System issues, security threats, KYC concerns, and various other reasons continue to be fed to investors of IOTA coin as to why they still have not received their share of token assets that were locked up by the development team.
The increasingly anxious group of investors who support or invested in IOTA have been expecting this issue to be resolved for about 3 months, yet nearly 13% of all IOTA tokens remain frozen.
Value? Nearly 1 billion USD.
Until recently there was little coming from the developers and many were beginning to call IOTA a SCAM and some are hesitant to reverse that label as they hold their breath over the next 10 days.
At this point calling this a SCAM simply isn't supported by the facts. Poor decision making perhaps, questionable practices for sure, but a SCAM? No, not given the current effort by the foundation and even the facts presented by those who are unhappy with the current situation lend support to the foundation's efforts to return the correct value to rightful owners.
After multiple failed estimates or delivery date, and a period of outright silence, the IOTA team has finally given a delivery or "reclaim" date of January 10th as to when they can expect to receive their IOTA coin.
That said, there are certainly plenty of questions to be asked about the decision making and ability to support IOTA that cannot be ignored.
What Happened?
What happened? Depends on who you ask.
Token Holder View
Investors paint one picture. Their take is that of an innocent holder snug in bed dreaming of safe IOTA tokens while the evil development team sneaks in while nobody is paying attention, picks a few holders they don't like, locks up the value, throws the key into the dungeon, and then slithers off in the night never to be heard of until after the holidays which have now been ruined.
IOTA Team View
The IOTA team has a different interpretation. While the holders are snoring with their private keys laying all over the place reused to the point they are worn beyond recognition, an armada of angry scammers approach in full tactical gear preparing to launch an onslaught of attack on the holders and they worn-out private keys. Have no fear, IOTA team is here! They swoop in to save the day, save the holders from the scammers, and he holders from themselves. They'll hold on to the holders tokens for them since it's all their fault the armada of scammers have attacked.
The Reality
So which version is the truth? Between the two, most likely a spec of reality exists in there somewhere.
Setting aside the confusion, long periods of silence, speculation, and public outcry which was complete with demands for answers, empty promises, and Slack channel bans of investor accounts who continued to press the question of "what the hell is going on?", Co-founder Dominik Schiene posted a lengthy blog post outlining the "story" of how this came to be.
Here's the synopsis:
"During an attack on the IOTA network in October, some funds were found to be at risk of theft, due to users re-using their private keys. The IOTA team took the decision to protect IOTA token holders by taking those funds which were at risk into temporary custody through a snapshot.
Once the attack was stopped, the team worked on setting up a process for reclaiming the funds, and sending them back to the rightful owners. This process of receiving and validating the claims has been understandably complicated and sensitive — especially when taking into account the immutability of the IOTA distributed ledger. This effort has required the full attention of the entire core and legal teams of IOTA over the last few weeks. We are pleased to announce that we have finally come to the final step: sending out the reclaimed funds."
Let's address the elephant in the room first. How in the hell did they do this? How did they do this technically without any knowledge of anyone until after the fact? That's an immediate concern first and foremost.
They say "from snapshot" without going into much detail. From explanatory documentation from the team, it appears as tho a snapshot is exactly what it sounds like where they take a picture of the the network, freeze everything and in this case, sent 13% of all IOTA tokens to an IOTA controlled wallet address. This is where they are currently stuck.
An Industry Opinion
Whereas we reject the notion that IOTA is a SCAM, that doesn't mean we support the foundations decisions or performance over the last 90 days by any means. In fact we have some serious concerns regarding this.
The entire event is enough to deter many people from ever going anywhere near IOTA. This is the ongoing problem with new assets and new networks. For example, something like this would not be possible to accomplish on the bitcoin blockchain
It also completely undermines any attempt at an immutable network.
The IOTA network is marketed as "secure", "quantum resistant", and "decentralized", however based on the events of October forward this appears to be a brutal contradiction. The two things that stick out the most are the fact that the foundation themselves were worried enough about their "secure network" being hacked that they took this action and secondly, they were able to do this without folks knowing much about it.
THEY MOVED HOLDERS TOKENS TO A WALLET THEY CONTROL.
Something is flat out wrong with that. They just up and move 1 billion in coin to their own wallet. Now why isn't that in the brochure? Let me just run over and sign up immediately for that bucket of joy!!
If my token is in my wallet I expect it to bet here tomorrow. If my token was sent to my friend, I expect that to be in his wallet tomorrow. Apparently with IOTA this isn't always the case. The developers can just put them wherever they want and keep them from you for three months.
The general understand of all virtual currency models is that if some hacker or scammer manages to get their paws on a token then one has only themselves to blame outside of the scammer. They know this going in. This is the same reason we hide the keypad when we type in our ATM pins.
However, never once has an ATM spit out a receipt stating that it had taken the entire balance of the account and it'll be on hold for 3 months because some guy was walking up behind them and they thought he might see the pin.
That's about how ridiculous in comparison the IOTA story is.
Good Intention Infused Poor Decision Making
Given the current situation, IOTA doesn't appear to be a truly decentralized network. It's more like central control disguised as something that appears decentralized but as evidence of power to control asset to the point they have, clearly has a central element of control.
If it wasn't, we wouldn't be talking about this and holders would have their coins.
It's bad enough they had the ability to do this. It's more disturbing that they made the decision to do this.
This is simply a party foul. You cannot advertise anything as a decentralized network only to turn around and not only prove that it is not, but make a decision on behalf of others affecting their personal financial health.
You simply do not do this. This was a terrible decision regardless if the intent was good or not. You simply have no right to make this decision.
If I lose an asset to a scammer or hacker because I left my private key laying on the porch, then I will deal with my dumb ass regarding the loss. My value, my asset, my private key, and my decision. Not someone else who thinks it's a good idea.
Maybe I was using the network for something else and didn't care if the value was stolen? Perhaps I was documenting the process for a reporting project due next week. Maybe I buried my IOTA wallet in a bomb shelter on a physical wallet? Maybe my entire staff received IOTA for Christmas bonuses.
Point being there's a million reasons this decision should not have been made and not one good one in support of it since "protecting tokens" is not necessarily protecting tokens and this three months of disaster in returning the tokens is proof that doing something like this inserts a large degree of additional risk putting the property of others in jeopardy without any certainty there was any problem to begin with.
The only actual danger may well be this catastrophe created by the IOTA team themselves because if tokens were not stolen, then there is no way to state with certainty that they would have been.
This is right up there with the bonehead decision made by the Ethereum team to rewind the network and get the foundations money back putting millions of others at risk for the foundations own gain.
Many folks will never trust Ethereum again as a result of that decision and IOTA may face the same consequences. Either way, there is no winner here, everyone loses. Holders of that 13% have already lost, now with the almost predictable damage this may do to the asset, everyone else is going to be affected and potentially lose as well.
It is understandable if a team wants to do everything they can to protect others from losing assets, but this may cross the line and it certainly raises allot of concern regarding the security, safety,. and even true ownership on the network. There intentions may have been good, but execution and decision making may have fallen short.
January 10th
The long awaited "claim" date for all coins to be re-distributed to the rightful owners after 3 months of delay in now January 10th.
They have begun to send very tiny amounts which leads to another curious question. Why are they taking so much longer after taking so long?
Possible market manipulation? Borderline, but understandable. You can't just toss back a billion bucks to a pile of pissed off investors who are just about guaranteed to immediately sell and wash their hands of IOTA.
That could cause a painful and dramatic drop in price as a billion is auctioned off as fast as it's received. It's rather possible the IOTA team has thought of this and trying to mitigate that by drizzling the confiscated tokens back to their rightful owners and a pace so painfully slow, if it were any slower it would go backwards in time.
IOTA may be hanging by a thread at this point, even if they stick with the slow drizzle it's still going to be a large dip in the price as volumes sell, which in turn will likely lead to the reason why, which will in turn cause great concern, which in turn may result in further dumping.
Then again, it may be fine and triple in price.
Regardless, January 10th is the key and likely the last chance the IOTA team has to deliver before a group of angry token holders considers legal action against the team. There have already been discussions regarding this very topic.
Regardless, January 10th is the key and likely the last chance the IOTA team has to deliver before a group of angry token holders considers legal action against the team. There have already been discussions regarding this very topic.
If January 10th happens, IOTA may well end up just fine. Then again, here's how the blog post closed.
We understand that users were frustrated due to the prolonged process of regaining access to their funds, and we sincerely apologize for the delays. At IOTA, our priority is it to ensure that user funds are protected at all costs. We want IOTA to be a protocol that can be used with confidence, to transfer and store value. Because of this, we have taken this extraordinary step of taking user funds into custody during the attack.
Centralized thinking in a decentralized model. It simply doesn't work well nor is it supposed to ... that's kind of the entire point.
You can read the blog post and learn more about the refunds here and we'll continues to check up on this situation. If they make good on January 10th, it's certainly a start and a big step in redemption.
IOTA has committed to this date and there's really no reason for anyone to do anything at this point other than wait.
Unless of course, you're part of the IOTA team in which case you have only one option ... deliver.
IOTA has committed to this date and there's really no reason for anyone to do anything at this point other than wait.
Unless of course, you're part of the IOTA team in which case you have only one option ... deliver.
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