Dutch court grants request for hearing on dismissal of Syscoin foundation directors following criminal complaint

Syscoin is the fifth oldest cryptocurrency in the world. It was founded over 10 years ago by Sebastien DiMichele and Sebastian Schepis. It is also the second largest blockchain in the world by hashrate, having been adopted by over 70% of Bitcoin miners through an innovative process called merge-mining. The Syscoin Foundation, registered in the Netherlands, is the official legal entity overseeing the development of the Syscoin blockchain and representing the interests of the Syscoin token holder community.

Long-standing tensions at the Syscoin Foundation came to light in late July 2024, when Syscoin Foundation directors Willy Ko and Bradley Stephenson, as well as its head of business development Matthew Mappin, officially revealed allegations of mismanagement of Syscoin Foundation funds, which at one point contained assets worth over $100 million. According to Willy Ko, Jagdeep Sidhu had sole control over the wallet with the entire Syscoin Foundation treasury.

Angel Versetti, an authorized representative of Dogecoin Foundation, the largest investor in Syscoin SYS cryptocurrency, spoke with Jagdeep Sidhu on July 25, 2024, in a recorded conference call with multiple witnesses. Angel Versetti commented: “Jagdeep Sidhu confirmed in this conversation that he does indeed have sole control over the Syscoin Foundation wallet, stating that he cannot trust his fellow foundation directors with funds.”

Following reports of the Dogecoin Foundation filing a criminal complaint in the Netherlands, Jagdeep Sidhu, Christopher O’Shea, and Michiel Naring attempted to remove Willy Ko and Bradley Stephenson from the Syscoin Foundation, claiming they were preparing a “hostile takeover” and intended to present themselves as whistleblowers. In a defense statement, Willy Ko responded by claiming that “The evidence indicates that the foundation’s funds were used to support and operate Jagdeep, Michiel, and Chris’ own for-profit company, SYS Labs.” Sebastien DiMichele, the original co-founder of Syscoin, agreed, stating that “a non-profit foundation cannot simply fund a for-profit foundation, especially when the foundation and project members @SYSLabsOfficial (SYS Labs) and @RolluxL2 (Rollux) are the same individuals.”

In the meantime, the Dogecoin Foundation has filed a motion to remove the directors of the Syscoin Foundation and appoint an independent court-appointed director. The director will conduct a comprehensive investigation into the alleged wrongdoings at the Foundation, including initiating a detailed financial audit and seeking the full return of any assets misappropriated or otherwise unlawfully transferred from the Syscoin Foundation by its directors.

Angel Versetti concluded: “The Syscoin Foundation was promoted to retail investors as a legitimate and legal Dutch non-profit foundation operating under EU law. In practice, what was a huge Dutch non-profit treasury just two and a half years ago, with assets worth over $100 million, somehow ended up mostly in a for-profit company in Dubai (SYS Labs Holdings Ltd) owned and managed by the same people who serve as directors of the Syscoin non-profit foundation. Unlike the Dutch non-profit, their Dubai company has no transparency obligations, and this company has made acquisitions of other projects and companies, including buying companies owned or launched by the same foundation directors. So ultimately it looks like the money from the non-profit foundation ended up in their pockets. Were they trying to launder their allegedly criminally obtained money while trying to present these acquisitions as somehow beneficial to Syscoin token holders? We hope that courts, regulators, auditors and criminal investigations will find clear answers to this pressing question.”

All five Syscoin Foundation directors and two Dogecoin Foundation directors will be parties to the upcoming public hearing and are scheduled to appear in court on September 19, 2024.