The Book of Bitcoin

The Bitcoin Foundation

The Bitcoin Foundation is a US non-profit Bitcoin trade association that was co-founded in September of 2012 by Gavin Andresen, Mark Karpelès, Patrick Murck, Charlie Shrem, Roger Ver, and Peter Vessenes. The Foundation's literature claimed Satoshi Nakamoto as a Founder of the organization, however this was not honest: Satoshi never had any relationship with the organization.

The Foundation solicited donations and contribution on the basis of promoting member interests, through a graded member system. One of the founding goals of the project was to find money to provide Gavin Andresen with full time employment, which it accomplished by hiring him to fill the role of "Chief Scientist", although that is widely considered to be an empty title as he did not demonstrate scientific output, and there are no other scientists for him to be a chief of.

Member Malfeasance

From the start, the Foundation was widely criticized as falsely claiming authority in its naming, actions, and choice of membership. Foundation members at various levels including leadership were accused of being corrupt and some were found to be guilty of various crimes.

Founding member and Vice Chairman of the Foundation Charlie Shrem pled guilty to violating US monetary regulations by knowingly conspiring with a drug market money dealer to exchange Bitcoin with fiat currency through his platform.

Founding member Peter Vessenes was seen to have a potentially corrupt relationship with another founding member Mark Karpelès. This issue manifested itself in a lawsuit between Peter and Mark Karpelès, neither stepped down from their Foundation Board positions during the course of the lawsuit.

Foundation director Brock Pierce faced his own legal troubles, including accusations of sexual misconduct with his employees, paying tens of thousands of dollars to settle out of court.

Founding member Mark Karpelès presided over one of Bitcoin's greatest disasters: the collapse of the MTGox exchange. He was later charged with embezzlement of funds, with misuse of company monies including payments to prostitutes. A very large number of Bitcoins were lost to their owners due to the dramatic failure of the exchange. Before co-founding the Bitcoin Foundation at age 24, Mark had been convicted of computer related fraud multiple times, and was a fugitive from justice of a one year prison sentence from a French trial in absentia.

Founding member Roger Ver pled guilty to sending unlabeled explosives in the mail and improperly storing fifty pounds of explosives in a residential apartment. He served ten months in prison. Later he was found to have abused his administrative privileges on the Blockchain web wallet service to settle a personal problem by publicly revealing information about a user in an attempt to pressure them.

Foundation Law & Policy Chair Mike Hearn very publicly quit Bitcoin, and went on a media tear. He proclaimed Bitcoin to be a failure to mainstream news outlets, shaking confidence in the currency.

The Foundation's Chair of the Bitcoin Foundation’s Legal Advocacy Committee Brian Klein was found to be working with Josh Garza, the notorious PayCoin scammer who was later formally charged by the SEC for operating a Ponzi scheme.

The MMMGlobal Ponzi scheme was directly granted a Silver membership to the Foundation. Gavin Andresen claims to have not known, however the website of the scheme directly offers impossibly high returns, and Gavin's lengthy involvement in Bitcoin should have made him well aware of this type of scheme. A Google search for the scheme reveals the Wikipedia page) for the organization, a page which contains Ponzi scheme in the title.

Censorship Program

Mike Hearn, the Law & Policy Chair of the Foundation, worked to create censorship and fungibility threatening programs for the Blockchain. Mike Hearn outlined his proposal in the private Foundation Forums:

Consider an output that is involved with some kind of crime, like a theft or extortion. A "redlist" is an automatically maintained list of outputs derived from that output, along with some description of why the coins are being tracked. When you receive funds that inherit the redlisting, your wallet client would highlight this in the user interface. Some basic information about why the coins are on the redlist would be presented. You can still spend or use these coins as normal, the highlight is only informational. To clear it, you can contact the operator of the list and say, hello, here I am, I am innocent and if anyone wants to follow up and talk to me, here's how. Then the outputs are unmarked from that point onwards. For instance, this process could be automated and also built into the wallet.