Crypto Startup Helium Promised a 'People's Network.' Instead, Its Executives Got Rich.

Helium was touted as the best real-world use case of Web3 technology. But as it struggles to generate revenue, a Forbes investigation found that executives and their friends quietly hoarded the majority of wealth at the project's inception. From a report: A review of hundreds of leaked internal documents, transaction data and interviews with five former Helium employees suggest that as Helium insiders touted the democratized spirit of their 'People's Network,' they quietly amassed a majority of the tokens earned at the project's start, hoarding much of the wealth generated in its earliest and most lucrative days. Forbes identified 30 digital wallets that appear to be connected to Helium employees, their friends and family and early investors. This group of wallets mined 3.5 million HNT -- almost half of all Helium tokens mined within the first three months of the network's launch in August 2019, according to a Forbes analysis that was confirmed by blockchain forensics firm Certik. Within six months, more than a quarter of all HNT had been mined by insiders -- valued at roughly $250 million when the price of Helium peaked last year. Even after the crypto price crashed, the tokens are still worth $21 million today.

Cryptocurrency companies typically compensate early investors and employees for building their offerings with an allotment of tokens, and disclose these rewards in blog posts or white papers. 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 was identified by Forbes. This means that at a time when Helium rewards per hotspot were at their highest, insiders claimed a majority of tokens, while little more than 30% went to Helium's community. Each hotspot earned an average 33,000 HNT in August 2019, according to blockchain data; today, each hotspot only earns around 2 HNT per month. Some insiders exploited vulnerabilities known to the company to increase their hauls even more.

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