Layer1 accused of mischaracterizing people’s involvement in fundraising pitch: report

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U.S.-based block reward mining firm Layer1 is reported to have exaggerated the role Liu Xiangfu plays within the company during the recent version for its Series A fundraising deck. 

Since June, Layer1 has reportedly been attempting to complete a $50 million raise in senior secured debts during a financing round that initially started in 2019, according to a CoinDesk report. The fundraising proceeds will be used to scale Layer1 operating mining capacity in West Texas to 150 mWh and deliver its proprietary mining chips in mass production.

The deck reportedly was updated as recently as June and shared with the news outlet by an undisclosed investor. It shows Liu as a core management team member that heads the supply chain. Moreover, on the equity structure slide, the deck described Liu as a founding member of the block reward miner and shareholder. 

When the news outlet reached Liu for a comment, he denied being involved in Layer1’s business. Liu said via Wechat, “I introduced some of my friends to them. … That did help them when they [came] to China. But I’m not a shareholder [and do] not work for them.” 

Liu is the co-founder and former director of Chinese ASIC hardware manufacturer, Canaan Creative. His inclusion within the deck would bolster the gravitas of the management team with investors. Even Layer1’s profile page to investors on crowdfunding platform BnkToTheFuture shows Liu as a team member in charge of the supply chain.

Layer1 boasted in its pitch deck that its leadership team has experience producing digital currency mining hardware “with a global market share of 14%.” Without Liu, it would be dubious whether that holds true. That might be why former Layer1 President Jakov Dolic reportedly described Liu’s role as “a team member and a friend” during investor Zoom call in April.

Alexander Liegl, CEO of Layer1, confirmed to CoinDesk that the information they received was correct, explaining that “There is a disconnect with regards to Liu Xiangfu’s involvement with Layer1. Xiangfu has been a good friend and supportive of the company since the very beginning. It should be no surprise to anyone who follows our business to see Xiangfu’s name connected with Layer1.”

Liegl has now said that Layer1’s $50 million Series A is now complete.

Besides stretching Liu’s role, the slide deck purportedly alleged that Layer1’s CTO, Ivan Kirillov, was a former lead engineer for rival block reward mining firm Genesis Mining. When contacted for comment, Marco Streng, CEO of Genesis Mining, informed CoinDesk that Kirillov’s role was smaller, and Genesis Mining did not employ him directly.

Per Marco, “He [Ivan] worked together with our engineering team as an external [contractor]”.

These alleged mischaracterizations from a long-term investment should be a huge red flag for existing shareholders or new investors. When poor judgment mixes with searching for quick cash, corruption can rear its head. Lancium is also suing Layer1 for copyright infringement. It’s no telling what other skeletons are hiding in its closet.