Key Takeaways
- ConstitutionDAO has announced it will float a new governance token WTP as reimusement to the exisitng PEOPLE.
- The group was behind the crypto crowdfunding aimed at buying a copy of the US Constitution at Sothby’s auction.
- With an unclear plan and conflicting announcments, the entire project reeks of a well-executed ploy.
YEREVAN (CoinChapter.com) – Earlier this month, ConstitutionDAO made news when it raised over $40 million in less than a week in an attempt to buy a rare copy of the US Constitution. Over 17,000 people participated in one of the largest crowdfunding projects ever. Unfortunately, last week, the group lost the bidding war organized by Sotheby’s.
To make matters worse, the group lost the bid to Citadel CEO Ken Griffin. Griffin is not a liked figure in cryptocurrency circles. For one, he denounced the crypto movement as a “jihadist call” against the dollar. Moreover, Griffin faces a lawsuit accusing him of serious Wallstreet malpractices. For example, people believe his firm Citadel Securities was behind the decision to restrict trading in GameStop. The decision allegedly benefitted Griffin, resulting in losses for other users.
Since losing the bid, ConstitutionDAO has been having a hard time charting a new course for itself. Or should we say it has been playing its members like a pro? It initially promised to refund the amount collected should it fail to acquire the Constitution. After that, however, there was no plan to continue in any form whatsoever.
The group has now declared they are launching a new token called We The People (WTP). Those who participated in the crowdfunding can now acquire WTP instead of a refund. The whole idea stinks about a scam.
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How ConstitutionalDAO fooled people by being transparent
To be fair to ConstitutionDAO, everything it has done has been transparent. Prying on people’s gullibility and ignorance, the group has capitalized on the hype to get over 17,000 participants to send them Ethereum (ETH).
Most people participating in crowdfunding thought they were buying a piece of ownership of the document. Many had hoped their decision would yield profit in the future. In return for their donations, contributors had the option to redeem $PEOPLE at a rate of 1 million $PEOPLE tokens per 1 ETH donated, issued to them through Juicebox.
However, a FAQ Document issued by the group clearly states otherwise.
“You are receiving a governance token rather than fractionalized ownership of the artifact itself. Your contribution to ConstitutionDAO is a donation with no expectation of profit,”
the document reads.
The document also clarifies that $PEOPLE was just a governance token allowing holders to vote and advice on matters related to the copy of the Constitution, such as where the Constitution will be displayed, how it should be exhibited, and how long.
By the time some found out about this, it was too late. They had already sent funds to ConstitutionDAO. Even though the group has maintained that participants can claim a refund, it defies logic. The sheer high gas fees of the Ethereum (ETH) network would result in them getting only a fraction of their donation. The entire refund operation could cost ConstitutionDAO as high as $1.5 million in gas fees.
Hence, to most people, getting a refund made no sense whatsoever.
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ConstitutionDAO backtracks again
Left without ownership of the constitution copy and a proper refund, participants in the project had no option left but to stick around. But, unfortunately, the group behind ConstitutionDAO had set a well-thought-out trap, and people had walked right in.
To sound genuine, the team announced they had no plans of continuing beyond the initial goal of buying a copy of the Constitution.
Declaring that the community has taken all actions that it was organized to accomplish, Graham Novak, a ConstitutionDAO organizer, told group members that they would cease operations.
“We have determined that building and maintaining an ongoing project is not something that we as a core team are able to support, given the technical and administrative requirements of doing it properly.”
Unsurprisingly, fans were not pleased with the announcement and wanted the team to explain what would happen to their funds. ConstitutionDAO had announced earlier that they would be replacing the $PEOPLE token with the $WTP token. The utility of the new token would still be the same. However, they soon retracted this announcement, too, ditching plans for the new token
“At this time, the core team has determined that we cannot adequately support the launch of a new token or organization,”
they announced
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But wait, there is more to the ConstitutionDAO story
To the sheer shock of the excited fans, ConstitutionDAO deleted past posts and messages on its platform.
This raised more doubts about the project’s intentions, with members scratching their heads to figure out what was going on. Chaos reigned in its Discord group. The actions of the small core team defeat the purpose of a Decentralized Autonomous Organization (DAO), which is supposed to be transparent and democratic.
The group has again decided they will continue existing, resuming the plan of floating the $WTP token. The team will give people the option to get a refund, donate their money ($PEOPLE) to the DAO, or exchange it for the new token and get governance right. But governance rights to what exactly is still unclear.
In effect, ConstitutionDAO will keep whatever funds donors decide not to demand back. As ETH increases in value, those funds lying in its vaults will increase over time as well.
“For everyone who wants to continue riding with us, you’ll also be able to sign a message (without paying for gas) committing your funds to the DAO’s treasury and get our governance token $WTP (We The People) back. Of course, you can also do nothing and see how things play out,”
they Twitted.
According to data from CoinMarketCap, the value of $PEOPLE has seen a parabolic rise in recent days. This can be explained by DAO participants purchasing the currency or receiving them in exchange for their initial donations.
However, by the looks of it, there will be more twists and turns in the days to come. What ConstitutionDAO has done is they have pulled the most genius of scams. Everything has been transparent and out in the open, yet they have been able to get people to send them money for absolutely nothing in return.
Of course, the crypto community is not new to scams, but this one has been pure genius.
