You can also read this piece on Steemit.

For a summary of the recent controversy in the Synereo project, please see Smith + Crown's excellent summary article.

Synereo and RChain roadmap as envisioned on Greg Meredith’s napkin.

As you may be aware, the Synereo project is currently experiencing a broad disagreement and schism in its management structure, which has led to an 85% depreciation in the AMP asset from its August pre-crowdsale highs. At odds are the Synereo and RChain development teams, and in the spotlight is a public and unfortunate falling out between their two founders —CEO Dor Konforty and CTO Greg Meredith—with the two sides pointing fingers at alleged shortcomings in promised budget allocations, dragging technical delivery schedules, and accusations of attempts to oust each other from the alliance. The last Synereo crowdsale raised approximately $5M in September of this year, commencing excitedly during Ethereum’s annual developer conference, and was focused squarely on the vision of Synereo (a decentralized social media platform) built as the first application on RChain, its underlying smart contract platform.

CoinFund met with Greg Meredith and RChain partner Ed Eykholt, CEO of LivelyGig, this past August. We were immediately taken in by the depth of Greg’s vision for RChain — a revolutionary smart contract platform that combines incredible scalability with formally analyzed proof-of-stake consensus, and a smart contract language designed for mathematically provable security.

We judged Greg’s affiliation with the Ethereum Foundation and ongoing research of Casper-style proof-of-stake betting algorithms intellectually and technically state-of-the-art and an important research approach to blockchain consensus in general. We were also impressed by the vision of building out a sequence of applications as part of the business roadmap of the RChain project. Unlike other open source platforms, we saw a plan of this kind instrumental toward bootstrapping an alternative blockchain platform, as in today’s environment Ethereum maintains strong network effects across new development and viable smart contract functionality is par for the course in upcoming blockchain platforms.

It is on the strength of that vision that CoinFund purchased a significant portfolio allocation to Synereo AMP tokens, nearing almost 10% of our holdings at that time. Notably, the crowdsale proceeded at a token sale price slightly above then-current AMP market prices; this was unusual, but also understandable given the history of the Synereo project and its crowdsale structure. We didn’t mind paying a small premium as we believed that the money was going to fund one of the most innovative projects in the space. Our intention as investors was to directly support and fund the RChain product team instead of going to cryptomarkets as speculators. To be clear, while we are closely following the decentralized social media space (which also includes Steemit, Akasha, and Yours platforms) we did not see Synereo as having particular competitive advantage over incumbents other than being built on a truly promising platform.

At the time of this writing, the Synereo and RChain teams have participated in several public forums in which they have failed to agree on a mutually beneficial path forward that resolves their differences. In those forums, they have also demonstrated a decisive inability to continue onward as a unit in building a platform and application suite. Furthermore, the Synereo side has rejected the RChain proposal found here, with Dor Konforty stating that “the Synereo team deem[s] Greg’s proposal unreasonable and crippling to its future plans” in their Slack channel. Dor Konforty writes in the Synereo Slack:

As you may know, Synereo only has two board members — Dor Konforty and Greg Meredith. While we have been able to function smoothly for a very long time, achieving consensus on most things, we are currently in deadlock. In such a situation, the shareholders of the company may take on the responsibility of a 3rd board member, casting a deciding vote. I have now sent notice to all of our shareholders. A meeting will take place next week, on Monday 12.12 10:00am PST, via teleconference. If the majority of shareholders vote to cancel Greg’s employment contract, as well as remove him from the board, the current situation will immediately be resolved, and the Synereo team will be able to continue working on delivering on its vision unhindered.

At CoinFund, we would like to share our current position on the matter of Synereo and RChain and advocate for a resolution, as amicable as possible under the circumstances, which seeks to protect the project’s investors first and foremost. While the outcome for the product teams is certainly less than ideal, the biggest loser of all is the blockchain technology space. If we collectively allow questionable management shifts, unapproved reallocations of funds, and unwarranted limitations of investor recourse there will be legal battles, regulatory scrutiny, and investor disappointment for years to come.

In summary, our position is:

Some Slack and forum participants have called for the founders to “put aside their differences” and continue the project. While this may seem desirable at first, our opinion is that the Synereo and RChain teams are not able to continue a productive working relationship based on the observable interactions which are in the public record. Synereo as a standalone product has no competitive advantage over other products being developed in the decentralized social vertical and should demonstrate a credible roadmap for its platform before investors are well-advised to participate. We believe that a coin split, as proposed by Vlad Zamfir, is ultimately detrimental to investors because it creates two separately underfunded and disadvantaged teams which are collectively less likely to succeed in their respective endeavors. The token split also creates legal liabilities of the exotic variety; in our estimation, exploring these liabilities in the legal system is disadvantageous for the space. Synereo allocation of crowdsale funds towards the decentralized social media product and away from RChain constitutes, in our view, a misappropriation of investor funds towards a project that wasn’t accurately advertised to investors and one that investors weren’t equally likely to support.

We propose that the cleanest outcome possible is a refund to investors, to the best of Synereo’s ability, of all crowdsale funds. Once the new team structure and technology roadmap is created the two teams can run their own marketing and crowdfunding efforts and investors would be free to participate as they feel appropriate.

To be sure, considering that AMPs have been trading on an open market during and after the crowdsale, instrumenting such a refund may be complicated. One way to proceed would be to refund the original investors to the extent they still own the AMPs tokens purchased during the crowdsale. Considering that AMP prices never went above their crowdsale levels chances are most of the crowdsale can be refunded in this fashion, though Smith + Crown is reporting that this will come with a 33% haircut from spent funds.

We understand that human factors often play a decisive role in the way projects turn out. However, in such circumstances it is critical to prioritize transparency, professional integrity, and the needs of the community at large. The choice is between one failed (and possibly restarted) project and damaging the sentiment around the entire field of cryptofinance innovation, whose widespread adoption is contingent upon exactly such thing not happening. We therefore call on the members of Synereo and RChain teams to take the larger community into account and act in the interest of the blockchain space.

Sincerely,

The CoinFund Team