Blockchain asset management platform NEM (XEM) announced it had completely reformed its non-profit NEM Foundation amid financial difficulties in an announcement Jan. 31.
The Foundation, which previously had a budget with a monthly burn rate of 9 million XEM (~$392,000), now plans to spend less than half that amount, as a new streamlined entity aims to cut costs.
“The NEM Foundation has restructured to eliminate regional teams and replace them with newly created product-focused teams,” the announcement explained.
Summarizing the changes, NEM confirmed that the “NEM Foundation you knew before is gone.”
The impetus for the changes reportedly comes from a lack of funding and criticism of spending under the old Foundation model.
XEM, the company said, had a difficult year in 2018, losing a significant portion of its value against previous highs as part of the ongoing cryptocurrency bear market.
NEM
XEM price and market cap 1-year chart. Source: CoinMarketCap
“In terms of running an effective organization, the existing structure failed. Maybe that didn’t seem like a big problem when the XEM price was high, but it’s a very big problem as we seek to sustain a viable organization in the ‘Crypto Winter,’” NEM continued in the post, adding:
“The XEM exchange rate has suffered catastrophic drops from this time a year ago, just as many other ambitious cryptocurrency projects have suffered, now the NEM Foundation is facing challenging budget decisions.”
XEM/USD is trading around $0.044 at press time, dropping over 8 percent on the day following the publication of the news. The pair hit an all-time high of $1.90 in early January 2018.
Later that month, the token was implicated as a target in a hack of Japanese cryptocurrency exchange Coincheck, which saw funds worth over $530 million at the time disappear.
Today’s announcement did not confirm major staff layoffs, setting it apart from those that afflicted companies such as Bitmain, Shapeshift and ConsenSys in recent weeks.
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By Aaron Wood
Crypto Exchange QuadrigaCX Missing $145 Mln After Death of Founder
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Crypto Exchange QuadrigaCX Missing $145 Mln After Death of FounderNEWS
Following the sudden death of its founder Gerry Cotten, cryptocurrency exchange QuadrigaCX is reportedly missing CA$190 million dollars ($145 million) in digital assets, Canadian news daily The Globe and Mail reports on Feb. 1
Citing a creditor protection filing from the Nova Scotia Supreme court, the Globe and Mail states that the firm has been unable to locate or access the funds since Cotten passed on Dec. 9, leading to a liquidity crisis at the exchange. QuadrigaCX filed for creditor protection in compliance with the Companies' Creditors Arrangement Act (CCAA) on Feb. 1.
The exchange only has CA$375,000 ($286,000) in cash, while it owes CA$260 million ($198,435,000) to its users.
The exchange kept most its assets in offline storage systems called cold wallets, which are secured by digital security keys in order to protect them from hacking and theft. Cotten was solely responsible for the wallets and corresponding keys, which the company has been trying to find after his passing.
A filing from Ernst & Young reportedly states, “Quadriga was unable to access the cold wallets and/or discovered that the cold wallets contained minimal cryptocurrency units.” ‘Big Four’ auditing firm Ernst & Young has been appointed as an independent third party to monitor the proceedings.
Per The Globe and Mail, Cotten mostly worked form his computer at home, which is encrypted. Cotten’s wife, Jennifer Robertson, reportedly stated in an affidavit, “I do not know the password or recovery key. Despite repeated and diligent searches, I have not been able to find them written down anywhere.” Robertson purportedly went so far as to hire a cybersecurity expert to “hack into Gerry’s computers” to no avail.
Other exchange operators told The Globe and Mail that it was unusual for a single executive to control access to an exchange’s funds, as it would have made Cotten a target for kidnapping and extortion. Michael Gokturk, CEO Einstein Exchange in Vancouver, said, “It’s the equivalent of walking around with millions of dollars in cash on you at all times.”
Users of the platform, some of whom were already unable to withdraw funds due to a legal battle between the exchange and a major Canadian bank, took to Twitter and Reddit following an announcement of Cotten’s passing. Some users asked for proof of death or an obituary.
Robertson’s affidavit reportedly states, “There have also been threats made against [her]. “Slanderous comments have been made against [her] and sent through Facebook messenger to [her] entire contact list.” Robertson is reportedly funding the creditor protection motion herself and a preliminary hearing has been set for Feb. 5
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