Information on Funds and Dumping of SWM Tokens


#1

Dear Philipp, Timo, the Swarm Capital team, and the former Swarm Fund team,

I hope to find you well.

1- The Swarm Community is eager to to know what happened to 18K ETH tokens that were collected during the Swarm ICO back in late 2017 please.

“Philipp Pieper, a partner at the company, told CoinDesk that 637 contributors took part in the token sale, which was split into two phases. All told, those backing the project gave 18,048 ethers in exchange for 8,171,014 SWM tokens, with almost all of the funding being raised during the pre-sale.”

1A- We’d like to know which wallets were used to receive the Ether and take note of where it has gone since then please.

1B- Did you receive a lot less ETH and simply lied to the press?

2- With something in between 5.5M and 25M dollars at hand, (depending on price of ETH being sold) why have you been paying contractors using SWM tokens as early as the end of 2018 through today?

3- Do you know how much would the average monthly expenses Swarm would need to pay to consume so much value? I’d say around 200-500k dollars a month or even more, depending on the ETH price when sold.

4- How much have you, Timo and all other team members been paying yourself from those ICO funds to actually burn through so much ETH in such a short time?

5- Haven’t you pointed out to the community on many occasions that the team was always small and agile? How could a tiny team spend so much in such a short time?

Considering you haven’t paid for a single decent exchange or for any product marketing, it just doesn’t add up. AT ALL.

This whole decision-making strategy caused a -99.7% loss in value in said SWM tokens.

6- Did the tech that was built costed millions of dollars? We don’t even have a functioning masternode framework, since rewards have to be paid manually and nodes don’t process any other data, given no other payment aside those from the SWM pool is being received.

6A- What happened to the 10m SWM tokens that were supposed to be used for the Market Development Fund? Once that was postponed due to regulation uncertainties, have you just pocketed them and dumped the tokens like always?

7- What open-source tech was released that costed millions upon millions of dollars? So expensive to compel you to start using SWM tokens to pay for costs, after consuming all ICO funds received?

8- Why are all the tools on the Swarm Fund website, meant to be open-source, clearly being labelled as belonging to Swarm Capital? A private business that you recently launched.

9- Lastly, according to which country’s laws was the Swarm Network Constitution recently drafted?

10- Instead of using SWM tokens and destroying our holdings, why haven’t you offered equity in Swarm Capital like every other respectable business would do when in need for money? If money were in fact needed, after such a large ETH amount (18K units) received during the ICO phase.

The community has more questions, but this can do for now.

Thank you


#2

Dear anonymous person or group,
please find some facts about the project below.

  • There have been misconceptions about the amount of ETH contributions in the crowdsale: In the crowdsale of the SWM utility token the network achieved 2,734 ETH at the time valued at $804K in Nov’17. The quoted article should have been more clearly stating “the equivalent of 18K ETH”. Other purchases were predominantly done in exchange for in-kind services and fiat, where a good portion covered dev, legal and other activity leading up to the crowdsale.

  • The spend was done in line with the budget highlighted in the original whitepaper, with general and admin (incl. legal) -6% vs plan, product and development -4% vs plan and sales and marketing +10% vs. plan; Expenses on exchanges were and could never have been part of the budget; PP has never taken any salary from the network and TL received a total of $40K since joining; JD received $120K against certain deliverables.

  • On that basis, the project delivered to build out the SWM token utility beyond what was scoped in the whitepaper. There is a fully functional swarm protocol layer. Go to swarm.app right now if you’re not a developer - it only takes a few clicks to build SRC20 tokens (and stake against them as part of the Swarm token utility model), all based on open source technology. Shortly completed will be the enhanced fundraising smart contracts. And with a network running on 390+ masternodes this is far from being a deserted project. We would like to encourage everyone to use the tools at hand and even poke in the previous Stellar based iterations.

  • With the evolution of the community, we initiated the Swarm network constitution to further formalize the community involvement, which received community approval in Q2’19. We really advise to read (and comprehend) that document to get clarity around the role of each member vis-a-vis the council. The default masternode delegation took it to the next level - truly giving fallback decision power to those committed to supporting the network infrastructure.

  • Unfortunately, that has not yet brought members beyond Swarm Capital to bring forward beyond a handful of GAPs, tangible projects, develop additional tech or promote the project. E.g. we continue to look forward to output of any kind beyond announcements from the self-proclaimed Swarm Strategy group…

  • On a personal note, also per commitment in the whitepaper we both have been transitioning out from the council as a natural evolution to further community involvement. While we continue to be hands-on community contributors, we’ve purposely retracted from the noisy conversation. In some ways we were hoping to see whether others can fill that void. Disappointing to see that there are even two vacant council seats, and nothing tangible has been achieved by the rest of the community (at least visible to the eye).

  • In bear markets the tourists leave: it seems that most of the community that show up in the channels are bystanders who don’t do more than complain without commitment. Likely, that most probably aren’t currently or ever have been Swarm network members (look it up!).

While others pop in and out, we are continuing to demonstrate our commitment with continuing to enhance (and open source) the smart contracts and bring adoption to the network.

/Timo & Philipp


#3

Dear Timo and Philipp, thank you very much for taking the time to begin offering some clarity. I am sure the community will appreciate it a lot. And I still hope Swarm can become a success.

I am happy to see that you came to your senses and decided that it is best to keep communication open, feed network members with trust and offer human respect and sensitivity towards the community of SWM holders.

As a side note, does it really have to be such an effort to get some replies and be in touch with us regularly?

It would just be much easier for everybody involved if you could keep the same level of communication from now on, if not with us, at least with the Council which in turn has the duty to communicate with the community.

1- As for now, they say not much is being shared regarding the documentation that we discussed before the 5M SWM GAP, which were taken from the treasury without providing the relevant paperwork, promised before this key vote went on.

Don’t worry, I know they haven’t been sold or distributed yet, I keep an eye on those wallets. However, before making such movements, documentation was not delivered.

2- I am very confident in what the Swarm Constitution implies, I am the one who submitted almost all GAPS and wrote the changes to the Council Duties and other adjustments needed to the Constitution.

There are two more GAPS I submitted just sitting in the repository for which I have not yet deposited the 250 SWM required, since I have been loosing faith in the Swarm leadership after you moved onto Swarm Capital, without completing MAP and other tools/necessities discussed (to name one: giving a legal status for the Swarm Network), while at the same time appropriating of the 10M tokens that were to be devoted to the Market Development Fund.

Am I correct in thinking that?

3- With regards to being more active with proposals and other actions, the Treasury isn’t permitting us to do much for two reasons:

  • You paying contractors with SWM tokens has brought the token value to basically nothing.
  • There were 50M tokens in the Treasury when it started and millions were taken, including those devoted to the MDF, leaving it almost empty, at around 8M tokens. If I read Etherscan correctly, and I think I do, millions of tokens have gone from it in 2018-19, with destination unknown.

4- Furthermore, why are the tools on the Swarm Fund website labelled “by Swarm Capital”, while they should be open-source?

  • Who has access to the website to change that?
  • Who has access to the Swarm Fund mailing list? Not many updates have been coming through there or through the Swarm Announcements Group on TG, or on Medium and Reddit, so…if we have to do anything, we’d need access to those.

5- On top of it, I don’t think it is fair to ask network members to work for free when Viviane and others were paid towards unknown duties.

6- Could we therefore have a clear list of the duties accomplished that the Swarm Treasury is paying 2+M tokens for? We still don’t understand what would be costing so much, and who commissioned it, since the Network did not vote to assign such tasks.

7- Could we also please make sure developers and issuers know they can use ALL of the Swarm Fund tools available on this page? https://www.swarm.fund/powered-by-swarm

And if they don’t:

  • Could you please indicate which tools were not paid by the Swarm Network/Foundation and provide proof of ownership in the form of expenses and invoices paid, contracts stipulated and all relevant documentation indicating that somebody else (e.g. Swarm Capital) owns such tools like Blackbird, for instance?

We’d like to make sure, through official legal documentation, that the payments for those tools under the IP of Swarm Capital were not in fact paid with funds belonging to the Swarm Treasury please.

8- Regarding the Council seats. The two vacant seats are you and Chris, I imagine. We will be submitting two new members by the new round of GAPS.

Timo Lehes (current term ends March 25, 2020) ------ VACANT
Chris Eberle (voted in with GAB, December 25, 2019; pending acceptance) ---- VACANT?

9- If we are to work towards bringing clients towards Swarm Capital, we’d like to have clear guidelines on the incentives that SC will provide, such as receiving a % of the fees a client would pay to SC, or a flat payment for contracts signed, or whatever it is that you want to offer. If you want us to bring you customers, we can try, but it will have to be remunerated and guidelines will have to be issued like you do with a few other network members.

10- Lastly, is Swarm Capital looking to walk the talk and tokenise its shares using the Swarm tech?

I hope that with this reply, you understand where I am coming from.

I wish you and Swarm Capital well, and let’s keep in touch. We aren’t the ones that disappeared here, just so that you know.

Thank you for your attention.


#4

I can adress part of the list right off the bat (but in reverse order).

Ten : At the right time, Swarm Capital will consider issuance of a security token.
We are not big fans of tokenizing startup shares, since the underlying value is hard to quantify.

Nine: Yes, there is a standard partner arrangement Swarm Capital offers partners. You would obviously have to be an identified legal entity as counterparty to the agreement.

Eight: Correct, both are vacant.

Regards,
Timo


#5

Thank you very much Timo.

One of the main confidence issues of the community is this:

  • SC moving away from staking Swarm requirements to issue tokens. (I know the contracts can be tweaked to stake ETH for example.)
  • SC not having funds to continue long-term, thus leaving the Swarm Network with tech nobody is using.

Could you please give us some clarification or assurances over the above?

Regarding offering shares, I understand what you are saying, and look forward to hear how it develops.

Regarding the Council, we’ll try filling them by next round of GAP, no worries.

For anything else, we’d like to hear how the smart contracts are coming up please, and we’ll wait to hear from you on the rest.

Best of luck, thank you for that.


#6

To add to the above:

Ad 1/ the council has been provided with documentation and has been kept up to date on the developments; in fact, Zak was being helping peer-review some of the legal language for the agreements. One part (issuance credits) is sitting in multsig wallets under Swarm Council governance. SC has already requested to stake against an upcoming €7.5M SRC20, answer pending. The other part is waiting for completion of the fundraising smart contracts and the linearly releasing smart contract is waiting to receive those tokens as a result. We could be a few weeks from completion + auditing here. But we’ve already encountered surprises, so we’ll have to see.

Ad 2/ not sure I have an opinion on your view here.

Ad 4/ best to refer to the thread here; it’s been covered in there

Ad 7/ All repos have been properly open sourced on the network github


Re you’re recent comment:

"SC moving away from staking Swarm requirements to issue tokens.”
Fail to understand the logic here. Why would that make sense to us community members?

"SC not having funds to continue long-term, thus leaving the Swarm Network with tech nobody is using.”
How? The protocol is open source. Anyone )or any other organization) can extend based on their preferences.


#7

Thank you very much Philipp. I am glad some more detailed communication can be established.

Ad 1/ I understand and am glad some clarifications are coming. The new duties of the Council, which I wrote, imply that they should let the community know of all these things. So I hope they can follow through with it because we haven’t heard anything solid from the Council in a long time.

Amazing that 7.5M Euro will be staked soon, answer pending. Congratulations on this.

Ad 2/ Ok, no problem. May we know what happened to the 10M SWM dedicated to the MDF please? It seems to me that while the MDF was cancelled/postponed due to regulatory uncertainty, those 10M should have been sitting in the treasury. If they were used, wouldn’t be fair to know why and on what they were used for?

Ad 4/ Ad 7/ It is not clear why the tools are indicated as “by Swarm Capital”, and not by Swarm, and what tools precisely on this page are open-source. Sorry to be repetitive, but is Blackbird open-source, for example? https://www.swarm.fund/powered-by-swarm

Here we have:
Early Bird
Investor Pass
Swarm App
Blackbird

Are we positive these are all OS please?

Re you’re recent comment:
The problem is that with the absence of leadership, people become suspicious when they are not given detailed information, so I hear people thinking that SC will ‘rent’ out tokens to issues, or switch to staking Ethereum for issuance, or all sort of things… I am not saying SC will do this, I am saying what I hear, and it gets people fearful which lowers confidence, and in turn diminishes the value of our tokens, and of your tokenss as well. You see what I am saying? :slight_smile:

People are afraid you’ll only think about making cash with SC and forget about the utility of Swarm. Unjustified maybe, but as said before, people get suspicious and feed the fear, which in turn affects the market and consequently the treasury value and so on, in a downward spiral.

"SC not having funds to continue long-term, thus leaving the Swarm Network with tech nobody is using.”
Yes, the protocol is open source, but you are the only ones using it for now. Without a marketing budget for the Swarm Network, since the treasury is valued very low, it is a closed street.

Yes anybody can use it, but nobody does apart from Swarm Capital.

Lastly: fundraising contracts aside, what’s the current situation/development status/plan for MAP please? Masternodes would love to process transactions and so forth, so we’d love some sort of update on the plan here.

Thank you.


#8

The spend was done in line with the budget highlighted in the original whitepaper, with general and admin (incl. legal) -6% vs plan, product and development -4% vs plan and sales and marketing +10% vs. plan; Expenses on exchanges were and could never have been part of the budget; PP has never taken any salary from the network and TL received a total of $40K since joining; JD received $120K against certain deliverables.

My recollection from this period was there was a budgetary meeting in Dec 2017 and that it was proposed to pay all of the executives at that time $240,000 per year. I recall stating that this seemed excessive and that it threatened to cause a situation of severe under-delivery regarding the promises in the whitepaper.

I suppose you are saying that these salaries were not actually paid out, or if they were, that only other executives received them (i.e. not you TL and PP).

I also suppose that the only people who have access to these financial records are the two of you, so you are expecting people to take you at your word.

Is there anyone else who can verify this?


#9

Of course releasing documentation showing payments would be important to restore much needed community trust.

I have to say that if anybody in a start-up was paid even just 1/3 of that in a year, executives or not, they should be ashamed of themselves. I just hope it’s not the case.


#10

We’d also like to know please:

Who is in control of Swarm’s Brand? Logos, all material, designs, documentation, Facebook, Twitter, Youtube, Website, Medium, Github, Domains etc.

Is this the foundation, the council, the network…? Should it be controlled by Masternode holders through a DAO?

Thank you very much.


#11
  • MDF: with the GAB ending 9/5/2018 the Swarm Masternodes Program and Budget were approved. As part of that, Sec 3 approved “to evaluate the Market Development Fund under organizational, legal and regulatory considerations, and if feasible to execute with a scoped budget of an additional 10,000,000 SWM of the Swarm organization’s tokens”. Unfortunately, the considerations didn’t prove to be feasible and rather could have introduced regulatory risks; the MDF concept therefore needed to be dropped and the corresponding budgets remained in the treasury.

  • Swarm Brands:

    • The generic name “Swarm” is not trademarked (nor trademarkable)

    • The “Swarm+bird” logo was created by PP, but has been transferred to Swarm Foundation, which in turn open sourced it

    • Domains (swarm.fund, swarmmasternodes.com, swarmnetwork.org), Social Media accounts (Facebook, Twitter, Youtube, Website, Medium), eMail lists and Github are held by SF; note: each of these require an entity as a counter-party for various reasons, which is the role of the SF

    • Swarm Members and Council can interact with the Swarm Foundation to coordinate access (e.g. community management has been already given to different community members; or community can vote for (and incentivize) selected representative operates a website for the network, which then the domain would be pointed to)

  • Tech:

    • Open-source: the open-source technology created by (or on behalf) of the SF is listed in the Github repos (and was updated recently). Aspects around the other modules have been covered in this thread.

    • MAP: there are various open-sourced repos on the Swarm Github, which cover the current state of MAP. development. Like anyone else can, SC is using these versions to operate verification + certification infrastructure tied into different issuer offerings. SC has not yet prioritized a further decentralization of the MAP infrastructure, which then would be open sourced and could migrate into the master nodes. But independently, certainly the Members should decide how to prioritize and advance it with available means. Maybe someone can update us on the discussions of the Swarm Strategy Group in this context - we are unaware of any progress there.


#12

Thank you very much Philipp.

A- It still remains unclear if all the tools present on the website are open-sourced. I cannot find a repository for Blackbird. Was it developed with Swarm Foundation funds from the ICO and/or Swarm Treasury? Could you please point to which repo is it in please?

For any tool that Swarm Capital is claiming IP for, IF ANY, we’d kindly require proof under the form of contracts, invoices and payments, that those tools were not paid for by using Swarm Foundation ICO funds, SWM tokens or the Swarm Network treasury.

If all tools are open-sourced, we are very glad for it. Thank you.

B- MDF. Yes, I know about that. Why isn’t the corresponding budget for it in the treasury anymore? What was it used for?

C- Could you please point out what the following treasury movements were used for and who approved them please?

Picture A is the amount that was seating on the Treasury when it started. Around 50+ millions SWM. We are sitting at 8m now.

Picture B shows only a few of the unaccounted and undocumented withdrawals for which the Swarm Council would like complete official documentation. Again, contracts, invoices, references and payments about the following list of transactions being moved from the Swarm Treasury.

If the Foundation acted as a 3rd party, there must be paper trails for all this on archive.

Therefore, we are hereby requesting the Swarm Foundation to provide the Council with such documentation to be published and reviewed in full.

Who can they ask for it at the Swarm Foundation? We will assign two network Council members to overlook this request. Thank you.

We’d also kindly like to know who approved such movements and why, since the Swarm Foundation received money for development through an ICO in October 2017.

D- Brands, ok thank you very much for clarifying.

E- MAP. Understood, thank you.

F- Aren’t these questions from Joel going to be addressed at all? Let me repeat them please.
My recollection from this period was there was a budgetary meeting in Dec 2017 and that it was proposed to pay all of the executives at that time $240,000 per year. I recall stating that this seemed excessive and that it threatened to cause a situation of severe under-delivery regarding the promises in the whitepaper.

I suppose you are saying that these salaries were not actually paid out, or if they were, that only other executives received them (i.e. not you TL and PP).

I also suppose that the only people who have access to these financial records are the two of you, so you are expecting people to take you at your word.

Is there anyone else who can verify this?

G- In the Strategy Group, while most have given up and just don’t care anymore, we have been trying to figure out all of the above and trying to understand where the ICO and Treasury funds have ended up at, as well as what we can now do after the Treasury have been eaten out to the bone and network member have been abandoned on their own without leadership.

Thank you very much for your kind attention and time. Much appreciated.


#13

It also and to my attention that the legal entity that was supposed to receive the ICO funds was the Swarm Foundation Panama but the legal entity that actually got the funds was Philipp Pieper’s personal holding company.

Philipp, can you disprove this indication and demonstrate that the Swarm Foundation received all funds from the ICO?

We would still be very interested to assess if all that was done was legal and receive all documentation, bank statements, invoices, records, contracts and payments done by the Swarm Foundation to any third parties to date.

Thank you.


#14

Are the following tools open sourced? And if not, again, we’d like to see documentation, contracts, payments and invoices demonstrating that the tools were not paid with Swarm ICO or Treasury funds. Thank you.

Investor Pass - https://www.swarm-capital.com/investorpass (Which was connected to a couple of KYC providers)

Early Bird - https://www.swarm-capital.com/investorpass (A tool that allows potential token issuers to gauge interest on their offerings)

Blackbird - https://www.swarm-capital.com/blackbird (Onboarding tool that connected Investor Pass to a live Token Sale)

IQ Manager - https://iq.swarm.app/#/ (Tool to manually manage investor qualification)