An investigation into Helium, a company that was fashioned as the best real-world use case of Web3 technology, has revealed that it was established to “enrich the founders and early supporters at the expense of everyday people.” The company is reportedly struggling to generate revenue, and its top executives have been accused of hoarding a majority of wealth during the project’s early days, leaving the investments of those people “who bought hotspots thinking they were going to bring value” at risk.
Helium Is A Fair Network?
At its inception, the Web3.0 company said it was building a “People’s Network” that consisted of a worldwide wireless internet connection for objects like dog collars and parking meters. The $1.2 billion firm backed by Tiger Global and Andreessen claimed that all users were required to purchase a gadget that looked like a wifi router for $500, plug it into their wall, and receive Helium’s native cryptocurrency – HNT – in return. Many saw this as a great form of recurring passive income, which some investors alleged could recoup their investments in weeks.
The company implied that the network’s gains would be shared by all its users and investors if demand for Helium’s ecosystem took off and drove up HNTs value. According to the company’s 2018 blog post, Helium’s chief hype master and Chief Operations Officer (COO) Frank Mong wrote that one of the firm’s principles was that it was fair and that “Everyone has an equal opportunity to mine.”
But is it? Does everyone get an equal opportunity on the Helium network?
A Forbes investigation reviewed the company’s leaked internal. Documents, transaction data, and interviews with former employees of Helium found that as Helium’s top leadership sold it as a “People’s Network,” they silently acquired most of the tokens for themselves at the beginning of the project. The investigation also reveals that top executives and their friends hoarded much of the wealth they acquired during the project’s most lucrative days.
According to Policy Director at the Duke Financial Economics Center Lee Reiners:
“This is a recurring pattern in the crypto economy. This thing was set up to enrich the founders and early supporters at the expense of everyday people.”
Forbes alleges that it identified 30 digital wallets connected to executives, employees, friends, family, and early investors that mined nearly 50% of HNT tokens (3.5 million HNT) in the first three months of the launch in August 2019. According to a Forbes analysis verified by Certik, a blockchain forensics firm, more than 25% of all HNT had been mined by insiders – which would have been worth $250 million when the token hit its all-time high in November 2021. Even after the crypto market crashed in 2022, the tokens are still worth $21 million.
It is common for crypto projects to compensate founders, early investors, and sometimes the core development team who invest their time, skills, and capital to kickstart a project. This compensation usually takes the form of allotment tokens and is disclosed in white papers. However, in Helium’s case, Forbes alleges that:
“While Helium and its executives have publicly discussed their incentive plan — a scheme called Helium Security Tokens, or HST, which guarantees about a third of all HNT for insiders — they haven’t previously disclosed the additional windfall taken from Helium’s public token supply, worth millions, that Forbes identified.”
The global business media company claims that when Helium hotspot mining was profitable, only 30% of rewards were distributed to the community, while insiders kept most of the tokens.
Helium co-founder and CEO Amir Haleem responded to the accusations by saying that 50% of the hotspots were distributed to employees, their families, and friends. He added that he does not believe the additional windfall should have been disclosed to the community. In his interview with Forbes, Halleem said he felt that none of the numbers were egregious or unreasonable. “I don’t know why we would be asked to be in a position to reveal anything about these people… They took an enormous risk and a huge chance of paying money to build something,” he told Forbes.
Helium’s HNT token is trading at $4.64, more than 90% down from its November 2021 high of $55 amid the broader crypto bear market and increasing complaints from miners.
Last week, Helium announced it has secured a partnership with two global mobile network providers, DISH, and T-Mobile, and is now building its own 5G network.