There’s a poignant irony to the fact that Ryan Carson’s Twitter background is Norman Rockwell’s iconic 1961 painting, “The Golden Rule.” The image, which prominently displays the words, “Do Unto Others As You Would Have Them Do Unto You,” perfectly captures the spirit of discussion that Carson’s recent actions have caused the Web3 community to confront like never before. 

After fumbling the announcement of a new Web3 fund called Flux, the serial entrepreneur and host of the NFT Twitter Space, The Daily Dose, has found both his business acumen and character subject to a harsh interrogation by the NFT community at large. However, more important than the specific details of the controversy surrounding Flux is the broader debate such a case study engenders: As Web3 continues to grow, what exactly do trust, transparency, and the Golden Rule mean in a decentralized world?

In constant flux

On February 3, 2023, Carson announced Flux, a new Web3 fund, in a now-deleted tweet. In that announcement, the former Proof Collective COO revealed his intention to raise $10 million via 100 investors, claiming that 21 spots had already been filled. The names listed as partners (both advisors and investors) were the highest-caliber of star power that Web3 offers: Luca Netz, Gmoney, Zeneca, and Gary Vee, to name a few.

But NFT community members began to notice significant abnormalities regarding the amount of money that was said to have been raised at that point and ambiguity about who had signed on to be a part of the fund. Flux’s official website stated that all investors had to contribute at least $160,000. If 100 individuals invested that much, it would total $16 million — $6 million more than what Carson said he was raising. The math wasn’t adding up. Members of the community alleged that those 21 investors likely contributed far less than $160,000 yet would receive the same equity share as those who contributed far more. As a result, several investors took to social media to withdraw their investment from the project, with some confirming they hadn’t paid the minimum investment.

The fund was quickly hemorrhaging finances and public support just hours after it had been announced, and the Twitterverse was up in arms, trying to figure out exactly what had happened. The following day, Carson hosted a several-hour-long AMA on Twitter, fielding a series of questions from critics and supporters to address the mishap. 

Dozens of individuals voiced their views on the controversy, which ranged from empathetic and understanding to blunt and scathing (and, at times, even verbally abusive). By the time the AMA began to draw to a close, a clear thread had emerged: Why does Carson repeatedly find himself in situations where he needs to explain and justify his actions to a disgruntled community?

Carson’s past haunts his current projects

Carson’s contentious professional history certainly didn’t help bolster his standing with the Web3 community upon the arrival of this latest scandal. First, there was Treehouse, the online coding school he founded and ran as CEO. Carson found himself in hot water in the summer of 2021 after he announced the company would be laying off the vast majority of its workforce without severance pay or benefits on short notice. More recently, his April 2022 exit from the high-profile Proof Collective to establish the Web3 fund 121G resulted in ruffled feathers throughout the Moonbirds community that he had helped promote.

In November of 2022, Carson drew attention to himself once more when he withdrew from his advisory role at Venture Capital X, a self-labeled exclusive club of investors that claimed they would be able to provide members early access to profitable crypto startups. The team behind VCX turned out to have widely overstated their credentials. After apologizing for not properly vetting the group before publicly endorsing them, Carson offered to personally refund anyone who had lost money through their involvement in the club.

Addressing Flux’s fundraising mixup

But the lessons of these troubled episodes don’t seem to have impressed themselves on Carson enough for him to have avoided making another misstep with how he communicated Flux’s first moves. For his part, Carson attributes much of what transpired to a combination of assumptions made on his end and a general lack of understanding in the NFT community of how these kinds of fundraising efforts work.

“Even if something was agreed over DMs and public CoTweets were made, it’s still very important to double-check before using someone’s name publicly,” Carson reflected on the matter in a recent email interview with nft now. “I believed I had full permission to use the names of my investors, but I should’ve double-checked. There are many folks who don’t understand how fundraising works and [the] nuanced differences between Rule 506(c) and 506(b). We were utilizing 506(c), which means we can publicly raise funds, but we must verify accreditation status. In hindsight, I would avoid 506(c) because the general public doesn’t understand it, and it causes unnecessary FUD.”

The rules Carson refers to here are the Securities and Exchange Commission’s (SEC) regulations on general solicitation. He further claimed that most Twitter users fail to realize that most funding rounds are raised on handshake deals first, with term sheets and capital being called at closing. 

“Whenever I invest, it’s done on a handshake,” Carson elaborated. “The person raising money can then use my name to help raise additional money, and then I sign and send capital. My default mode is to move fast and operate as a solo founder. This opens me to communication mistakes. I’m going to slow down my Twitter communication and rely on trusted peers to check important tweets.”

The Flux fund backlash ripples outward

Whether or not those oversights represent an honest mistake, the look isn’t a great one, causing some figures who have previously worked with Carson to distance themselves from him publicly. Most notable among this group is Moonbirds and Proof Collective founder Kevin Rose, who recently took to Twitter to respond to leaked documents that allegedly revealed part of Flux’s investor pitch deck. The images indicated that the fund intended to use “the same playbook [Carson] used at PROOF,” as well as a Flux Genesis NFT Pass that would grant holders allow list spots to all the projects the fund incubates in the future. 

Carson confirmed to nft now that the images were indeed part of Flux’s pitch deck but claims they have been misinterpreted. “That was one slide from a large deck and has been taken out of context,” Carson stated. “The ‘playbook’ the slide refers to is simply having the same number of NFTs (~ 1,000), so we can build a tight-knit community that would support Flux projects — in a similar fashion to how Proof members supported Moonbirds at launch.”

How does the NFT community view all of this?

Carson certainly has his critics. Speaking to nft now on condition of anonymity, an industry insider who previously worked with the entrepreneur in the Web3 space described Carson’s recent debacle at Flux as an unsurprising series of events. Such behavior, they said, is emblematic of a pattern of conduct that involves overstating and leveraging past credentials and achievements to build up excitement for the next venture. Reliably, the source said, Carson then engages in questionable behavior or mismanagement that leads to a public apology and a period of laying low before the cycle starts all over again. 

Likewise, several NFT community members have publicly commented on what they view as a seeming repetition of events all too familiar to Carson. Web3 educator Zeneca, who Carson had previously named as an advisor to Flux, was one such individual, though even he has since stated his future role in the fund is uncertain. While wishing Carson well in his endeavors on Twitter, Zeneca begrudgingly acknowledged that the possibility of Carson’s recent actions constituting a trend simply can’t be ignored at this point.  

But to say Carson is universally seen this way would be misrepresenting the truth. Likewise, ignoring the number of supporters who spoke up during his recent AMA and their frequent and continued vocal endorsement of his character throughout this controversy would be unfair and unwise. His popular daily Twitter Space, The Daily Dose, has potentially even benefitted from the affair, with its most recent episode pulling in over 7,000 attendees, a marked increase from the previous week’s average of around 4,000.

What’s next for Carson and Flux

Suffice it to say the future of Flux is uncertain. “We can’t launch Flux without raising [more than] $10 million in capital,” Carson acknowledged, speaking to the project’s future. “Losing the majority of our angel investors, founding advisors, and partners puts a significant hurdle in front of us.” 

Indeed, the kind of success or growth that Carson had hoped for Flux is now in jeopardy, given its rocky start. Regardless, Carson is proud of his involvement in Web3, especially so with the community he has managed to build up around The Daily Dose. He explained that his latest plans for the Twitter Space involve uplifting “those who have been systematically discriminated against,” and he intends to focus on this effort in the near future. 

Trustless, indeed

Web3 is often hailed as the much-awaited cure to the ails of Web2. The open nature of the blockchain was meant to free us from having to take big tech companies at face value when they say they’re operating ethically. However, as Web3 continues to grow, its community is rapidly learning that they still need to play the trust game — only with individuals instead of corporations. A step in the right direction, to be sure, but a deflatingly familiar problem to have just the same. 

Jack Butcher recently changed the shape of the NFT landscape with his obscenely popular Web3 undertaking, Checks VV. The project explores the question of who indeed wields the authority to anoint someone as being notable, trustworthy, or anything else. But Web3 needs to remember: that question is far from resolved.

The uncomfortable reality is that those who have embraced Web3’s decentralized nature with open arms face a similar crisis of conscience to political or religious apostates: deeply entrenched mental and logistically practical infrastructure don’t get replaced overnight. For some, the justification of ethical and moral authority that Web2 giants like Google claim to have is evidenced by the cultural and economic power they wield. Betrayals like clandestinely selling users’ private data to the highest bidder are easy enough for them to overlook because it’s human nature to want to believe those living in the city on the hill have pure intentions. 

Wishful thinking will have a harder time surviving in Web3. Untoward behavior and incompetence are simply easier to uncover, showing up either in the immutable record of the blockchain or in well-documented and sourced Twitter threads. Whether or not Carson is the hero or the villain his supporters and detractors make him out to be is not nearly as important as the fact that the NFT community is taking notes and asking the hard questions it needs to thrive in an unfamiliar, decentralized future. Carson’s case is simply the latest in a string of incidents that are helping to train Web3’s immune system. Give it enough practice, and eventually, the immune system wins.

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