The Bitcoin Foundation, formed in 2012 to promote the virtual currency, has rejected claims by a board member that its bankrupt but has acknowledged significant financial problemsironically as a result of a big drop in the value of its bitcoin holdings.

On Tuesday its board of directors rejected claims made a day earlier by board member Olivier Janssens that it was effectively bankrupt, but said the bitcoin roller coaster has forced it to drastically cut back its operations.

In early 2013 a bitcoin was valued at around $14 but that soared to $1,145 by November that same year, according to Coinbase. Three weeks later, it had collapsed to $569 and continued wide swings throughout much of 2014. Today, a bitcoin is worth about $258.

Those swings add up to bad news for the organization.

The drop in bitcoin price drastically affected the Foundations bottom line as the majority of assets were held in bitcoin, it said.

As a result, the foundation has cut programs to concentrate on one mission: development of the Bitcoin Core Protocol. Staff numbers have also been cut, although the foundation rejected Janssens claim that 90 percent had been fired.

Some team members left voluntarily and agreed to continue helping on a volunteer basis to help the Foundation during this financially austere time, it said.

The foundation hasnt revealed exactly how many bitcoins it holds, but a filing with the Internal Revenue Service said the holding was worth $4.5 million at the end of 2013. Based on figures from Coinbase, that was equivalent to just over 6,000 bitcoins. Today, those bitcoin would be worth $1.5 million.

The current state of the foundations finances should become clearer in the coming weeks when its latest IRS filing, covering 2014, becomes public.

And when it does, the board might face questions about why they didnt diversify the foundations assets to put it on a more stable base, instead choosing to keep them all in a volatile investment.

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Bitcoin Foundation hit hard by big bitcoin losses