Author: Zhou, ChainCatcher
This year, Bitcoin pioneer Adam Back and his founded Blockstream have repeatedly been at the center of crypto community discourse.
In February, U.S. Department of Justice-releasedEpsteinrelated documents revealed that Jeffrey Epstein invested in Blockstream in 2014 through a fund associated with Joichi Ito.
In April, The New York Times published an investigative report listing Adam Backas one of the strongest candidates for Satoshi Nakamoto, the inventor of Bitcoin.
Meanwhile, the Bitcoin treasury company BSTR, which he helped promote, is preparing to go public via a SPAC.
However, new controversies quickly emerged. At the beginning of this month, the investigative account NatInfoSec published a lengthy article accusing Blockstream of potentially raising billions of dollars from investors under the guise of mining revenues, while raising doubts about the existence of actual mining operations and hashing power, with structures exhibiting characteristics of a Ponzi scheme.
This article is strongly worded, and although some of its inferences still await independent verification, the several concerns it raiseshave prompted the market to reevaluate Blockstream.
ImageSource:RootData
Chain of Allegations: Hashpower, Returns, and Disclosure Concerns
1. Questionable hashing power and settlement capability
This is the most financially robust part of the entire accusation. NatInfoSec points out that to fulfill the currently issued BMN obligations, Blockstream would need to operate more than 20 EH/s of hashing power; when including contract buffer clauses, the required hashing power rises to 35 to 45 EH/s. However, Blockstream’s own dashboard shows that its current actual hashing power is only 15 EH/s.
A mine of this scale should appear in ERCOT grid interconnection filings in Texas, power purchase agreements with Hydro-Québec, ASIC equipment customs import data, pool hash rate attribution, and on-chain coinbase signatures.NatInfoSec stated it found no evidence matching the scale of Blockstream’s notes in any of these public channels.
According to NatInfoSec, if the mine output cannot cover the settlement obligations, it must be questioned where the BTC ultimately received by investors comes from. The article specifically highlights the Substitute Performance BTC mechanism in the BMN2 clause, stating that this clause allows Blockstream to fulfill delivery obligations with BTC from any source during the 48-month contract period, without prior notice, disclosure of source, or quantity limits.
The article also stated that BMN1 previously replenished payouts by purchasing BTC on the open market, shifting the core issue of BMN from “whether mining revenue was sufficient” to “whether the source of payouts is verifiable.”
2. High returns and high-risk debt-bearing
The article mentions that Blockstream has issued various tiers of related notes through platforms such as STOKR, with yields gradually increasing from approximately 9.775% to 18%, and the latest tier approaching 20%.However,some maturity arrangements do not involve direct principal repayment but instead roll over into new notes with higher yields. However, these claims still require verification against the original offering documents.
It is well known that Bitcoin mining is a highly cyclical industry, with machine prices, total network hash rate, difficulty adjustments, electricity costs, and BTC prices all fluctuating in real time,makingmining companiesit difficultto offer static, fixed returns. A fixed annual yield of around 20% in this context requires the issuer to provide a clear explanation of its source.
3. Chris Cook's prior record and disclosure issues
The most striking part of the allegations,concerns the background of Christopher William Cook.
NatInfoSec stated that Cook was a key leader in Blockstream’s mining operations and is currently the CEO of Exacore. The articlepoints outthatExacore is the related operating entity spun off from Blockstream’s mining business, and afterreviewing U.S. federal court recordsfoundthat Cook was sentenced in 2008 by the U.S. District Court for the Southern District of Florida to 41 months in federal prison for mail fraud, case number 06-80187, and ordered to pay approximately $1.85 million in restitution.
The core scheme of this case was commercial credit fraud: by registering multiple shell companies and forging financial statements and bank information, the perpetrators defrauded over 30 retailers out of goods worth more than $1.8 million, which were then resold for cash.
The article points out that this conviction record does not appear in any of BMN's offering documents. Additionally, Blockstream's marketing materials on the STOKR platform claimed that Cook "worked at NASA," but his actual association with NASA was merely a student visit program when he was 18.
In addition, NatInfoSec further listed clues such as Cook’s recent luxury homes, private jets, yachts, investments in Trump Media stock, and several supplier lawsuits, accusing BMN of underlying fund flows and governance risks.
4. Controversies Involving BSTR/SPAC
NatInfoSec also attempted to extend the BMN controversy to Bitcoin Standard Treasury Company（abbreviated as BSTR）. The company is associated with Adam Back, and market information indicates it is preparing for a SPAC listing. NatInfoSec questioned why Cook’s criminal record and BMN’s substantial potential liabilities were not disclosed in SEC registration documents, and raised concerns about BSTR’s governance structure, including Adam Back signing agreements on behalf of both parties and the equity relationship between the custodian Komainu and Blockstream.
However, this is the easiest part of the entire allegation to refute. The legal relationships, guarantee structures, and liability boundaries among BMN, Blockstream, Exacore, and BSTR are currently unclear. If the relevant instruments are not guaranteed by the group and do not enter the BSTR listing entity, equating BMN’s risk directly with BSTR’s risk may constitute overextrapolation.
BitMEX cools down, community questions verifiability
On June 21, BitMEX Research published a commentary addressing each of NatInfoSec’s allegations. BitMEX acknowledged that Cook’s criminal record is likely accurate and that NatInfoSec probably identified the same individual. BitMEX also expressed concern regarding the nearly 20% yield, stating that the issuer should provide further clarification.
However, for several other allegations, BitMEX believes the evidence is insufficient or misleading. Regarding the failure to disclose Cook’s prior record in the BSTR SEC filing, BitMEX’s position is that Cook was not a director of BSTR, and the mining business was not expected to be included in the listing entity, thus no mandatory disclosure obligation existed. Regarding whether BMN’s liabilities should be consolidated into BSTR, BitMEX notes that the BMN documents contain no group guarantee clauses, and the two entities are legally structured as independent. Regarding the allegation of insufficient collateral for L-BTC, BitMEX thenasserts that the data cited in the original claim originated from a coding error on the liquid.network website, which has since been fixed and now displays correctly.
In addition, the controversy continues to escalate at the community level. Former Blockstream CSO and current Jan3 CEO Samson Mow has defended the BSTR narrative on X. He argues that the market should not focus solely on short-term disputes but should recognize that more Bitcoin treasury companies are about to enter. Mow stated that BSTR is set to enter the market with $1.5 billion in funding, positioning itself as a major competitor in the BTC asset accumulation space.
But opponents quickly refocused the issue on BMN itself. Prominent Bitcoin commentator Matthew R. Kratter, in his response, directly questioned whether Adam Back’s allegations of a cloud mining Ponzi scheme could impact the launch of BSTR. He then further asked which mining pool Blockstream is using, whether the public can verify the pool’s share, and demanded clarification on whether Cook’s background should be disclosed in SEC filings.
The debate over computational power verifiability has intensified further. Mow responded that the so-called cloud mining claim is unfounded, and that Blockstream engages in actual mining using its own PPA and equipment. He also stated that during his tenure at Blockstream, he personally handled a $50 million hardware order, and urged serious investigators to examine the pool shares from Blockstream rather than ignoring the PoW evidence.
But the质疑 party did not accept this explanation. Developer Chris Guida countered by asking where exactly the public can verify Blockstream’s hash power. He argued that merely knowing which mining pools are listed in the BMN file does not prove that the valid shares from those pools actually originate from Blockstream, unless Blockstream or the mining pools publicly label the source of their hash power.
This debate distills the core issue of BMN to one point: whether Blockstream truly has mining power is not the only question—the real issue is whether investors and external observers can independently verify the sources of this hashing power, revenue, and payouts.
BMN remains unanswered: Real assets and liability boundaries
Although the community is clearly divided on this event, it has not resolved the questions surrounding BMN itself. The market still lacks several key pieces of information regarding this mining ticket.
First, what is the actual issuance size, outstanding obligations, and liability boundary of BMN? Authorized issuance size, actual issuance size, outstanding amount, maturity structure, and related guarantees are not the same thing. The market needs to know where the risk of this mining note is contained—whether it could spill over to Blockstream or other affiliated companies.
Second, whether the mining farm's hashpower is sufficient to support redemption expectations. If publicly visible information such as mining farm locations, power contracts, miner scale, pool earnings, and historical output cannot match the issuance size and redemption terms, outsiders will naturally question whether the returns come from actual mining or other sources of funds.
Third, where does the nearly 20% fixed income come from? High returns themselves are not fraud, but in a highly cyclical industry, they demand greater transparency.
Fourth, whether the BTC or L-BTC redeemed by investors is verifiable. If BMN redemptions involve L-BTC on the Liquid network, on-chain transparency, peg-out risk, and proof of reserves will become genuine concerns for investors.
Fifth, what is Cook’s actual authority and beneficial relationship with BMN and Exacore? If he holds a central role in fund usage, mine assets, or instrument design, the importance of disclosure increases.
These issues do not currently prove fraudulent activity by Blockstream, butobjectivelyspeaking,,as a mining note product designed for investors,its elevated yield premiumpresents notable risks. This means that BMN still has considerable room for further clarification regarding its actual scale, fund usage, sources of returns, and governance disclosures.yetmanyaspectsrequire further explanation.
As of publication, Blockstream has not issued a systematic response to the related controversy.