Flowcarbon is refunding investors after failing to launch its carbon credit crypto token

The death of “Goddess Nature Tokens”.

In May 2022, a company called Flowcarbon raised US$70 million to “tokenize carbon credits and build an on-chain market”. The funding was led by Andreessen Horowitz, along with other investors including General Catalyst, Samsung Next, Invesco Private Capital, and Allegory Labs. Additional funding came from sales of Flowcarbon’s Goddess Nature Token.

Sarah Emerson, writing in Forbes, reports that in recent weeks, Flowcarbon has been quietly refunding investors, “after failing for years to launch its ‘Goddess Nature Token’”.

Flowcarbon was set up by Adam Neumann, who became a billionaire through WeWork, a company that crashed from a US$47 billion valuation in summer 2019 to needing an US$8 billion bailout within just a few months. Bloomberg describes the collapse of WeWork as “a case study of when a company got too much money, too fast, with no effective oversight on how to spend it”.

Fast-forward to 2022 and Neumann’s next big idea. Flowcarbon was called out as a scam even before its token was launched to the public. (And yes, it really was called the “Goddess Nature Token”.)

Vox described it as sounding like “a scam within a scam”. TechCrunch asked whether Adam Neumann deserved a second chance after the disaster of WeWork.

And Canadian-British blogger, journalist, and science fiction author, Cory Doctorow, did not mince his words. “Flowcarbon is a scam,” Doctorow wrote.

Bad product, bad timing

Flowcarbon’s May 2022 press release states that, “the ability to scale the volume of credits available has been limited by the VCM’s [voluntary carbon market’s] opaque and fractured market infrastructure”.

Putting carbon credits on the blockchain, and calling them Goddess Nature Tokens was supposed to address this.

Neumann’s own private wealth management firm 166 2nd Financial Services was also an investor in Flowcarbon. No prizes for guessing where 166 2nd Financial Services is registered.

Yes, it’s the tax haven of Delaware.

But just as Flowcarbon appeared on the scene, crypto markets crashed.

To make matters worse, Verra, the Washington DC-based carbon certification corporation, announced in May 2022 that it would immediately “prohibit the practice of creating instruments or tokens based on retired credits”.

One of the reasons that Verra put forward for this ban was that it wanted to find a way of tokenising carbon credits that, “prevents fraud and upholds environmental integrity”.

The announcement followed the creation of tokens based on junk carbon offsets from Verra’s registry that were “bridged” onto the blockchain. A company called Toucan had created about 22 million “Base Carbon Tonnes” through this process.

Verra spokesperson Lara Kennedy told Forbes that Verra stands by its decision to prohibit tokenisation of credits. She added that, “there is no forecast date as to when Verra will make its next announcement on this subject”.

In July 2022, just two months after it had raised US$70 million, Flowcarbon announced that it had decided to “wait for markets to stabilize” before launching its Goddess Nature Token.

That turned out to be a long wait.

Forbes reports that,

[I]n recent weeks, Flowcarbon has been issuing refunds to people who purchased its “Goddess Nature Token” and waited years for a launch that never happened. According to sources who were contacted by the company last month, Flowcarbon cited market conditions and resistance from carbon registries as the reason for returning buyers’ funds instead of continuing to hold them indefinitely.

Forbes reports having seen a contract that asks the buyers of Goddess Nature Tokens to sign a release that includes a “broad waiver of claims against Flowcarbon and its affiliates, as well as confidentiality terms”.

Flowcarbon did not answer Forbes’ specific questions about the refund.

Flowcarbon told Forbes that,

It's well known that since last year we have been offering refunds to retail GNT buyers due to the industry delays, with standard and customary terms, as we continue to grow Flowcarbon as a leader in carbon finance.

Flowcarbon’s mission “is an incredibly powerful one”

It’s pretty funny two-and-a-half-years later to listen to the venture capital firm’s justifications for throwing money at Flowcarbon.

Here’s Arianna Simpson, general partner at Andreessen Horowitz on CNBC in May 2022:

We think the mission of Flowcarbon is an incredibly powerful one. They want to bring the carbon credit market online and enable it using tokens. What that means is that there’s an ecosystem of opaque brokers that can be replaced by a more open market. And we think that can do a really positive job of bringing more people to the carbon credit market.

In general, you know, we’re incredibly excited about the positive real world effects of cryto and Web 3. The ecosystem has been sometimes criticised for being very much, you know, focussed on traders, or things like that, but in reality we’re seeing that it can have major real world impacts. . . .

Adam and Rebekah's vision is a key part of the story and that is really what gave birth to the company. We are very excited to work with them. I think they have an incredible vision for it and really want to do something great environmentally here.

Anyone who thinks that the biggest problem with carbon markets is the “ecosystem of opaque brokers” obviously hasn’t spent long enough looking into the carbon market.

And anyone who thinks that “bringing more people to the carbon market” has anything whatsoever to do with doing “something great environmentally” has to be completely deluded, working in the carbon trading industry, or working in the fossil fuels industry.

Andreessen Horowitz did not respond to Forbes’ request for a comment.

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