METALLICUS EXPOSED A Comprehensive Investigation into Centralization, Financial Misconduct, and a Systematic Pattern of Retail Investor Harm All claims sourced from public court filings, official company documents, and on-chain blockchain evidence Metallicus, Inc. — the San Francisco-based company behind Metal Pay, XPR Network (formerly Proton), the LOAN protocol, and the METAL blockchain — publicly presents itself as a decentralized, community-governed fintech innovator. Behind that narrative lies a thoroughly documented record: governance votes that are overridden when inconvenient, a serial cycle of token inflation used to fund payroll, a rewards pool secretly raided while investors were told it was ring-fenced, an SEC investigation, five active civil lawsuits including one alleging customer crypto was used to pay executive salaries of up to $1 million per year during a year of zero revenue, a hacked lending protocol, and Terms of Service that allow the company to freeze your account and hold your funds for up to 180 days — without notice, for any reason, at their sole discretion. Metallicus was co-founded by Marshall Hayner and Glenn Marien in 2016. Hayner, its CEO, has cultivated a public image as a crypto pioneer. This document compiles the documented evidence that tells a very different story. PART I: A Network in Name Only — The Illusion of Decentralization Decentralization is the foundational promise of blockchain technology, and the cornerstone of every Metallicus marketing pitch. What follows is the documented reality. 1.1 Governance Theatre: The Vote That Always Goes to Metallicus The XPR network uses a token-weighted governance model — 1 XPR = 1 vote. The flaw is structural and deliberate: Metallicus and its founders received the majority of the XPR supply at no cost at launch. This concentration means Metallicus can — and does — override the entire investor community on any vote it chooses. Two cases prove it: The Phoenix Proposal — Doubling Supply Against Unanimous Community Opposition Marshall Hayner personally proposed doubling the total XPR supply from 10 billion tokens. This would dilute every existing holder's stake by 50% and generate a fresh supply for Metallicus to sell to fund operations. The community was overwhelmingly opposed. The proposal passed anyway, because Metallicus controlled the votes. Investors who bought XPR on the basis of a capped supply had no recourse. Source: Phoenix Proposal — Original Document Consortium Pay Removal — A 942M-to-2.5M Landslide Vote That Was Simply Ignored The community voted to eliminate Consortium pay — ongoing XPR distributions to block producers dominated by Metallicus affiliates — by a margin of 942.16 million XPR in favor versus just 2.58 million against . Despite this overwhelming mandate, Metallicus refused to implement the result. The proposal was blocked and buried. On-chain governance records confirm the outcome. This was not a close call. The community spoke with near-unanimity. Metallicus simply didn't care. Source: XPR Governance Proposal — Consortium Pay Removal | Community Confirmation (X/Twitter) 1.2 The Consortium: A Private Telegram Chat That Controls the Entire Network XPR's block producers — the validators responsible for confirming all transactions — operate under the name "The Consortium." Entry is not determined by any on-chain mechanism or community vote. It is controlled exclusively by a private Telegram group created and administered by Metallicus. The official XPR Network "Block Producer Code of Conduct" makes this explicit: violations are enforced by the Consortium itself — meaning Metallicus — and serious breaches result in removal from mainnet. There is no independent arbiter. Metallicus wrote the rules, Metallicus judges compliance, and Metallicus executes the penalty. Source: XPR Network Block Producer Code of Conduct The consequences of disagreeing with Metallicus are a matter of public record: • Proton London — block producer removed from the Consortium and the network entirely after publicly disagreeing with Metallicus. [Source] • Proton Kiwi — block producer removed from the Consortium and the network entirely after publicly disagreeing with Metallicus. [Source] A blockchain on which a single private company decides unilaterally who may validate transactions — and expels those who speak out — is not a decentralized network. It is a privately controlled ledger with a blockchain marketing wrapper. 1.3 Wrapped Asset Risk: Centralized Custody, No Independent Audit XPR's "X Tokens" — wrapped Bitcoin (XBTC), XRP (XXRP), and others — are held under the exclusive custody and control of Metallicus, a single centralized private company. There is no decentralized escrow, no smart-contract-based custody, and no independent auditor verifying that the underlying assets actually exist in the quantities claimed. If Metallicus becomes insolvent, faces regulatory seizure, or simply ceases operations, users holding X Tokens would have no independent legal mechanism to reclaim the underlying assets. Given the company's active lawsuits and reported SEC scrutiny, this is not a theoretical risk — it is the most plausible scenario. 1.4 Your Account Can Be Frozen, Your Funds Held — All in the Fine Print Metallicus's Metal Pay Terms of Service, last updated February 12, 2024, contain a set of unilateral powers over user accounts that are extraordinary in scope. These are not buried in complex legalese — they are stated plainly, directly, and in plain English. Every Metal Pay user has agreed to all of the following: • Account suspension at any time, for any reason, without notice. The Terms state: "We may close your Account or indefinitely ban you from accessing the Services at any time, with or without notice for any reason." • Your funds can be held for up to 180 days — or longer. The Terms explicitly state Metallicus may hold your balance "for up to 180 days, or longer as required by applicable laws and regulations" if they decide there is any "Restricted Activity" — a category they define unilaterally and broadly. • Holds placed without notice. The Terms state Metallicus "may place a hold on payments sent to your Metal Pay Service Account with or without notice to you" based solely on internal "risk decisions" at their "sole discretion." • Withdrawals were not available. The Terms state under Withdrawing Money: "This service is currently not available but is being planned in near future." Users could deposit funds but not necessarily withdraw them. • Force majeure covers market volatility. Metallicus's liability exemptions include "significant market volatility" — meaning they can halt operations or freeze funds during the very market conditions when users most urgently need access. • Class action lawsuits are banned. Section 42 of the Terms contains a mandatory arbitration clause that explicitly prohibits class action claims: "THIS WILL PRECLUDE YOU FROM BRINGING ANY CLASS, COLLECTIVE, OR REPRESENTATIVE ACTION." Every harmed user must fight Metallicus alone, one at a time, in individual arbitration. • Metallicus can change the Terms with 21 days notice and reduce your rights at will. Continued use of the service constitutes acceptance of whatever new terms they impose. Taken together, these Terms give Metallicus the legal cover to freeze your account, hold your funds for six months, prevent you from suing alongside other victims, and exempt itself from liability when markets crash — all while describing itself as a regulated, compliant, user-first platform. Source: Metal Pay Terms of Service (US) PART II: The Repeating Playbook — Build Hype, Drain the Pool, Dump on Retail Every Metallicus product follows the same arc: a new narrative generates retail excitement, founders receive the majority of tokens at no cost, specific promises to investors are quietly broken, the token supply is inflated to fund operations, and the project is eventually abandoned in favor of the next initiative — leaving retail holders devalued while the cycle repeats. This is not coincidence. It has happened with every single product Metallicus has ever launched. 2.1 MTL / Metal Pay (2017): The ICO, the Raided Promise Pool, the Quiet Betrayal Metal Pay was Metallicus's first major product. In 2017, the company raised approximately $9.9 million through an Initial Coin Offering, selling 55 million MTL tokens at $0.18 each. The MTL whitepaper was explicit: 26,341,112 MTL tokens were specifically ring-fenced in a dedicated pool for the Proof-of-Processed-Payment (PoPP) rewards program — a core feature that promised users they would earn MTL on every payment. This was marketed heavily as a foundational and permanent feature of the platform. What happened to that 26.3 million MTL pool? Community investigators and early investors documented that Metallicus quietly drained it — using the ring-fenced investor rewards to fund company payroll and keep Metal Pay operational during periods of zero revenue. When Metallicus finally shut down PoPP in October 2021, the company retroactively reframed the entire program as an "experimental, fun way to distribute cryptocurrency." The 26.3 million tokens investors were promised as rewards had been spent. On payroll. Simultaneously, the total MTL supply was inflated from the original 66.6 million to over 89 million — further diluting ICO investors. The token has been in long-term decline ever since. The people who paid $0.18 per token in 2017 funded years of Metallicus operations and received none of the rewards they were promised. Sources: Metal DAO Whitepaper (PoPP Pool: 26.3M MTL ring-fenced) | ICO Details — icomarks.ai | Original MTL Whitepaper 2.2 Proton / XPR Network (2019): The Monthly Treasury-to-Payroll Drain, On-Chain As MTL stagnated, Metallicus pivoted to Proton — later rebranded as XPR Network. Existing MTL holders and Metal Pay users were encouraged to migrate into the new ecosystem, funneling a fresh wave of retail capital into a token controlled, once again, predominantly by the founders. The XPR token's decline was not random. Community members tracked a recurring on-chain pattern: in the period approaching each monthly payroll cycle, large transfers of XPR moved from the publicly visible XPR treasury account ( @xprtreasury ) to the on-chain Metallicus payroll account ( @metalpayroll ), and were then liquidated to fund employee salaries. This predictable monthly selling pressure drove the XPR price down like clockwork. These are not allegations — the transactions are permanently recorded on a public blockchain and can be verified by anyone. Verify on-chain: @xprtreasury (XPR Treasury Account) | @metalpayroll (Metallicus Payroll Account) When the supply available for selling was no longer sufficient to cover costs, Metallicus's response was the Phoenix Proposal: double the entire token supply. When community members raised objections, they were ignored. When block producers protested, they were ejected. The pattern is consistent, and it is documented. 2.3 LOAN Protocol: Centralized Lending, Zero Governance, Hacked in 2024 Metallicus launched LOAN as a lending and borrowing platform, inviting comparisons to Aave. The comparison is deliberately misleading. LOAN token holders have zero governance rights. All platform decisions — which assets are listed, what rates apply, any protocol change — are made exclusively by Metallicus. All deposited assets are held in Metallicus's custody, not in audited smart contracts. The platform is not open-source. The Terms explicitly state: "Metallicus retains the right to modify" terms at will, and "all money transmission is provided by Metallicus, Inc. pursuant to Metallicus, Inc.'s licenses." Sources: Metal X Terms | Metal X Documentation In September 2024, the LOAN protocol was successfully exploited in a re-entrancy attack. An account identified as "letsgopuppy" drained wrapped DOGE, LTC, XRP, BTC, and ETH from the protocol's lending smart contracts before Metallicus detected the attack. Metallicus was forced to manually halt all deposits, withdrawals, borrowing, and liquidations across the platform. The fact that a supposedly "decentralized" DeFi protocol required a centralized company to manually freeze operations is, by itself, definitive proof of what the platform actually is. Source: Metallicus — Official LOAN Hack Announcement (Sep 2024) The hack also intersects directly with the Krueger lawsuit (see Part III): the 8.7 billion LOAN tokens allegedly embezzled by Metallicus leadership were held on this same platform — the one that was later hacked, is not open-source, and is controlled exclusively by the company accused of taking them. 2.4 METAL Blockchain: The Fourth Iteration, Same Insider Structure The most recent product is the METAL blockchain — a fork of Avalanche repackaged around a credit union narrative. Per the official Metal Blockchain documentation, the largest METAL holders at launch are Metallicus and its founders. As with every prior project, insiders received the majority supply at no cost. Every retail participant and partner institution acquires tokens at a structural disadvantage to founders who already hold the majority — and who have a documented, multi-year history of liquidating that supply to fund operations regardless of the price impact on everyone else. Source: Metal Blockchain Token Documentation MTL. XPR. LOAN. METAL. Four tokens, four narratives, one playbook: founders hold the majority, retail funds the company, and when the token fails, there is already a new one in development. PART III: The Legal Record — Five Lawsuits, an SEC Investigation, and a Court Sanction Metallicus and its founders are the subjects of five separate civil lawsuits and a reported SEC investigation. In one case, the court found Metallicus filed suit in bad faith and ordered it to pay sanctions. All citations below link directly to public court records. 3.1 Donald Berk v. Metallicus, Inc. — Whistleblower Alleges Customer Funds Used for $1M Payroll During Year of Zero Revenue Donald Berk is a banking professional with over 25 years at Northern Trust. Metallicus publicly celebrated his appointment as COO and then, in June 2023, his elevation to the Board of Directors — describing him as an "indispensable linchpin." He was subsequently terminated. He then sued. Berk filed in San Francisco Superior Court alleging wrongful termination, age discrimination, and whistleblower retaliation. The central allegation: upon reviewing internal coin balances, Berk identified a "hole" in the financial records that, in his professional assessment, reflected customer-held crypto tokens being misappropriated to fund company payroll . The suit alleges that certain executives received salaries of up to $1 million per year during 2022 — a year in which Metallicus generated no meaningful revenue. When Berk raised these concerns internally, he was fired. Berk's complaint also alleges Metallicus was under active SEC investigation in 2024 — potentially for selling crypto tokens without a broker's license, or for "double minting" : pledging the same tokens across multiple transactions simultaneously. The San Francisco Business Times called it "an explosive lawsuit alleging financial malfeasance at a crypto firm trusted by the Federal Reserve for fund transfers." Sources: Berk v. Metallicus — Court Docket | SF Business Times Coverage 3.2 Kliebert et al. v. Metallicus, Inc. — Securities Fraud at Necker Island This case traces to a 2017 blockchain conference at Richard Branson's Necker Island, where plaintiffs allege they were induced by Marshall Hayner and Metallicus to purchase MTL tokens based on material misrepresentations about their value and prospects. The complaint asserts violations of the Texas Securities Act, deceptive trade practices, fraud, and negligent misrepresentation. The case survived early dismissal and the conference setting — a luxury private island stacked with high-profile names — was itself part of the sales environment used to lend the pitch an air of legitimacy the plaintiffs allege it did not warrant. Source: Kliebert v. Metallicus — Court Docket (S.D. Texas) 3.3 Proton AG v. Metallicus & Marshall Hayner — Trademark Infringement Proton AG — the company behind Proton Mail — brought a trademark infringement action after Metallicus named its blockchain "Proton," alleging consumer confusion. Proton AG later moved to add Marshall Hayner personally as a co-defendant, arguing he directly authorized and oversaw the infringing use. Metallicus did not oppose the motion — a tacit acknowledgment of Hayner's personal involvement. The dispute generated parallel proceedings in the Northern District of California. Source: Metallicus v. Proton AG — Court Docket (N.D. Cal.) 3.4 Krueger & SoftAtom v. Metallicus et al. — 8.7 Billion Tokens Stolen, Preemptive Bad-Faith Lawsuit, and Court-Ordered Sanctions This case is the most thoroughly documented in Metallicus's legal history, and its details are damning on multiple levels. Frederick Krueger was a genuine co-founder of Proton. Marshall Hayner recruited him specifically because Krueger had built the Lynx blockchain and its successful wallet. Krueger brought his team, his codebase, and his community. The @name account structure and core wallet architecture that Proton was built on came from Krueger and Lynx. In recognition of his contributions, Krueger received the title of Co-Founder, became Chairman of the Board of Proton Chain LLC, and was later appointed Chief Strategy Officer of Metallicus. In 2021, Krueger, his company SoftAtom, and a charitable trust accumulated 8.7 billion LOAN tokens that Metallicus held in trust on their behalf. On February 16, 2022 , those tokens were removed from the trust account. No authorization. No notice. No compensation. On February 28, 2022, Krueger sent a letter to Metallicus demanding restitution and requesting a response by March 4, 2022. Metallicus did not respond to the letter. Instead, on March 4, 2022 — the day of the deadline — Metallicus filed a preemptive lawsuit against Krueger in San Francisco Superior Court , using what court filings describe as a nonexistent address (a UPS Store post box). The court filing states explicitly: "Metallicus hastily initiated this case on March 4, 2022" as a "preemptive forum-shopping maneuver." On March 16, 2022, Krueger filed his own suit in Los Angeles — where all parties actually resided — alleging conversion, embezzlement, breach of fiduciary duty, unjust enrichment, and violations of California Business Statutes. The named defendants include Marshall Hayner (CEO), Irina Berkon (CFO), and Syed Jafri (VP of Engineering) individually. The court found that Metallicus filed in San Francisco in bad faith , granted the venue transfer to Los Angeles, and ordered Metallicus to pay sanctions — specifically, attorneys' fees and expenses incurred by Krueger and SoftAtom in filing the transfer motion . A company that responds to allegations of token theft by racing to file a preemptive lawsuit in an improper venue using a fake address — and gets sanctioned for it — is demonstrating something about its character that goes beyond any single dispute. Source: Court Filing — Motion to Transfer Venue (with full factual record) 3.5 Alexander Christian v. Metallicus, Inc. and Marshall Hayner An additional civil complaint was filed against Metallicus and Marshall Hayner personally in San Francisco County Superior Court in December 2020. The filing adds further to the consistent pattern of litigation naming Hayner as an individual defendant — indicating that multiple plaintiffs across multiple unrelated cases believe his personal conduct is at the center of the alleged harm, not merely corporate policy. CONCLUSION: The Same Story, Four Times Over MTL launched in 2017 on promises of a capped supply, decentralized governance, and a dedicated rewards pool for investors. The supply was inflated. The pool was raided. The rewards were never paid. XPR launched in 2019 on promises of decentralization and community governance. Community votes were overridden. Validators who objected were expelled. The treasury was liquidated monthly to fund payroll. LOAN launched on promises of DeFi governance and secure custody. Token holders were given zero governance rights. 8.7 billion tokens were allegedly stolen from a co-founder. The platform was hacked. METAL launched in 2022 with a new narrative and the same insider-heavy token distribution that has preceded every prior failure. Running through all of it: a company that uses terms of service to freeze your money without notice, bans you from joining class actions, and claims force majeure protections during market downturns. A company whose own COO and Board Member alleges its customers' crypto was used to pay million-dollar executive salaries in a year the company earned nothing. A company that, when accused of stealing 8.7 billion tokens from its co-founder, responded not by returning the tokens — but by racing to file a preemptive lawsuit in the wrong city, at a fake address, and was sanctioned by the court for doing so. Every piece of evidence in this document comes from a public court filing, an official company document, or a publicly verifiable blockchain transaction. None of it requires speculation. The record speaks for itself. All Cited Sources • Phoenix Proposal (Supply Doubling) — Original Document • Consortium Pay Removal — XPR Governance Proposal • Proton Kiwi — Community Evidence of Governance Block (X/Twitter) • XPR Network Block Producer Code of Conduct • Proton London Ejection — X/Twitter • Proton Kiwi Ejection — X/Twitter • Metal Pay Terms of Service (Account Freezes, Arbitration Ban, Force Majeure) • Metal DAO Whitepaper (PoPP Pool — 26.3M MTL) • MTL ICO Details — icomarks.ai • Original MTL Whitepaper — Coinpaprika • On-Chain: @xprtreasury — XPR Treasury Account • On-Chain: @metalpayroll — Metallicus Payroll Account • LOAN Protocol Hack — Official Metallicus Announcement (Sep 2024) • Metal X Terms of Service • Metal X Documentation • METAL Blockchain Token Documentation • Donald Berk v. Metallicus — Court Docket (Case No. CGC-25-628277) • SF Business Times — Berk Lawsuit Coverage • Kliebert v. Metallicus — Court Docket (S.D. Texas) • Proton AG v. Metallicus — Court Docket (N.D. California) • Krueger v. Metallicus — Motion to Transfer Venue (Full Court Filing)