AI Crypto Startup O.XYZ Faces Allegations of Misrepresentation and Internal Turmoil: Sources

O.XYZ, a blockchain and AI firm touting crypto and synthetic intelligence companies, is going through allegations of falsely inflating its technological claims and fascinating in aggressive ways to suppress dissent inside the firm.

Whereas founder Ahmad Shadid has defended each his and the corporate’s actions, a number of sources accustomed to the corporate’s operations who spoke with Decrypt have refuted public claims, alleging widespread misrepresentation of O.XYZ’s capabilities.

O.XYZ positions itself as a community-owned “Tremendous AI” ecosystem. The corporate claims to leverage substantial GPU computing energy, purportedly deploying tens of hundreds of open-source fashions, enabling it to execute a wide selection of duties.

Sources declare the corporate has exaggerated its capabilities, falsely stating it may hook up with over 100,000 AI fashions, runs 20 occasions sooner than opponents, and owns highly effective {hardware} it doesn’t truly possess. 

It’s additionally accused of inflating the worth of its satellite tv for pc program and misrepresenting its token launch, elevating questions on transparency and accountability.

Because of these allegations, sources declare holders of the corporate’s just lately launched O.XYZ token are prone to being harmed.

In an emailed assertion to Decrypt, Shadid issued an in depth response to considerations raised concerning the firm’s claims, insisting that O.XYZ’s promotional language is “forward-looking” and aligned with its growth roadmap. 

Nevertheless, sources who spoke with Decrypt dispute this characterization, pointing to supplies on O.XYZ’s web site and investor displays that describe capabilities as present quite than aspirational.

In June, Shadid stepped down as CEO of Solana-based decentralized infrastructure supplier IO.web—an organization he based—amid allegations surrounding his previous and misreported firm metrics, citing his determination as a transfer to cut back distractions and deal with the corporate’s progress.

A public assertion Shadid printed amid his departure from IO has since been deleted from Twitter (aka X). To keep away from conflicts and distance itself from Shadid, IO agreed to supply a “six-figure severance,” one supply accustomed to the matter instructed Decrypt. IO earlier this yr raised $30 million in a Collection A spherical from notable crypto business traders, together with Hack VC, Solana Labs, Aptos Labs, Multicoin Capital, and Animoca Manufacturers. 

A number of sources who’ve beforehand labored with Shadid described him as a “sensible, succesful particular person” who manages every time to assemble a extremely skilled group for the job. Nevertheless, each a former worker and an investor who wished to not be named acknowledged they’d “by no means work with Shadid once more.”

Disputed infrastructure and efficiency claims

In response to allegations that O.XYZ is exaggerating its capabilities, Shadid highlighted the corporate’s investments in U.S.-based Cerebras Methods {hardware} and plans to deploy cutting-edge AI knowledge facilities, asserting that its infrastructure helps “20x sooner” AI processing. He cited benchmarks of Cerebras WSE-3 chips as proof of O.XYZ’s efficiency leap.

Sources dismissed these claims as “patently false,” as a substitute alleging O.XYZ has but to accumulate the mandatory {hardware} for such operations, regardless of Shadid’s claims of “superior talks” with Cerebras.

“There’s no inside benchmarking supporting the 20x determine,” one supply mentioned, who famous that the corporate’s routing know-how may truly improve latency quite than scale back it.

Deceptive Starlink and partnership claims

O.XYZ has additionally promoted itself as being powered by SpaceX’s Starlink, with Shadid emphasizing the know-how’s integration inside the firm’s operations. 

He additional clarified that the declare refers to O.XYZ’s ongoing infrastructure roadmap, together with plans for “maritime connectivity options” and future AI capabilities in house slated for 2026.

Nevertheless, sources strongly contest that narrative. As an alternative, they assert Starlink is barely used for fundamental web connectivity in distant areas and performs no function in AI processing. 

“No satellite tv for pc designs exist inside the firm, and there’s no engineering group able to growing such capabilities,” one supply instructed Decrypt. They added that there are not any ongoing discussions with SpaceX, regardless of the impression created in advertising and marketing supplies.

Shadid’s responses additionally addressed the show of logos from main organizations resembling OpenAI and Neuralink, claiming they had been used to symbolize contributors’ backgrounds quite than formal partnerships. 

Nevertheless, sources allege that this apply misleads traders and prospects, noting that contributors requested their logos be eliminated after leaving the corporate—a request that allegedly has but to be resolved.

Controversy round token launch

The corporate’s O.XYZ token launch on October 15 throughout a number of “lesser-known” exchanges has been one other flashpoint. Whereas the token solely averages round $23,000 in day by day buying and selling quantity throughout all exchanges—with a mere $8.1 million totally diluted token provide valuation—sources say it is solely a matter of time earlier than token holders are harmed.

“There is no such thing as a means to make use of the token to pay for something like API requires the corporate AI, nor does the token legally entitle the holder to any property of the corporate,” one of many sources mentioned.

Shadid characterised the “preliminary liquidity pool activation” as occurring throughout a “testing section,” which was “instantly communicated to the group.”

“After a radical market situation evaluation, we made a strategic determination to proceed with the launch quite than withdraw the liquidity, successfully advancing our deliberate token launch timeline,” Shadid mentioned.

He added: “This determination was communicated transparently by means of a number of channels, together with Discord and inside communications,” he mentioned. “Whereas the preliminary activation was unplanned, our subsequent determination to take care of the token’s availability was deliberate and strategic. We preserve complete documentation of all communications all through this course of, demonstrating our dedication to transparency with each our group and stakeholders.”

One former worker who didn’t want to be named, for concern of reprisal, shared that they had been supplied monetary incentives tied to a non-disclosure settlement after questioning the moral implications of the launch. 

One other supply alleged, “Shadid was testing buying and selling algorithms when the ‘accident’ occurred.”

“Was testing my O.CAPITAL market maker quant methods, and it created a pool on Uniswap, and tokens went dwell by mistake,” in line with a screenshot reviewed by Decrypt of a message from Shadid posted to a common Slack channel for all workers to see. “I can’t take it down.”

Secret recordings additionally reviewed by Decrypt seem to contradict Shadid’s rationalization. Sources say the token launch was as a substitute deliberate, and workers had been instructed differing tales—some that it was intentional, others that it was a “mistake.”

“Completely towards what the public-facing firm docs would have folks consider with traces of transparency and group possession,” one supply mentioned. “Ahmad owns all of the tokens successfully and may dump them at a whim.”

Allegations of retaliatory practices

Sources declare that O.XYZ has used non-disclosure agreements to suppress dissent. They described a tradition of retaliation, together with terminations following inquiries into the corporate’s operations. 

“The NDAs are being weaponized to silence legit considerations,” one supply alleged.

Shadid defended the corporate’s contractor-based employment mannequin and strict confidentiality agreements, stating these practices are customary within the business. 

Shadid has in a roundabout way addressed the allegations of retaliation, however emphasised O.XYZ’s dedication to “clear, correct communication” and “complete documentation” of its strategic objectives.

In any case, the allegations have led a number of former workers and contributors to hunt authorized counsel. Sources Decrypt spoke to say these former workers at the moment are exploring additional choices to make clear O.XYZ’s alleged practices.