utilize the EOS blockchain. There’s so much activity and funding from Block.one going to so many different places but to the EOS community. It would be tough to dispute any claim that Block.one has some vendetta against EOS, considering its actions for these past four years. This is precisely why the community feels cheated by Block.one, thus its consideration of taking legal action.

Perhaps it was somewhat of a foretelling statement when Block.one CEO made this statement in reference to centralized tech giants like Facebook and Uber:

*“I’m a big believer that the blockchain is empowering communities to disrupt the company and over time you’re going to see these communities really start to pick off the largest tech organizations in the world.”* – Brendan Blumer (Block.one CEO)

For the first time in years the EOS community is really starting to feel empowered to take matters in its own hands; to take charge of its destiny.

In spite of all of this there are certain parties, who are financially well off regardless of whether or not EOS is a success, suggesting they are the biggest victims from all of this. When in reality there’s a greater number of individuals who’ve poured their life savings into EOS, some of whom left other opportunities to work on the EOS project and it’s felt like they’ve been working backwards ever since its 2018 launch.

For the first time in years it is now starting to feel like progress is being made again in the network’s growth and success. Which is where the debate of whether or not this is the right time to be starting legal wars just when EOS was beginning to build momentum. Not forgetting that a big reason for this positivity towards the network’s prospective growth and success is because of the work the ENF has been doing ever since it was founded 7 months ago.

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Can EOS survive a legal battle with a multi-billion-dollar company?

Things get even more interesting with the possible ENF lawsuit against Block.one. It is a known fact that Block.one has one of the strongest legal teams in the industry. The same team that negotiated a lesser settlement with the SEC than they paid for a domain name. A team that has been there since the beginning to guide Block.one every step of the way to ensure they don’t do or say anything that might implicate them in a court of law.

Every move Block.one has made thus far has been a calculated one. Even in those many instances when they would make statements regarding their involvement with EOS but had to phrase them a certain way to “comply with regulations” so as to avoid having EOS labeled a security or a centralized entity. It seems that those statements work both ways because it now provides them with plausible deniability.

For instance, the very same quote that I used earlier to highlight one such statement about the company’s promise to the EOS community doesn’t really state that the $4 billion they’ve used will be used for EOS projects.

*“The thesis behind our token sale was to take that capital that was normally used to create tokens and then divert it back to the developers that are spawning the next generation of innovation.”* – Brendan Blumer (Block.one CEO)

When analyzed; all this statement says is that funds they gained from the sale of the EOS tokens are compensation for the tokens/software they created, but they’ve decided (since they raised too much money?) to divert those funds back to next generation innovations i.e., the EOS VC fund or their newest multi-billion-dollar venture Bullish. Is it fair that the EOS community received almost none of those funds? No. But is it illegal? Well, that’s the argument, isn’t it? But if they never made any promises to directly invest in EOS, then it becomes a difficult case to convince a judge that Block.one is guilty based on promises they made.

But, since the EOS Network Foundation has appointed a law firm to try and pursue legal action against Block.one it could mean that they believe they have enough evidence to build a strong case against them. After everything that’s been said and done by Block.one, it is likely they may have said or done something that clearly suggests their intentions to invest in the EOS ecosystem. If there’s any entity with plenty of information on Block.one, then it is the ENF because its members are longtime stakeholders in the EOS ecosystem even way before its launch. The ENF’s founder and CEO is also the former CEO of a top EOS Block Producer and there he would’ve gained a lot of inside information that the general EOS community member wouldn’t know. Especially considering the many times EOS Block Producers and Block.one have had meetings to discuss EOS network operations.

One example was when EOS Nation (Block Producer) proposed a Worker Proposal System, one the majority of the community supported, which would help in the funding and the promotion of the EOS ecosystem, but Brendan Blumer came out against it and somehow convinced Block Producers not to implement it. A month later he tweeted:

*“Marketing spent in the next 24 months will be far more effective than marketing in the last 24 months. No blockchain is ready to for what #EOSIO is preparing for.”* (Tweet - 2020)

Another 24 months later the community is yet to see this far more effective marketing he was talking about. Proving the point once again that the only effective marketing that Block.one ever did was when it benefited them; first with the $4 billion ICO and again with Bullish which has raised billions in investments. It seems the only thing Block.one has ever done for the EOS community since launch is in delivering never-ending frustration and emotional stress, to the extent of legal action.

So, considering Block.one’s actions and promises, can EOS survive a legal battle with a multi-billion-dollar company? At this point perhaps it’s a question of who has got more to lose. For the EOS stakeholders it’s next to nothing as they’ve had to watch the value of their tokens shrink to tenths (-90%) since launch while the rest of the market has gone on to see new all-time highs. Meanwhile, Block.one has been growing from strength to strength with billion-dollar funds, billion-dollar mergers, multi-million-dollar projects, a strong global workforce, and more. Perhaps then the question should really be…

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Can Block.one survive a legal battle with an entity backed by a globally distributed community?

The EOS Network Foundation’s purpose is to fulfill the wishes of the EOS community – developers, investors, block producers and other stakeholders; all of whom are likely EOS token holders. This community of EOS stakeholders has for years been urging Block.one to fulfill its promises and do what’s right by them, only to receive responses of more promises. All the while with Block.one’s actions pointing to the contrary as true.

As much as bad press can be detrimental for EOS and its token price; it will be much worse for Block.one as a company that has shareholders most of which I assume would rather not be associated with an entity accused of defrauding billions of dollars from the world’s citizens. This would also put off many other potential investors, consumers, businesses or partners from dealing with them in the future. Not to mention the already evident disdain that the blockchain space has for Block.one, a disdain that has by association weighed on EOS for the past four years.

*“EOS was nothing more than a bitcoin heist*.” – Peter McCormack (Tweet)

Peter McCormack is one of Bitcoin’s biggest supporters and one the more influential personalities in the cryptocurrency space. He tweeted the above statement in response to a previous tweet by Block.one CEO, Brendan Blumer, in which he announced that his company now controls nearly 1% of all the bitcoin in circulation. That’s more bitcoin than that owned by El Salvador, a country that has made bitcoin its official currency.

Link tweet

The bitcoin is worth at least $6 billion today and yet almost two years later there’s still no sign of that bitcoin benefitting the EOS stakeholder. All it has done is create a more high-tension environment for the EOS network.

Recently, as the EOS community has started to show signs of ridding themselves of Block.one, other blockchain communities are also now starting to show their support for EOS. For a company whose business is to build enterprise blockchain solutions, this does not bode well for Block.one’s future in this industry. It is also possible that the market might see it as a bullish sign if the ENF takes Block.one to court and the EOS token price goes in the upside direction instead. For most in the industry this would be a story of David vs. Goliath, the day that a decentralized community took on an institution that blockchain technology was built to displace in the first place. A sign of the times.

A lawsuit for Block.one could also mean they might have to make their business dealings and transactions known in the court of law which could expose possible practices that do not comply with regulations. A big industry interest would be to find out whether Block.one was involved in washtrading or money laundering during the EOS ICO. It could also mean that individuals might be called up to testify as witnesses, especially people like Daniel Larimer, Brock Pierce, and Brendan Blumer, who’ve been involved at Block.one at some point in time but who also have close or direct ties to the EOS network.

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Conclusion

Not everything is as it seems, and the general EOS community is always the last to find out about things that go on behind the scenes. A lot has unfolded these past four years between the EOS community and Block.one with many private conversations from leaders on both sides. For the EOS community a court case could help bring to light some of the information that’s remained hidden until now.

The EOS community has gone through the most over these last four years where the apparent ups always led to downs and further downs, legal action against Block.one may be the closing of a chapter and the start of a new one. Whether this new chapter is written with Block.one or not, the theme will be one where the EOS community wrote their own stories by taking destiny into their own hands.

Whether the ENF succeeds in litigating Block.one or not, the EOS network should only be moving forward from here on forth. Without anymore expectations from anyone else but ourselves. This is the year baby EOS grows out of its infancy to explore the new world on its own. May the future forever be on your side EOS.

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