GuShiio.com Unclear equity causes bad consequences, and fierce battles are fought around control.
Author: Wu said blockchain
On March 7, TON ecological project Yescoin posted a tweet stating that Zoroo, founder of Yescoin and alumnus of Zhejiang University, was taken away from Hangzhou by Shanghai police due to a business dispute with partner Wang Mouxin (Lao Wang), and the case has been upgraded to a criminal case. The Yescoin team said that the product is still in normal operation and thanked the community for its concern for Zhang Chi.
Wang Mouxin, the partner mentioned in Yescoin’s official tweet, posted a long word article stating that Zhang Chi had no actual funding relationship with 3WW3 or any other project; from the launch of the Yescoin project in February to early June, Zhang Chi has not participated in any work, and his core energy has been devoted to doing his own Tonverse project; Zhang Chi participated in the planning and launching an illegal robbery incident in July, illegally removing the authority of founder Wang Mouxin, and illegally instigating members to control the project; On October 31, he plotted code information related to check-in on online core income on Lark, preparing to illegally seize online income.
Yescoin Hangzhou Zhangchi team denied that the project belonged to Wang Mouxin, believing that the team itself had paid more and had never reached a plan on the distribution of benefits. In the end, all members agreed to kick Wang out.
The full text of Wang Mouxin’s self-defense:
https://docs.google.com/document/d/1IkVP2CiCrVMQYyBjg5ATutTwZMj5VIt1B0DQ6Lvowg0/edit? usp=sharing
Yescoin Zhang Chi’s Hangzhou team responded to an interview:
Colin: Who is the founding team of Yescoin?
Eric et al.: I am the only person responsible for brand design and marketing design in the project, and I am the earliest member to participate in this project. Throughout the period from 0 to 1, the only information I received about the project was its name-Yescoin. After that, all visual bearing, including color selection, style setting (such as pixel style), styling design and brand tonality, were completed independently by me.
During this process, no one has reviewed my design, and all creative and visual expressions are independently decided and directly presented by me. Therefore, there is no such thing as “someone else” or “someone” completing this whole set of construction. I can provide process records of all design outputs to prove this. In addition, this project was originally incubated by 3WW3, of which I myself was an early member.
Let’s talk about project execution first. From a personnel perspective, the earliest core team had a total of seven people, including one product manager, two back-end development teams, two front-end development teams, one operation team, and brand design. Among them, the front-end, back-end and product manager were recruited by Lao Wang through outsourcing and belonged to external manpower directly recruited by him. The remaining four people, namely the core front-end development, back-end development, operations and design, were recruited internally by Chige through the 3WW3 system in 2023. This was the basic composition of the team at that time, and it was the seven people who jointly completed the core construction of the project.
Therefore, Lao Wang said “he did it” and we said “we did it”. Strictly speaking, it should be completed jointly by the members of 3WW3. Because there was no clear concept of the company’s main body at that time, everyone promoted the project with their contribution and ability.
Let’s talk about funding issues. If you want to ask who paid for it, I can tell you clearly that the funds mainly come from 3WW3, because there are two levels involved. First, when President Tang, I, and other members of 3WW3 (including Zhang Chi) joined the project, they actually participated in the form of “labor costs” as an investment. In other words, we do not receive wages, but our daily work and labor are essentially equity injections into the project.
During this process, since the project had no actual output at that time, it was impossible to discuss the issue of valuation or confirmation of rights. But from the actual situation, our contribution is not only manual labor, but also forms real project value. So even if these investments are not cash, they are still real investments.
Colin: As Lao Wang said, all the money was paid by Lao Wang from beginning to end?
Eric et al.: We use financing funds. Some of the money also came from another investor, but I couldn’t disclose his name. Not only Lao Wang contributed, Eric also contributed, and even we personally invested money in it. Although some living expenses are reimbursed, we sometimes don’t care about many business expenses and spend what should be spent directly. Of course, these amounts are not large compared to the bulk of funds. Eric spent more than 400,000 yuan on this side. If necessary, we can communicate and see if we can display these records.
Colin: How much money do you think Lao Wang actually paid out? Including the Asia-Africa and Latin America Institute and Yescoin?
Eric：0。I can definitely say it is 0. We have previously compiled statistics from Zhang Chi, and there is relevant evidence that can directly show that although Lao Wang has invested funds, he specially mentioned the word “borrowing” in the capital contribution record. Moreover, when he communicated with our former members responsible for financing, he specifically emphasized that once the subsequent financing funds arrived, he would have priority in repaying his loan of 1.6 million RMB.
During the entire period from 2022 to 2023, with 3WW3 as the main body, we received a total of US$1.42 million in financing funds, which is the actual amount received. The money was mainly invested by individual investors. Known investors include Dashan of Shuidi Capital, and the vast majority of the funds come from individual investors. After July 11th, we officially separated from Lao Wang. After that, Zhang Chi took on all debts in his own name, communicated with all investors one by one, and signed an agreement clearly stating that Zhang Chi would bear the financial responsibility of all investors.
Colin: Whether it’s Yescoin or 3WW3, does this project have an equity structure? Or is there a formal corporate entity? Are there any relevant legal documents?
Eric et al.: The reason why we had such a fierce dispute was because from the beginning, this project had never established a formal main structure. Only when Brother Chi realized the necessity of this matter did he begin to cause various contradictions and disputes.
When we first joined the project, it may have been out of pure or naive ideas, and we all cooperated based on verbal commitments. Everyone was told that they were “partners”, but specific equity arrangements and legal agreements have not been implemented. The original idea was to get things done first and then discuss these issues when results were available. However, after the matter was done, Lao Wang began to talk about “dividing the family” or simply screened out some people and excluded core members. In other words, after the project really developed, he tried to take control of everything unilaterally.
Colin: So, all cooperation agreements and financing contracts were ultimately signed with Lao Wang’s company, right?
Eric et al.: We don’t actually know who he signed it with. We really don’t know about this issue, because he handles many things himself, and the specific details of the contract have never been disclosed to us.
Colin: How can there be investment without a formal contract? Whether it is institutional investment or personal investment, this level of capital flow must be supported by contracts.
Eric et al.: We really don’t know the specific investment contract. You can understand it this way-Lao Wang wants to control all things involving “collecting money”, and all things “working” are carried out by us.
Colin: So you haven’t asked him to give everyone a formal equity allocation plan for so long?
Lao Tang: Of course, this request was mentioned.
Colin: Or, when did you formally put forward a clear equity requirement?
Lao Tang: In June, we formally made a request to him. But before that, since the project had not yet generated actual benefits, no one cared too much about these matters, and the team as a whole was considered united.
Colin: Because there are no actual interests involved, right? So there were not many disputes at that time.
Lao Tang: Yes, the problem is that the project began to produce some good results in May, and we officially began to discuss equity distribution and dividends. But even so, we did not make excessive demands, just tried to communicate, hoping to reach a reasonable plan. Moreover, we have talked to him three times, but each time he is very perfunctory, constantly drawing cakes and promising to solve the problem “in a few months.” I have a recording here to prove his story.
However, when the time he had promised came, he not only failed to fulfill his promise, but instead began to find a new team, trying to transfer the project resources and funds to them, and let our original team members “find a job by themselves.” Because of this, on July 11th, all of us unanimously agreed to remove Lao Wang from management while still retaining his corresponding rights and interests.
Personally, I don’t think we have overdone anything in our handling of this matter. Lao Wang is not suitable to lead this team, nor can he give real value to the project in terms of management. His behavior has seriously damaged the interests of the team. Therefore, on July 11th, all members of 3WW3 unanimously agreed to remove him.
Colin: So there are still two problems. The first one is that Lao Wang questioned that you have actually made a lot of money through this Bot diversion. Is this true?
Eric: Well, objectively speaking, the peak of project traffic was from May to November last year. During this time, the entire Telegram Ecological Track was the hottest. Everyone knows this. During this period, we estimate that the total revenue of all commercial activities and commercial decisions, including diversion transactions between us and our partners, is between US$2 million and US$3 million. However, all of these business income is in the personal hands of Lao Wang and is not on our side.
Since we officially took over the project on November 7, in the three months from November and December to January this year, our business income mainly comes from the turnover and slow-volume model. Even if we have revenue, we reinvest most of our money into project development.
Colin: How much revenue did you make in total during this time? And what is the cost consumption?
Eric: The total income is between $400,000 and $500,000.
Colin: I understand. There is another question, which is about issuing coins, right? You actually missed a good opportunity to issue coins. Is the main reason why the situation has become difficult now because of this internal struggle?
Lao Tang: From my perspective, the main reason is decision-making mistakes. Originally, the best market opportunity was May, when everyone was pushing forward the project hard, and the real internal conflict broke out after July 11.
Colin: I understand, so after July 11th, your Hangzhou team took over the project, and Lao Wang may be trying every means to file a case, call the police, prosecute, etc., right?
Lao Tang: No. He sacrificed the opportunity to issue coins, then deliberately set up various company entities, and even claimed that he had intellectual property rights. In fact, his purpose was to target us, not for the project or users. He never really cared about the development of the project, nor did he understand the actual needs of users. He may not even be clear about the basic portraits of users, let alone truly contact and understand them. We have been communicating with users on the front line, analyzing their needs, and knowing how to attract them.
Colin: But from a legal and equity perspective, these questions you raise may not make much sense. For example, if Musk invests in a company, if he is the majority shareholder of the company, no matter how hard the employees work, the company will still belong to Musk in the end.
Lao Tang: Yes, but the situation here is different. The employees invested in Musk have formal contracts, but we have not been paid since the first day of the project launch, but have participated as partners. It’s just that in actual operations, we bear greater responsibilities and everyone’s division of labor is different.
From the beginning, we did not define team members according to traditional employment relationships, but we worked together as partners to push the project forward.
Colin: So between the time you officially took over the project and the recent incident, did this happen many times? Or is it relatively stable overall?
Lao Tang: It has happened many times. This is also a point that I want to emphasize. For example, the communication software we used was Lark, but later Lark’s management rights were inexplicably taken away by some “mysterious force.”
Not only did the other party take away the Lark permissions, but we even received an email notification showing that our email login permissions had been modified. This means they can log in to the system using our account and even post information. Therefore, a lot of information has been taken out of context or tampered with, and we have also lost some historical records, resulting in some key details that can no longer be verified. At that time, we realized that the team had been artificially divided and some core resources had been artificially cut off.
Colin: I understand, this kind of thing is actually normal. Lao Wang may continue to appeal about the so-called equity and control, including using various legal means to try to regain control. Rights struggles with tools such as Lark are a relatively common situation in such disputes.
Lao Tang: Yes, we have been just focusing on the project itself, but he has been making small moves behind the scenes and trying to target us. And I think he may have been planning all this more than half a year ago.
Colin: I understand. So what are your plans to deal with this situation now? Have you communicated with lawyers and police?
Lao Tang: Yes, we have taken legal measures to deal with it.
Colin: And now he has taken away the main authority on the project, right?
Lao Tang: Not exactly. The main body is still on our side. This is actually a civil dispute in essence. But the problem is, for some unknown reason, this matter was escalated into a criminal case by “some force.” This is the most strange thing.
Colin: I mean, has Bot’s administrative rights and Telegram channel rights been taken away by him?
Lao Tang: We still have part of the Bot authority and channel authority, but now there is a “hard fork” situation.
Colin: OK, I heard before that in February, Eric said that Lao Wang used the TON Foundation in some way to transfer the authority of the main channel?
Eric: Yes, yes, he transferred the rights to the main channel.
Lao Tang: However, after he took away the main channel, we also re-established a new traffic channel and retained new Bot rights.
Colin: So are users staying on the original channel or moving to a new channel?
Lao Tang: There are both sides, which is equivalent to the fact that there are now two versions of the Yescoin community.
Colin: So it may seem complicated, but it’s not that complicated in essence. In the final analysis, it is because you did not have a clear contract and equity structure when you first started your business that led to these disputes later on. In the end, everyone held their own words and had their own positions.
Lao Tang: Yes, and the most bizarre thing is that this should be an ordinary equity dispute was forcibly upgraded into a criminal case through some unknown means. Moreover, this project ranges from 0 to 1. The entire 3WW3 has been developing in Hangzhou in the past two years, but now it has been transferred to Shanghai. This is really incomprehensible.
Colin: In fact, this situation is a very common phenomenon in the Web3 industry, such as Binance. When Binance first started, it gave tokens to many advisers and investors, but when the company grew bigger, Binance refused to recognize these early commitments. Because when the company grows into a billion-dollar enterprise, they may not be willing to fulfill the early investments or commitments of tens of millions of dollars.
Lao Tang: This may be the case commercially, but we still feel that there should be some idealism in the Web3 industry. A decentralized organization should be promoted by a group of like-minded people, rather than letting capital control everything. This is also where we were relatively simple at first. Looking back now, maybe this is “bad money drives out good money”, and young people with ideals can only suffer losses in the end.
Colin: You can’t say that idealism means everything. Indeed, it is difficult to make a final conclusion on this kind of matter, and it is difficult to say who is right and who is wrong. But judging from your experience, this also sounds a wake-up call for other entrepreneurs-entrepreneurs in the Web3 field need to be legal awareness, equity awareness, and contract awareness, otherwise similar problems will easily arise when the project becomes bigger.
Lao Tang: Yes, this is also part of our reflection.
Colin: So, in other words, all members of the Hangzhou team did not sign any contracts during the entire process and did not participate in the equity structure of any company?
Eric: Yes, it is.
Lao Tang: It was not until after the project was transferred to Shanghai that they began to supplement these structures, and the people who added in were basically members of Lao Wang’s original team. He first introduced his team to us and said that they were outsourcing personnel. Later, he took his outsourcing team to Shanghai, where he found a new group of outsourcing teams. At that time, he also told us that this was only a temporary adjustment and would return to Hangzhou later. We also have relevant video records of that time.
At that stage, we were still discussing incentive plans and still had a certain trust between each other. Zhang Chi took the lead in helping us advance this matter. But in July, we clearly reached an agreement that Zhang Chi would be responsible for all authority and serve as an agent to negotiate the final incentive plan. Until November, the incentive plan had not been negotiated, and as a result, Lao Wang directly isolated us completely. In order to protect our rights and interests, we can only first control the core account of the project in our own hands to ensure that the results of our work will not be embezzled.
Colin: Why wasn’t a compromise reached in the end? After all, it’s actually a lose-lose or lose-lose situation for everyone.
Lao Tang: Perhaps only Lao Wang and Zhang Chi know the specific reasons best. They communicated many times, but they never reached an agreement. Of course, I can only evaluate Lao Wang on behalf of my personal position. I think he is very good at acting. Zhang Chi had a lot of communication with him. Zhang Chi’s feedback was that Lao Wang was very selfish and greedy. For example, during their negotiations, Lao Wang once asked the team to transfer almost 80% of the benefits. This distribution plan would not leave a reasonable income space for the team. To put it bluntly, it was worse than the treatment of working directly.
Lao Wang, one of the founders of Yescoin, responded to an interview:
The earliest acquaintance with Zhang Chi should be around July and August 2022. At that time, I had the idea of building a community similar to the DAO.
Zhang Chi’s early core direction was mainly to favor the HR role, helping to see if there were suitable partners who could introduce them to the community and establish connections. Zhang Chi himself has also worked in a community before and knows many people. Therefore, in this process, his role is more oriented towards community operations and helps introduce suitable talents.
The community did not initially involve markets, products or businesses, but only produced some content, such as some public account articles. Throughout 2023, the industry is still in a bear market. By the end of 2023, the Bitcoin ecosystem will begin to heat up and the community atmosphere will also change accordingly. At this time, the flow of people in the community began to increase. Although people came and went, some regular friends stayed and were willing to try to do some business activities based on the community.
At that time, my personal promise was that I could reimburse all food, accommodation and entertainment. If anyone has some product ideas, I can also provide early support.
By 2024, the market will start to pick up, and everyone will have their own ideas on currency speculation or other aspects. In the process, early team members gradually began to do their own thing.
But at the same time, some differences in values began to emerge within the community, which was harmful to the community. The community itself is not a company. It has no strict management mechanism and cannot expel members at will, so I can only maintain a certain balance among them.
As there were more and more people, the community began to develop towards decentralization, gradually forming some small groups and gangs, and everyone formed their own projects. During the same period, multiple different projects can be seen in the community working at the same time.
In the initial stage, financial support for these projects relied mainly on community reimbursement mechanisms. Later, some projects also began to receive independent investment. However, incubating projects in the community is not easy. The decentralized management model makes overall planning difficult and leads to reduced efficiency.
In the later period, community reimbursement costs became higher and higher. What impressed me most was that during the peak period, the monthly reimbursement amount could reach hundreds of thousands of RMB.
In this process, it is inevitable that there will be a phenomenon of “not worrying about scarcity but about inequality”, and there will even be a situation where “bad money drives out good money.” Because some people have the authority to spend funds in the community and some have the resources of the project, some internal conflicts inevitably arise.
During Yescoin’s later community development process, everyone did their own things. But the specific project of Yescoin was co-sponsored by me, one of my partners who have been working with for 9 years, and an external partner. Around mid-February 2024, my partners and I began to discuss this direction, and the project name was determined around February 28.
During the period from March to May, Yescoin grew rapidly. But there is a critical point in time here-the progress of financing. The progress of financing may not be that fast, but I had been promoting products, operations and matchmaking cooperation on the front line. Judging from all work records, I am mainly in charge of these things.
Secondly, as the influence of the community continues to expand, projects grow exponentially, resulting in extreme funding constraints. The team needed to expand, but the initial number of core members was insufficient, so we were in a hiring frenzy. However, in this process, due to the rapid growth, the authority management of some personnel has become relatively extensive, thus laying hidden dangers of subsequent problems.
In the Asia-Africa-Latin America Research Institute, my personal expenditure exceeds RMB 4 million. Yescoin spent a total of more than $1 million. I prefer to give money directly, but I am indeed negligent in account management. So, initially Eric mastered part of the accounts, a certain developer held part of the accounts, and another was a developer from our company who also mastered part of the accounts.
Then, around May and June, during this process, they began to continuously adjust the authority configuration and gradually centralized account management in the hands of the Hangzhou team. And to put it bluntly, it was because after Notcoin was launched, the atmosphere in the community began to become strange. Because no one would take the initiative to come to Yescoin before, but at that time, the project attracted more attention, and everyone began to snatch resources and start to pick up problems.
After July, they should have gone through several “rehearsals” and then announced directly that the account belonged to them. At that time, I happened to be on a business trip, and they took advantage of this time to cut off all permissions. This incident happened very suddenly. I was completely unprepared. When I came back, I realized that the control of all accounts was no longer in my hands. I was very passive at that time and could only try to solve the problem. The information gap between the two sides also caused conflicts. On the one hand, the Hangzhou team has been saying that there is not enough money. On the other hand, from my work records, they have long been using account authority to secretly divert resources and transfer resources out. Simply put, the account was indeed in the hands of employees in the early days, but later, the Hangzhou team gradually used various means to completely control the authority in its own hands.
A member of the Shanghai team because he had authority at the time. However, when he arrived in the Hangzhou community, he was affected and may be said to have been brainwashed. The Hangzhou team was emphasizing the concepts of “decentralization” and “freedom”, as well as some interest demands. Influenced by this concept, he handed over authority to the Hangzhou team.
In fact, the core authority at that time and the most critical part was the Bot account, which was first designed and managed by the Shanghai team. Later, on this basis, the Hangzhou team gradually expanded its authority, began to take over more project resources, and also launched a new Channel. Judging from the overall situation, some members of the Shanghai team were indeed affected at that time, and later we found that there was a complete series of evidence to prove how authority was gradually transferred.
I have financing terms, business contracts, and a series of related documents. All the company’s corresponding equity certificates, including my personal investment records, are in these materials. I am fully aware of my rights.
In theory, there might indeed be some options or equity among early team members. But the problem was that the matter had not been formally negotiated at that time, and Zhang Chi had not officially entered the shareholder structure, so there was no way to talk about this matter at all. At that time, Zhang Chi and the others were not on the list of shareholders at all. Eric was actually only responsible for community operations in the early days, and another person was responsible for design. Therefore, it is impossible for me to sign the equity agreement when everyone joins the job, because this will only amplify the conflict. Our original intention was to have two or four people make the core decisions, but in fact, the team had grown to more than a dozen people at that time, and the situation became even more complicated.
To be honest, everyone was very excited to work on this project at the time, and I also felt that this thing could develop in the long run, so in the process, I always wanted to make it work more sustainably. However, in July, some people were already secretly selling traffic and cooperating privately with external forces. When they realized that things might not be able to hold back, they used this time to completely take away the account authority.
At that time, Zhang Chi stood up and negotiated with me, but he had more information than I did. He used some issues within the team to play games with me. In fact, I was talking to the team about equity allocation and salary structure, but in the end, it turned out that they wanted to take the entire project away.
