Bolt’s founder is battling in court for suspected DAO fraud.
Ryan Breslow, founder of payments company Bolt, together with his fellow directors Alex Fine and Jon Gordon are suing software developer Mark Philips over alleged embezzlement and fraud of millions. The missing funds account for two-thirds of total contributions, from Movement DAO, a crypto start up project set up by Breslow and his fellow directors.
A hearing is scheduled for 16 March.
Breslow is being represented by Christopher Berg of Ellis George Cipollone O’Brien Annaguey.
The founders of Movement DAO contributed more than US $16 million to the fund as seed money. This was nearly 97 percent of its total assets. Other contributors invested around US $300,000. Most of the funds have allegedly disappeared and the amount left is around US $5.5 million.
Breslow claims that transfers made by Philips out of the DAO fund are hard to trace because anonymous crypto wallets were used to make multiple transfers of small amounts of money to launder stolen tokens.
Philips has a previous four-year conviction in 2001 by the Western District of Washington on two counts of money laundering and four counts of federal wire fraud. The complaint was filed in the Florida Southern District Court. Records show that he transferred funds to an account he controlled in his girlfriend’s name and spent more than US $500,000 on luxury goods that included two Breguet watches and an Aston Martin sports car.
Hired by Breslow
Mark Phillips was hired by Breslow in July 2021 on a six-year contract as a coding engineer. His bio stated that at some point he had previously worked for the Securities and Exchange Commission (SEC) and therefore had security clearance as well as experience in SEC reporting and blockchain governance. It seems that no due dilligence was performed during the recruitment process. Philips is represented by attorney Nitoj Singh of Nitoh Law Firm.
During the first few months of his employment with Movement DAO, he set up a multi-user wallet and issued tokens for authorisation by signatories. The first few months went smoothly but he eventually started to take control of the wallet and made changes to the website without consulting the founders. He also made payments to a crypto-compliant law firm Dao-lawfirm.eth which in reality was allegedely an alias used by Phillips. He is also accused of taking control of the DAO endowment.
Movement DAO was set up in 2021 as a community platform for funding social cases. It was scheduled to be launched this year. One of the causes supported by Movement DAO is ‘Black Lives Matter’. Other causes were chosen to help marginalised communites. As a DAO it was blockchain-based. Members of Movement DAO contributed funds and had the right to collectively decide how the money was spent. Breslow hoped that people would prefer to make donations to a financial vehicle on a blockchain platform rather than a traditional NGO as the fund community would be able to hold DAO management accountable.
Bolt is a technology payments company based in San Francisco. Its platform includes a checkout UI, payment processing, and fraud detection. Ryan Breslow and Eric Feldman founded Bolt in 2014. The first two years of the company’s growth were spent developing payment relationships and complying with PCI security. The company was launched publicly in 2018.