Augur (REP) Pawned 1 Million ETH At $0.7 As Crypto Community Weighs In On Right Or Wrong Decision
Augur Chief Explains Augur Decision to Sell ETH at $0.7 USD
The price increase by crypto coins in the past two years has surged the value of many crypto projects to date. However, Augur is on the spotlight after a crypto currency research by Dovey Wan showed the project sold 1 million worth of Ethereum coins at $0.7 back in 2015. These were the Ether altcoins raised during Augur’s Initial Coin Offering (ICO).
According to statistics of the prevailing market prices, Augur could have made a killing had it held on to its 1 million Ether coins. Ethereum’s price had rallied to $1,500 towards the end of 2017, an exit point that would have seen Augur make over 2000% Return on its investment. Today, Ethereum is still between the $250 and $290 region which is way more than what Augur sold its ETH coins for.
Dovey Wan shared sentiments on the early Ethereum sale made by Augur, according to him the team might have placed itself at a disadvantaged position. This is from a financial perspective where Augur would have been at a probable $250 million position with its Ethereum reserve. In addition, selling off its Ethereum position might have raised questions on Augur’s trust on the ETH platform where the network is also built.
“Augur is a Startup, Not a Hedge Fund”
Augur Foundation CEO and founder of the betting project, Joey Krug argued against the sentiments offered by Wan, claiming the company was acting in its role as a startup and the company was not willing to hold the Ether. The simple argument that the company fit a startup rather than a hedge fund, was further echoed by other crypto enthusiasts replying to Joey’s tweet.
Back in 2015 when the Augur, token symbol REP, took the decision to sell the ETH raised at its ICO at partly $0.7 USD the cryptocurrency world was taken abuzz. This came at a time that the overall cryptocurrency market was in a strong bearish trend and very unstable conditions. The price of ETH fell from a high of $2.20 USD in August to $0.5 USD in September causing fear and confusion for holders of ETH.
Augur, in its place as a startup and an open-source project took the considered best decisions for the project by converting the ETH to fund development. In his defense, the Augur boss further stated that the money provided by investors in initial coin offerings is not for the benefit of the founders and management of these companies but the fulfillment of their tasks to develop the project. Unlike investors, the management team has to put the development needs of the company first before the investment needs.
The CIO to Pantera Capital, a $1 billion cryptocurrency hedge fund responded to the fault of not holding ETH on his Twitter saying,
Completely disagree, Augur converted 90% of its funding to fiat to fund development going forward. People funded it to fund software development and get it built, not to run a profit seeking investment vehicle / hedge fund.
If you want to speculate on crypto prices https://t.co/fpjirtduRb
— Joey Krug (@joeykrug) September 4, 2018
“Completely disagree, Augur converted 90% of its funding to fiat to fund development going forward. People funded it to fund software development and get it built, not to run a profit seeking investment vehicle / hedge fund. You should invest in or start / run a fund or manage your own capital, but crypto projects shouldn’t be doing this.”
Furthermore, the co-founder of Scalar Capital and advisor to the 0x project, Linda Xie, joined in the conversation, praising the Augur team’s decision claiming the move was a right one for the betting project.
“You and the Augur team did the right thing and I have been advising projects to do the same. It's easy to view all of this in hindsight as the price of ETH could have easily gone the other way while you were building.”
Crypto-related projects would be better off utilizing the ICO raised funds to develop and fulfill milestones documented on their white papers. This will avoid future confrontations with investors whom will be requesting for fundamental progress facilitated by their funds!
Xie, a crypto savvy enthusiast further emphasized that crypto projects and companies should be focusing on protocol development. At the moment, most projects have deviated to becoming more hedge fund-oriented hence speculating and taking positions with the raised funds.
In conclusion, cryptocurrencies should invest in accordance with the commitments prior ICO. This means utilizing resources to increase project’s value as is investor expectations!