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Allegations have been made that Helium’s so-called “people’s network” has vastly enriched a small group of insiders at the expense of ordinary people who invested in hotspots and who have gained very little.
An investigative article recently published in the Forbes Digital Assets section suggests that while the widely touted Web3 project Helium has been struggling to generate revenue, a small group of executives and their family and friends amassed a fortune in the early days of the project.
The article records the plight of investor Dulce Davis, who spent $500 on a machine that looked like a wireless router, believing from the Helium pitch that once plugged in she would receive cryptocurrency in the form of HNT that would be a source of passive income.
However, Davis has only made 1 HNT token over the 3 months that her machine has been operating - worth around $5. Davis is one of thousands of people who invested approximately $500 million on machines that provided hotspots.
According to Forbes, 30 wallets have been identified that are connected to Helium employees, their families and friends, and early investors. Together, these wallets mined almost half of all the tokens mined in the first 3 months of Helium’s launch, with a value of 3.5 million HNT, while within the first 6 months, insiders had mined more than a quarter of all HNT tokens, at a value of around $250 million.
While cryptocurrency projects typically do reward the core team and early investors, Forbes said that it had identified an additional undisclosed windfall from the public token supply “worth millions”. The article claimed:
“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.”
Forbes quoted Lee Reiners, expert in cryptocurrency law, and Policy Director at the Duke Financial Economics Centre, who said:
“This thing was set up to enrich the founders and early supporters at the expense of everyday people who bought hotspots thinking they were going to bring value."
Amir Haleem, co-founder, and CEO of Helium, said when asked if his company should have disclosed this windfall to the community:
“I don’t know why we would be asked to be in a position to reveal anything about these people…They took an enormous risk and a huge chance on paying money to build something.”
Helium is currently trying to push its latest deal with T-Mobile, and DISH, two of the largest carriers in the U.S., to its community. Those wishing to take part in the new network just need to fork out between $1000 to $2600 for an upgraded hotspot.
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