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Did The Bitcoin Foundation Go Bust?

Days after a newly elected board member said the Bitcoin Foundation is "effectively bankrupt," the organization has responded that it's not, but it's working from an austerity budget after the collapse in bitcoin's price "drastically affected the Foundation’s bottom line as the majority of assets were held in bitcoin," according to a foundation blog post on Tuesday (April 7).

The foundation also didn't fire 90 percent of its staff, but the belt-tightening "meant downsizing our team" so remaining resources could be focused on "funding developers working on the Bitcoin Core Protocol," the post said, adding that Executive Director Patrick Murck is voluntarily stepping down to take himself off the payroll and will serve as a volunteer.

Those explanations came in the wake of a post on a Bitcoin Foundation forum on Saturday (April 4) by newly elected board member Olivier Janssens, who said the foundation "has almost no money left, and just fired 90 percent of its people," and that it can no longer afford to fund development of the Bitcoin Core Protocol. Janssens also recommended that the foundation's members replace the entire board or shut the organization down.

While the foundation hasn't recently reported how much it holds in bitcoin, a 2014 IRS filing said it had the equivalent of $4.5 million at the end of 2013, which would be worth $1.5 million today, IDG News reported. The foundation's filing covering 2014 should be available soon.

"The foundation started a lot of ambitious projects at the end of 2013 and beginning of 2014," Bitcoin Foundation chief scientist and former board member Gavin Andresen told IDG News. "Unfortunately, most of those projects never had a chance to show any results, because they had to be cut back or dropped as funds dried up due to the combination of a falling bitcoin price and declining membership revenue."

Membership numbers were also hit because of bitcoin-related scandals, Andresen said, including the resignations of Charlie Shrem (now serving prison time for money laundering) and Mark Karpeles (founder of the failed Mt. Gox bitcoin exchange).

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