Austrian Programmer And Ex Crypto CEO Likely Stole $11 Billion Of Ether

Ethereum, the second biggest crypto network, is worth $360 billion. Its creator, Vitalik Buterin, has more than 3 million Twitter followers, has made videos with Ashton Kutcher and Mila Kunis, and has met with Vladimir Putin. All the most popular trends in crypto over the last several years launched on Ethereum: initial coin offerings (ICOs), decentralized finance (DeFi), non-fungible tokens (NFTs), and decentralized autonomous organizations (DAOs). And it has spawned a whole class of blockchain imitators, often called “Ethereum killers.”

Ethereum is also the subject of a great mystery: who committed the largest theft of ether (Ethereum’s native token) ever, by hacking The DAO? The decentralized venture capital fund had raised $139 million in ether (ETH) by the time its crowd sale ended in 2016, making it the most successful crowdfunding effort to that date. Weeks later, a hacker siphoned 31% of the ETH in The DAO—3.64 million total or about 5% of all ETH then outstanding—out of the main DAO and into what became known as the DarkDAO.

Who hacked The DAO? My exclusive investigation, built on the reporting for my new book, The Cryptopians: Idealism, Greed, Lies, and the Making of the First Big Cryptocurrency Craze, appears to point to Toby Hoenisch, a 36-year-old programmer who grew up in Austria and was living in Singapore at the time of the hack. Until now, he has been best known for his role as a cofounder and CEO of TenX, which raised $80 million in a 2017 initial coin offering to build a crypto debit card—an effort that failed.

The market cap of those tokens, which spiked at $535 million, now sits at just $11 million.After being sent a document detailing the evidence pointing to him as the hacker, Hoenisch wrote in an email, “Your statement and conclusion is factually inaccurate.” In that email, Hoenisch offered to provide details refuting our findings—but never answered my repeated follow-up messages to him asking for those details.

To put the enormity of this hack in perspective, with ETH now trading around $3,000, 3.64 million ETH would be worth $11 billion. The DAO theft famously and controversially prompted Ethereum to do a hard fork—where the Ethereum network split into two as a way to restore the stolen funds—which ultimately left the DarkDAO holding not ETH, but far less valuable Ethereum Classic (ETC). The proponents of the fork had hoped ETC would die out, but it now trades around $30. That means the descendant wallets of the DarkDAO now hold more than $100 million in ETC—a high dollar monument to the biggest whodunnit in crypto.

Last year, as I was working on my book, my sources and I, utilizing (among other things), a powerful and previously secret forensics tool from crypto tracing firm Chainalysis, came to believe we had figured out who did it. Indeed, the story of The DAO and the six-year quest to identify the hacker, shows a lot about just how far the crypto world and the technology for tracking transactions have both come since the first crypto craze. Today, blockchain technology has gone mainstream. But as new applications arise, one of the first uses of crypto—as an anonymity shield—is in retreat, thanks to both regulatory pressure and the fact that transactions on public blockchains are traceable.

Since Hoenisch won’t talk to me, I can only speculate about his possible motives; back in 2016 he identified technical vulnerabilities in the DAO early and may have decided to strike after concluding his warnings weren’t being taken seriously enough by the creators of the DAO. (One of his TenX cofounders, Julian Hosp, an Austrian medical doctor who now works in blockchain full time, says of Hoenisch:

“He is a person that is super opinionated. Always believed he was right. Always.”) Looked at from that perspective, this is also a tale of the big brains and big egos that drive the crypto world–and of a hacker who may have justified his actions by telling himself he simply did what the faulty code baked into The DAO allowed him to do.

In early 2016, the Ethereum network was not even a year old, and there was only one app on it that people were interested in: The DAO, a decentralized venture fund built with a smart contract that gave its token holders the right to vote on proposals submitted for funding. It had been created by a company named Slock.it, which, instead of seeking traditional venture capital, had decided to create this DAO and then open it up for crowdfunding—with the expectation that its own project would be one of those funded by The DAO. Slock.it’s team thought The DAO might attract $5 million.

Yet when the crowd sale opened on April 30th, it took in $9 million in just the first two days, with participants exchanging one ether for 100 DAO tokens. As the money poured in, some on the team felt queasy, but it was too late to cap the sale. By the time the funding closed a month later, 15,000 to 20,000 individuals had contributed, The DAO held what was then 15% of all ether and the price of the cryptocurrency was steadily rising. At the same time, a variety of security and structural concerns were being raised about The DAO, including one that would, ironically, later prove to be crucial to limiting the hacker’s immediate access to the spoils.

That problem: withdrawing funds was too hard. Someone wanting to retrieve their money had to first create a “child DAO” or “split DAO,” which required not only a high degree of technical knowledge, but also waiting periods after each step and the agreement of anyone else who moved funds into that child DAO.

On the morning of June 17th, ETH reached a new all-time high of $21.52, making the crypto in The DAO worth $249.6 million. When American Griff Green woke up that morning in Mittweida, Germany (he was staying in the family home of two brothers who were Slock.it cofounders), he had a message on his phone from a DAO Slack community member who said something weird was happening— it looked like funds were being drained.

Green, Slock.it’s first employee and community organizer, checked: there was indeed a stream of 258-ETH (then $5,600) transactions leaving The DAO.  By the time the attack stopped a few hours later, 31% of the ETH in The DAO had been siphoned out into the DarkDAO. As awareness of the attack spread, ether had its highest trading day ever, with its price plummeting 33% from $21 to $14.


Split Fortunes

The 2016 DAO crowdfunding sale drove the price of ether (ETH) to a then record high—until the June 17th attack on The DAO sent it plummeting. After the hard fork on July 20th, the old blockchain began trading as ether classic (ETC).


Soon, the Ethereum community pinpointed the vulnerability that enabled this theft: the DAO smart contract had been written so that any time someone withdrew money, the smart contract would send the money first, before updating that person’s balance. The attacker had used a malicious smart contract that withdrew money (258 ETH at a time), then interfered with the updating of the contract, allowing them to withdraw the same ether again and again. It was as if the attacker had $101 in their bank account, withdrew $100 at a bank, then kept the bank teller from updating the balance to $1, and again requested and received another $100.

Even worse, once the vulnerability became public, the remaining 7.3 million ETH in The DAO was at risk of a copycat attack. A team of white hat hackers (that is, hackers acting ethically) formed and used the attacker’s method to divert the remaining funds into a new child DAO. But the attacker still had about 5% of all outstanding ETH, and even the rescued ether was vulnerable, given the flaws in The DAO. Plus, the clock was ticking down to a July 21st deadline—the first date when the original hacker might be able to get at the funds they had diverted into the DarkDao.

If the community wanted to keep the attacker from cashing out, they would need to put tokens in the hacker’s DarkDAO and then in any future “split DAOs” (or child DAOs) the unknown hacker created. (Under the rules of the DAO smart contract, the attacker couldn’t withdraw funds if anyone else in their split DAO objected.) Bottom line: if the white hats ever missed their window to object, the attacker would be able to abscond with the funds—meaning this informal group would have to be constantly vigilant.

Eventually, after much bickering (on Reddit, on a Slack channel, over email and on Skype calls) and Ethereum founder Buterin publicly weighing in, and after it seemed that a majority of the Ethereum community supported the measure, Ethereum did a “hard fork.” On July 20th the Ethereum blockchain was split into two. All the ETH that had been in the DAO was moved to a “withdraw” contract which gave the original contributors the right to send in their DAO tokens and get back ETH on the new blockchain. The old blockchain, which still attracted some supporters and speculators, carried on as Ethereum Classic.

• • •

On Ethereum Classic, The DAO and the attacker’s loot (in the form of 3.64 million ETC) remained. That summer, the attacker moved their ETC a few hops away to a new wallet, which remained dormant until late October, when they began trying to use an exchange called ShapeShift to cash the money out to bitcoin. Because ShapeShift didn’t at that time take personally identifying information, the attacker’s identity was not known even though all their blockchain movements were visible.

Over the next two months, the hacker managed to obtain 282 bitcoins (then worth $232,000, now more than $11 million). And then, perhaps because ShapeShift frequently blocked their attempted trades, they gave up cashing out, leaving behind 3.4 million Ether Classic (ETC), then worth $3.2 million and now more than $100 million.

That might have been the end of the story—an unknown hacker sitting on a fortune he couldn’t cash out. Except last July, one of my sources involved in the DAO rescue, a Brazilian named Alex Van de Sande (aka Avsa) reached out, saying the Brazilian Police had opened an investigation into the attack on The DAO — and whether he might be a victim or even the hacker himself.  Van de Sande decided to commission a forensics report from blockchain analytics company Coinfirm to help exonerate himself (though then, the police closed the investigation, he said). In case any similar situations arose in the future, he went forward with the report examining those cash-out attempts in 2016.

Among the early suspects in the hack had been a Swiss businessman and his associates, and in tracing the funds, Van de Sande and I also found another suspect: a Russia-based Ethereum Classic developer. But all these people were in Europe/Russia and the cash-outs mapped onto an Asian-morning-through-evening schedule—from 9 A.M. to midnight Tokyo time—when the Europeans were likely sleeping. (The timing of their social media posts suggested they kept fairly normal hours.) But based on a customer support email the hacker had submitted to ShapeShift in the leadup to the attack, I believed they spoke fluent English.

Jumping off from the Coinfirm analysis, blockchain analytics company Chainalysis saw the presumed attacker had sent 50 BTC to a Wasabi Wallet, a private desktop Bitcoin wallet that aims to anonymize transactions by mixing several together in a so-called CoinJoin. Using a capability that is being disclosed here for the first time, Chainalysis de-mixed the Wasabi transactions and tracked their output to four exchanges. In a final, crucial step, an employee at one of the exchanges confirmed to one of my sources that the funds were swapped for privacy coin Grin and withdrawn to a Grin node called grin.toby.ai. (Due to exchange privacy policies, normally this sort of customer information would not be disclosed.)

The IP address for that node also hosted Bitcoin Lightning nodes: ln.toby.ai, lnd.ln.toby.ai, etc., and was consistent for over a year; it was not a VPN.

It was hosted on Amazon Singapore. Lightning explorer 1ML showed a node at that IP called TenX.

For anyone who was into crypto in June 2017, this name may ring a bell. That month, as the ICO craze was reaching its initial peak, there was an $80 million ICO named TenX. The CEO and cofounder used the handle @tobyai on AngelList, Betalist, GitHub, Keybase, LinkedIn, Medium, Pinterest, Reddit, StackOverflow, and Twitter. His name was Toby Hoenisch.

Where was he based? In Singapore.

Although he was German-born and raised in Austria, Hoenisch is fluent in English.

The cash-out transactions occurred mainly from 8 A.M. until 11 P.M. Singapore time.

And the email address used on that account at the exchange was [name of exchange]@toby.ai.

In May 2016, as it was finishing up its historic fundraise, Hoenisch was intensely interested in The DAO. On May 12, he emailed Hosp a tip (“Profitable crypto trade coming up”) to short ETH once the DAO crowdfunding period ended. On May 17th and 18th, in the DAO Slack channel, he engaged in a long conversation in which he made, depending on how you count, 52 comments, minimum, about vulnerabilities in The DAO, getting into various aspects of the code and nitpicking over exactly what was possible given the way the code was structured.

One issue spurred him to email Slock.it’s chief technology officer, Christoph Jentzsch, its lead technical engineer, Lefteris Karapetsas, and community manager Griff Green. In his email, he said he was writing a proposal for funding from The DAO for a crypto card product called DAO.PAY, and added, “For our due diligence, we went through the DAO code and found a few things that are worrisome.” He outlined three possible attack vectors and later emailed with a fourth. Jentzsch, a German who had been working on a PhD in physics before dropping out to focus on Ethereum, responded point by point, conceding some of Hoenisch’s assertions but saying others were “false” or “don’t work.” The back and forth ended with Hoenisch writing; “I’ll keep you in the loop if we find anything else.”

But instead of further email exchanges, on May 28th, Hoenish wrote four posts on Medium, beginning with, “TheDAO—risk free voting.” The second, “TheDAO—blackmailing withdrawals,” foreshadowed the main issue with The DAO and why Ethereum ultimately chose to hard fork: if it did not, the only other options were to let the attacker cash out his ill-gotten gains or for some group of DAO token holders to follow him forever into new split DAOs he created as he attempted to cash out. “TLDR: If you end upon in a DAO contract without majority voting power, then an attacker can block all withdrawals indefinitely,” he wrote. The third showed how an attacker could do this cheaply.


To put the enormity of this hack in perspective, with ETH now trading around $3,000, 3.64 million ETH would be worth $11 billion.


His last, most telling post for the day, “TheDAO—a $150m lesson in decentralized governance,” said DAO.PAY decided against making a proposal after uncovering “major security flaws” and that “Slockit down-played the severity of the attack vectors.” He wrote, “TheDAO is live … and we are still waiting for Slockit to put out a warning that THERE IS NO SAFE WAY TO WITHDRAW!”

On June 3, his last Medium post, “Announcing BlockOps: Blockchain Hack Challenges” said, “BlockOps is your playground to break encryption, steal bitcoin, break smart contracts and simply test your security knowledge.” Although he promised to “post new challenges in the field of bitcoin, ethereum and web security every 2 weeks,” I could find no record that he did so.

Two weeks later came the DAO attack. The morning after the attack, at 7:18 A.M. Singapore time, Hoenisch trolled Ethereum creator Vitalik Buterin by retweeting something Buterin had said before The DAO was attacked, but after it was known that the vulnerability used in the attack was evident in the DAO’s code. In the two-week old tweet, Buterin had said that he’d been buying DAO tokens since the security news. Over the following weeks, Hoenisch tweeted anti-hard fork posts like one titled, “Too Big to Fail is Failure Guaranteed.”

Curiously, on July 5, a couple weeks after the attack, Hoenisch and Karapetsas exchanged Reddit DMs titled “DarkDAO counter attack” — though the substance of the messages is unclear because Hoensich has deleted all his Reddit posts. (Hosp recalls that Hoenisch told him he had deleted his Reddit account after an altercation with an “idiot” on Reddit over The DAO.) Hoenisch wrote, “Sorry for not contacting first. I got carried away from finding it and telling the community that there is a way to fight back. In any case, I don’t see any way the attacker can use this.”

After Karapetsas told Hoenisch of the white hats’ plans to protect what was left in The DAO, Hoenisch replied, “I took down the post.” Karapetsas responded, “I will keep you up to date with what we do from now on.” Hoenisch’s last message in that exchange: “I’m sorry if I messed up the plan.”

On July 24th, the day after the Ethereum Classic chain revived and began trading on Poloniex, Hoenisch tweeted, “ethereum drama escalating: from #daowars to #chainwars. Ethereum classic now traded on poloniex as $ETC and miners planning attacks.” On July 26th, he retweeted Barry Silbert, the founder and CEO of the powerful and well-respected Digital Currency Group, who had tweeted, “Bought my first non-bitcoin digital currency…Ethereum Classic (ETC).”


“He (the DAO hacker) really screwed the pooch. Reputation is way more valuable than money.”


Upon hearing the name Toby Hoenisch, without knowing evidence indicated he was the DAO attacker, Karapetsas, a usually good-humored Greek software developer who was one of the DAO creators and had engaged with him by email and on Reddit, said: “He was obnoxious…. he was quite insistent on having found a lot of problems.”

After hearing that the DarkDAO ETC had been cashed out to a Grin node with Hoenisch’s alias, Karapetsas observed that if Hoenisch had instead remedied the situation while the DarkDao funds were frozen, the Ethereum community would have given him “huge kudos” for finding the weakness and then returning the ETH. Similarly, Griff Green, whose current projects lean towards helping non-profit and public causes grow in the digital world, believes the hacker missed the chance to “be a hero.” Says Green: “He really screwed the pooch…Reputation is way more valuable than money.”

Ironically, in a 2016 blog post, Hoenisch wrote, “I’m a white hat hacker by heart.’’ Twenty days later came the DAO attack.

As I noted earlier, after being sent a document laying out the evidence that he was the hacker and asking for comment for my book, Hoenisch wrote that my conclusion is “factually inaccurate.” He said in that email he could give me more details—and then did not respond to four requests for those details, nor to additional fact checking queries for this article. In addition, after receiving the first document detailing the facts I’d gathered, he deleted almost all his Twitter history (though I’ve saved the relevant tweets).

In May 2015, Hoenisch and the cofounders of his crypto debit card venture—first known as OneBit—had some success at a Mastercard Masters of Code hackathon in Singapore. They started making the card available that year on an invitation-only basis, because, as Hoenisch explained on Reddit, “We don’t want to launch a half-assed Bitcoin wallet that gets us in trouble for violating KYC (know your customer) laws. And yes, legal is the main reason we can’t just ship it.” A Bitcoin Magazine article at the time said Hoenisch had a background in AI, IT security and cryptography.

In early 2017, just months after the presumed DAO attacker stopped trying to cash out their ETC, Hoenisch’s team—by then operating as TenX—announced it had received $1 million in seed funding from (among others) Fenbushi Capital, where Ethereum founder Buterin was a general partner. Then came the $80 million ICO. In early 2018, things started to go south for TenX when its card issuer, Wavecrest, was booted from the Visa network, meaning that TenX’s users could no longer use their debit cards.

On Oct. 1, 2020, TenX announced it was sunsetting its services because its new card issuer, Wirecard SG, had been directed by the Monetary Authority of Singapore to cease operations. On April 9, 2021, TenX posted a blog called “TenX, Meet Mimo.” It outlined a new business that would offer a euro-pegged stablecoin, which kept its value pegged to a fiat currency such as US dollars or euros or Japanese Yen. The market cap of TenX tokens, which spiked at $535 million, now sits at just $11 million. TenX has rebranded itself as Mimo Capital and is offering holders of TenX tokens mostly worthless MIMO tokens instead at a rate of 0.37 MIMO for each TenX.

Hosp, who was the public face of the company while there, was booted by Hoenisch and another cofounder in January 2019. This occurred a couple months after some crypto publications reported on Hosp’s past affiliation with an Austrian multi-level marketing scheme. However, before hearing that evidence indicated Hoenisch was the DAO attacker, Hosp said his feeling had been that Hoenisch had perhaps pushed him out over jealousy that Hosp had sold bitcoin at the top of the bubble in late 2017, netting himself $20 million. Meanwhile, Hoenisch had kept all his crypto as the bubble – and his personal net worth – deflated.

“He came from a very poor family, he had no experience in investing, and he was in crypto in 2010 but he had literally no money, nothing, when we were in Las Vegas together [in the summer of 2016] he had nothing, and I was doing really well with my investments… he would always push for getting more salary, for having something nicer.” Hosp also mentioned Hoenisch had to send money home to his mother, who had raised him, as well as his sister and brother, as a single parent.


As new blockchain applications arise, one of the first uses of crypto—as an anonymity shield—is in retreat.


Upon hearing that Hoenisch was the likely DAO attacker, Hosp said he was “getting goose bumps” and begin recalling details from his interactions with his former partner that now seemed to take on new significance. For example, when asked if Hoenisch was into Grin (the privacy coins to which the hacker had cashed out) Hosp said, “Yes! Yes, he was. He was fascinated by that…I lost money because of those stupid coins! I invested in them because of him, because he was so fascinated by them.”

He said that Hoenisch was also obsessed with building a Bitcoin/Monero “atomic swap” – or a way to use smart contracts to swap between Bitcoin and the privacy coin Monero. At the time, Hosp was confused by that, because he felt there was no market for such a product. Later, Hosp pulled up chats from August 2016, in which Hoenisch seemed excited about the price of ETC, the coin held by the hacker after the ethereum fork.

When trying to recall the incident that he believed prompted Hoenisch to close his Reddit, Hosp began searching on his computer and muttered to himself, “He always used tobyai.” He confirmed that one of Toby’s regular email addresses ended in @toby.ai.

Recalled a still astounded Hosp: “For some weird reason, he was quite well aware of what was happening…He understood more of the DAO hack when I asked him what had happened…than I had found on the internet or anywhere.”

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Follow me on Twitter or LinkedIn. Check out my website.

A former senior editor of Forbes, I’m a crypto journalist, host of the Unchained podcasts, and author of The Cryptopians: Idealism, Greed, Lies, and the Making of the First Big Cryptocurrency Craze. https://bit.ly/cryptopians

Source: Exclusive: Austrian Programmer And Ex Crypto CEO Likely Stole $11 Billion Of Ether

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Recent News

5 Tips for Crowdfunding During the Pandemic

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With the in a holding pattern and businesses shutting down, you may be wondering if a campaign can succeed right now. Are people going to be interested in funding your next cool gadget or product?

’s numbers reveal that backers are still showing up to support their favorite projects.  crowdfunding campaigns are also thriving.

To those afraid to launch a crowdfunding campaign, I say this is an excellent time to go ahead. While people are cautious about how they spend their money, most are getting on with life and resuming activities they may have paused — including funding projects. And as the number of live campaigns is lower than usual, you can take advantage of less competition and leverage the platforms’ deadline extensions and reduced fees.

Here’s how to make sure your crowdfunding campaign is a success.

1. Focus on community

Community fuels Kickstarted and Indiegogo campaigns. If you have a strong community, build on it. Engage with your audience. Find new ways to pique their interest and regularly update them about product delivery or delays. Consumers have more time to browse and buy products than they used to, so they’ll seek out something that resonates with them. Attract attention with the right messaging and product discounts.

2. Level up promotion

As people make more deliberate money decisions, your job is to be more convincing in your pitch. Give backers strong reasons for funding your project. Invest in ads, doing aggressive A/B testing to get your messaging and visuals right. Spend smartly on social advertising, not more.

Related: How to Kickstart Your Capital Funding

3. Increase your outreach efforts

Start or ramp up how often you send out press releases, reach out for influencer , and guest post, to name a few outreach strategies. People are spending more time online, scanning for content. Address the demand by sending out two guest posts a week instead of one, for example. Add to your content, engaging with your audience and showcasing the impact your product can have.

4. Plan for a relaunch if you are having supply chain issues

If your product relies on supplies from a region with production slowdowns and you have limited options for workarounds, communicate that to your community. Most likely, they will continue to support you through the delay.

Related: 12 Key Strategies to a Successful Crowdfunding Campaign

If you see a dwindling in your funding despite the , marketing and promotion, plan for a relaunch. A relaunch in the next few months may prove to be more effective than stalling a campaign that can’t deliver because of supply-chain issues.

5. Communicate

Regardless of your crowdfunding journey and current status, communication is key to running a successful campaign. Talk to your suppliers and shippers. Keep your community informed, communicating any setbacks or issues you experience. Going silent when you encounter challenges will not help you achieve your goals.

No matter what your situation, give your backers the benefit of knowing the truth. They will likely understand and may try to meet you where you are. Continue to press on for the best outcome and keep involving your backers. That’s how to succeed today.

Related: Beyond Kickstarter: 10 Niche Crowdfunding Platforms for Startups

By: Sohail Khan Entrepreneur Leadership Network Writer

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Facing $370 Million In Debt, This Team Is Asking Fans To Chip In

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When Turkish Super Lig side Fenerbahçe asks fans like Tolga Babuz for money there is no doubt about him reaching for his wallet.

Facing debts of $370 million, hit by the coronavirus suspension of play and struggling with an already high wage bill, the club called for direct donations via text message.

Sending ‘1907’-the year of the club was established-to a special number gives Fenerbahçe 20 Turkish Lira, around $3.

“If the club is campaigning for something, it is our duty to join it”, Babuz says.

He did not hesitate in sending multiple texts, not only on his behalf, but in honour of his infant children and deceased father.

It’s not the first time the club has asked fans directly for money.

Despite being listed on the Turkish Stock Market and having been granted many lines of generous credit from the banks, Fenerbahçe is well-versed in fan-based fundraising.

Back in 2016, Babuz, who considers himself a ‘fanatic’ or ultra, saw every item in a downtown merchandise store bought by diehard fans, after calls for financial support.

Even the air-conditioning unit was unscrewed from the wall and carried off by a paying supporter.

Crowdfunding appeals may have raised sums in the short-term, but one figure which is harder to alter is the money owed to the banks.

Big signing addiction

The Istanbul giant is the 6th most indebted in Europe and has consistently lost money. Yet it cannot shake the habit of making flagship signings of players in the twilights of their careers.

From Nani to Martin Skrtel, Robin Van Persie to Mathieu Valbuena, players have queued up for a final pay-day by the Bosphorus.

But paying the giant wages these stars expect has pushed the club further and further into the red.

Not that the Istanbul giants are alone, bitter inter-city rivals Galatasaray and Besiktas have similarly large debt piles, having taken the same approach to player recruitment.

Trabzonspor from the Black Sea, which is considered the country’s fourth superpower, is also drowning in debt.

“These four clubs dominate Turkish football”, says leading soccer economist in Turkey Tugrul Aksar.

“[But they] do not seem to be able to solve their own financial problems because there are big gaps between total revenue and expenses.

“It is not possible to solve problems without generating new sources of income. Cash flows are insufficient, shareholders’ equity is negative, their debts are more than their income and their accumulated losses are about TL 4.5 billion, around $750 million.”

Aksar’s assessment of what would happen to the clubs if they played in a different country is blunt: “They would probably go bankrupt and be relegated.”

Helping ‘the family’

The idea that clubs might ask fans to donate to their soccer club at a time of national crisis is not universally embraced.

In countries like the U.K., the backlash against teams seen to be cashing in on fan’s goodwill has been extreme, even at teams where financial resources are tight.

English third division side Sunderland caused uproar by refusing to refund supporters season tickets for the remainder of the season. A decision which was subsequently reversed.

There was also a huge public outcry when Liverpool and Tottenham attempted to make use of the British government’s coronavirus support scheme-where the government paid a proportion of employees salaries to safeguard jobs. This also prompted U-turns by both organizations.

Players, the argument goes, should take a pay cut before others step in to support the club.

In Turkey, the mentality of supporters is different.

“I felt as if I was helping my family”, says Fenerbahçe fan and club member Ergün Bülbül.

“I supported with SMS [text message], I also sent money by bank transfer.”

“It is necessary to think as a whole, both the football player, the fan and the club should make a sacrifice.”

But as Fenerbahçe asked fans to donate, faced with what looks like a perilous financial scenario, rumours of a big-money move for the world’s most famous player of Turkish descent kicked into overdrive.

‘No explanation for this’ 

World Cup winner and Arsenal playmaker Mesut Ozil has long been rumoured to fancy a move to Fenerbahçe.

So it didn’t take long for speculation to begin that the crowdfunding SMS initiative could be used to fund a move for Ozil.

Hardcore supporters know such claims are hopeful at best, the target of the text campaign is to reach one million messages, which would be about $3m.

That wouldn’t even cover a month’s wages for Ozil whose current deal with Arsenal is an estimated $800,000 per week.

But the relentless need to spend big on a star player, regardless of the consequences or financial position, is a constant issue for Turkish soccer’s big four.

In January 2019, the banks whom Galatasaray, Fenerbahçe, Besiktas and Trabzonspor owe a combined TL 10 billion ($1.4bn), restructured their debts.

The aim was to get the vast sums owed under control.

Rather than helping to shift the approach, it prompted another summer of spending.

The four teams signed a total of 51 players for TL 716m ($104m) in the 2019 transfer window.

“Unfortunately, there is no logical explanation for this”, finance expert Aksar continues.

“These expenses were spent by the clubs so as not to be left behind in the competition. But it was a completely wrong policy.”

Aksar believes that stronger leadership and longer-term solutions from the Turkish Football Federation would help.

Whether that comes at this moment is another matter.

Ultimately for the sporting authorities and even the Turkish government, its four soccer superpowers are simply too big to fail.

Fenerbahçe fanatic Tolga Babuz certainly thinks so.

“Big clubs will survive. I think the state will help where the fan is not enough.”

Follow me on Twitter or LinkedIn.

Currently I am head of content at Construction News, specialising in investigations. I have led numerous collaborations with major media outlets. These include an undercover slave labour expose with the BBC, a Financial Times report which uncovered a sexual assault scandal and an international investigation into worker deaths on the world’s biggest airport with Architects’ Journal. My work has been longlisted for the Orwell Prize for Journalism in 2020 and I was a finalist at the 2019 British Journalism Awards. I was named International Building Press’ Journalist of the Year 2019 and awarded the IBP Scoop of the Year and Construction/Infrastructure Writer of the Year prizes.

Follow me on Twitter @JournoZak and email me at zakgarnerpurkis@gmail.com

Source: https://www.forbes.com

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Austerity has shaken the Turkish Süper Lig. Beşiktaş, Fenerbahçe, & Galatasaray face pressure from UEFA’s Financial Fair Play regulations, while a currency crisis and economic downturn has added to a wider sense of malaise. The Turkish game is now probably in its worst ever financial state.
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Mexican Companies Launch Crypto Donation Platform for People Impacted by COVID-19

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A crypto exchange from Mexico has launched an initiative to gather COVID-19-related donations through cryptocurrencies.

Mexican cryptocurrency exchange Bitso joined forces with the crowdfunding platform Donadora to launch a crypto-based donation system. The platform will help gather funds to buy food for the most vulnerable families affected by the COVID-19 crisis.

According to a report published by El Heraldo de México on May 15, each pantry delivered will be worth 150 Mexican pesos. They will have enough food to feed families of between four and six members for a week.

Donation options include both fiat currencies and various cryptos, such as Bitcoin (BTC), Ether (ETH) and XRP.

Crypto donations gain popularity as a crowdfunding method

The local exchange stated that crypto donations are a very efficient method for crowdfunding. This is due to their decentralized nature and the fact that anyone in the world can participate in the initiative.

Bitso released the following comments after the announcement:

“Donations through cryptocurrency wallets are easy, fast, and secure. Transactions are reflected in seconds, making it a very transparent method to ensure that your donation was received.”

Initiatives to fight COVID-19 continue to arise in the crypto space

Cointelegraph reported on another crypto crowdfunding campaign in April launched by the Italian Red Cross. The campaign aimed to build an advanced medical post to combat COVID-19 in Italy. This endeavor successfully raised $10,000 in four weeks.

Several crypto firms launched similar initiatives related to the COVID-19 pandemic crisis across the world, such as Binance, BitMEX and the Stellar Foundation.

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Source: https://cointelegraph.com

Hello and welcome back. Mexican Bitcoin exchange Bitso has opened bitcoin donation support for Mexico City’s earthquake relief. Donations can also be made in Ethereum and Ripple. 50% of the donations will go to the Red Cross. The rest of the funds will go to professional non-profit Mexican rescue team, Topos de Tlatelolco. Cryptocurrency users who donate funds can also get the receipt related to their transfer. Bitso will liquidate any donated funds every Friday at noon for the next four weeks. Over 230 lives have been lost as a result of this sad event and at least 44 buildings collapsed in Mexico City with thousands more damaged. Let’s see how some of the top cryptocurrencies are performing. There is now talk that another version of bitcoin might be created in November. So let’s take a closer look. There was plenty of uncertainty and concerns before the August 1st split, but we saw it surge to over $3,000 at the beginning of August and it then climbed past $4,000 the very same month. Bitcoin hit its last record high at the beginning of September surpassing $5,000 on some exchanges. At the moment, Bitcoin remains just under $4,000. It did not suffer any significant losses over the past few days, since its dramatic drop at the weekend, when we saw it fall below $3,000. Last week, news surrounding China’s crackdown had quite a bit impact on cryptocurrencies, but defender of the cryptocurrency world, John Mc Afee who is currently in China was asked on twitter whether China plans to ban mining. Mc Afee replied that they will not, but trading of cryptocurrency against the Yuan will be halted in a few weeks. Until that time, users can still complete trades without issue. Mc Afee continues to defend bitcoin and remains bullish as he believes it will reach $500,000 in less than three years. Let’s take a quick look at ethereum, it remains under $300. It is currently around $280. The first stage of the Metropolis upgrade on the Ethereum network has been launched Bitcoin Cash climbed past $540 on Tuesday, but today we saw it drop to around $462. Dash has climbed over 10% over the past 24 hours. Last Friday we saw it fall to as low as $221.

How Bitcoin (and Blockchain) is Changing Crowdfunding

How Bitcoin (and Blockchain) is Changing Crowdfunding: Blockchain technology is quietly disrupting a whole lot of industries. Right now, it’s mostly being done without a lot of fanfare (much like the internet at the beginning), but the ball is rolling and it’s gathering momentum…. https://www.pivot.one/share/post/5c7b835c016de75c3cdd99cb?uid=5bd49f297d5fe7538e6111b6&invite_code=JTOJYV

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