Crypto investors who failed to buy copy of Constitution bashed
This wasn’t part of the plan.
The crowdfunded cryptocurrency group who were outbid on a rare first-edition copy of the US Constitution is now being bashed by some members as a scam.
The group, who called themselves ConstitutionDAO, which stands for a decentralized autonomous organization, ended up raising more than $40 million in the form of ether, the digital currency native to the popular Ethereum blockchain.
But now the group is facing allegations of fraud after the crypto enthusiasts failed to purchase their target, according to Vice News.
Before the failed bid attempt and as ConstitutionDAO was amassing its fund, the administrators behind the group explained that contributors would not actually receive a fraction of ownership of the text.
Instead, they would get a governance token, called $PEOPLE, that lets them vote on where the Constitution goes, how it’s displayed and other matters, the organization said.
But on Saturday, after the failed bid, the DAO announced they would abandon $PEOPLE because “we did not acquire the constitution and $PEOPLE’s explicit reason for existing has now run its course,” an admin said in what was billed as “a note from our legal team,” according to Vice.
Instead, the group said, they would establish a new token called “We the People,” or $WTP, which would govern a yet-undetermined project.
Contributors could either participate in the new project or request a refund, but the refund would be just a fraction of their original contribution due to so-called gas fees, which are charged for processing an ether transaction.
Quartz pegged the total amount lost to gas fees at more than $1.5 million.
Those weekend announcements from the developers had the effect of tanking the value of the $PEOPLE tokens that original contributors had gotten from buying into the fund, sparking outrage among contributors, according to Vice.
Amid mounting backlash, the developers of the project backpedaled on Sunday, now abandoning their plans to co-opt the funds for a new project and instead just opting to refund everyone who contributed, minus the burdensome gas fees.
In an attempt to limit confusion, the developers even deleted old announcements about the new token, though that ended up just confusing contributors even more, according to Vice.
“Core team should have asked people to vote with their tokens,” one user posted on the community Discord, according to Vice.
“There was no need for anything. there was no need for anyone in the core team to deliberate. whole point of dao and crypto infrastructure + ethos was missed.”
Others peppered the message channel with requests for refunds and accusations of the whole project of being a fraud.
“This project lost the community the moment publically [sic] made announcements were deleted. it created speculation and uncertainty that could have been avoided,” another user said.
“It’s leaderless chaos. worst of both dao and real world. people had $people token, why weren’t they asked to vote.”
The whole episode, from start to finish, underscores both the passionate enthusiasm tied up in the crypto and so-called web3 movement.
However, the mess that the project ended up causing also puts the uncertainties around the industry on full display, as well.