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Civil was supposed to have created a more transparent and democratic model for journalism. But so far, journalists working on his platform still have to receive all the compensation they say they have been promised when hired.
According to several current and former employees of news organizations sponsored by the startup blockchain, Civil told reporters in its 18 newsrooms in the United States that the CVL cryptocurrency – which, once issued, should have been part of their pay – will probably end up be worth more than the estimated assessments mentioned in the meetings and reported in the tax forms.
However, weak demand led Civil to cancel a public sale of tokens last month. Now, journalists have no idea if or when the tokens that should have been part of their compensation will be paid.
Meanwhile, the platform, conceived as a collaborative network in which readers would pay for quality journalism and journalists would earn money for content, remains unfinished. The editors, employing dozens of journalists, operate normally, but without the tokens originally designed to provide attractive added value for users.
"Civilian can talk about everything he wants to create a new future for the media, but the reality is that it builds up by putting journalists in debt," said Jay Cassano, who left the news channel Civil Sludge. November 8, because, he said, not delivering the tokens made up about 70 percent of his salary for five months.
"I had to borrow money to pay rent and student loans," Cassano told CoinDesk.
The civil managing director Matt Iles disputes the claims of current and previous employees.
"We did not promise anyone that tokens would be worth a specific amount," he told CoinDesk. "Whenever we discussed potential symbolic value with the newsrooms, we made it clear that we were making estimates and that there were risks."
Iles contests that Civil took steps to discourage the kind of frantic purchase that could have driven up the price of the CVL, if the tokens were issued publicly. He told CoinDesk:
"Civil's consumer token structure limits liquidity and volatility as a means of driving speculators away and ensuring that people who buy CVL do so because they want to participate in the network."
In fact, Civil used a rigorous customer knowledge process and partnership with the AirSwap exchange startup, which created a means to limit access to CVL purchases.
But according to Cassano and other insiders, employees were told a different story about the expected price of the CVL.
Internal hype
Specifically, according to Cassano, Civil told reporters that they work with its sponsored news operations that the CVL token that they would pay in part could be worth around $ 0.75.
However, on tax documents, tokens were valued at a fraction of a cent. Iles declined to comment on this difference.
"They continued to exaggerate internally to keep us in line, saying they would even exceed that assessment," Cassano said. "Iles, at one point, said he expected the tokens to double or quadruple with respect to what was written in our contracts."
A second civil reporter, who is still working in one of the editorial offices sponsored by the startup, told CoinDesk that the startup's leadership "absolutely" spoke about the potential growth of the token for employees.
"The expectation was that they would be able to get rich," the source said.
According to this informant, who spoke about the condition of anonymity, a few days before the sale of tokens failed, Civil turned to the journalists' concerns saying that the cryptic "whales" would buy unclaimed tokens to help the startup to reach its goal threshold.
Iles denied making any promises, but acknowledged that the company tried to involve large investors when the sale failed.
"When the sale ended, it was obvious to everyone that the only way to achieve the goal would be to attract large buyers … of course we were still working hard to bring major buyers in the last days ", said Iles. . "We have communicated our ongoing efforts on this front, but no promises or guarantees have ever been made."
The sale of failed tokens forced Civil to reimburse investors for $ 8 million, including $ 1.1 million CVL purchased in September by ConsenSys subsidiary, which is led by Civil primary investor Joe Lubin.
While Iles confirmed that Lubin was promptly reimbursed, journalists from Civil's editors said they did not know whether they would ever receive the token portion of their compensation packages.
Iles has confirmed a quartz report that will eventually have 5 million CVLs, each time they are distributed.
When tokens?
Regarding the moment when this should happen, Cassano and an insider say they have not received a calendar, despite the declaration of Iles in the opposite direction.
"We have communicated the dates of the objectives to the editorial offices and we have planned to confirm the details in the next weeks," said Iles. "We will not share these dates publicly before talking to them."
In addition, Iles stated that Civil has an active GitHub project for an open source application and a publishing platform, often collecting dozens of contributions per week.
The polemics about the compensation of Civil employees raise a number of legal issues compared to those that usually arise in the discussion of tokens, which usually focuses on the fact that the first coin offerings (ICOs) are unregistered securities.
Preston Byrne, partner of the law firm Byrne & Storm, P.C., told CoinDesk that different laws could apply to private offers through employment contracts rather than public offers.
"There are things you can give or possess that increase in value but are not a security," Byrne said. "You have to pay your people and you have to be honest with them, otherwise different questions arise."
Byrne also added that the legal issues related to tokens will be guided by specific facts and circumstances. In the case of CVL, public investors have been repaid, meaning Civilians may have nothing to worry about from the US Securities and Exchange Commission (SEC) or investors.
"There is a provision in securities laws that allows anyone who has participated in a sale of unregistered securities [to] extinguish its responsibility to these people by giving them the right to terminate, "Byrne said.
He concluded:
"As for employees, it depends on how they acquired the thing and if they are considered part of the offer".
Newspaper via Shutterstock
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