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A Closer Look Into "Who Funds Bitcoin Development?"

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Avatar for IMightBeAPenguin
Written by   54
1 year ago

Not too long ago, BitMex Blog made an article titled Who Funds Bitcoin Development, back in March of 2020. Though our "conspiracies" may have been right all along, I decided to do some research because I found the topic particularly interesting. In the BitMex blog, there is a graph that shows who is funding Bitcoin development based on the number of developers:

Right off the bat, it is extremely shady that Blockstream is one of the biggest investors in the space, but it doesn't end there. Blockstream's main investor which is a clear conflict of interest is DGC, also known as Digital Currency Group. The reason Digital Currency Group is such a big conflict of interest is because:

1. They have a current member of the Federal Reserve as a part of their "team".

2. They have considerable connections to legacy financial systems such as credit cards, and banks.

At first glance, this might seem like a mere coincidence, and ridiculous conspiracy theory, but it doesn't end there. I decided to take a deeper look into who exactly is funding Digital Currency Group, and more possible associations they might have with the current/legacy financial system. The nice thing about this is that there is a tool called Crunchbase which tells you who exactly is investing into what venture funds, and how they might be connected one another. I was first interested in Blockstream, which is the obvious "elephant in the room" so to speak.

A Look Into Blockstream

So I searched up Blockstream on Crunchbase, and luckily they are more public about their funding as compared to other organizations. When it comes to their initial seed capital (November 2014), everything seems fine, and this is reflected in the perspective that Adam Back holds on Bitcoin. Keep in mind that there still is a conflict of interest here since Liquid directly profits off of Bitcoin's inability to scale and have reasonably cheap transactions. So at this moment in time, Adam Back is in favour of increasing the Bitcoin blocksize limit. This view isn't just what Adam Back thinks as a Blockstream founder. Peter Wuille was also in support of increasing blocksize, and proposed a BIP to increase the blocksize limit (this is also 6 months before they receive funding from AXA Ventures) at the same rate of technological development. This is where things get interesting...

In February of 2016, Blockstream opens another round of investing titled "Series A - Blockstream". In this funding round, institutional investors appear, and pour money into funding Blockstream. This is despite the fact that Blockstream has barely made any product yet, nor does it have solid financials. If Bitcoin transactions are already reasonably fast and cheap, what reason is there to invest in a sidechain with the purpose of fast and cheap transactions? It's naive to assume that such a business is being run in good-faith, as running in "good-faith" won't give its investors an ROI in this case. Interestingly enough, Adam Back starts endorsing sidechains and Lightning as the scaling solutions for Bitcoin.

In this funding round, Blockstream got funding from a few institutional investors including Horizons Ventures, Digital Currency Group, and AXA Ventures. Horizons Ventures does not seem to have any conflicting interests, but where it gets interesting is with Digital Currency Group, and AXA Ventures. We already know about the connection between AXA Ventures and the Bilderberg Group, but this connection has plausible deniability, and is not a very strong one. It is a conflicting interest, but it can be passed off as a "conspiracy theory". As for Digital Currency Group, the conflicting interests are very evident.

Digital Currency Group has their first funding round in September of 2011, which gets a small venture firm to invest in their organization, but an irrelevant one at best. Their next funding round was not until more than 4 years later, and this is when the institutional investors start coming in. The start of the second funding round is in October of 2015, where the main investors are yet another venture capital firm, but more importantly, MasterCard. This is only a mere few months before Blockstream gets its investment for Digital Currency Group. I think it's safe to say that the capital coming from MasterCard was invested into Blockstream shortly after MasterCard decided to invest into Digital Currency Group.

* I also forgot to add, Digital Currency Group STILL has a member on their team who is currently a member of the Federal Reserve, Glenn Hutchins, and Blockstream's model of making money is from collecting monthly fees from investors.

Note: DCG also acquired Coindesk back in January of 2016

A Look Into Lightning Labs

The second biggest financial supporter of Bitcoin development is Lightning Labs. At first glance, there doesn't seem to be any connection with Lightning Labs and Blockstream, but it only takes a few minutes to find that connection. Lightning Labs was founded in 2016, and is a for-profit company building services to improve Lightning Network user experience. They had their first funding round in 2018, where investors came to pour capital into the company, despite Lightning Network not showing any signs of being promising. Who is one of the main investors in Lightning Labs? You guessed it! Digital Currency Group!

As for Lightning Labs, where do they get their profit from? Those investors need to get their return from somewhere, and I certainly am not naive enough to believe that investors are just investing because they see potential and want Bitcoin to succeed. Well, I took the time to look at their website, and it looks like they're providing a few services related to the Lightning Network. The first and main service that they are providing is liquidity for Lightning through a product called "Loop". If you look at the website, it is a way of providing liquidity through Lightning, so users can easily keep funds flowing. The fees charged on this service are percentage-wise, so we know that it is a product that is supposed to generate profit.

We already know that Lightning Labs still (even after 4 years!) hasn't declared the Lightning Network production ready (which likely means that there are a lot of attack vectors, and Lightning transactions aren't safe), so if it's unsafe, someone might as well just use the normal feature of broadcasting a transaction. In fact, this is what people did not too long ago. This was until RBF was implemented, which an overwhelming majority of the community was NOT in favour of. Interestingly enough, the time this post was made was in November of 2015, which was right before the founding of Lightning Labs in 2016. Though I can't I accuse Lightning Labs of anything, my theory is that they saw the ruining of 0-conf transactions as an opportunity to capitalize on, since Lightning Network was going to be pushed and endorsed as a scaling solution. This only makes logical sense. Now that we know the link between Lightning Labs, and Blockstream, we can conclude with fair certainty that both entities have the same interests.

A Look Into Digital Currency Group

Digital Currency Group (abbreviated as DCG) is an organization/team with the supposed purpose of investing into building blockchain infrastructure, and helping Bitcoin as a technology. We have already established that they have strong links to MasterCard and the Federal Reserve, but if you look closely, they have one more investor that would benefit from Bitcoin's inability to have cheap and reliable transactions: Western Union. Though I wasn't there during the early days of Bitcoin, a lot of people who were will remember this image. It was very popular, and illustrated how much better Bitcoin is compared to legacy financial systems like Western Union for money remittance. Western Union joined the effort to fund DCG back in April of 2016, well before DCG decided to pour capital right into Lightning Labs.

A Look Into Square Crypto

The third organization that appears to be a big contributor to the funding of Bitcoin development is Square Crypto. I was unsure of whether or not Square Crypto was related to Jack Dorsey's Square: Point of Sale, so I took a closer look at their twitter, and they claim that they are a separate organization, which is true. After going further into their twitter, it turns out that Jack Dorsey is the founder of Square Crypto, and the same guy who provided funding for Lightning Labs during one of their funding rounds. This is not mentioning that Jack Dorsey himself has a conflict of interest, being the owner of a point-of-sale application. Both Square and CashApp are centralized financial services with the likes of PayPal, Venmo, Western Union, MasterCard, and Visa. Jack seems enthusiastic about bringing more adoption to Bitcoin, and this can be illustrated with Square Crypto's commitment to make "Bitcoin for everyone". Making "Bitcoin for everyone" would imply a few things:

- Cheap, affordable fees

- The ability for Bitcoin to scale on-chain

- The ability for Bitcoin to be used by more people (implied by the second point)

- Educating others on Bitcoin

From the looks of it, Jack Dorsey has only invested a few million into Lightning Labs' development, while he has likely put at least tens, if not, hundreds of millions of dollars into Square and CashApp. Knowing this, it would be naive to assume that Bitcoin adoption and development is his priority, when most of his capital and net worth is put into projects with conflicting interests.

A Look Into MIT DCI

MIT DCI (the Massachusetts Institute of Technology Digital Currency Initiative) is the fourth-largest financial contributor to Bitcoin Core's development. When looking at the current team members, there are no real conflicting interests, or reasons any of them might want to stifle adoption in any way - at least at first glance. One of the team members are a current Bitcoin Core developer (Cory Fields), but has no connection to Blockstream, so there aren't any conflicting interests as far as we know. There is one more person who plays a role in "Bitcoin" development, and that is Thaddeus Dryja, who is one of the creators of the Lightning Network. Being the creator of the Lightning Network, he does have incentives to keep the blocksize small (which will push his second layer scaling solution), but drawing such a conclusion would be a bit of a stretch. For now, I think we should assume that he has good intentions, and give him the benefit of the doubt. I did a little more digging, and interestingly enough, there is more to MIT DCI than at first glance.

I looked up articles regarding MIT DCI, and there seems to be a link between the creator of DCI and Jeffrey Epstein. It turns out that Jeffrey Epstein has donated funds towards MIT for a while, and those who were subject to the bribes kept quiet about it. Specifically, there have been links between the creator of DCI and Epstein. It turns out that Jeffrey Epstein directly funded Ito, the creator of DCI. This doesn't necessarily mean the organization of DCI is bad itself, but it definitely is not a good look. Jeffrey Epstein funding DCI isn't bad because Epstein is a pedophile, but rather because he has ties to the legacy financial system, and is very much connected to a lot of political figures.

A Look Into Chaincode Labs

So far, it looks like Chaincode labs is pretty clean, but at the same time, not a lot is revealed about it. As far as the organization goes, it is funded by the two founders, but it doesn't seem like there is any active project or direct way of them receiving funding (at least, not that we know of). As of right now, Chaincode has two ex-Blockstream employees as a part of their team, but they don't have any financial ties as far as I know. Currently, their funding is mostly going towards research and development towards Bitcoin, but there isn't much going on. When looking up their organization on Crunchbase, there isn't any information on who their investors may be, or if there are any more investors.

A Look Into DG Labs

The sixth largest contributor to Bitcoin development is DG Labs, also known as DG Daiwa Capital. They are yet another venture firm, and at first glance don't seem suspicious, but it gets interesting when you dig deeper... Blockstream had three funding stages. The first one was in November of 2014, which did not have anything particularly suspicious about it. Blockstream managed to raise $21 million for initial funding from several investors, none of which have strong connections to legacy financial institutions. The second round was in February of 2016. This is where things got suspicious, with the funding of AXA Strategic Ventures, whose main player is part of the Bilderberg group. Now in the third funding round, Blockstream raised $25 million, but by only one investor, and that is DG Labs. DG Labs put their funding back in November of 2017, the peak of the last bullrun. So now we have established that DG Labs has direct connections with Blockstream, and their interests can be considered... mutual.

A Look Into Acinq

I took a look into Acinq and its investors, and it doesn't seem to have much start-up capital (a few million), and is struggling to get adoption for its products. For now, Acinq looks clean, but I will do more research to spot any potential connections they might have with other mentioned partners.

A Look Into Bitfinex

Bitfinex is a well known exchange that has been in business since 2012. It doesn't have the best reputation, to say the least. Apart from this, they also are known for owning Tether. This isn't new, since it has been going on since 2014. Initially Bitfinex seems to just be an exchange like any other, but this story digs deeper. Bitfinex is known and notorious for market manipulation, and fraud. So already starting off, they don't have a very good reputation, but it gets worse. In general, the BTC community never advocates for Tether getting an audit despite their extremely shady behaviour. The last time they had a proper audit was back in June of 2018, and it still shows up as the last "proof of funds" which is over 2 years ago. Even though this already looks shady, Bitfinex is known to have connections with Blockstream. Of course, they were never public about their partnership, but that partnership was figured out later when the representative Zane Tackett admitted to Bitfinex investing in Blockstream. This would explain why Adam Back, founder of Blockstream has gotten defensive about Bitfinex, and failed to reasonably justify their lack of transparency. So now we know that Blockstream and Bitfinex are also closely connected, which definitely doesn't help with their reputations.

A Look Into Xapo

Xapo is a well known business that is a competitor to Coinbase. Like Coinbase, they are a Bitcoin bank, and NOT a Bitcoin wallet. Xapo has been in business since 2013, but they didn't start accepting capital from investors until early 2014. Interestingly enough, in their first funding round, they accepted capital from a few venture firms, but one investor stands out: Digital Currency Group. Hold on... Aren't they the same ones who funded Blockstream? Well, yes, so now we've established that Xapo is directly connected to DCG, but it gets worse. Looking into their second funding round, a new venture firm appears to also have funded Xapo: Greylock Ventures. What's interesting is that one of the biggest partners of Greylock Ventures is Reid Hoffman. Does that name sound familiar? It should. Reid Hoffman started funding Blockstream as early as 2014, so now he has investments both in Blockstream and Xapo. In other words, he was one of the first to fund Blockstream. If that isn't enough, there's more to know about Hoffman.

When taking a closer look, Reid Hoffman is not just a part of Greylock Ventures or Blockstream, but he is also a part of another organization called, which seeks to improve the failed immigration and criminal justice systems. Seems unrelated, right? Well, at first sight yes, but if you look at the founding team members of FWD, one of the founding members is Mark Zuckerberg, who is also the founder and creator of Facebook. Zuckerberg is the same one creating Libra: a direct competitor to the current cryptocurrencies that offers a completely centralized solution, which would be in support of the legacy financial system. It only gets better. If you look at the "members" section of Libra, Xapo is directly partnered up with them as an investor, along with the likes of Coinbase. So now it's very plausible that Xapo and Coinbase are both establishment puppets. We already know that Xapo is invested in Libra and funded by Greylock ventures, who is partnered with Reid Hoffman, an initial investor in Blockstream. Why would Reid be invested in a company that supposedly is "scaling/improving Bitcoin", while also being partnered with a competing product? It would make as much sense as working for Coca Cola (and claiming that I love my job and company) while drinking Pepsi on my lunch breaks.

Note: A lot of people who were members of MIT DCI are now part hired to be part of Facebook's Libra, which is directly funded by Xapo.

A Look Into Hardcore Fund

From the looks of it, Hardcore Fund is just another non-profit fund dedicated to raising money toward Bitcoin development. However, they aren't just any fund who just gives money to Core. They have a "donors" section, and a "donee" section. If you look at the donee section, funds are only pooled toward two developers. The first of them is Ben Woosley, who seemed to stop receiving funding in late 2019, so now there's only 1 developer receiving funds from the fund: Luke Dash Jr. Luke is a founder of Blockstream, which is a little bit suspicious, and I've tried searching up if he's still active in Blockstream, to which I couldn't find much information.

A Look Into BitMEX

BitMEX doesn't have much to see as of right now, but they do have an extremely shady reputation, and are known for manipulating market prices so they can collect liquidation fees.

A Look Into OKCoin, BTSE, Bull Bitcoin, Cardcoin, and Payvant

None of these financial contributors look to have any connections to those who fund most of Bitcoin development, and seem clean as of right now. If anything comes up, I will make sure to update this article accordingly, and ensure that all of the information here is up-to-date.


Out of all of the 17 financial contributors to Bitcoin development, 7 of them have ties to the legacy financial system which is pretty concerning since those 7 are some of the biggest contributors to this list, and make up a bigger amount of the total contributions than the other 10. If there is any more information, feel free to message me, and I will update the article, so everyone can know what's really going on. I'll be sure to also make a schematic which will illustrate all the connections between the big investors in Bitcoin development so people can understand what exactly is going on and how all of these organizations are potentially related. Until then, this is all I could get.

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Avatar for IMightBeAPenguin
Written by   54
1 year ago
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Bitcoin doesn't have to be "made legal". there's nothing illegal about it in most jurisdictions.


$ 0.00
1 year ago

I'll be sure to also make a schematic which will illustrate all the connections between the big investors in Bitcoin development so people can understand what exactly is going on and how all of these organizations are potentially related.

not to sound lazy, but that's a lot of text to digest 😳 perhaps a hierarchal chart or relational graphic would be useful in summing up the relationships between all these parties .. regardless, I find this all quite interesting 🧐

$ 0.00
1 year ago

Yes... I will come with one soon. It takes a lot of time to make :)

$ 0.60
1 year ago

There are several existing charts out there that document these connections and more. Just FYI so that you know to look for them.

$ 0.00
1 year ago

It takes a lot of time to make :)

I'm sure it does! again, I appreciate the time you've put into this research .. it's important for all of us to keep our eyes wide open!

$ 0.00
1 year ago

Interesting post. I have an idea that Bitcoin is a project of Fed, if you look at the countries which made Bitcoin legal, all are allies of the US.

$ 0.00
1 year ago

Bitcoin doesn't have to be "made legal". there's nothing illegal about it in most jurisdictions.

$ 0.00
1 year ago

great research! thank you

$ 0.00
1 year ago

No problem!

$ 0.00
1 year ago