Who is we?
@zooko and I, with help from Jason McGee, asked Alex from FPF to review some ideas about how ZCG could be reformed and what compromises were possible during discussions with ZCG themselves, who are also (obviously) concerned about any proposal satisfying legal requirements.
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What restrictions exist? Because allowing ZIP 1015 to be modified to change the permitted usage of funds would suggest that FPF did not correctly follow ZIP 1015 in the first place (which per above, said that the “above constraints” applied, not “the constraints specified in this ZIP” which would permit future modifications to apply to already-received funds).
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We have followed all legal requirements including the review of ZCG’s independence, see here. All of ZCG’s financials are public and we are in compliance with all reporting requirements.
We have also worked with our Cayman legal counsel to review a potential donation to the NSM and as long as there is an affirmative community vote in favor of the proposal and an accepted ZIP the donation can be legally completed.
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Great, thanks! Good to see the ongoing review.
I would like to see more details as to what restrictions are currently placed upon the ZCG funds that FPF manages. Which of your reports or documents should I look at for this?
Given that such a ZIP would require a consensus change to take effect (due to the current lack of an NSM donation field), the closest avenue that exists for this is the same one used for NU7: a combination of ZCAP, Coinholder, Zcash Engineering Caucus, and ZecHub DAO polling, followed by implementation in full nodes and deployment to the network by node operators.
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ZCG funds are segregated from FPF operational and other funds. We don’t share specific details publicly for security reasons. Unless I’m misunderstanding your question.
FPF reports quarterly (3rd quarter will be released next week) and you can also see current info on the Grants Dashboard which is updated at least once weekly. You can also view ZCG info at ZCG · OpenZcash . We are fully transparent in our work with all community orgs.
FWIW, the ZCG independence review was conducted before the significant increase in the price of ZEC.
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I wasn’t referring to security restrictions (I’m well aware of the reasons to not disclose those publicly). I meant legal restrictions.
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The displays of aggression, unfounded accusations and even threats that we’ve seen the past few days are a major inflection point in the 10 years of respectful disagreement culture of Zcash
Besides the fact that sets an awful precedent. It’s kind of disappointing.
Confidence between the different Zcash organizations has visibly deteriorated. The public display of force that occurred in X was, in my humble opinion, completely unnecessary. Plus, “The compromise proposal” doesn’t guarantee that there won’t be another of these episodes next week because of [insert random reason here]
All proposals that attempt to solve this disagreement must include a clause where the parties involved in this inelegant dispute refrain from further discussions on the same subject for a prudent period of time.
More than a compromise, we need a peace treaty. We can’t let drama take over the ecosystem again.
If drama wins we all lose.
Disclaimer:
As it is of public knowledge, I worked at ECC, received funds from ZCG as grantee and I currently work at ZODL. My opinions are my own and I express them in good faith seeking the best outcome for our beloved project.
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I agree with @zooko that the ZCG wasn’t designed to be robust to this degree of volatility.
I agree with others on this thread that this process could have unfolded in a more reasonable way and at a more reasonable pace.
Hopefully there are things we’re learning from this process that will smooth future iterations.
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Just curious, why the Caymans? Why not somewhere like the US or Switzerland? It is a very bad look for the ZCG and you cannot fund anything useful which requires fiat. Why not try to transition?
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I completely agree with you. The “drama” shouldn’t have been brought to Twitter, nor should Zcon have been used as a platform to raise this issue—especially since the event is meant for an anniversary, celebration, and peace.
Differences? Yes, we’re bound to have them!
Disagreements? They’re inevitable—and actually necessary.
There’s a Latin American saying: “dirty laundry should be washed at home.” I believe that here, among true Zcashers, we can reach healthy agreements that are satisfactory for all parties involved.
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alright team, its time to do a brain wipe on all perspectives. you definitely need to oppose what is being now trotted out as a “compromise” but it in fact the furthest reaching attempt to create a purely political dependency that is the core founders who want now immunization from all liability by building a legal shell around them at “network” expense. if core devs are such excellent persons deserving this remarkable entitlements how would you characterize this design mechanism?
i joined the forum in 2020 to specifically argue against broadly the extension of the initial founders reward under MGRC in 2020. I will spare the told you sos because anyone here long enough knows that a community grant product that ended up being a critical product for the community.
consider the discussions in 2020 as to “forking the forum” when the founding team and ECC recognized they are openly created this continuing ongoing technical and political debt and their unique social and legal liabilities that follow. Now, all are resting with the proposition that should anyone oppose “the Devs” you will be speaking to legal at network expense.
What “legal” What “firm” What “country”?
vehemently oppose this “compromise”
I have logged into this forum 742 days, viewed and read thousands of posts and topics before even becoming a member, and have never received 1 single cent from any community member, or funding for anything.
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Thank you @zooko, @aquietinvestor, @ebfull, and others who contributed for taking the time to develop this proposal, (in the midst of Zcon, no less!).
I’m a little confused by the ZIP, and am therefore currently unable to support it.
If I understand this correctly, the ZCG Committee loses its stewardship of the Dev Fund and the funds go into a lockbox when the ZIP is approved (based, of course, on the assumption that the ZIP would be approved), but it punts on the question of how those funds get allocated. If funds are collecting in a lockbox but there’s no process in place for using those funds, isn’t the issue of idle funds exacerbated because you have a growing pot with no allocation/distribution mechanism? I’m concerned that these funds could be locked away until we reach consensus, if ever, while developers (and others) lose access to an important source of funds that helps promote ecosystem development because there’s no governance infrastructure in place.
Tbh, I’m a little lost as to why ZCG suddenly has become so unpopular and distrusted? I don’t want to make the assumption it’s due to bigotry/trans hate, but I don’t have much to go off of here.
$100 million is a lot to let sit idly, but this is pretty recent, no? Have people really even had a chance to consider how the funds could be used? There’s so much more we can be doing to market Zcash and promote its use.
With respect to the Dev and Legal Defense Fund–I’d argue these should be maintained separately. Maybe there’s some sort of balancing mechanism we can use so that $20 million USD is maintained for ecosystem development and promotion and $30 million USD for a legal defense fund. That way if the price of ZEC dips (knock on wood), there’s still a large enough pool of funds to continue funding the important work builders are doing and funds for when (not if) legal defense is required.
Wrt the legal defense fund, I hear the concerns around all of it being milked by BigLaw firms. I’d be happy to help think through ways of preventing this (maybe negotiating reduced fees for this work or supplementing legal fees with pro bono work? I’d need to speak with attorney friends about how something like this could be structured but do think it’s possible.). Even at the rates firms charge, the legal precedent that comes from defending against enforcement and cementing developer protections into law would be worth it IMHO.
Note that something like a legal defense fund would require a body to oversee it, comprised of attorneys/people familiar with the legal system (plus admin support, etc.) since the process has to be managed closely. I strongly support a legal defense fund though–keep in mind that in the U.S., we still have unresolved issues around criminal liability for developers alleged to have engaged in unlicensed money transmission, a case like this could cost millions of dollars (see Roman Storm’s case, which is still ongoing), and we are likely to see more enforcement actions and investigations given the growing backlash against crypto in the U.S. by policymakers. When the pendulum eventually shifts back, there’s a strong chance FinCEN and the DOJ will be encouraged to go after crypto, especially given that many in the broader industry have aligned themselves with the Trump administration, with many having donated to the campaign and inaugural fund.
Happy to discuss and would appreciate any thoughts. Will think on this deeper to see whether some of these potential hurdles can be mitigated and the proposal potentially supplemented.
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Hey, Divij!
What do you think about these points:
- Both ZCG and this Legal Defense Fund should have a protected legal entity in a country in the West, such as the United States. This would also support lobbying efforts from accusations of foreign funding, and allow the ZCG to, via a non-profit arm, fund research at universities and labs that currently remain out of reach.
- Both ZCG and this Legal Defense Fund should be required to establish a fiat reserve.
- A holdout mechanism should be used for proactive balancing, where the funds for a period are withheld from both ZCG and the Legal Defense Fund, and coinholders decide who needs it more every vote.
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I received my first Zcash in May 2026, so I am still very new here.
I care because I believe Zcash can empower ordinary people around the world. As an immigrant in the U.S., the idea of being able to move money privately, safely, and across borders means something to me.
One thing I appreciate about @zooko’s perspective is the reminder that Zcash has been through the grinder before. It has faced difficult moments, weathered them, and is still here, now 10 years old and thriving in ways that once seemed uncertain.
This is another challenge, and I hope the community can meet it with wisdom, respect, and some patience.
The world is still not broadly using Zcash. So I keep coming back to a simple question: What is the mission of Zcash now?
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Now that we have reached the moon, the mission is to aim for the stars. Making it an ubiquitous currency. NU7 brings 25 second block times, just twice as long as Ethereum, and @ebfull’s Tachyon will finally make it FAST.
I’ll preface my response by stating that any decision regarding establishing an entity should involve counsel, since there are tax, compliance, and other legal and organizational considerations to work through. I’ll reach out to our counsel, Jason Schwartz at Cahill Gordon & Reindel (@cryptotaxguy on X), to see if he has any thoughts on this. He’s great to work with, very familiar with Zcash, and a leading tax attorney in the digital assets space. We also work with FPF for our back-office support, and they’ve great sherpas through this process. I’ve needed a lot of hand-holding in getting PGPZ set up, and they’ve been very generous with their time.
We’d want to start by considering which jurisdiction makes the most sense. I’m most familiar with the United States, since that’s where PGPZ is based and where I’ve done the most research, but there could be benefits to establishing an organization outside the U.S. For example, FPF was established in the Cayman Islands, in part to provide an independent base outside the United States. I’d defer to FPF and counsel on the specific advantages and limitations of that structure. Zcash Foundation and PGPZ are both U.S.-based entities.
We’d then want to weigh the pros and cons of each type of structure. If we’re considering a U.S. nonprofit, two relevant options are 501(c)(3) and 501(c)(4) status. Those are federal tax classifications, rather than legal structures themselves: we’d also need to decide how the organization would be formed and governed.
A 501(c)(3) can be a good fit for a legal defense fund that serves a charitable or public-interest purpose. It generally provides a federal income tax exemption for the organization and allows eligible donors to claim charitable deductions, subject to the applicable rules. Zcash Foundation, for example, is a 501(c)(3) public charity. The important caveat is that calling something a “legal defense fund” does not automatically qualify it for charitable status. Counsel would need to assess whether its mission and case-selection criteria serve a qualifying public purpose, rather than primarily paying the legal expenses of particular individuals or businesses for their private benefit.
A 501(c)(4) is often more appropriate for an advocacy-focused organization because it can make lobbying its primary activity, provided that lobbying advances its social welfare purpose. Like a 501(c)(3), it generally benefits from a federal income tax exemption, but donations generally are not deductible as charitable contributions. A 501(c)(3) can conduct some lobbying within limits, so the distinction isn’t that one can lobby and the other cannot; it’s how central lobbying would be to the organization’s work. A 501(c)(4) also has to serve a broader social welfare purpose, as it isn’t an unrestricted vehicle for covering private legal expenses.
Regarding lobbying: is the idea here to influence or change tax law, or primarily to support legal defense and litigation? If lobbying isn’t part of the intended mission, I’d keep the organization focused on that mission rather than adding another function to administer. Supporting litigation and lobbying for legislative changes are distinct activities, even when they concern the same underlying issue.
If there are concerns regarding foreign funding, I’d suggest we have counsel review the funding arrangements and any donor letters. Those letters may help document the organization’s independence and the permitted uses of a donation, but they aren’t a blanket solution. For example, foreign funding alone does not establish a registration obligation under the Foreign Agents Registration Act; whereas, the actual relationship with the foreign donor and the activities undertaken matter.
For anything related to lobbying, we should probably discuss potentially folding that advocacy under PGPZ, assuming it aligns with our mission and capacity. Setting up a new organization is very much a labor of love (and by that I mean death by a thousand cuts!).
With respect to structure, something to consider for ZCG in particular is privacy and public reporting. Both 501(c)(3) and 501(c)(4) organizations generally have reporting obligations. Form 990 is publicly available and requires disclosure of officers, directors, and trustees, as well as certain employees and compensation information. If ZCG members served in those roles, their names would generally be disclosed. That doesn’t necessarily mean every committee member or community participant would have to be named. It would depend on their actual role and the reporting requirements. We should work through that before deciding on a structure, especially for anyone who wants to keep their identity private.
Assuming ecosystem stakeholders support a formal organizational home, it might make the most sense to house ZCG and/or the LDF under an existing sponsor organization, such as ZF or PGPZ, rather than establish separate entities immediately. That could reduce the time and costs involved in setting up and maintaining a new organization.
But this would require a lot of trust from the ecosystem, and the sponsor would need to be willing and legally able to take on the responsibility. A sponsor’s role goes beyond providing a bank account or back-office services. In a charitable fiscal sponsorship arrangement, the sponsor must retain control over the donated funds and ensure they are used for appropriate purposes. We’d want a written agreement covering decision-making authority, administrative costs, reporting, conflicts of interest, and what happens if the project later becomes independent. The sponsor’s tax status would also matter since housing a project under a 501(c)(4) would not, by itself, make donations tax-deductible (not sure if that’s a strong concern though given that funds would be allocated via the lockbox).
On your second point, the fiat reserve could be relatively straightforward to administer once we’ve established who legally holds the funds and who has authority to distribute them. It could potentially be held in a dedicated organizational bank account. It could also be a legal trust, but that would be a separate arrangement with its own terms and responsibilities. We’d also want clear rules for converting ZEC to fiat, maintaining the reserve, approving payments, and accounting for the funds.
For the third point, can you elaborate on the holdout mechanism, particularly who could block a distribution, under what circumstances, and for how long? There are tradeoffs to this idea, at least in the way I think I’m understanding it.
For ZCG, my concern is that coinholder voting could lead to some of the governance issues the new ZIP is intended to address. Depending on how voting is designed, the largest holders could effectively pick winners and losers, rather than a diverse group administering ZCG and being trusted to review grants and allocate funds against agreed criteria. My concern here is that projects like ZECsy might not get funded because influential coinholders disagree with, or don’t fully understand, the mission, even if the project otherwise meets the program’s objectives.
For the LDF, coinholder voting on each individual allocation could reduce the speed and efficiency with which the fund operates. Litigation has its own timeline, and waiting for a vote or consensus could make it difficult to respond quickly. Public deliberation could also put applicants in the difficult position of having to disclose sensitive information about their cases to receive funds.
For an LDF, you’d probably need someone to oversee and administer the fund, plus a small group that includes attorneys or other qualified legal professionals who can review cases and recommend or decide which ones to support. I’d suggest written eligibility criteria, a process for handling conflicts of interest, and authority to approve urgent funding within agreed limits.
You’d also want lawyers involved in reviewing budgets, monitoring progress, and assessing whether continued funding makes sense, partly so you don’t have BigLaw firms trying to milk every last drop of the fund. That oversight should be structured with counsel to protect confidentiality and respect the supported client’s relationship with their own lawyers.
One approach worth considering would be to give the community a role in approving the fund’s overall mandate, budget, and oversight arrangements, while delegating individual case decisions to the people responsible for administering it. That could preserve community accountability while giving the LDF the speed, discretion, and legal judgment it would need to function.
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Sorry for replying to a question that was not asked to me. But for the sake of historical perspective, before the current US administration took office and de-escalated the war against crypto, the Zcash community sentiment was for ZF and ZCG pivoting away from US based jurisdictions because of the legal liabilities it entailed.
There was a very strong discussion during Zcon4 between Dodger and Zooko
I googled “zcon4 zooko” and then asked gemini “was there an argument between Jack Gavigan and Zooko Wilcox?” and it replied this:
Yes, there has been a notable and public leadership conflict between Jack Gavigan (Executive Director of the Zcash Foundation) and Zooko Wilcox (Founder of Zcash). [1]
According to reports from Forbes: [1]
- The Incident: During a public speech/keynote, an awkward scene unfolded when Jack Gavigan interrupted Zooko Wilcox on stage.
- The Interruption: Gavigan reportedly cut in, stating: “If you are going to lie about us, I’m going to step up.”
- The Root of the Argument: The confrontation exposed a deep-seated rift over US compliance and governance. While Zcash was built as a decentralized privacy coin to remain outside the control of central authorities, its primary administrative bodies—the Zcash Foundation and the Electric Coin Company (ECC)—are registered entities in the United States. Wilcox had raised the controversial reality that Zcash must abide by corporate realities like the U.S. Treasury’s sanctions lists, prompting a direct clash with Gavigan over how that relationship and the Foundation’s actions were being characterized.[1]
It is my understanding that FPF was created to have an administrative body outside the US jurisdiction because there was wide consensus within the community that Zcash exposure to legal risk was high and needed to decentralized as well in terms of jurisdiction.
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We’re traveling right now and connectivity is spotty. Both Pacu and Div are correct re: why FPF was setup in Cayman.