By The District Court of East Brabant in the city of ‘s-Hertogenbosch, Netherlands that is hearing cases 407588 EX RK 24-127 and 407808 EX RK 24-131 concerning the proposed dismissal of current directors of Syscoin Foundation and installation of a court-appointed Director to investigate fraud, embezzlement, document forgery, money laundering and participation in a criminal organization allegations has ordered that unlawfully transferred SYS, cryptocurrency units of Syscoin blockchain, be returned by directors of Syscoin Foundation from their private cryptocurrency wallets and transferred to a court-approved escrow account while the case is being heard. Additionally, the Judge has also ordered that relevant accounting of SYS Labs Holdings Ltd (SYS Labs) be shared with the requesting parties’ legal teams.
SYS Labs is the UAE-based company launched, owned and operated by Syscoin Foundation directors that is at the center of the unlawful and improper transfers of funds from the Dutch-based non-profit Syscoin Foundation (Syscoin Stichting). During the initial court hearing that took place on 26 September 2024, Syscoin directors Jagdeep Sidhu, Chris O’Shea and Michiel Naring attempted to withhold financial statements and accounting of SYS Labs, despite the majority of Syscoin Foundation’s treasury at one point worth over 100 million USD having been diverted to SYS Labs. Subsequently, they claimed there were no such records available. At the end of the hearing the Judge ordered that Sidhu, O’Shea and Naring produce and share the relevant financial statements and accounting.
On 1 August 2024, several days after the news of the criminal complaint filed against the directors of Syscoin Foundation, Jagdeep Sidhu stated the following in the public announcements Discord channel of Syscoin: “We take these unfounded allegations seriously and are doing a comprehensive internal audit and are committed to being transparent in the findings.”. Despite that, as of 3 October 2024, no such audits have been released to the community.
Syscoin is the world’s fifth-oldest surviving cryptocurrency. It was co-founded over 10 years ago by Sebastien DiMichele and Sebastian Schepis. It is also the world’s second-largest blockchain by hashrate power, as it has been adopted by over 70% of Bitcoin miners through an innovative process called merge-mining. Syscoin Foundation, registered in the Netherlands, is the official legal entity stewarding the development of Syscoin blockchain and representing the interests of Syscoin community of tokenholders.
Long-simmering tensions within Syscoin Foundation became public in late July 2024 when Syscoin Foundation Directors Willy Ko and Bradley Stephenson as well as its Head of Business Development Matthew Mappin went on the record to Decrypt alleging funds mismanagement of Syscoin Foundation’s treasury, which at one point contained over 100 million USD worth of assets. According to Willy Ko, Jagdeep Sidhu held sole control over the wallet with the whole treasury of Syscoin Foundation.
After the news of Dogecoin Foundation filing the criminal complaint in the Netherlands became known, Jagdeep Sidhu, Christopher O’Shea and Michiel Naring attempted to remove Willy Ko and Bradley Stephenson from Syscoin Foundation alleging they were preparing a “hostile takeover” and had intent to position themselves as whistleblowers. In the statement of defence Willy Ko hit back claiming “Evidence shows that foundation funds were used to support and exploit Jagdeep, Michiel, and Chris’ own for-profit company, SYS Labs.”. Sebastien DiMichele, an original Cofounder of Syscoin concurred, stating that “a non-profit foundation cannot just fund a for profit foundation, especially When members of the foundation and @SYSLabsOfficial (SYS Labs) & @RolluxL2 (Rollux) projects are all the same people.”
Earlier this year, Dogecoin Foundation also filed a motion to dismiss Syscoin Foundation directors and to bring in a court-appointed independent director to perform a comprehensive investigation of the alleged crimes that took place at the Foundation, including initiating a thorough financial audit and seek complete recovery of any assets that were embezzled or otherwise unlawfully transferred from Syscoin Foundation by its directors. Tax authorities and financial regulators in the Netherlands, UAE DIFC and other relevant jurisdictions have also been informed of the ongoing procedures, criminal complaint and potential tax avoidance and money laundering that allegedly occurred at Syscoin Foundation and SYS Labs Holdings Ltd and their related entities.
Another hearing regarding Syscoin Foundation’s case is due to take place in October 2024.
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