At least 10 members of the nonprofit Bitcoin Foundation have
resigned over last week's election of onetime Disney child star and
current Bitcoin entrepreneur and financier Brock Pierce as a new
director, officials at the group said.
Some of the members cited Pierce's troubled past. That includes
allegations in lawsuits from three employees of Pierce's first
company, bankrupt web video business Digital Entertainment Network,
that he provided drugs and pressured them for sex when they were
Pierce has denied the accusations, which first surfaced in 2000.
"The allegations against me are not true, and I have never had
intimate or sexual contact with any of the people who made those
allegations," Pierce told Reuters via email.
Court records show 33-year-old Pierce, who played the title role in
Disney's "First Kid," paid more than $21,000 to settle one employee
suit, and he said others dropped their claims without money changing
While Bitcoin Foundation officials played down the defections,
several members who resigned from the Foundation assailed its
governance track record.
"The track record of prominent Bitcoin Foundation members has been
abysmal," said Patrick Alexander, a resigning Foundation member in a
post on its discussion pages. "I no longer want to be associated
with these people." Attempts to reach him for additional comment
Though it is highly volatile, the value of the electronic currency
in existence has skyrocketed into the billions of dollars as the
number of businesses accepting it has increased and investors have
sought to create new ways for it to be used.
More than 1,000 Bitcoin investors, business people and enthusiasts
are expected to attend the conference in Amsterdam.
The programming effort that governs how Bitcoin works is led by
Gavin Andresen, who is chief scientist at the Foundation and gets a
salary from it. The Foundation also plays an important role for
Bitcoin in lobbying on its behalf in various jurisdiction as
authorities grapple with how to police the semi-anonymous currency.
CALL TO VET CANDIDATES
Other members who resigned called on the board to more carefully vet
future candidates as well as remove Pierce from the board.
Bitcoin Foundation General Counsel Patrick Murck said that his group
had more than 1,500 members and would bounce back from the latest
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"Democracy is messy sometimes," Murck said. "If in the future
members decide they want to have a vetting process, that's great."
Some Bitcoin Foundation members say they weren't aware of Pierce's
past until after the election, when others circulated media accounts
concerning the allegations.
Pierce was voted in by the Foundation's industry members, who pay
higher dues, to fill one of two spots vacated by others who had
resigned: Mark Karpeles, chief executive of the bankrupt top Bitcoin
exchange Mt. Gox, and Charlie Shrem, who has been charged with
conspiring to launder money for users of the shuttered Silk Road
underground drug bazaar.
Pierce has made a splash in the insular Bitcoin world by backing
more than a dozen startups, speaking frequently at conferences, and
leading a bid to buy Mt. Gox for one Bitcoin, currently worth less
Bitcoin startups have attracted investment from some venture capital
firms and from individuals through "crowdfunding," in which many
amateurs support projects, often with small investments and without
the due diligence typically conducted by professional investors.
Pierce has been a major beneficiary of the trend, garnering pledges
of more than $700,000 for his investment syndicate on the
crowdfunding site AngelList.
Cyan Banister, a startup CEO who made a nonbinding pledge of $5,000
to Pierce's investing syndicate, after learning of the allegations
said she would withdraw from his group.
Phil Sanderson, an IDG Ventures investor in San Francisco who
follows Bitcoin, said that the currency's growth was being hindered
by the lack of effective public faces. "Bitcoin hasn't really had a
strong, vocal leader with a great background," he said.
(This story corrects spelling of Mt. Gox CEO in paragraph 16 to
Karpeles, not Kapeles)
(Reporting by Joseph Menn; Editing by Martin Howell)
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