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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

It marks the first time that a candidate for president has accepted purely digital campaign funds.

The Libertarian Republican is an obvious choice to test the waters. Bitcoins are an independent currency that's totally outside the realm of U.S. dollars. It's like Euros or Yen -- except bitcoins are created and distributed privately by a community of tech enthusiasts.

Bitcoin fits in with Paul's views that government should take a more "hands off" approach to controlling the nation's money supply, which drives up inflation and devalues the currency. He's also likely trying to draw the attention of young, tech-savvy voters.

Paul, a U.S. senator from Kentucky, announced his bid on Tuesday. His website shows he's also accepting donations in credit cards and from PayPal.

Related: What is Bitcoin?

Bitcoin is frequently associated with tech geeks and crime. That's because it's a highly complex system that has famously been used on black markets online.

However, it's much more than that. It's a creative new system of money that allows for immediate, secure transactions with very low fees.

Startups are trying to build networks so that people in rich countries can more easily send money to family members in poor countries. Major banks are experimenting with ways to make faster and more convenient person-to-person payments.

There's also a concern that -- because bitcoins function outside the banking system -- they're harder to trace. That's a dangerous implication for mysterious, untraceable donations.

But that's largely unfounded. Contrary to popular belief, bitcoins are perfectly traceable (like email). And new rules from the Federal Election Commission say that politicians have to register new donors just like they do with regular U.S. dollars anyway.

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Rand Paul is first presidential candidate to accept donations in Bitcoin

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Home News Apps Bitcoin Foundation board director says company is bankrupt The financial future of one of the biggest backers of bitcoin is hanging in the balance according to directors within the company.

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The Bitcoin Foundation, an organisation that promotes development of bitcoin, is "effectively bankrupt" and has shed most of its staff, a member of the foundation's board of directors has said.

Two other board members, however, said the foundation was not bankrupt, though in need of some kind of restructuring.

The outburst by Olivier Janssens, who was elected to the board last month, is the latest in a series of controversies surrounding the foundation, which was founded in the U.S. in 2012 as a nonprofit entity.

"The foundation has almost no money left, and just fired 90 percent of its people. Some will stay on as volunteers," Janssens wrote in a blog post on the foundation's forum.

"The Bitcoin Foundation hates transparency," he added. "If they would have been transparent then everyone would know there is no money left."

Janssens attributed the foundation's financial straits to two years of "ridiculous spending and poorly thought out decisions," adding that the board has tried to remedy the situation by finding a new executive director. He called for the replacement of the entire board.

Described as a bitcoin millionaire, Janssens wrote that he will donate "several 100k" to a special trust fund aimed at supporting core development of the digital currency and supplemented by crowdfunding efforts.

The foundation did not immediately respond to a request for information about Janssens' post. But Patrick Murck, its executive director, wrote in a response to Janssens' post, "The foundation is not bankrupt, but a restructuring is needed. Olivier basically jumped in front of our announcements on that and our annual report on the 2014 finances to be released next week, and he spun it very very negative."

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Bitcoin Foundation board director says company is bankrupt

The founders of a new digital currency, known as LEOCoin, have hit back at reports published over the weekend linking them with a suspected pyramid scheme back in 2012.

Last week, U.K.-based Learning Enterprises Organisation (LEO) unveiled a trading platform in Hong Kong for its cryptocurrency called LEOCoin, which the company is promoting as an alternative to more popular digital currencies like bitcoin.

At a London launch the previous week, LEO boasted that it had already promoted the product to its current client base, claiming it meant over 100,000 entrepreneurs were already actively using the cryptocurrency in anticipation of its official trading debut, with around 30,000 merchants already signed up.

It also claimed this made it the "second largest digital currency" in the world, second to bitcoin, but has been slammed by reports on industry websites in the last week. Joel Dalais, a virtual currency entrepreneur and the director of bitcoin exchange IBWT, said on cryptocoinsnews.com that LEOCoin was a "good example of what a pump and dump coin looks like." He also dismissed its claims of its sizeable usage as "bulls*t."

Read MoreBitcoin gets a rivalhow will it fare?

An article by another industry website, called CoinDesk, delved into the history of project founders Dan Anderson and Atif Kamran and said that both were caught up in a controversy surrounding a suspected pyramid scheme, called UNAICO Pakistan, that was warned by the Securities & Exchange Commission of Pakistan in 2012.

Published online, the report by the Pakistani SEC said it had received various complaints from the public claiming that UNAICO was a pyramid scheme. The letter, dated April 2012, concludes that the company's activities did "broadly fall" within the definition of "fraudulent activities" and gave a recommendation to shut down the firm.

LEO's Dan Anderson is named as being the CEO of UNAICO at the time and Atif Kamran was also linked to the company through Sitetalk, a social community platform that is described as a "sister concern" by the Pakistani commission.

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Bitcoin alternative in 'pyramid scheme' storm

The Bitcoin Foundation, the nonprofit that has led adoption and standardization efforts for the open-source cryptocurrency, is considering restructuring into two smaller organizations, just days after one of its board members said it was effectively bankrupt.

The foundation itself has no control over the open-source Bitcoin, but it has taken a strong role in organizing the community and calling for standardization and adoption.

On Tuesday, Bitcoin Magazinereportedthat the foundation was considering splitting into two parts, one focused on maintaining and developing the currencys core database, and the other as a promotional organization designed to foster the currencys growing community.

Olivier Janssens, the groups newest board member who was elected last month, wrote a scathing forum post on Saturday, claiming the foundation was out of money and had shed most of its staff, hiding these problems from its members.

The Bitcoin Foundation hates transparency. If they would have been transparent then everyone would know there is no money left. ... The Foundation has almost no money left, and just fired 90% of its people. Some will stay on as volunteers, he wrote. If I get asked to leave the Foundation for telling the truth, so be it. The truth is being told.

He blamed the foundations problems on two years of ridiculous spending and poorly thought out decision, and said the boards plan to find a new executive director is insufficient, calling for the entire board to be replaced.

"My big issue was that they did not tell the membership about the real financial status," Janssens told Ars Technica. "You cant be a member-run non-profit and still try to get money from your corporate or individual sponsors while hiding the fact that youre near-bankrupt. Thats the reason I came forward, I could not live with that. Thats up to the members to decide."

Janssens previously threatened to give up his lifetime membership in 2014, after a board member, Brock Pierce, was linked to a sex abuse case, but ultimately decided against it.

In a response on Saturday, board member Patrick Murck refuted the claims."The Foundation is not bankrupt, but a restructuring is needed. Olivier basically jumped in front of our announcements on that and our annual report on the 2014 finances to be released next week, and he spun it very very negative," he wrote.

Previous board members of the Bitcoin Foundation have been embroiled in controversies. One of its founders, Charlie Shrem, pleaded guilty to transmitting money that was linked to the illegal Silk Road marketplace, and another, Mark Karpeles, who was the head of Mt. Gox, the worlds largest trade site for Bitcoins, when it collapsed.

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Bitcoin Foundation Is 'Effectively Bankrupt,' Considers Restructuring: Report

The Bitcoin Foundation, an organization that promotes development of bitcoin, is effectively bankrupt and has shed most of its staff, a member of the foundations board of directors has said.

Two other board members, however, said the foundation was not bankrupt, though in need of some kind of restructuring.

The outburst by Olivier Janssens, who was elected to the board last month, is the latest in a series of controversies surrounding the foundation, which was founded in the U.S. in 2012 as a nonprofit entity.

The foundation has almost no money left, and just fired 90 percent of its people. Some will stay on as volunteers, Janssens wrote in a blog post on the foundations forum.

The Bitcoin Foundation hates transparency, he added. If they would have been transparent then everyone would know there is no money left.

Janssens attributed the foundations financial straits to two years of ridiculous spending and poorly thought out decisions, adding that the board has tried to remedy the situation by finding a new executive director. He called for the replacement of the entire board.

Described as a bitcoin millionaire, Janssens wrote that he will donate several 100k to a special trust fund aimed at supporting core development of the digital currency and supplemented by crowdfunding efforts.

The foundation did not immediately respond to a request for information about Janssens post. But Patrick Murck, its executive director, wrote in a response to Janssens post, The foundation is not bankrupt, but a restructuring is needed. Olivier basically jumped in front of our announcements on that and our annual report on the 2014 finances to be released next week, and he spun it very very negative.

While saying that the money has basically run out, board member Gavin Adresen wrote in another response that The foundation isnt bankrupt, but the board needs to decide whether the responsible thing to do is to continue the organization with a much smaller organization and vision or to dissolve it.

The Bitcoin Foundation is no stranger to controversy. Among its founding members are Charlie Shrem, who pleaded guilty to transmitting money linked to the Silk Road online drugs site, and Mark Karpeles, who presided over the collapse of MtGox, once the worlds largest trading place for bitcoin.

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The Bitcoin Foundation is out of cash, says board member

Newly elected board member Olivier Janssens blamed 'ridiculous spending' and bad decisions

The Bitcoin Foundation, an organization that promotes development of bitcoin, is "effectively bankrupt" and has shed most of its staff, a member of the foundation's board of directors has said.

Two other board members, however, said the foundation was not bankrupt, though in need of some kind of restructuring.

The outburst by Olivier Janssens, who was elected to the board last month, is the latest in a series of controversies surrounding the foundation, which was founded in the U.S. in 2012 as a nonprofit entity.

"The foundation has almost no money left, and just fired 90 percent of its people. Some will stay on as volunteers," Janssens wrote in a blog post on the foundation's forum.

"The Bitcoin Foundation hates transparency," he added. "If they would have been transparent then everyone would know there is no money left."

Janssens attributed the foundation's financial straits to two years of "ridiculous spending and poorly thought out decisions," adding that the board has tried to remedy the situation by finding a new executive director. He called for the replacement of the entire board.

Described as a bitcoin millionaire, Janssens wrote that he will donate "several 100k" to a special trust fund aimed at supporting core development of the digital currency and supplemented by crowdfunding efforts.

The foundation did not immediately respond to a request for information about Janssens' post. But Patrick Murck, its executive director, wrote in a response to Janssens' post, "The foundation is not bankrupt, but a restructuring is needed. Olivier basically jumped in front of our announcements on that and our annual report on the 2014 finances to be released next week, and he spun it very very negative."

While saying that "the money has basically run out," board member Gavin Adresen wrote in another response that "The foundation isn't bankrupt, but the board needs to decide whether the responsible thing to do is to continue the organization with a much smaller organization and vision or to dissolve it."

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Bitcoin Foundation said to be out of cash

Further Reading One of the newly elected board members of the Bitcoin Foundationthe 2.5-year-old organization that was meant to bring order to the famously open source and freewheeling cryptocurrencyhas declared the group "effectively bankrupt."

While the Bitcoin Foundation obviously does not have control over Bitcoin itself, its the closest thing to a public face that the community has. Individual memberships start at $25, while corporate memberships start at $1,000 annually. The non-profits own tax filings from 2013 show that it ended that year with over $4.7 million in total assetsnearly five times as much as it had at the same time the previous year. It has yet to release financial details for 2014.

The organization was founded in 2012 by a number of Bitcoin luminaries who have since fallen, and the group itselfhas been marred by controversy in recent months. Of its original five founders, one isnowin prison (Charlie Shrem), another oversaw the collapse of the largest Bitcoin exchange (Mark Karpeles), and yet another has since left the United States for a Caribbean nation known for offshore banking (Roger Ver). Of the original board members, only Bitcoin lead developer Gavin Andresen has remained.

The Bitcoin Foundation did not immediately respond to Ars request for comment, nor did it address the issue on Twitter or its blog.

In a Saturday blog post, the new member, Olivier Janssens, claimed that the group has been hiding this financial distress from its membership. As he wrote:

The Bitcoin Foundation hates transparency. If they would have been transparent then everyone would know there is no money left. Something I think the members have a right to know, wouldnt you think? Members have a right to know that the current board failed to tell them the truth, and that their way of running the organization resulted in it going bankrupt. But instead of taking responsibility, they want to find the next executive director that will come up with another magic plan. Ironically, being transparent from the start might have prevented this whole thing to begin with.

Janssenspreviously said in May 2014 that he would resign his lifetime membership from the organization after board member Brock Pierce wasallegedlylinked to a sex abuse case. He ultimately decided not to leave it and wanted to reform thingsfrom withinJanssens recently stood for election to the groups board and succeeded on that effort.

"My big issue was that they did not tell the membership about the real financial status," Janssens told Ars via an encrypted chat on the Telegraph app."You cant be a member-run non-profit and still try to get money from your corporate or individual sponsors while hiding the fact that youre near-bankrupt. Thats the reason I came forward, I could not live with that. Thats up to the members to decide."

Janssens said he would prefer to heed whatever the groups existing members decide.

"If its up to me, Id make it a positive-only organization, no longer involved in any power position," he added."I would think its great to engage the members and make a map of every store in the USA, and have members go store to store to convince them of the benefits of Bitcoin, and in return they could get an affiliate percent or a referral reward. I also see the Foundation helping to organize mass changetip events to get a bitcoin (or bit) into the hands of every person in this world. For something like that, it can be very useful, and add a lot of value to Bitcoin itself. Its a non-threatening, positive thing to do."

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Bitcoin Foundation is effectively bankrupt, board member says

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