It seems as though the issues surrounding blockchain firm Blockstream just blew up, if a recent report is accurate. There have already been several issues about how the company’s main players conducted business, but this latest revelation is a true game-changer. It appears that the company brass, and other employees, are siphoning funds from investors.
The issue is so egregious that it required its own website to be built. Cashbleed.com goes into great detail about how employees at the company have been stealing “millions” of dollars in SegWitCoin (BTC) and transferring it to their personal wallets. The site leads off by asserting, “We have uncovered Blockstream, a major startup in the cryptocurrency industry has created a sophisticated scheme to siphon millions of dollars’ worth of Bitcoin from company wallets into the personal wallets of its employees and founders. This scheme is ongoing and makes it very difficult for investors to get a return on their investment.”
The scheme is perpetrated rather simply. Cashbleed points out that an employee joins the company and negotiates to have some of his or her salary paid in BTC at below market rate. This is provided over a five-year period as an “effective bonus,” allowing the employees to purchase BTC from Blockstream cheaper than they could on the open market.
According to Cashbleed, this purchase rate is as low as $350 per BTC. Because of this, the employees are trapped in so-called “golden handcuffs,” stuck in the company because of the incredible pay.
To back up its theory, Cashbleed provides a scenario. It states, “Suppose an engineer was hired at $150,000 a year, and an extra 20% of their salary was paid as a bonus on top in Bitcoin. 20% of the salary would be $30,000. Blockstream then pays that amount in BTC assuming a price of $350/BTC. $30,000 / $350 = ~85 BTC to the employee, worth roughly $700,000. In effect the employee earns $850,000 a year. The salaries of senior executives are likely to be higher than this modest amount for an engineer.”
The result is a salary level that is described as “obscene.” For example, the CEO earns a golden handcuffs bonus of just over $1 million and even a Human Resources Generalist picks up an addition $310,162.
The information is reportedly based on a compilation of data available from several sources, so that the theory presented can be verified. Cashbleed adds that, at its current rate, Blockstream “won’t be able to survive more than a year of operation without raising another round of investment.” However, that would only be perpetuating the cycle.
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