Crisis Leads to ‘Cut and Run’ at BOScoin

Brian Newar 2019-05-31

The disputes over proper management of the BOScoin project by the BOS Platform Foundation and affiliated entities has made made more waves in the Korean blockchain industry. On May 16th earlier this month, two of the three chairpersons on the BOS Platform Foundation held a press conference where they announced the launch of a new mainnet and ERC-20 offering, BOSAGORA and BOA Token respectively.

Serge Komaromi speaking at a press conference the announce the launch of the BOSAGORA project. May 16th, 2019.

As outlined earlier this month by TheNews.Asia, people in high positions in relation to the project have been entrenched in a heated disagreement about proper management of BOS Platform Foundation funds, investor relations, and various other elements. At the heart of the disagreement are Inhwan Kim and Serge Komaromi, the president and director of the BOS Platform Foundation on one side, and the BOS Operating Committee on the other.

The suspicious activities defining this issue do not simply end with the allegations surrounding their involvement in Gold Link Service, Xtremer, MME, and BPF Korea. With the recent development that BOSAGORA will essentially replace BOScoin, a deeper look into the numbers behind such a move should be explored.

Mr. Kim, Mr. Komaromi, and Mr. Mathias Lang held a press conference in Seoul on May 16th to announce, among other things, that the BOSAGORA project would require its own ERC-20 token independent of BOScoin before they could launch their mainnet. This will include an airdrop and subsequent swap-out of BOScoin for BOA tokens. Such a re-branding and airdrop wouldn’t be entirely unusual if not for a few unseemly circumstances.

As early as March 8th, 2019, plans to discard the BOScoin project were underway. A correspondence from someone handling the email account director@bosplatformfoundation.io issued an inquiry to KuCoin regarding the amount of BOScoin in the exchange’s supply, their ability to airdrop, and how to list the airdropped token.

An email appearing to come from the director of the BOS Platform Foundation inquiring about airdrop and listing options at KuCoin in early March, 2019.

There is further evidence that shows that the discussion surrounding an airdrop and new listing on KuCoin was ramping up as the month progressed. The circumstances guiding the discussion, however, had become a far cry from usual as the points of contact abruptly changed. Even in the slapdash blockchain industry, often evocative of the American Wild West, such changes are not commonplace.

In an email dated March 20th, 2019, an individual claiming to be a representative of BOS Platform Foundation but using the email address doyoon.kim@xtremer.io, reached out to the product operations manager at KuCoin. This individual was apparently seeking to disrupt the line of communications between KuCoin and the previous point of contact at BOS Platform Foundation. It should be noted that InHwan Kim has already been established as a former auditor of Xtremer, and is thought to have had a tremendous amount of sway at the company.

There also appears to be several inconsistencies in regard to cash flow and funding for projects peripheral to BOScoin. One may rightfully ask where the approval to fund BOSAGORA is coming from if the president and director of BOS Platform Foundation already earned votes of “no-confidence” and BOScoin’s value is at an all-time low. How does one fund a project that no one seems to have asked for and which doesn’t appear to offer any significant improvements?

At least as early as September, 2018, it appears that someone was exaggerating salaries at Xtremer in order to skim the excess from the top. Payroll from Xtremer in September, 2018, was summed up to 52,904,760 KRW ($44,377.31), but reported in their official documents as 68,433,783 KRW ($57,403.28), a discrepancy of 15,529,023 KRW ($13,025.98). The next month, the discrepancy was 6,992,343 KRW ($5,865.28); the following month, the discrepancy was 6,991,843 KRW ($5,864.86). The dollar value was calculated from May 23rd, 2019 exchange rate.

A discrepancy of over $13k appears between the Xtremer payroll and official financial report from September, 2018.

Further discrepancies appear to emerge from Gold Link Service and Xtremer. It has already been established that Gold Link Service was intimately connected with Mr. Inhwan Kim. His daughter was listed as the director of the company despite the fact that she was nowhere to be found. There is another connection between Mr. Kim and Xtremer as it is alleged that his wife provided much of the funds needed to start that company.

Evidence that Gold Link Service and Xtremer were in a secret agreement with each other has surfaced. There are no known officially recorded documents demonstrating a business relationship between Gold Link Service and Xtremer, however an invoice has been recovered showing Gold Link Service tendering a payment to Xtremer for “development design and product verification” in the sum of 4,400,000 KRW ($3,694.04).

An invoice for payment sent to Xtremer from Gold Link Service for “development design and product verification” in the sum of 4,400,000 KRW from December, 2018.

What makes the agreement seem peculiar is that Gold Link Service was being funded by the BOS Platform Foundation. That is to say that Xtremer was being paid by the BOS Platform Foundation in two ways: directly through the contract they had with each other, and through the back door via Gold Link Service. Red-flagging inconsistencies in cash flow, whether they be positive or negative, is a job set aside for an auditor.

At the press conference for BOSAGORA, Serge Komaromi talked at length about checks and balances and the new governance system that BOSAGORA offers to the community. He showed how a Swiss foundation is superior to any other because of the “protections and safeguards it provides to the contributors.” He explained that 3rd-party audits would not be necessary because they “already do audits every month with the Swiss government” which require 40 to 50 pages per each.

A protest outside the BOSAGORA press conference consisting of community members from the BOS Operating Committee, May 16th, 2019.

He continued to promote the benefits of BOSAGORA over its predecessor by saying “[BOSAGORA] gets rid of all conflicts of interest. No participant will have more than one hat.” He then assured the audience that BOSAGORA would welcome all community members to voice their opinion in a democratic manner. All the while, a protest from the BOS Operating Committee was taking place just outside the press conference venue.

CTO Mathias Lang says that although BOA Token is an ERC-20 token, “The new project is NOT based on Ethereum. The ERC-20 token is just a stopgap measure.”

He continued to explain that the previous underlying code, known as Sebak, was simply not good. There were heavy hints dropped that the time had come for Blockchain OS to step aside since they failed to fulfill promises from the original whitepaper, and had released a whitepaper 2.0 that “was more like a political manifesto.”

The future of BOScoin and its community members who are still dedicated to the original project is uncertain. As the value of BOScoin continues to drop, it will likely become harder to remain a holder of the cryptos. The real question is if they will adopt BOSAGORA as a natural evolution of the technology or abandon the drama altogether.