Breaking: Bitcoin enterprise Neo & Bee insolvent?

Journalist:
Christoph Marckx @cryptomaniacs
April 2, 2014
Neo & Bee CEO Danny Brewster broke a long silence today. He claimed Bitcoin enterprise Neo & Bee is insolvent.

A few days ago, trading of LMB Holdings Bitcoin shares on Havelock Investments exchange had been suspended. Reason for this was “an increase of abnormal activity”. LMB Holdings is the parent company of Neo & Bee, a Bitcoin company that tries to offer Bitcoin users a bank-like experience. Just a little while ago, it opened a flagship store in Cyprus. Rumours kept spreading about this news. Neo & Bee’s Bitcointalk forum thread was flooded with worried people. All that time, Neo & Bee’s spokesperson remained silent, until today.

Insolvency and threats

It seems Neo & Bee are insolvent. Danny Brewster, aka Cryptocyprus at the Bitcointalk forums, replied in the official Neo& Bee thread today. He explained his reasons for the long silence (which was what caused people to worry in the first place) and gave insight into Neo & Bee’s situation. After coming clean, he locked the post.

The start of his post was dedicated to reassuring people he did not leave Cyprus for good. Nothing was shipped and Bitcoins are still where they need to be. Brewster claims his reason for leaving were threats. He says he and, more importantly, his daughter received direct threats. Authorities were informed, but he felt safer leaving Cyprus.

“My recent silence has been forced due to the actions of two people, one of which has been posting on here thinking they know me and have the inside knowledge about my life that is largely false, and they really should obtain some better sources, however, those posts had much wider ramifications than they probably assumed they would have, so I hold them partially responsible for what has occurred since their posts.

I left Cyprus on a short term temporary basis for reasons that will follow, I have not shipped anything from Cyprus and I certainly have not run away with company or peoples money or bitcoins. Following those posts on the forum, I received direct threats targeted directly at my daughter; they have been reported to the relevant authorities, Once those threats were made I took the advice to remain outside of Cyprus and remove contact with anyone that could be responsible for the threats, this included not speaking with members of staff that could be responsible.”

Threats are never a fine way to resolve issues like these, but neither is complete silence. The past months have proven that an open communication with customers yields respect and gives you more time to get things done. Silence is usually a very bad sign and this is proven by what follows in his statement. Threats weren’t the only reason for leaving Cyprus.

“My reason for leaving was to raise additional capital for the business through the sale of my equity as we had run out of liquidity, I had exhausted all of my own liquidity too through directors loans to the company. Every single Bitcoin raised and spent is accounted for, any claims of embezzlement are nothing but empty claims with no foundation.”

It seems the Bitcoin community was right to fear the worst. Neo&Bee ran out of liquidity and Brewster left for the United Kingdom in order to gather funds. Even though he states “every Bitcoin raised and spent is accounted for”, this still leaves many questions unanswered. How could a promising company turn from hero to zero in such little time? A brief explanation was given, saying coins were lost in certain projects, as well as people still owing money to the company.

“There were coins lost in BitFunder/WeExchange that I personally covered and assumed that debt of 1420BTC to ensure the company could continue unaffectedly, UKYO also owes me an additional 260BTC separately from the 1420BTC. I also have 369.8BTC of my own Bitcoin stuck with MtGox that would have been given to the company to settle all creditors and continue operations whilst more capital was raised. Having funds on MtGox was a personal risk that I assumed and no company funds were ever held on there.”

New Mt. Gox?

A new Mt. Gox in the making? What happened cannot be changed anymore, unfortunately. So the interesting part of it all is the solution. How does Neo & Bee expect to become healthy again? At first, Brewster wanted to sell some of his own equities in order to raise more capital. The threats toward his daughter seem to have scared him, seeing he plans on selling all his shares now. When the sale is complete, the new owner will be able to appoint a new CEO. A special agency was hired to handle all of this the best way possible.

“My original plan was to raise more capital to allow the company to achieve its potential through the sale of some of my equity. The moment threats were made towards my daughter this plan changed and I decided I would sell all of my equity, allowing the new owner to appoint a new CEO.

The whole process will be completed and handled through an agency that specializes in these matters, once the final details are completed, the agency details will be made available to interested parties who wish to purchase 100% of my equity in LMB Subsidiaries Ltd thus taking full control of all subsidiaries. I shall also be providing the new owner full rights over the Bitcoin debts currently owed by BitFunder/WeExchange as I know people are working on a solution to recovering those debts for everyone that has funds stuck there. This process will also write off all directors loans I have made to the company and I shall not receive any financial compensation through this sale process.”

Another promising Bitcoin company seems to bite the dust. For all we know, these are growing pains for a new technology that is still trying to find its place in this world. However, Bitcoin had its fair share of setbacks now, this has got to stop soon. People’s faith in cryptocurrencies is low at the moment and this can only harm that trust even more.

The Neo & Bee story is still ongoing, CCN will provide further updates as more details become available.

Danny Brewster photo by kathimerini.com.cy

Last modified (UTC): April 20, 2014 18:34

Christoph Marckx @cryptomaniacs

Internet addict and virtual currency aficionado living in Belgium. I work in a school, where I am responsible for every computer and the entire network that keeps our students connected to the world. I love cryptocurrencies, mostly because it gives us a chance to take back our freedom. If we do this right, there are exciting times ahead!