By Maximilian Brichta / Original to ScheerPost
Cryptocurrencies are being used to bypass legacy payment rails to crowdfund causes that would otherwise be censored. Two unique cases utilizing two separate cryptocurrencies, Ether and Bitcoin, have been carried out in the early weeks of February. Each demonstrates a distinct use-case and illuminates some of the blockchain’s blessings and curses that deserve more nuanced attention.
WikiLeaks founder Julian Assange, who is currently seeking to appeal his extradition to the United States on charges of espionage, recently scored a $50 million dollar donation in Ether (the native coin of the Ethereum blockchain) for his legal defense. Assange collaborated with anonymous digital artist Pak to create a non-fungible token (NFT) called “Clock” to be auctioned off as a fundraising device. On February 9th, the highest bid went to AssangeDAO, a collective of cypherpunks who created a blockchain-based, member-owned organization to raise funds for Assange, who is himself an icon of the cypherpunk community. The artist Pak has posted his transaction receipt on Twitter, proving to the public the funds have been transferred in full to the Germany-based Wau Holland Foundation who manages donations for Assange.
NFTs have become a popular investment and crowdfunding tool over the last year. Their most popular form, digital images, are assigned unique serial numbers that allow users to authenticate their ownership on a public distributed ledger, making them verifiable digital collectables. While some of the most popular collections, such as Bored Ape Yacht Club, serve primarily as status symbols, a vast array of collections factor in a charity component in which all or a percentage of the proceeds go to predetermined organizations. AssangeDAO is modeled after FreeRossDAO, which raised legal defense funds for Silk Road founder Ross Ulbricht by purchasing and fractionalizing ownership of his NFT artwork.
While the $50 million bag appears to indicate the magnitude of global support for the captive journalist, AssangeDAO’s Discord server, the central communication hub for the members, tells a more complicated story. It appears that many of the members joined the DAO – short for Decentralized Autonomous Organization – under the impression they would be able to vote for the allocation of the funds that were raised. Members voiced their displeasure with the decision for the organization’s founders to bid the full amount locked in the treasury and donate it to Assange. The move exposed the fact there was little by way of organization coded into the DAO for management of this initial crowdfunded purse.
Other users shrugged off the pseudo-decentralization and emphasized the fact that the group’s main objective—raising funds for the WikiLeaks founder—was met. One user, Novocrypto, pointed out the potential catastrophe avoided by assuring all the funds were used to purchase the NFT: “Now imagine if we hadn’t succeeded in getting a max bid in and huge portion of funds were left in this DAO with as of yet [defined] structure! It would have been mayhem!”
Had there been more clarity over the structure of the organization and the fact that all funds would be treated as donations, it’s possible that the $50 million war chest would have been much smaller. While the organization’s website states that “AssangeDAO aims to raise ETH to purchase the 1/1 dynamic NFT” and that users could “contribute” Ether to that “will be used to bid” on it, there is no direct indication that the full amount would be used as a bid. The winning bid was four times the amount of the second-place bid.
The lack of clarity appears to have attracted speculators who were looking for stake in an NFT they imagined could appreciate. AssangeDAO’s Discord forum is replete with users commenting on the price and market capitalization of the organization’s governance token, $JUSTICE. As user Zylo.eth clarifies, “The purpose of this DAO is to raise funds to Free Assange, with the first goal already completed. You contributed, not invested.” While contributions for the “Clock” NFT have closed, the AssangeDAO website claims that holders of $JUSTICE token “will decide via governance what to do with the NFT and the future roadmap of the DAO.”
A concurrent crowdfunding effort, Honkhonkhodl, is using Bitcoin to help supply resources to truckers participating in the Freedom Convoy 2022, a protest in downtown Ottawa that started in late January over Covid-19 vaccine mandates and social regulations.
The crowdfunding effort was set up after two other efforts using popular crowdfunding sites GoFundMe and GiveSendGo respectively froze donated funds and suffered a security lapse. GoFundMe forbid the $10 million dollars that were raised for the Freedom Convoy 2022 and is issuing refunds for $9 million of the donations. In an official statement, GoFundMe cites “evidence from law enforcement that the previously peaceful demonstration has become an occupation, with police reports of violence and other unlawful activity,” which violates the platform’s promotion of violence and harassment clause in their terms of services. The remaining million was transferred to two TD Bank accounts—though it remains unclear who they belong to—where the funds were once again frozen. A member of the team leading the Honkhonkhodl campaign claims the funds have since been recovered with legal effort. Keith Wilson, a lawyer for the convoy, is seeking a court order for the release of those funds and says that a non-profit organization has been set up to manage them.
Following the denial of service from GoFundMe, donors turned to the Christian crowdfunding service GiveSendGo. While the funds remained secure on this service, TechCrunch received a tip regarding “a security lapse that exposed passports and driver licenses of donors.”
Honkhonkhodl organizers responded to the GoFundMe service denial and GiveSendGo data lapse by setting up a bitcoin fundraiser on the site Tallyco.in, a crowdfunding site that only accepts Bitcoin, where nearly $1 million dollars (21 bitcoins) have been raised to date. When explaining the choice to use Bitcoin for donations, one of the lead organizers, who goes by the pseudonym Nobody Caribou, wrote, “It’s a global financial network that is un-censorable, permissionless and when you custody it properly it’s un-confiscatable… these are the three primary variables that are most relevant for us right now, based on the challenges that we face so far.” The team leading this fundraiser campaign are on-the-ground at the Ottawa protest helping truckers download Bitcoin wallets so that funds can be distributed to them individually.
Each of these campaigns demonstrates how cryptocurrency is increasingly being used to support a variety of initiatives that call for censorship-resistant donations. A common thread of freedom of speech and financial freedom weave these two examples together, despite the specific organizing structures afforded by each blockchain and the transparency of the teams leading the efforts. For AssangeDAO, there very well may have been a higher premium on the team and artist staying pseudonymous given the political controversies surrounding Assange’s case.
While a fundraiser could have very well been organized for Assange using Bitcoin, there’s little doubt that it would have raised as much money as the NFT auction. Although, the disorganization and misleading nature of the AssangeDAO should give us pause when it comes to celebrating it as a triumph of decentralized organization. Much of the press that has come out about this story has missed the confusion and dissatisfaction of the organization’s members behind the scenes. Honkhonkhodl, on the other hand, is demonstrating how an aboveboard approach can successfully be used to securely collect and distribute funds to protesters on the ground, albeit for a very different type of cause.