Ryan Carson Faces Backlash For ‘Flux’ Web3 Fund. What Went Wrong?

The Alpha

• On February 3, 2023, Ryan Carson, a prominent Web3 builder and Proof Collective’s former COO, announced a new Web3 fund called Flux. In a now-deleted tweet announcing the fund, Carson stated that he intended to raise $10 million through 100 investors and that 21 spots were already gone. NFT community members, including those listed as investors, quickly noticed irregularities in Carson’s announcement.

• In short, Flux’s official website stated that all investors had to contribute $160,000 at minimum. If 100 individuals invested that much, it would equal a total raise of $16 million — $6 million more than what Carson said he was raising. Members of the community alleged that those 21 investors likely contributed far less than the $160,000 minimum, yet would receive the same equity share as those who contributed far more.
• Multiple investors that Carson mentioned in the tweet expressed dissatisfaction with how Carson communicated their involvement, noted that they had not committed the minimum investment amount, and said they would be withdrawing what they did invest as a result of Carson’s actions.  

• This is not the first time Carson has been accused of unethical dealings in the Web3 space, leading some to question the motivations behind his announcement and allege that he is only interested in extracting value from the space.

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It’s an unfortunate fact that many individuals see the Web3 space as the “Wild West” — as an ungoverned free-for-all filled with scams, rug pulls, and widespread fraud. And the way Carson announced Flux only serves to reinforce these perspectives.

In a several-hour-long AMA that took place on Twitter on February 4, Carson attempted to address questions from the community and quell those who were angered. When asked why he listed prominent Web3 figures as investors when they hadn’t actually made any commitments, Carson said that verbal commitments from investors are commonplace when fundraising, but also acknowledged that he should have communicated things more clearly. 

“I assumed some things that I shouldn’t have,” Carson said in the AMA. “This is a common practice. People commit verbally or over text. I guess I could’ve slowed down the process and waited until all the term sheets were signed [to announce the investors]. I have nothing to hide. That is just the way it is.”

Those who Carson listed as investors and advisors were also pulled into the fray. Some chose to distance themselves from the controversy, while many others took to Twitter to try and explain themselves.

In a thread clarifying his involvement, Gmoney stated that he committed $10,000 to the fund. However, he added that he “[didn’t] feel comfortable with how this announcement was made,” as Carson revealed his initial investors before the fundraising was complete. Consequently, Gmoney noted that he would be pulling out of the deal. Zeneca, who was listed as one of Flux’s founding advisors, also tweeted about the matter, saying he hadn’t disclosed his involvement in the fund due to the limited scope of his involvement and added that he didn’t list Flux on his Zeneca Transparency page yet due to its “recency.”

A troubled history

Unfortunately, this isn’t the first time Carson has been accused of acting unethically. In recent years, he has faced allegations stemming from his work at both Web2 and Web3 companies.

In August of 2021, Carson was the CEO and co-founder of the online coding school Treehouse. Towards the end of the month, he announced that Treehouse’s acquisition had fallen through and that Skillsoft would not be acquiring the company. As a result, Carson stated that significant cutbacks were likely in the future. Hours later, Treehouse laid off the vast majority of its staff without benefits or severance pay. While layoffs are sometimes necessary, several Treehouse employees claimed that the cuts were poorly communicated — and in some instances, not communicated at all. Others stated that the company had an erratic management style that often resulted in major strategic changes being made on a whim. 

Carson also has a controversial history in the Web3 space. Most troubling is the way in which he acquired Moonbirds and how he exited the Moonbirds and Proof Collective team.

In April of 2022, Carson left Proof Collective to found 121G, an NFT venture fund. The problem? He left less than two weeks after Moonbirds launched. Web3 enthusiasts were quick to call out the questionable ethics surrounding Carson’s exit, noting that he had collected more than 200 ETH of Moonbirds the day it launched and that he knew the collection’s rarity numbers in advance. This led some to speculate about the possibility of insider trading.

What’s next?

During the AMA, Carson emphasized that he will be putting his head down to work on Flux and continue doing his best to create value for the NFT space. The future of the fund and its investors remains to be seen, but the controversy has stirred a wider conversation in the NFT ecosystem on transparency, fundraising, trust, and ethics that is likely to continue to reverberate through the community.

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