It’s a Bunch of Smoke and Mirrors

February 17, 2019

I’m sorry. Yesterday, I said that Sayonara, Substratum would be my second to last post about Substratum. So, that would make this my last post. I lied. This won’t be my last post because Substratum CMO Christian Pope’s statements are too amazing to not write about. Pope, who is well known for referring to Substratum’s financially irresponsible misreporting of ICO funds as “a bunch of smoke and mirrors” recently took to Telegram to shed some light on Binance’s planned delisting of the SUB token.

In response to a community member’s concerns about Substratum “gambl[ing] ICO funds” and doing a “horrible job managing money post ICO,” Christian Pope stated the following without proper capitalization and spelling.

gambled ico funds? and u know this how? horrible job managing money post ICO? again, u know this how?

The community member was referring to Substratum CEO Justin Tabb’s announcement that the project has decided to “trade up” with a portion of its investor-contributed ETH holdings. As stated in Substratum’s whitepaper, the ICO funding was to be spent on “product awareness,” “product development,” and “network infrastructure”. Nowhere does it state that Substratum will use investor funds to “trade up” its ETH balance on the open market. The definition of “gambling” is to “take risky action in the hope of a desired result”. In this case, the risky action was the implication that investor funds would be moved to an unregulated exchange (ETH/USDT pair on Binance) in order to “trade up”. Tabb’s desired result is to increase Substratum’s ETH holdings. Thus, the community member is correct. Substratum did announce that they would gamble with ICO funds sourced from investors.

Regarding Substratum’s horrible job in managing their finances – that’s totally true as well. A financially-healthy company has no reason to “trade up” with investor funds unless it’s part of the business model. Substratum is not a hedge fund or trading firm. Furthermore, Substratum managed to misreport its ICO funding in its whitepaper by millions of dollars – more on that later.

In response to my question about how Substratum misreported 702 BCH in its whitepaper, Pope stated the following.

always go by the ledger, not some pdf, that the whole reason for blockchain 🙂

This is interesting because Justin Tabb has referred to the ICO funding numbers from the PDF since the conclusion of Substratum’s ICO. In a video from December 31, 2018, Tabb said, “What we raised in our ICO was 17,778 Ethereum.” 17,778 ETH is the same number in Substratum’s whitepaper. In reality, Substratum’s ETH contribution wallet shows that 18,920.52273 ETH was collected. It’s alarming how the CEO of a blockchain project is incapable of accurately extracting basic transaction data from a blockchain.

The conversation then shifts back to Substratum’s intention to “trade up” with investor funds with Pope stating the following.

let me ask u… when crypto holdings are depreciating in value, should we just watch thm continue to drop with no end in sight for the bear market? is it wrong to be proactive with a fraction of usd holdings?

The answer to this is “no, but sometimes yes”. Substratum’s ICO goal was $30 million, and they ended up raising ~$13.8 million – less than 50% of the targeted amount. With this in mind, any seasoned entrepreneur would’ve immediately converted the $13.8 million in a stable asset like the USD and re-budgeted projected expenses to reflect the raised amount. Instead, Substratum chose to keep 75% of its funding in unstable assets (BTC, ETH, and USDT), while the other 25% was moved to USD. There’s a fine line, especially when it comes to blockchain companies. I completely understand the desire to “support crypto” by keeping assets in crypto, but prioritizing that desire before the company’s overall financial health is absurdly stupid. The story would be different if Substratum already had an established source of revenue that covered all operating expenses – which some blockchain companies do have. Unfortunately that wasn’t the case, and still isn’t the case.

Pope then responds to my statement about Justin Tabb constantly referencing the PDF instead of the blockchain by stating the following (once again with a shocking number of spelling and capitalization errors).

i don’t recall him quoting the pdf, but assuming he did, he didn’t write the pdf, someone else did, and assumed they listed everything correctly. a ceo of a startup, has a tremendous amout of structure to build, and can’t possibly validate every single thing everyone does. at some point u have to trust who u entrusted.

Of course the CMO of Substratum has no idea about the contents of Substratum’s marketing videos – my bad for having such high expectations for a Chief Marketing Officer. I do agree with Pope that a CEO has a “tremendous amount of structure to build”. I’m sure Tabb is very busy making deals with the National Christian Foundation, sending shill payments to DataDash, charting the price of SUB and giving financial advice on Twitter, admiring his face on the front page of The Technology Headlines, and instructing Substratum community admins to “ban his ass”. Apparently all of these tasks are more important than knowing how much money your company has.

Later on, I ask Pope about the plan for monetization of the Substratum network now that the SUB token has lost 99% of its already unimpressive trading volume. Specifically, why would users choose to contribute resources in the form of electricity and network bandwidth to earn SUB – an illiquid shitcoin. Furthermore, since SUB is an ERC-20 token that requires ETH for transaction fees, wouldn’t it make more sense to just monetize the network with ETH instead? Pope’s response was hysterical.

there are some people who are attracted to sub for the potential remuneration for running a node, while others dont’ care about that as they are in it for true net neutrality.

With SUB’s current illiquid state, the first group of people might as well not exist anymore. Financially motivated people are not going to perform a service in exchange for an illiquid shitcoin that can’t be traded on reputable exchanges. Regarding the second group, who in the Substratum community is “in it for true net neutrality”? The answer is no one – not even the community moderators. These moderators did not operate TOR nodes prior to being knighted with the responsibility of maintaining Substratum’s censorship-heavy community guidelines. They don’t give a s*** about net neutrality. The same goes for Substratum’s community overall. Who would still stick around and chat mindlessly all day long if there wasn’t a chance to make money with the SUB token? Probably Microoo, but that’s it. With this in mind, I asked Pope about the statistics that show some people are “in it for true net neutrality”.

we’re gonna do a poll to find that out, as we’ve not polled it yet.

Yes, the Chief Marketing Officer of Substratum doesn’t even have an understanding of its community demographics, but still chooses to make sweeping claims that there are community members that are “in it for true net neutrality”. Ah, nice to know that Substratum’s marketing department is relying on the good ol’ “gut feeling” strategy – seems legit.

By the way, Pope also said that Substratum will be making an official statement regarding Binance’s delisting decision tomorrow. Perhaps Tabb will step down as CEO – that would be bullish for the project.


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