Dash Core Group 2023 Decision Proposal - Dash DAO Irrevocable Trust
How much is being requested?
1 Dash as reimbursement for the proposal fee.
What is this specific proposal for?
This proposal is being raised to highlight some of the challenges we have faced with the trust that was created back in 2017 and determine how we should move forward.
What is the Dash DAO Irrevocable Trust?
Dash Core Group Inc. (DCG) is a C Corporation that is incorporated in the state of Delaware and has its headquarters in Arizona. As with all corporations, DCG needs to issue shares (certificates of ownership) to one or more people or organizations. Given that DCG was created to support a decentralized network and does not operate to generate a profit and even if it did have a profit, there is no person or organization that “deserves” to profit from owning the company.
To solve the above dilemma, a New Zealand trust was created to own the shares of DCG and was to be managed by a board of “Dash Trust Protectors” (DTP) who were to be elected by the Dash Masternode network. The purpose of the DTPs is to manage the dealings of the trust and oversee the DCG board of directors. The trust deed states that if DCG were to ever get dissolved, all remaining assets would get donated to the Red Cross.
Why do we need to consider changing the above described structure?
PROBLEM 1: It has proven very difficult to find volunteers to serve the role of DTP and the last attempt to recruit volunteers was not successful (only one person volunteered and had insufficient experience). We currently have no DTPs so Brian Foster has been managing the dealings of the trust. There have been discussions in the past about potentially paying DTPs a salary/stipend so there is more incentive to serve the time and efforts involved but no such proposal has been raised and in the current market conditions, it seems unlikely it would pass.
PROBLEM 2: There were two trustees that oversaw the trust, the original trustee which is domiciled in New Zealand (this was one of the few crypto friendly regions at the time) and a co-trustee which is domiciled in Switzerland. From the knowledge acquired to date, most if not all communications occurred between the DTPs and the co-trustee in Switzerland. There was a single point of contact at the Switzerland firm and that particular individual has been very unreliable and often non-communicative (not responding for days or weeks at a time).
Most of our corporate accounts (Coinbase, Uphold, etc) requires us to verify the corporate status of DCG and that usually entails getting paperwork from the Trustee and when our contact was not responding to Brian regarding verification for a new partner, he tried calling their mobile and office numbers and still did not get what was required. Due to this lack of support from our primary contact at the Switzerland firm Brian reached out to the New Zealand trustee only to find that they retired from being trustee in 2022 due to paperwork sent to them from the Switzerland contact containing fraudulent signatures (this was verified by Ryan and the NZ trustee).
Very recently, and after months of further investigation it was discovered that the Switzerland contact has been acting in bad faith since 2019 when he left his employment at the Switzerland firm that was the legitimate co-trustee. We believe it began by him falsifying a name change of the Switzerland firm and then trying to file a new deed trust with the New Zealand firm, hence prompting them to resign as a trustee.
Some communication was achieved with the Switzerland contact recently after they sent us an invoice for the next year of services. Due to the above described events, it appears that we do not have a valid trust anymore.
PROBLEM 3: Without a valid trust, DCG will not be able to verify our corporate structure to any future partner and our standing as a legitimate organization is greatly jeopardized.
What are our options?
OPTION 1: Create a new trust with a single trustee. This would take time to evaluate new trustees and would likely cost anywhere between $4k - $12k to establish the trust and about $3k - $15k per year for trustee services. This would also require DCG to pause pursuit of any new partnerships with larger institutions and would increase the risk of legal ramifications for not having a valid corporation until the new trust has been established. However, even given these downsides, this would be a simple trust with no DTP component so that it is less complicated and less costly than the original structure. This option does not rule out the ability to re-institute DTP’s at a later date when the market improves and if the community wants to do so (if there is sufficient commitment from people who want to serve as Trust Protectors).
OPTION 2: Create a new trust with a single trustee that includes DTP oversight as the original. The costs for this would almost certainly be more than option 1 (probably double) and it doesn’t solve the issues surrounding recruiting competent Trust Protectors. This would also probably take longer to establish given the complexity and uniqueness of the structure; finding a willing trustee may prove difficult.
OPTION 3: DCG Board members hold the shares of DCG instead of a trust. This would require legal costs if/when the board changes to transfer the shares to/from new and departing board members but it is likely to be the least costly and most expedient option to make DCG a corporation in good standing. However, the DCG board does not feel comfortable having ownership in DCG even in a temporary time frame due to potential legal and tax consequences.
While other options have been discussed amongst the community, the DCG board and previously seated DTPs, they were either too disruptive to the operations of DCG, required development resources/money or were too complicated, requiring excessive administration.
The DCG board recommends OPTION 1. It has the least amount of legal risk and it would keep the structure of the organization more in line with the original one (which is good for existing partners that we would need to inform). Voting YES for this proposal would be showing favor for OPTION 1 and if this proposal passes, DCG would take steps to fully dissolve the illegitimate trust, retire the current/past trustees and reject payment of the latest invoice from the Switzerland contact. Research will start on finding a new trustee to set up a simple trust with no DTP oversight and re-issuing shares to the new trust. The creation of the trust will only happen when funding becomes available.