Private investors lost over $23 million in KNC Miner, but one of five founders came out a winner before the mine caved in, according to documents that Breakit has seen.
In 2014, the future looked bright for the Swedish Bitcoin company KNC Miner. Millions poured in from venture capitalists and from the sale of bitcoin mining-computers.
Over a steak dinner, co-founder Johan Rilegård discussed the initial press about the then-hype KNC Miner.
In an article from 2014 entitled The Dream of the Private Mint, Rilegård was quoted as saying, “the people who earned the most in the Klondike [gold rush] were the shovel salesmen. That’s our model.”
In the midst of all the hoopla, a conflict was brewing amongst the five founders of KNC, which eventually led Rilegård to leave the company.
There are various theories as to why he left – rumors claim he was forced out. Rilegård claims he did not get his fair say from the other founders of KNC Miner.
“We had different views on how to run the company,” he said.
What is clear is that Rilegård sold his shares in KNC Miner in 2014. At the time, he talked openly about the sale. But just how much Mr. Rilegård earned from the sale has been kept a secret, guarded by a confidentiality agreement.
Rilegård is still not allowed to talk about the financial settlement. “Details of the deal are private, and will remain so”, Rilegård said in an interview at the time.
But Breakit can now reveal that Rilegård was one of the few to come out a winner in the KNC Miner experiment – taking with him close to $3 million, according to documents that Breakit has seen.
“I neither can, nor want to comment on how much I made. I found an opportunity to sell my shares and took it,” said Mr. Rilegård.
A month before he left KNC Miner, he seems to have prepared for his exit by founding his own company, Rilajo AB.
In 2014, the same year that Rilegård sold his KNC Miner shares, the newly registered Rilajo AB reported a profit of nearly $3 million, while reporting $0 in sales.
According to the annual report, the entire profit was derived from a non-recurring item recorded as “earnings from associated companies”.
When Rilegård sold his share in KNC Miner, the money landed in Rilajo AB. “That is public information, but I still do not want to comment on it,” he says.
Ownership of KNC Miner was later consolidated in the then newly-formed parent company KNC Group, which raised $22 million in venture capital in 2014 alone. Then everything looked promising for the remaining founders.
But by the of end 2014, things were dark in KNC’s Bitcoin mine. The company was forced to write down the value of its stock of ASIC chip, the component that ensured KNC computers could mine bitcoins.
That year, KNC Miner wrote in their annual statement that due to “the high pace of development in the crypto-currency field, along with increased competition, the company took a loss in the development of ASIC. This had a strongly negative effect on the results for 2014.”
The next 18 months brought dissatisfied customers, litigation and frenzy of new competition from Chinese bitcoin miners. On May 27th of this year, KNC Miner filed for bankruptcy.
In retrospect, Johan Rilegård feels his exit was well timed. “It has given me opportunities to do some interesting things. It was just fine for me. Other than that, I will not comment on it,” he said.
Today, Rilegård runs a new startup called Rideshare. With the goal of helping the environment, and frustrated parents, the service simplifies carpooling for children to-and-from sports practice and other afterschool activities.
“Sometimes you can see 30 kids arrive in just as many cars,” said Rilegård.
He is funding the initiative without external capital, excluding contributions from the Swedish Postal Service and the Swedish Telecom Agency.
“I invested some of the earnings from my previous company to simplify everyday life for soccer-moms and the like, and to eventually reduce traffic overall.”