A bunch of crypto holders, calling themselves ConstitutionDAO, are asking for donations of ether to win the auction and buy the document. As we write this, they\u2019ve collected $5 million in ETH.<\/p>\n
ConstitutionDAO launched seven days before the auction. Their organisation is somewhat … sloppy.<\/p>\n
No, the crypto bit absolutely doesn’t do anything useful, except generate marketing buzz.<\/p>\n
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<\/p>\n \u201cDAO\u201d stands for Decentralised Autonomous Organization. You get a pile of cryptocurrency, and holders with the right tokens to vote decide what to do with the crypto.<\/p>\n DAOs have a less than illustrious history of crashing and burning in fraud and hacks \u2014 it turns out that \u201ccode is law\u201d is not very smart.<\/a><\/p>\n So ConstitutionDAO is doing things more simply and elegantly \u2014 they\u2019ve set up a multi-signature address with thirteen signers, where all the ETH gets deposited. It\u2019s just a crowdfunding. The \u201cDAO\u201d bit\u2019s connection to the money is more of an idea<\/i>, you understand. [Twitter<\/i><\/a>]<\/p>\n The completely and utterly centralised control of the project in all practical terms has led to some disappointment amongst those who bought the \u201cDAO\u201d pitch \u2014 but hey, it\u2019s not like they can do anything about it. [Twitter<\/i><\/a>]<\/p>\n The ConstitutionDAO founders say they’re setting up a Delaware LLC to front for this unincorporated bunch o’ guys who just got sent $5 million of ETH.<\/p>\n Everything is a gentleman’s agreement so far, worth only the paper it’s not written on.<\/p>\n If ConstitutionDAO doesn\u2019t win the auction, the funds will be returned via Juicebox, the platform they\u2019re collecting the money on.<\/p>\n If ConstitutionDAO does win, what happens then? From the FAQ: [ConstitutionDAO<\/i><\/a>]<\/p>\n Will the core team receive any of the raised funds for themselves or get compensated in any way from this?<\/b><\/p>\n The core team has not received or pre-minted any tokens. Following the purchase of the Constitution, we intend to submit a proposal to be voted on by the community. While this is unusual, we believe that it establishes a precedence of mutual trust between the core team and the backers of the ConstitutionDAO.<\/p><\/blockquote>\n Notice how this doesn\u2019t answer the question.<\/p>\n On the ConstitutionDAO Discord chat, Will Papper, one of the multisig signers, says<\/p>\n Delaware LLC. Minimal operating agreement for now while we finalize details. The LLC allows us to bid on the Sotheby\u2019s auction. Sotheby\u2019s does not allow DAOs themselves to bid. “ConstitutionDAO LLC” but it\u2019s still being set up. Need to consult more with securities lawyers we work with on this (since fractionalized ownership could be a security).<\/p><\/blockquote>\n Normally you\u2019d think further ahead than this when asking the public for $20 million. This almost makes us think they really did organise this in a week, and it wasn\u2019t all planned well ahead of time.<\/p>\n Sotheby\u2019s has apparently confirmed that they will accept an Ethereum address full of ETH as proof of sufficient funds to bid. Sotheby\u2019s also requires full Know-Your-Customer on bidders \u2014 hope ConstitutionDAO gets that LLC set up in time!<\/p>\n The Discord community moderators assure us that “everything has been worked out in the background\u201d and “the team is working 18h+ hours shift!!”<\/p>\n Packy McCormick is not a multisig signer, but he\u2019s been doing a huge amount of the publicity. McCormick is one of those \u201centrepreneur\u201d newsletter guys who doesn\u2019t appear ever to have done anything. [LinkedIn<\/i><\/a>] McCormick says he just joined venture capital firm Andreesen Horowitz\u2019 crypto team, though. [Twitter<\/i><\/a>, <\/i>Substack<\/i><\/a>]<\/p>\n This gibbering idiocy made it to CNBC, who never saw a blitheringly stupid crypto notion they didn\u2019t like. CNBC did a video interview with Packy McCormick and Alice Ma, one of the multisig signers. [Twitter, video<\/i><\/a>]<\/p>\n Another multisig signer is Joshua Austin Cain, a licensed financial advisor at wealth management outfit Rollins. He knows precisely how to handle other people’s money with probity, and he did … this thing. [LinkedIn<\/i><\/a>; <\/i>Rollins Wealth Advisors<\/i><\/a>]<\/p>\n Cain has a crypto-pumping Substack, where he\u2019s another newsletter guy \u201centrepreneur\u201d with no publicly visible entrepreneurship. [Substack<\/i><\/a>; <\/i>Twitter<\/i><\/a>]<\/p>\n Coincidentally, there’s a guy who used the name Austin Cain who was alleged to have run a Bitcoin investment scam in 2017. I\u2019m assuming it\u2019s not the same guy. [Steem<\/i><\/a>; <\/i>blog post<\/i><\/a>; <\/i>YouTube<\/i><\/a>; <\/i>Facebook<\/i><\/a>]<\/p>\n ConstitutionDAO is using a platform called Juicebox, which is another DAO. Juicebox was launched in July 2021. [Juicebox.money<\/i><\/a>; <\/i>Juicebox blog<\/i><\/a>]<\/p>\n The code for Juicebox is all public on GitHub, [GitHub<\/i><\/a>] and it’s substantially by one guy who never seems to have done anything else \u2014 a single-use pseudonym? \u2014 called Jango (@me_jango on Twitter). Jango is also one of the ConstitutionDAO multisig signers.<\/p>\n The Juicebox platform takes 5% of the incoming ETH, and they give the project JBX tokens in return. So that’s $150,000 in ETH so far from ConstitutionDAO, which gets JBX magic beans.<\/p>\n If ConstitutionDAO raises $20 million, Juicebox would take $1 million, a large slice of which goes to the founders. Not too bad a payday.<\/p>\n ConstitutionDAO is the big offering running on Juicebox. There\u2019s also Shark DAO, which is a group of people \u2014 \u201cJango, Kenny, Goldy and defi jesus,\u201d apparently \u2014 buying NFTs from another DAO, Nouns DAO. Sharkbox has taken in ETH and has some JBX tokens. [Medium<\/i><\/a>] There\u2019s a smattering of smaller projects. [Juicebox<\/i><\/a>]<\/p>\n ConstitutionDAO and Juicebox both appear to be very complicated handwaving to make you not look too closely at the flow of cash, and not notice the bits that look very like a simple money funnel.<\/p>\n It is possible that the ConstitutionDAO LLC will accumulate enough ether in ConstitutionDAO to put in a winning bid! Like a dog that chases a car and catches it.<\/p>\n The founders … don\u2019t have an actual plan for what to do if they win the document. They say they\u2019ll ask the DAO members. [Forbes<\/i><\/a>]<\/p>\n If they don\u2019t win, then the ETH is apparently returned via Juicebox. If they win, then … it\u2019s not clear what happens next.<\/p>\n Does the LLC principals saying things in a Discord chat constitute a contract with the ETH donors? (In securities law, it would 100% count as representations concerning an investment offering.) Will they get the LLC together in time? Just how hard will doing stuff fast and sloppy bite them in the backside?<\/p>\n Either this is an elaborately preplanned rugpull \u2014 or it’s actually the dumb stunt it appears to be.<\/p>\n![\"\"](\"https:\/\/davidgerard.co.uk\/blockchain\/wp-content\/uploads\/2021\/11\/constutition.jpg\")
<\/a><\/p>\nThe DAO you do when you\u2019re not doing a DAO<\/h3>\n
ConstitutionDAO and Juicebox: the flow of cash<\/h3>\n
How will this one crash and burn?<\/h3>\n
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