The Reasons why Crypto Founders Choose to Remain Anonymous
The Reasons why Crypto Founders Choose to Remain Anonymous
Founding crypto project by anonymous founders and teams in the cryptocurrency industry is not new. Since Bitcoin’s creation, its creator, Satoshi Nakamoto, to several founders, established projects like Monero, Zcash, DASH, Horizen, Verge, Beam, Peercoin and others, followed the path and kept their identity secret while developing the cryptocurrency to the next level.
There are several reasons for staying anonymous as a project team while maintaining the integrity and transparency of the project itself. Today, we’re going to discuss why some figures in crypto choose to remain anonymous.
Regulation and Law Enforcement
While projects attempt to stay within the legal obedience, sometimes it can be tough to implement, especially in an environment where there is minimal regulatory guidance. The cryptocurrency industry is being regulated as innovation spurs, which means new regulations or actions by regulators can have a high impact on project development.
Ripple’s XRP is a top example of such an instance: a lawsuit by the Securities and Exchange Commission (SEC). As a result, many established exchanges like Binance US, Coinbase and others delisted the token. This entire lawsuit process hit the price of XRP soon after the media outlets started covering the event.
An interesting case is the Financial Conduct Authority (FCA) ban on cryptocurrency derivatives for retail investors in the United Kingdom. Nevertheless, many point to decentralized derivatives to circumvent the ban, allowing retail traders to access financial tools. While decentralized projects can’t be “stopped”, another process can be used; going after the project’s developers is one of them.
While DeFi generally ought to be legal and regulatory, hurdles may soon come. If they do, anonymity is the only process to safeguard the people’s access to decentralized financial tools.
Staying Safe While Keeping Identity Secret
Keeping one’s identity secret allows one to remain safe from uncertain events. It’s unlikely for someone’s well being to be threatened as a direct result of running a blockchain project; it has happened before and can happen for many reasons.
One of the most pertinent examples possibly occurred in late 2020, Yearn.Finance (YFI) developer, Andre Cronje, was working on an unfinished project dubbed Eminence (EMN). The investors were banking on the success of the developer’s past projects and sent funds to the unreleased project, and hackers exploited the smart contract and drained $15 million.
After the fund loss, Cronje was sued by some investors and received several death threats via social media. Both issues could have been avoided if the developer had been completely anonymous or at least hidden his relation project, which was hyped by the community due to the past success of Yearn.Finance.
Attacks through Social Engineering
Another reason to stay anonymous is to minimize the risk of attack vectors. The crypto sphere is riddled with scammers and hackers, both due to the anonymous nature of cryptocurrencies and the developing nature of the ecosystem where many people can still be easily scammed.
The teams working on blockchain projects can be seen as targets of hackers, and social engineering is often one of the most efficient ways to access someone’s computer or accounts. These attacks can be quite effective and happen to the most experienced and tech-savvy people.
In December 2020, Hugh Karp, the founder of Nexus Mutual, was hacked, resulting in a loss of more than $8 million. At the same time, the attack was an elaborate hack that compromised Mr Karp’s computer. According to the article, the events leading up to the hack it was also targeted. The hackers were well known to the person targeting, and these hacks could have been easily avoided.
Scams are imminent within the cryptocurrency world, and they come in shapes and forms using tricky methods. Some of the most common processes involve convincing unsuspecting investors to fork over their coins by posing as the project founder or company team, or a well-known figure within the space.
Many of these phishing scams will do so in the guise of donations, loans or promises of higher returns. For example, in July 2020, a massive Twitter hack affected high profile accounts like Elon Musk, Jeff Bezos, Warren Buffet, Coinbase and Binance. Other examples are often found in fake Twitter or telegram profiles, which caused the founder of Ethereum, Vitalik Buterin, to change his Twitter handle to “Vitalik Not Giving Away ETH”.
Considering the above, keeping a low profile can be a way to save the project and the community from these types of attacks.
Individuals often express their random thoughts on the internet, whether political or personal. The project leader’s controversial opinions, statements, or actions can hurt the project itself. It’s becoming more pertinent as time goes on, with the surge of “cancel culture” when even fictional characters like Pepe frog can be spun as “hate symbols”.
For example, Tesla stock prices fell after the well-known Joe Rogan podcast episode where the billionaire inventor Elon Musk smoked cannabis with Joe Rogan. This stock price fall happened when he tweeted that Tesla’s stock price was “too high”.
Also, forks of Bitcoin got a bad reputation due to the people affiliated with them, including Roger Ver and Craig Wright, who earned bad names within the crypto sphere. Their association with their Bitcoin fork projects has harmed the reputation of said projects.
Anonymity might be a great way to practice free speech in their personal life without fearing a negative impact on their work.
Anonymous But Transparent
Can a DeFi project be anonymous and still be transparent? We believe so. Given the open-source nature of cryptocurrency projects, users don’t need to trust the claims made by project leads, and they have to verify themselves.
Considering this is too technical, Messari Disclosures Registry can be used to verify the claims by the said developers. For example, It’s hard to imagine what Bitcoin could have accomplished if the founder had been known to the world.
It’s nothing new that a DeFi project team like Indian Pariah wants to be pseudonymous. Still, there are hundreds of established projects. Nobody knows who is running the projects on the list Monero, Zcash, DASH, Horizen, Verge, Beam, PancakeSwap, PinkSale, and Unicrypt Network are prominent names.
The important point is to develop the project without worrying about threats, scams, warnings and a bad reputation. There will always be trade-offs with anonymity, but for the Indian Pariah project, we feel that staying pseudonymous is the right choice for the project team, and at least for now.