2015 Vitalik Buterin Recordings Released: Scam? Fraud? Ethereum?

Recently, former Ethereum advisor Steven Nerayoff has been promising to disclose a fraudulent scheme “1000x bigger than SBF” regarding the world's second largest blockchain.

For some months he has been stoking the fire with various posts on X claiming, for example, that “Vitalik slept on his couch & copied his inventions,” that ETH has been “centralised from the beginning,” and implying connections with corrupt U.S. government officials from some of the highest federal agencies. The explosive accusations are numerous and at some points look like tabloid hype, but several are backed up by various e-mails, screenshots, and other documentation.

Nerayoff had promised to disclose solid evidence showing fraudulent activities by Vitalik Buterin in the early days of Ethereum. Yesterday, he fulfilled that promise by posting recordings of his conversations with Vitalik Buterin during turbulent times preceding the launch of Ethereum.

The evidence disclosed includes five conversations between Nerayoff and Buterin and a proposed “Rescue & Restructure Plan” for the organisation. These conversations took place right before the launch of Ethereum in 2015. The plan by Nerayoff suggested a harsh reshuffle of the whole structure, an independent audit of all accounts, the creation of a new for-profit entity and layoffs of the leading figures.

Over almost 3 hours of discussions, Nerayoff expresses doubts that Buterin will be able to live up to his promises. He says that the situation is “not pleasant legally” and mentions securities regulations, tax regulations, money transfer regulations, transfer pricing regulations and personnel conduct regulations.

He criticises internal structure and points out many people involved in the project and their actions, saying that he sees only one way of dealing with them: removal. Neyaroff is also harsh on financial management, especially the decision not to hedge Bitcoin holdings. He tries to convince Buterin that a total restructuring of the entire organisation is needed.

“The recording isn’t directly related to the fraud but will illuminate a lot of what was really happening & show my involvement,” - Steven Nerayoff on X

The recordings indeed prove that Nerayoff warned Buterin about legal risks and questionable financial decisions. It obviously shows that the two disagreed on the future of Ethereum. It also portrays Buterin as a newcomer, lacking in confidence, seeking advice from Nerayoff. But it does not seem to contain solid evidence of any huge fraud scheme. It might harm Buterin's reputation, but it is not a reason to call him to the courtroom. 

It is unclear what exactly prompted Nerayoff to speak out now, but if found true, the accusations could potentially harm the blockchain that has been steadily gaining value over the past months.

The whole story has a whiff of tabloid scandal, which might be the reason why most crypto outlets haven’t said much about it. Buterin himself has also not commented on the accusations for the moment. While Nerayoff presents himself - and many agree - as a hero helping to punish villains, critics have also questioned his motives, pointing to a previous arrest for criminal extortion.