The story of would-be “bitcoin bank” is sure to become the stuff of cryptocurrency legend. From the high-profile launch of the company in Nicosia, Cyprus, to the dramatic collapse of the company only a month later, at every turn the Neo tale has been filled with drama, mystery and intrigue. Was founder and CEO Danny Brewster a well-intentioned innovator in over his head, or is he, as the Cyprus police have suggested, a fraudster? Were the company’s shares on Havelock Investments being manipulated by outside forces, or was insider trading to blame? And where, exactly, are all of the company’s funds?
Earlier this week, Danny Brewster broke his silence about the situation at Neo on a Reddit post, claiming the implosion at Mt.Gox and the failure of bitcoin crowdfunding platform BitFunder resulted in the lockdown of his company’s funds and eventual insolvency. Brewster said that he had covered the expenses from his personal funds, which soon ran out, and that he left Cyprus in an effort to find new investors. Along the way, he claims he received a threat against his daughter, had a funeral to attend, and had tried desperately to clarify the situation with Cyprus police.
Today, the staff of Neo & Bee posted their own version of events to Reddit, and it tells a very, very different story. George Papageorgiou, former COO, and Øystein Aaby, former Compliance and Risk Management Officer, claim the troubles at Neo were present almost from the very start, and that the fault lies entirely on Brewster’s shoulders.
Danny Brewster is the sole Director, shareholder and CEO of the group of companies. He was solely responsible for raising approximately 9,400 bitcoins prior to hiring any employees through crowdfunding on multiple platforms. Once we assumed our duties, we repeatedly made requests regarding transparency of bitcoins in the company’s possession so that the CFO could perform his duties. The CEO never divulged specific documented information regarding the IPVO bitcoins and amounts. To this date, and unless further information is revealed by Danny Brewster, the CFO is unable to account for the majority of bitcoins allegedly expended. Danny Brewster was the sole custodian of funds raised from the IPVO and despite repeated requests from both the CFO and Compliance and Risk Management Officer, he consistently deflected and delayed any attempts to have the coins witnessed or accounted for – increasing concerns leading up to the events of March 19th.
According to the report, Brewster claimed that the company had nearly 5,000 bitcoin in reserve until March 19th, when he called a meeting of the staff to inform them that Neo was down to its last 140 BTC (around $70,000 at the time). The next day, the staff “made very clear” to him that they wanted him to step down as CEO. After four days of delays and excuses, the post claims, Brewster left Cyprus and has been largely unreachable by the staff since. Reports about the “threat” made against his daughter appear to date from March 26, and Cyprus police claim that Brewster has yet to report the threats.
The Neo staff also claim that all of the company’s financial accounts and BTC reserves are under Brewster’s direct control, and that he effectively fled the country with all of Neo’s funds. They also confirm that Brewster controls at least 50 BTC worth of employee funds, and privately sold BTC to others in Cyprus, which he never actually delivered. After failing to receive their pay in early April, the staff and management of Neo decided that enough was enough.
For all of the above reasons, upon reading his last response, everyone in the company filed our resignations to be forwarded to the local Registrar of Companies, in absence of the CEO.
While there is a “he said/she said” element to these posts, the known facts tend to fall strongly on the side of the Neo staff. Brewster is currently under investigation for fraud in Cyprus, and has made several conflicting statements about Neo’s funds, his losses in Mt.Gox and his reasons for leaving Cyprus.
It’s worth noting that many well-known bitcoin advocates publicly supported or endorsed Neo & Bee, which is one reason for the success of their IPO. Andreas Antonopoulos was listed as an advisor to the company, for instance, but has yet to make a public statement on the failure of the company. Bitcoin-friendly economist and investor Tuur Demeester recently posted his own Reddit thread about his reasons behind backing Neo, and his regrets.