Internet-of-things darling Helium has come under fire for failing to disclose its centralized distribution of crypto tokens, revealed by a Forbes investigation. Insiders reportedly owned the majority of tokens after its launch and took advantage of its system to earn even more rewards.
Helium launched in 2019, promising to provide global internet connection for all kinds of smart objects, from refrigerators to light bulbs. Users can place a hotspot device in their home, providing low-power network coverage to nearby objects, all the while earning Helium’s native cryptocurrency, HNT.
Helium — self-titled the People’s Network — hopes to provide crypto miners with a less expensive way to earn tokens in what it calls Proof-of-Coverage. However, since an all-time-high of $55 in November, the price of HNT has plummeted to less than $5 at press time.
Profits for miners have consistently dwindled since Helium’s inception in 2019. Users are unimpressed with low earnings and long wait times to receive their devices. “I realized it was going to take years to break even,” one owner told Forbes, who says he’ll earn around $150 annually from his set up.
Yet more concerning is that insiders of the ‘People’s Network’ appear to be hoarding a large amount of the rewards themselves.
Helium insiders have their cake and eat it, too
According to leaked documents, blockchain data, and interviews with five former employees, HNT tokens were heavily distributed to Helium’s inner circle and friends and family. Forbes revealed that when Helium rewards per hotspot reached its peak, only 30% went to Helium’s community — the rest were mined by insiders.
Thirty crypto wallets were identified by Forbes as likely to belong to Helium employees, investors, and friends and family. Together, the wallets mined 3.5 million HNT, almost half of all tokens mined in the first three months of its launch in August 2019.
Within six months, over a quarter of Helium tokens were mined by insiders. At its peak in November, that equates to $250 million. Today, those tokens are worth $21 million.
Co-founder and chief exec Amir Haleem told Forbes that about half of Helium’s first hotspots were given to insiders. “None of those numbers feel unreasonable to me or egregious in any way,” Haleem said.
Helium failed to share this information with its community, something Haleem feels would have been unreasonable. “I don’t know why we would be asked to be in a position to reveal anything about these people… They took an enormous risk and a huge chance on paying money to build something.”
Cheating the system
What’s more, Forbes discovered that it became common practice for Helium employees to build ‘closet clusters’ with their devices. By placing multiple devices close to each other, the signal would be high enough to mine rewards faster. Owners can change the location of their devices to make them appear further apart, thereby covering their tracks.
Helium cracked down on customers engaging in closet clustering — over 70,000 hotspots have been banned. However, three former employees told Forbes that the practice was normalized in the office.
In response to the allegations, Haleem told Forbes that he was unaware of the malpractice internally: “We weren’t looking closely at what employees were doing.”
Helium was focused on fixing the issue rather than finding who was responsible, he added.
This article was originally published on protos.com