NEO & BEE: THE FULL PICTURE This is a reconstruction of the events that took place from the 17th of March up to the 18th of April 2014, surrounding the collapse of Neo & Bee (N&B). Within one month N&B, initially believed by many to be a promising bitcoin start up, vanished from the surface of the earth with its CEO still being on the hide with an arrest warrant issued for him for serious criminal charges. The timeline is derived from press reports, N&B announcements, Cypriotic police announcements, posts of Danny Brewster on Reddit and Bitcointalk, the post of N&B management team on Reddit and the subsequent AMA session, tweets by Brewster, tweets and posts on Reddit by Tuur Demeester and Andreas Antonopoulos, and other publicly available sources. September 2013 - February 2014: Brewster raises, through an IPVO in 3 exchanges, approximately 9,400 BTC for LMB Holdings, a UK “virtual entity”. September 2013 - March 2014: Brewster spends around 4,400 BTC in setting up N&B in Cyprus amidst one of the most aggressive marketing campaigns ever launched by a bitcoin company, with the motto "Who is Neo?”. On the 24th of February 2014 N&B opens its first branch in Nicosia Cyprus amidst a lot of enthusiasm, with the share price at Havelock almost doubling the IPVO price. 17th March: 6 months have passed since the publication of the original LMB Prospectus (September 2013) and even though investors were promised quarterly financial statements (copy from prospectus: “Quarterly financial statements will be published across all supported platforms where LMB Holdings shares are available to be purchased”), the company has not published a single financial statement. Investors that inquire about this in Reddit and Bitcointalk as early as December 2013, are always reassured by Brewster (“Cryptocyprus”) that the financial information “will be out very soon”. On March 17th, Brewster tweets that all financial information, projections and appendices "will be released later this week". 18th March: Brewster publishes an Updated LMB Prospectus of LMB (v.2.0) against the advice of his management team because, according to a later statement of them, "a lot of content was incorrect". To the surprise of many, the Updated Prospectus does NOT include any historic financial statements for the first 6 months of operations, nor any financial information or projections. Actually it does not include any “accounting or finance items” whatsoever. In spite of the absence of any finance and accounting numbers, on the same day, Tuur Demeester tweets: “The Neo & Bee prospectus is teaching us about the future of finance, so important reading!”. Apart from the "incorrect content", the prospectus includes misrepresentations such as the presentation of PricewaterhouseCoopers as the auditors of the company – copy from Prospectus: “We are also subjecting ourselves to external auditors for added transparency, we are working with Price Waterhouse Coopers (PwC)”. The Prospectus refers to an “advisory board” whose only member is Antonopoulos. The sole member of the Board of Directors is Danny Brewster as no other board members are revealed. 18th March: Brewster tells a member of the management team "we have 5,000 BTC left". As from March 18th, Brewster, an active user of social media with daily presence for months, goes completely silent and absent from Reddit, Bitcointalk, Facebook and Twitter. 19th March: The next day Brewster shocks the management team by telling them that the 5,000 BTC have…..overnight become only 140! "Actually I thought we had 5,000, but I have checked the wallet and the coins are not there, I spent them somewhere but I don't remember on what.......we have only 140 coins left. I am going to the UK to find investors. I will send you the 140 coins left and also sell my Mercedes and Bentley and will send you the money to pay the March salaries and the creditors". 20th March: Brewster goes to N&B offices for 1 hour. Management team tells Brewster that they want him to step down from CEO. Brewster agrees to step down after transferring control of the company to “investors”, without these investors being identified. 21st March: Brewster goes to N&B offices for 1 hour and then disappears and remains out of contact with anybody from the management team. 21st - 27th March: The Mercedes is reported sold but the funds from the sale and the 140 N&B coins "travel" together with Brewster to the UK, instead of being sent to the management to cover salaries and creditors as promised. The Bentley is reported to be in a car dealership in Nicosia with changed plates, it is unknown whether it has been sold as well with proceeds being taken by Brewster, or whether it is up for sale. Rumors start spreading on Reddit and Bitcointalk that N&B collapsed and that Brewster ran away with the investors’ coins, leaving behind unpaid employees and around €1M unpaid creditors. Many members of the bitcoin community, investors etc., reach out to Brewster on social media asking for clarifications. Brewster is nowhere to be found. Members of the community post on Reddit and Bitcointalk and tweet Demeester, Antonopoulos and N&B asking what the hell is going on. None of them has a clue and no official announcement is made. Some persons visit the branch and find it closed. Other persons call the company and the reply is “leave your details and we will call you back”. 27th March: With Brewster into the hide the management notes "abnormal trading" on the shares of the company on Havelock and the N&B Compliance Officer sends recommendation to Havelock to stop trading of the shares. 28th March: TAT (ThickAsThieves) terminates his contract as pass-through manager for NeoBee shares on Havelock. Havelock suspends trading of NeoBee shares. Brewster finally makes a contact with the management and says he received a threat for his daughter on the 26th. However, he cannot explain why he disappeared from all social media since the 18th and from the company since the 21st (!). Also strange is the fact that although he claims that the “threat” was for his daughter, he decides that the best course of action is to leave her in Cyprus and him to go into the hide in the UK (!). Brewster says the threats "have been reported to the relevant authorities". 29th March: Management team contacts Cypriotic Police asking about the threats against Brewster. Police says this is the first time they heard about it and no reporting of any threats has been made. 31st March: With Brewster into the hide, the management sends him a demand letter requesting he returns and give explanations regarding his absence in the face of dire problems with the company 2nd April: Brewster posts on Bitcointalk saying staff might be responsible for the threats and that's why he is out of contact with them. A new shocking assertion comes to light. Even though Brewster publicly and proudly claimed in the last weeks that he did not lose any coins on Mt.Cox as "the signs were there", in his post on Reddit he now claims that he lost coins on Mt.Cox. He also claims that "all bitcoins (raised in the IPVO) are accounted for". Furthermore, he claims that he doesn’t hold any funds/bitcoins that belong to customers: He writes: "I would like to reiterate that ZERO customer funds are under my control" (“capital letters” in ZERO being his emphasis) 4th April Trading of NeoBee shares on Havelock restarts without an explanation whether this was done by Havelock deciding on their own or under instructions from Brewster. 2nd - 15th April: Brewster’s disappearance continues, all employees resign, the offices and the branch close down, and the N&B brand becomes a joke in Cyprus with the media making derisive and derogatory comments "Where is Neo?" (paraphrasing the motto of the marketing campaign "Who is Neo?"). Brewster remains on the hide until news break out that an arrest warrant has been issued by the Cypriotic Police. Police says that Brewster is wanted for criminal charges including theft, forgery, counterfeiting and money laundering and for taking customers' and employees' coins and running away 15th April: Brewster posts for the second time on Reddit saying that although there is an arrest warrant for serious criminal charges he doesn't plan to return to Cyprus soon because he has to...attend a funeral in the UK (!), and that he can clear out all criminal charges whilst being in the UK. Also, in his post on Reddit, he instructs the Cypriotic Police to...pick up their phones and ....open their emails because he calls and emails them for days, and nobody cares to answer him (!). He also hints that “The manner in which the investigations are being carried out are concerning”, implying that the police might have set him up. He admits publicly that even though a threat was made against his daughter, he actually left her in Cyprus and he went into hiding in the UK. Even though on his posting on Bitcointalk on 2 April he reiterated that “ZERO customer funds are under my control", he now admits that he does, in fact, hold the coins of several customers and instructs the customers via the posting on Reddit “to provide me with their addresses so I can arrange for the bitcoins to be sent to them”. In this post a new shocking assertion is now made by Brewster, as he now presents a new excuse for the "lost coins". He now claims that he had sold all company coins that were at his disposal on the date Silk Road was busted (2 October 2013) at low prices and that's why he is now insolvent! 16th April: Official Spokesman of Cypriotic Police says the investigations against Brewster are "in an advanced stage" and does not rule out the issuance of a European or even an International arrest warrant. 18th April: Ex-senior N&B management team posts a detailed statement on Reddit saying "it is appropriate and justified to make the following statement regarding the mistruths and outright lies being fed by Brewster to investors, creditors and the public". Team says that there was never any accountability by Brewster about the money raised in the IPVO, in spite of repeated attempts by CFO and Compliance Officer to extract information from him. Even though Brewster claimed that "every coin can be accounted for", the CFO and the management team say that several thousands of coins "cannot be accounted for". CFO hasn't got a clue about what happened and around 5,000 coins are missing. Brewster said he had them on the 18th but “were lost” on the 19th of March. Later he claimed that they were all sold on 2 October 2013. Management also reveals that there have never been any financial reports or financial statements that were promised on several occasions by Brewster to the investors (in the original prospectus, in the updated prospectus and in social media). Management also reveals that in the prospectus issued on March 18th by Brewster against their advice, "a lot of content was incorrect" and included misrepresentations such as presenting PricewaterhouseCoopers as the auditors of the company. Management also reveals that Brewster took away with him customers' as well as employees' coins, even though Brewster claimed that "ZERO customer funds are under my control". Tuur Demeester posts on Reddit admitting that “things have taken a dramatic turn for investors and employees with N&B. The gist of it is that CEO Danny Brewster has disappeared, and with him apparently thousands of bitcoins from investors”. Andreas Antonopoulos posts on Reddit stating that “I was as surprised and bewildered by these events…dismayed that another bitcoin company had imploded amidst allegations of fraud and leaving many investors, creditors and employees with serious losses…all of whom betrayed by Danny”. N&B has collapsed, with thousands of coins missing and unaccounted for. It is revealed that after 6-7 months of operations the company didn’t manage to come up with any product, had zero revenue, and never produced any type of financial statements. The CEO is still in the hide and wanted by the Cypriotic Police.
We are pleased to announce that Neo's flagship branch is scheduled to launch on February 24, 2014. As part of the launch, we will also release the following three products:
Instant-Access BTC Wallet
This wallet will function as a standard Bitcoin wallet which utilizes the multi-signature process. Neo will earn revenue from these accounts through the fees paid when exchanging Euros for Bitcoin. Account holders will receive a Bee card, allowing them to make purchases at retailers around the island of Cyprus, and through existing Bitcoin payment gateways.
This wallet will allow the customer to hold Bitcoins over a predetermined time period in their own wallet with multi-signature functionality. These wallets will enable the customer to execute an exchange back to Euros on the predetermined date for either the original Euro amount or for the value of the Bitcoin that is held in the wallet at the time of the exchange, however the maximum amount of gains the customer will receive will be limited to an agreed level. Neo will derive income from this type of wallet through gains made in the value of Bitcoin over an above the agreed percentage.
This wallet will enable merchants to accept Bitcoin payments from anyone. Merchants will have the ability to determine the exact percentage of revenue they wish to retain as Bitcoins and how much they wish to convert instantly to Euros as settlement. Merchants may accept payments into their bank account through electronic transfer, or collect as cash from one of the Neo branches. Should the merchant choose to access their money through one of our branches, they will have access to those funds within one minute of accepting the payment. We have decided to delay the second branch in Nicosia to ensure the flagship branch opening goes smoothly. The second branch will tentatively launch within the first quarter of 2014.
Bee Payment Network
We have taken delivery of the first batch of POS terminals. We are now finalizing the integration with Neo applications. Bee will not charge transaction fees to merchants. This ensures the lowest barrier to entry. Bee will instead derive income from the rental of POS terminals and monthly fees for online payment gateways. We have been working closely with a number of POS and Stock Management System developers to ensure compatibility and ease of integration with their systems and the Bee network. This will enable thousands of Cypriot and international merchants to easily integrate our terminals with existing infrastructure.
Neo EasyCoin is nearing the completion of beta testing. We are waiting for some locations to go online with different payment service providers. We are also working with other payment service providers in Europe to enable Neo EasyCoin to service additional European countries. Neo EasyCoin will provide service to the United States once we are in possession of a written clarification from FinCEN regarding our business model. Our lawyers are working on this daily. While we are confident in our plan, we also want to ensure long-term stability.
We have received consistent and positive attention from local news outlets, including newspapers, television, magazines and news websites. Here are some examples:
Neo's first advertising campaign is now underway. The first television advertisement will premiere on February 1st. Radio advertisements and a new Neo & Bee website will be launched in support of this campaign. The website will include detailed information about our personal and merchant wallet service offerings.
We continue to make progress in establishing clear regulations for the operation of Bitcoin-based businesses in Cyprus. We have taken the necessary steps to obtain a Cyprus investment firm license, which would enable us to offer time-locked wallets to customers. We will offer these wallets when we open the first branch.
Neo Xchange is a new venture in which Neo will act as a brokerage and trade on a new Bitcoin exchange under development. The Neo Xchange platform will offer trade derivatives and other financial instruments. This requires the platform to be regulated. We are working towards obtaining the required licenses from CySEC to operate this platform. More information will be provided as available. Once this platform has been launched, Neo will have greater ability to hedge the instant-access pegged wallets.
We are now developing our own ATM hardware that will enable customers to have access to all subsidiaries in many countries. This development will enable global expansion. By increasing our footprint in this manner, we can assess the data from these portals to determine optimal locations for expansion of the Neo network of branch locations. The Neo Portals project is being managed by Brad Vaivoda. Brad Vaivoda graduated from the University of Colorado at Boulder with a B.Sc in mechanical engineering. After beginning his career performing brake rotor design and analysis in Formula 1, he accepted a position aiding orthopedic surgeons during operations whilst working for Zimmer Holdings Inc., a medical device manufacturer in the orthopedic industry. Most recently, Brad was employed by The Boeing Company as a Test & Evaluation Engineer working across Boeing's commercial aircraft product lines. Brad has since turned his focus to Bitcoin and Bitcoin-related ventures. He has considerable experience with bleeding-edge technology and is familiar with working in fast-paced environments.
Opinion: This subreddit could use a bit more skepticism
People, be a bit more skeptic to things you upvote. This subreddit is becoming too ridiculous. You upvote anything that sounds cool without even checking how it works, if it works, if the thing isn't overhyped. Hey look, NeoBee has a nice video and an ad campaign! Let's give them our money! Hey look, sidechains! Don't ask how it works and if it's a good idea at all! Somebody talked about it in a podcast, that's good enough! Upvote upvote upvote! Hey look, DarkMarket, a design prototype hacked in one day with 0 comments, 0 specification, 0 proof of stability, 0 proof of anything! But they had Wired and VICE articles, that's enough proof! Upvote upvote upvote! Hey look, DarkWallet, a wallet in a browser with centralized obelisk servers, with 0 proof of anything, but they have nice video! Right now you are overhyping a weird idea about signing in with public BTC addresses. ....I don't say that talking about those things is bad, or discussing them is bad, but I don't see discussion about positives and negatives, I don't see skeptic discussion about technical background of things, I see just wild blind upvoting and "this will work because it has 'centralized' in the description, 'bitcoin' in the description, and has a well done PR". I guess it's because people in general don't actually know that much about Bitcoin and the protocol? I guess so.
Had been putting most of my savings into Bitcoin for some time, I started buying when they where around $50. And then I had the great idea of "investing" them on Ukyos Bitfunder. The coins went mostly into ActiveMining, and some NeoBee Shares. When I heard the news about Bitfunder closing down, I sold my shares and tried to get my coins out. And pufff is gone. Decided I will not let that put me down, and will try to create a Project around Bitcoin to move my attention and energy into something positive. So immediately started to focus on this. I wanted to create a game, where people could win based on their Skills and intelligence and not just by chance like most of the current popular Bitcoin games. So http://www.satoshicode.com was born. The game is pretty self explanatory, you are suppose to find the code before everyone else does. You submit the answer and it costs 0.001 to do so. If you are first to get it right the prize is yours, and is sent directly to your wallet. (We don't store much on our hot wallet, security first). If your answer is late or incorrect it funds the next round. The more people that play, the bigger the prize gets. The less people the easier is it for you to win. We take 20% of prizes, and use it for a weekly prize and to cover our server costs (and maybe some day generate some revenue). The "codes" are randomly taken from Wikipedia. We have done a beta test for the past few weeks, and some of our players had play non stop for up to 16 hours a day! So beware the game can be addictive. The beta testers found some tricks to give deep to the game, for example sometimes they try a "Bluff". Basically submit an answer without knowing the actual answer to buy some time and try to get it right. I guess is better you see it to understand how that works. Every hour on the hour we add 0.004 to the prize. Is easy money if you are the only one there. We have many ideas and upcoming features to improve the game. While it mostly works well it will remain a Beta for a few more weeks. I wish I had started this post without the ever happening "lost coins", but is just how things where. Now, I have no idea if more people will enjoy the game and play, but is certainly been fun working on it. Whether the game becomes popular and I make a few coins back, or wether is forgotten with the many projects appearing every day, the Bitcoin adventure is just starting and we have a long way to go. I will keep putting my energy into building things around Bitcoin until you guys finally like one of them and then hopefully it will be the start of a new Bitcoin company. Edit: Extremely sorry on the typo, as you can understand English is not my first language.
Seems the mantra of late amongst the circle jerkers is that using bitcoin is complete financial freedom. I laugh every time I read that crap. Bitcoin is restrictive if anything, blockchains, hot wallets, paper wallets, cold storage, protocol, mining, blah blah blah. What a major pain in the ass and you all still get goxxed/neobeed every couple of weeks. All anyone who accepts btc does is instantly convert to fiat. The whole thing is pretty much a joke and the joke is on you unless you bought/mined btc low and got rich from these lemmings. The greater fool theory applies here. You know who has freedom? Me. I have 1 bank card in my wallet i use to buy everything, i walk around and swipe swipe swipe without a worry. There is no need or purpose for bitcoin in this world. Bitcoin is an obstacle to freedom. Hopefully US will ban all banking related to it and let this die off.
NeoBee are interesting: Unfortunately Mt Gox was not just a convenient tool for users to make bitcoin transactions into their own wallet, it held the bitcoin on behalf of users and the reserve ratio fell away from 100%. Like Like. Reply. Paul Marks (@paulvmarks) March 2, 2014 at 11:38 am. Neo’s Time-Locked Wallets will allow consumers to hold their bitcoins for a pre-determined amount of time — allowing them to convert back to Euros on an agreed-to date for the value at which they were when the wallet was established or the value of bitcoin at the time of the exchange.Gains (should the value go up) would be limited to a certain level. Powerful Client/Wallet: desktop, web and mobile apps with wallet, token creation, exchange and more built-in. Cheap Transactions: 0.05 EUR/tx. Transaction Speed: several hundred tx/s (Bitcoin: 3-7 tx/s, Ethereum: 18-22 tx/s). Data Transactions: store, share and process business data on the blockchain without developing smart contracts. The Ethereum blockchain network is second only to bitcoin’s in terms of popularity, despite launching in 2015—six years after bitcoin. According to the cryptocurrency-tracking website CoinMarketCap, Ethereum is worth close to $30 billion. The logo of the bitcoin firm NeoBee in Nicosia, Cyprus, on April 3, 2014. Yiannis Kourtoglou/AFP/Getty At least two clients have already filed complaints with the police in Cyprus against the Bitcoin company Neo & Bee. The local authorities are currently investigating the alleged fraud, while the company’s CEO Danny Brewster is still missing. The complaints were filed earlier this week, according to an article published by the Cyprus Mail, which also …
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