ETCDev is Drowning: Is ETC Labs a Liferaft or Anchor in its Financial Problems?
The world of cryptocurrency is currently on a sharp bearish trend that has seen crypto’s lose over 80% of their value in the past year. The bear market crunch seems to hit hard on some coins more than the rest as witnessed with the recent Ethereum Classic development team (ETCDev) misunderstanding. This is causing a sharp decline in ETC’s price as well as loss of trust of investors in the future of the project. The high tension situation arose from the decision by ETCDev team to keep its funds in cryptocurrency which stifled operations as prices collapsed and it could no longer pay staff in the last few weeks.
This however is only part of the story as alleged by ETC Labs, a competitor to ETCDev, who offered a different view. The story of Ethereum Classic is a classic case of how internal feuds are killing the industry and causing development stagnation on projects. We dissect the “ETCDev issues” offering both sides of the story below to offer more clarity on the subject.
The ETCDev Demise Timeline
October 2018: ETCDev Funding Problem Begins
In a post on Medium, Igor Artamonov, the CEO of ETCDev, confirmed that the ETCDev team was facing huge financial constraints. The comments were backed by Business Development Manager Donald McIntyre, and Darcy Reno, then Program Manager, who all agreed the company needed some form of external financing to survive.
“Just recently, I was talking about our financing and I found out that most people think that ETCDEV is well backed, but that is quite the opposite. ETCDEV has been always bootstrapping and working on Ethereum Classic (ETC) projects without much external finance.” – Igor Artamonov
Mid-October: The US$ 300,000 Grant To ETCDev
Once the team agreed on sourcing for external finding, the managerial team of ETCDev approached Digital Finance Group (DFG) and ETC Labs for the funding. ETC Labs is currently a subsidiary of DFG. James Wo, the chairman of DFG offered US$ 300,000 to the team with a condition to be the sole external financer.
In McIntyre’s report, he confirms they received US$ 40,000 from the DFG group in October. This was the first installment of ‘upcoming’ funds in the next months from DFG. The US$ 300,000 promised never saw ETCDev team’s accounts till today.
November: The “Trojan Horse”
According to Igor, Darcy Reno proved to be an insider who was working for the ETC Labs team. The “Trojan horse” as explained by Artamonov remained at the ETCDev team only to collect internal information, contacts, the roadmap and technical developments from the ETCDev team. In mid-November, Reno, went to Hong Kong for an unplanned meeting with executives of DFG to discuss the funding operations.
In the course of the negotiations and requests of funding, Terry Culver, the CEO of DFG asked for a representative on the ETCDev team. Igor accepted and added a DFG representative (krykoder) to the ETC Community GitHub as an owner.
Mid-November: Darcy Reno Leaves ETCDev For ETC Labs
After his meeting with the DFG executives in Hong Kong, Reno switched for the ETC Labs development team on November 19th. This came a few days after Tyler had contacted Igor with a proposal for DFG to be the leading voice in ETC core development after funding. The proposal was rejected despite the team only having only a week’s worth of operational funding.
The tale by Igor was however disputed by Elizabeth Kukka, the Program Director for ETC Labs. Kukka said the teams had discussed on the future core development of ETC project by both teams. Furthermore, she says Artamonov walked out in a meeting to agree on the provisional process of financial sourcing from DFG. Speaking further on the troubles ETCDev faced she said,
“ETCDev operated as a business. DFG looked at providing financial support, but we know this wouldn’t solve the problem. Their burn rate far exceeded the $300,000 assist we offered. The company may have been in the same position again in three months.” – Kukka on Crypto Briefing
ETC Labs Actively ‘Poaching’ ETCDev Team?
The dispute is starting to creep in to other members of the ETCDev team after the managerial team led by Artamonov and McIntyre, couldn’t close the funding. According to a source in ETCDev (who wished to remain anonymous), developers are starting to switch ship to ETC Labs after not being paid in the last few weeks. Igor and McIntyre however have blamed ETC Labs of poaching their developers accusing Reno of pushing the move.
“Unpaid employees don’t get poached,” the source said in a call. “Darcy [Reno] produced a lifeline for the [ETCDev] developers. I definitely refute Artamonov’s claims that he [Reno] was poaching.”
Of the total 8 developers at ETCDev, two already switched allegiances with the rest confirming they had been offered jobs at ETC Labs. One of the developers accepted the offer only to turn it down later. This has been one of the biggest troubles the ETCDev team is facing at the moment, the future of its developers.
Is The ETCDev Management Team Drifting From The Wider Ethereum Classic Community?
In all the fuss and drama, the ETCDev managerial team seems to be drifting apart from the rest of community and recently its own staff. Anthony Lusardi, the Director of ETCCooperative – who only found out about ETCDev’s financial situation last week – said that the managerial team had become increasingly isolated from other projects.
Mismanagement Of Funds?
A section of the Ethereum Classic communities place responsibility of the demise of ETCDev on the financial mismanagement by the managers. As talked about earlier, ETCDev kept most of their funds in cryptocurrency which affected the cash flow management once the market experienced the sharp bear trend starting October.
McIntyre and Artamonov however hold a different view in the matter as they believe they are ‘committed to staying true to the founding ideological principles behind Ethereum Classic’. In a statement McIntyre spoke on the plan of ETC Labs to use the financial situation at ETCDev to take over as the central ETC developer.
The move to retain funding in cryptocurrency is a failure by the management team financially as Lusardi said on the issue. “I don’t think he [Artamonov] was the right person to manage finances,” he said.
In a response to the calls of mismanagement Igor wrote that the Reno and Lusardi were out to damage his reputation and there was no truth in it. He further wrote,
“None of them had access to my long-term finances, don’t know how exactly they were managed and what is the reason of the issue. It’s a pure speculation and intentional misinformation used to damage my reputation.”
It became clear that financial constraints is the main issue in the demise of ETCDev – albeit by surprise. Keeping the core development team will be key to the ETCDev team and the hundreds of developers working on the platform.
Ethereum Classic (ETC) is currently trading at $3.90 representing a 105% drop in price since the dispute started. Decentralized app developments are however thriving on the platform as Kukka confirmed the launch of 12 new projects on Ethereum Classic in the next month.
It would be crucial for ETCDev, ETC Labs and DFG to solve their differences for the good of the platform and discourage a fork on Ethereum Classic in future.