Responding to Concerns

First and foremost, Paul and Josh have misread the key piece of the the director agreements. "Upon termination of this Agreement, Director shall be deemed to have resigned from all offices then held with Organization by virtue of his position as Board Member". This element of the agreement clearly refers to "officer positions" that a director may hold in connection with their board membership (e.g. President, Secretary, VP). This does not represent the end of the Director tenures, which are instead governed by the bylaws.

Second, the Bootstrap bylaws (III(1)) state that directors serve for a term of 3 years or until their successor is elected. Does that mean the term ends at 3 years? No. Delaware law has a long-standing holdover rule. This rule states that directors positions continue until they resign or are replaced and do not automatically expire - which is why the bylaws state "or until their successor is elected." Note that in the hierarchy of corporate governance, Delaware laws rank above the bylaws, which rank above contracts.

It's a myth that we received three (meaningful) valuations. The board resolution we were asked to sign includes a statement that the board believes the deal has achieved the "Fair Price" requirement by reviewing three "independent" valuations: (i) market approach, (ii) cost approach via internal audit, and (iii) income approach via bona fide arm's length market offer.

In fact:

1. The "market approach" was actually a cost approach, and compromised by conflicts.
This valuation used theoretical replacement cost, which is by definition a cost approach, not a market approach. A market approach would analyze comparable transactions, applying market-derived multiples to relevant metrics such as revenues, transaction volume.

Moreover, this valuation was conducted by a firm whose engagement was managed exclusively by the conflicted CEO - the same individual who stands to benefit from the transaction. This arrangement undermines any claim of independence. (This is the same reason the board could not accept the promoter's proposal to use another valuation firm, of his recommendation, regardless of the firm's nominal qualifications.)

2. The "cost approach via internal audit": we are not aware that an audit on the costs of making Zashi was done. If it was, no documentation was provided.

3. The "income approach via bona fide arm's length market offer": An income approach typically requires projecting the asset's future cash flows and discounting them to present value. There is a theoretical basis for treating a buyer's offer as a proxy for income-based value, the premise being that rational buyers price assets based on their income-generating potential. But this logic depends on the transaction being genuinely arm's length and emerging from a competitive process.

Neither condition is met here. The buyer includes insiders who stand to benefit from the transaction, and no market canvass or competing bids were solicited. A single offer from a conflicted party is not a valuation. It is the buyer declaring what they are willing to pay themselves.

Therefore, there was not a single clean valuation the board could use, and explains why the board sought to obtain one.

In addition, the documents were inconsistent or incomplete in a few ways, including: (a) the assets valued in the valuation report are a subset of the assets listed in the transfer agreement, and so further undervalues the transferred assets, and (b) the board resolution asserts that the board has reviewed a letter from the investor group, but the board has not seen such a letter. The conflicted executives should have had strong reason to get valuation right. While it is not our responsibility to consider the potential harm to conflicted individuals, for a sense of how grave the situation may be, refer to the Personal Liability Calculator.

No one is entitled to a one-month notice for suspension. The one-month notice for changes in terms is for things like salary, holidays, etc. See Employee C, "Suspending the CEO violates his contract's 1-month notice".

Josh refused to meet with us without (1) 2 days notice, (2) calling a board meeting, and (3) an exhaustive list of questions. This is a highly unusual demand from a CEO to his board.

Further, Josh repeatedly informed the board of his intention to form a new company and that regardless of progress on a deal that he would be imminently forming a new company in early January. Putting Josh on leave essentially provided a paid vacation where Josh had maximum flexibility and self-funding to structure the transition.

A reasonable Director of Finance and Ops should have informed us if he had concerns about any instruction. It is not sensible to assume that the board is intimately aware of company policies - which he may have drafted, and the board may never have seen. He was asked to provide "execution details," whereupon he could have proposed a different strategy, or explained why the organization's policies currently do not allow such a sale. In an email, he was told: "If you are unable to execute for any reason, immediately inform the Board what is preventing execution. To be clear: we are not asking for immediate execution if circumstances prevent it. We are requiring acknowledgment and communication. Continued non-response is not acceptable." Instead of responding to us, he stonewalls us for 2 days, ignoring 3 emails and 1 text message. For an executive holding a critical position, this behavior is not tenable. When he finally communicates, it is addressed to all the employees, and in it he accuses us of various offences. He attached two emails and excluded the third, which contained the language quoted above.

The board views these action part of an ongoing pattern of frustrating the boards obligations as a fiduciary over the assets.

Nevertheless:

The liquidity position around ZEC has materially changed since October. Cypherpunk DAT has acquired 290,062.67 ZEC. The Grayscale Trust has grown by 2.1 billion. ECC custodies most of its ZEC on Gemini.

Daily ZEC volume is now greater 1 billion dollars in both spot and perp markets. Gemini is not a very liquid exchange but its order book is arbitraged against Binance and Coinbase. Thus a limit order should be easily filled.

Assuming a $25mn treasury, liquidating $4mn/16% of the treasury is incredibly reasonable. The Ethereum Foundation has done sales of that size relative to its treasury before (this is public info).

Unlike other organizations, to our knowledge, ECC has not updated its treasury strategy in the face of the major price run up to $800. This is highly uncharacteristic for well-run treasury operations. We have seen ECC go through very thin periods and want to avoid being exposed to such risks again, if the market allowed for it. We were making up for a lack of basic treasury management.

Finally, all this organizational turmoil has furthered our burn in unnecessary spend. It may even be construed as deliberate in order to obtain leverage. We are experiencing extraordinary legal costs managing the proposed transaction. Ultimately, the board is responsible for the financial well-being of the organization.

On the claim of "insider trading": ZEC is a commodity, not a security—a position the Zcash ecosystem has consistently maintained and which the SEC recently reinforced by closing its investigation into the Zcash Foundation without enforcement action. Insider trading prohibitions for commodities are far narrower than for securities and have never been applied to cryptocurrency trading. For the full legal analysis, see "The board engaged in insider trading".

Paul was only removed from the board. He is still an (the only) employee at the company. His board membership is not part of his employment. Notably, Paul was on the board when he was briefly at Coinbase; when he came back as an employee, he maintained his board position. These are separate roles.

There is a specific legal procedure which achieves the "legally permissible and not uncommon" outcome. That language was referred to on the first page, and predicated on ~15 ensuing pages of information.

Every attempt to execute that specific procedure on the ensuing pages has been frustrated by the promoters of the NewCo. Whereas the actions the board took is exactly the kind of procedure that reduces the impact of conflicts of interests on the deal.

Editorial note: it was the NewCo's responsibility to present a deal that the board could sign; instead the board had to do hundreds of hours of work to try to structure a legal deal. It is extremely unconventional that the approached party needed to do so much work for a deal proposed by the approaching party.

Importantly, the board has nothing to retaliate against since it did not oppose the claim of protected concerted activity (whether the action was legitimate is a different question). It seems that people are making assumptions about the board's ideas.

Leave or suspension is generally understood to not be equivalent to changing the terms of contract (which are more like salary, holidays, benefits).

No one gives an executive one month notice that he is going to be suspended. Imagine the moral hazard that gives rise to.

We intentionally kept all the terms of the contract including compensation and benefits in place.

Leaving Josh's compensation and benefits in place is a clear indication that we did not terminate him. Therefore, there are no requirements for a one-month notice.

Retaliation would require that the board sees employees to be taking actions it disapproves of. The board does not disapprove of employees taking their concerted action (though its legitimacy is a separate question - see Employee F, "Protected concerted activity protects the divestiture"). (Also, stating the obvious - we hold ZEC too.)

About price manipulation: we routinely see 100,000's of thousands of ZEC moving in and out of exchanges. It's extremely unlikely that sale of 8000 ZEC would have had any price impact under current conditions - unless we had suboptimal routes for liquidation, which the Director of Finance and Ops was welcome to discuss with us.

Separately, we are also aware of a rumor going around saying we asked to liquidate all our ZEC. This is obviously not true. It is unfortunate that untruths are being spread which causes a contagion of fear and mistrust.

On "insider trading": this framing applies securities law to ZEC, contradicting the position that Zcash's founders, foundations, and ecosystem have always maintained—that ZEC is a commodity. The SEC recently closed its investigation into the Zcash Foundation without action, reinforcing this view. Commodity insider trading rules are far narrower and have never been applied to crypto. See "The board engaged in insider trading" for the full analysis.

Converting volatile cryptocurrency to stable assets isn't a breach of fiduciary duty—it's often required by it. A nonprofit holding millions in a speculative asset has an obligation to manage risk prudently. The sale was textbook Duty of Care. Calling risk management "dumping" is rhetorical framing—especially when the amount is 0.5% of ZEC's daily trading volume.

On "blocking funding": the board's job under 501(c)(3) law is precisely to scrutinize transactions that would transfer value to insiders. The independent directors are doing what the IRS requires: ensuring charitable assets aren't transferred to private parties without proper process and fair value.

"Waste" has a specific legal meaning: dissipating assets for no valid corporate purpose. Getting independent valuations, consulting legal counsel, and ensuring regulatory compliance isn't waste. It's governance.

ZEC is a commodity, not a security. The classification of ZEC as a commodity rather than a security is not merely the Board's preference—it is foundational to the entire Zcash ecosystem's legal standing and operational viability.

Insider trading law does not apply in the same way to commodities. We have always maintained that ZEC is a commodity; it is *not* a security issued by ECC. We expect ECC's former employees share this view. If they do, then their apparent concern about "trading with material non-public information" is understandable but misplaced. That standard derives from securities law. Insider trading prohibitions for commodities are far narrower in scope (refer to this memo for more info) and, to our knowledge, have never been applied to cryptocurrency trading.

Applying securities-law frameworks to ZEC would undermine the ecosystem. It would contradict the legal position that Zcash's founders, its foundations, and its ecosystem participants have consistently maintained. It would also undermine the regulatory clarity that the ecosystem has fought for years to establish—clarity that the SEC's recent decisions have finally begun to provide.

Note: The view on ZEC not being a security has substantial and recent support. On December 15, 2025, Zooko Wilcox delivered a keynote address at the SEC Crypto Task Force Roundtable on Financial Surveillance and Privacy, appearing before Chairman Paul Atkins and Commissioner Hester Peirce. At this roundtable, Zooko disclosed that the SEC had previously investigated him and ECC for potential fraud, calling it "unjust" and "an insult to my character." (Decrypt)

One month later, on January 14, 2026, the SEC closed its investigation into the Zcash Foundation without taking any enforcement action—ending a probe that began in August 2023 and focused on whether ZEC-related activities fell under securities law. This outcome represents a significant indication that the agency does not view Zcash as a security.

The Board bears responsibility for ECC's financial matters and any associated liability, and we take that responsibility seriously—but we will not accept standards that are legally inapplicable and strategically damaging to the ecosystem.

Consider the full context. Bootstrap holds a modest amount of ZEC—too small to meaningfully move the price even if we liquidated our entire treasury, let alone the proposed 14%.

At the time of the proposed liquidation, Bootstrap had only 7.5 months of runway in USD-equivalent assets. After years of operating under stressful financial conditions, the significant price appreciation represented an opportunity to secure a longer runway. Yet despite this, ECC management did not adjust the treasury strategy to lock in these gains.

When the board asked to proceed with liquidation, we had no solid information on the timeline for forming NewCo, nor whether difficulties structuring the asset transfer might jeopardize a funding round the team depends on. If NewCo's funding fell through, Bootstrap would need to be in a position to continue paying salaries. Prudent treasury management required acting on available information.

The board is responsible for the organization's financial well-being. Securing runway during periods of price appreciation is a core fiduciary duty, not evidence of ill intent.

Please see "The $4M ZEC liquidation is impermissible" for the operational context, and "The board engaged in insider trading" for why securities-law insider trading standards do not apply to ZEC as a commodity.

The board had no problem with the staff's claim of protected concerted activity. Retaliation is therefore not a logical assumption.

Paul's allegations are not "whistleblower" concerns. Whistleblowing is when someone with nothing to gain tells authorities what insiders are hiding. This is someone with everything to gain telling people what the internet says about someone standing in his way of gain. That is engaging in advocacy rather than whistleblowing.

Here is the testimony about the incident by the current manager of the sloths, which should counter the claims of the sloths. When the community demonstrated they preferred if Zaki stepped away, he did: https://x.com/canbildik/status/2009257234643943838

The sale order was much larger than previous, but also the size of the treasury 10-20x'd since late September. The numbers should be considered in context.

It is also basic treasury management to capitalize on higher prices to secure runway for potentially more difficult times ahead.

If there was a concern, the Director of Ops and Finance should have raised it with the board. Either we edit the instruction, or create specific public communication explaining the rationale. Going to all employees with speculative reasoning is not behavior befitting someone responsible for the organization's financial security.

Up to the reader to determine if putting the CEO on leave, as part of valid governance decisions, constitutes "intolerable." The law considers these to pass the threshold of intolerable: sexual harassment, racial discrimination, pay cuts, etc. The board taking action regarding the CEO doesn't change the employees' job duties, pay, or working conditions.

When considering a related party transaction, the board of non-profit is supposed to focus on a process that demonstrates fairness. Other considerations are secondary. That's what Zaki meant by "fulfilled our obligations."

His expression was lamentably autistic in its matter-of-factness, but it did not signify intent or endorsement. It would trouble all of us if the value of Zashi went to zero. The idea that board members are working with him to bring the value of Zashi to zero appears to be conspiratorial narration.

In hindsight we could probably have responded to that, but the environment was so hostile, the accusation was so wild, and we were busy firefighting—so this did not make it to top priority. It was also clearly an ad hominem attack. We might have responded if the tone were not so aggressive as to indicate that any argument would not be met with reason.

It's not clear where "his cavalier attitude towards the Zcash community" comes from. Please provide a specific reference (ideally one that considers the entire context of the conversation).

About "impermissibility": Boards remove CEOs. That's a core board function, not an impermissible act. Placing a CEO on administrative leave when there's a governance dispute about a transaction that would benefit him is exactly what a board should do. Specifically, why was Josh put on leave? See "Multiple" sources, "The CEO's suspension proves no contract is secure".

For Paul, he held dual roles: Bootstrap board member and ECC VP. Under Delaware law, that creates independence problems for any transaction where ECC management benefits. Addressing that conflict is governance hygiene, not retaliation. Please also see General, "Why was Paul removed from the board?"

Regardless, it's hard to argue that changes in governance structure that preserve Josh and Paul's employment and benefits are retaliation.

It's not clear what we are being accused of. We were never asked to explain certain things. If there are specific discrepancies, we welcome the opportunity to address them.

The team has worked the hardest, but the board has also been active at strategic levels. There appears to be a misunderstanding of the nature of board work.

Two board members were present with Josh when a big group meeting with Promoter first happened (4 Oct). One board member went back a few days later with 3 friends for a separate reason. At the end of that meeting, this board member emphasized to Promoter that we needed help with funding more than with partnerships on the proposed network state+privacy conference or other advocacy/education efforts. When the connection with Promoter first happened, the board and the CEO lightly discussed the potential of raising funds (separate from Promoter). One board member offered to connect Josh with some of the funds that were on a list but with whom meetings were not scheduled.

Separately, the board was also involved in attempting to do a structured sale of BLD tokens and OTC sales of NAM tokens. We assisted in restructuring the LAE debt (although only later did we learn that the terms we agreed on with Josh weren't fully incorporated, and Josh did not update us; only when we wanted to rely on a particular clause did we find out). We have thought of different ways of raising money for much of 2024 and 2025. One proposal was an ICO for Zashi utility token that could have been a first use case for ZSAs.

It is unclear where the narrative of the board has been passive and impotent comes from.

The unescapable set of facts is that the proponents of the deal never hired a qualified non profit attorney. The proponents of the deal proposed multiple deal structures that did not meet the requirements of the law.

This deal could have been executed in a timely manner if the deal proponents had hired an attorney with appropriate expertise and provided a legally viable deal from the start.

While it is not our responsibility to consider the potential harm to conflicted individuals, for a sense of how grave the situation may be, refer to the Personal Liability Calculator.

This represents a misunderstanding of how conflicts of interest are managed in transactions like this.

First, the law precludes him from being able to move the deal forward: He is both "A person in an employment relationship subject to the direction or control of [the conflicted CEO]," and "A person who receives compensation or other payments subject to approval by [the conflicted CEO]." Source: nonprofitlawblog.com

Second, the board determines if a conflict exists (and he could have asked us first). Based on long-standing career and personal relationships—Josh hired Paul twice into ECC, and asked for him to be put on the board when he left briefly for Coinbase—it would be infeasible for any court to consider Josh and Paul independent of each other.

We aren't mad that employees asserted these claims, but to address the points:

1. They're not protecting employment conditions—they're trying to force a corporate transaction. The employees aren't organizing to improve wages, hours, or working conditions. They're demanding the board approve a specific deal that would transfer assets to a company they would own. That's not "mutual aid and protection."

2. The CEO and VP are not "employees" under the NLRA. Section 2(11) explicitly excludes supervisors. Management doesn't acquire employee protections by agreeing with employees.

3. The ultimatum undermines the claim. "Accept $1.5M or Bootstrap would receive $0 as all ECC workers walk away." Protected activity doesn't typically include demanding your employer transfer its assets to you on your terms.

The deeper problem: The letter accuses the independent board of "private inurement" for conducting due diligence. This inverts the actual concern. The board's caution is what 501(c)(3) law requires. The employees and management are the potential beneficiaries—they're the ones the rules are designed to scrutinize.

Zaki is being accused of actions that the board decided or acted on together. None of us responded; we scheduled the employee meeting (he did not even send out the email). The ad hominem attack makes it hard to focus on productive action.

Zaki was requested by the rest of the board to take on the role of interim CEO since after this situation, someone needs to run the company. His first reaction was "no, I am working on something else." It took him 2 days to come around.

The argument is: "Anonymous tweets say Zaki did bad things elsewhere, and this situation feels similar to me, therefore Zaki is probably doing the same bad thing here." That's not reasoning; it's narrative construction.

The only source for Zaki saying "f*** off" to Josh is Josh—the other party in a heated dispute who stands to benefit from the transaction Zaki was scrutinizing. Context matters: what was Josh saying? What preceded it? We have one side's characterization.

This seems to be a disingenuous attempt to paint two board members as bad actors (one explicitly, and one by omission), while making ludicrously irrational claims (destroying the company that the board members serve), in order to create division.

Also, the lawyer cannot suddenly step in to take over their client's job. The lawyer said he can pass messages along, but he cannot take on our fiduciary duties.

Meeting was not validly called: a director cannot announce himself unconflicted, and then demand to conduct activities reserved for a Special Committee which was formed to ensure the deal is considered without the influence of conflicted parties. He has to be formally added to the Special Committee. Please see Employee G, "Paul declared himself unconflicted", explaining why he cannot announce himself unconflicted.

Directors are not obligated to attend meetings. That's why all bylaws talk about achieving quorum for a meeting (and discuss what can happen if quorum is/is not met).

Our meeting was scheduled first. Josh scheduled over the pre-existing meeting.

In hindsight, we could have moved our call, but it was unclear that he wouldn't simply find another way to sabotage that rescheduled call. Consider that he had not scheduled the call when we requested, and when we scheduled one ourselves, he scheduled a call right over it.

He was not fired at all. He was only removed from the board. He was removed because he was undertaking actions that inappropriately exploited his position and demonstrated an insufficient understanding of governance—e.g., calling recurring special board meetings until he was satisfied with the outcome, demanding attendance, announcing himself unconflicted and demanding to undertake activities only the Special Committee can undertake, requesting to attend meetings that he was a conflicted party in.

He also separately displayed a disregard for the legal process required as advised by the lawyers, issued threats twice on a single call, asked the board to step down if we weren't going to agree to the deal as presented (an extraordinary ask), and informed us that he had done valuation work and had arrived at a conclusion that was fair when in fact he has no valuation experience.

So that he could start the new company. Josh repeatedly informed the board of his intention to form a new company and that regardless of progress on a deal he would be imminently forming a new company in early January. Putting Josh on leave essentially provided a paid vacation where Josh had maximum flexibility and self-funding to structure the transition.

Also, Josh refused to meet with us without (1) 2 days notice, (2) calling a board meeting, and (3) an exhaustive list of questions. This is a highly unusual demand from a CEO to his board and creates an improper organizational situation, with the board members on the hook if anything untoward happened.

Considering all the above, we reluctantly decided to put him on leave. We would have much preferred if he had handled the transaction process more smoothly and all we had to do was sign.