Syscoin, one of the oldest blockchain platforms, faces serious accusations of manipulating its SYS token supply to defraud investors. The Dogecoin Foundation has filed a report alleging misconduct within the Syscoin Foundation and SYS Labs Holding Ltd.
Unauthorized Token Issuance
Directors Jagdeep Sidhu, Willy Ko, Christopher O’Shea, Michiel Naring, and Bradley Stephenson are accused of issuing 100 million new Syscoins without proper authorization. This issuance was allegedly disguised as a community-approved action, with O’Shea posting a proposal under the alias “BigPoppa.” However, the legitimacy of this vote is in question, with allegations that it was either faked or conducted in secret.
Misappropriation of Funds
The new tokens were purportedly meant to strengthen the foundation's treasury. Instead, the Dogecoin Foundation claims the funds were redirected to SYS Labs, enriching the directors while disadvantaging the foundation and its investors.
Governance and Transparency Issues
João Fernandes of Rollux proposed redirecting Syscoin’s masternode governance budget towards Rollux, a project initially developed by the Syscoin Foundation but later transferred to SYS Labs. This move allegedly increased the personal stakes of the directors significantly.
Legal Investigations
The Dutch authorities are investigating potential financial crimes, including theft, embezzlement, fraud, forgery, and money laundering. The issuance and subsequent sale of 100 million tokens caused the SYS token’s value to drop sharply, negatively impacting investors.
Failure to File Tax Returns
The Dogecoin Foundation’s report also accuses the Syscoin Foundation directors of failing to file corporate tax returns, a criminal offense under Dutch law.
Denials and Deflections
Despite reports that Jagdeep Sidhu would resign amid these allegations to form a new entity, 'Syscoin Red,' Sidhu denied these claims on Twitter, labeling them as FUD (fear, uncertainty, and doubt). Meanwhile, Willy Ko raised concerns about the transparency of the foundation's treasury wallet, and Matthew Mappin, a former business development manager at SYS Labs, highlighted the community’s ongoing concerns regarding financial transparency and the obscure relationship between the Syscoin Foundation and SYS Labs.
Claims of Transparency
Christopher O’Shea stated that treasury funds are managed through a cold wallet, with monthly transfers to a hot wallet for operational expenses, countering claims of mismanagement.
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