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Informants of the company alleged that the figure that allegedly raised R3 last year was overestimated. They also denounce embezzlement and dissatisfaction of some of the R3 consortium banks, and some other indications that the company is going through difficult times

R3, an initiative that last year announced to have raised USD $ 107 million to introduce Blockchain services in the financial sector, is going through difficult times and could run out of money at the beginning of next year, according to two former employees of the company.

The difficulties currently facing the company arise in the midst of questions about R3 and its ability to build a business around its own Blockchain.

R3 was launched in 2014 with ambitious plans to provide Blockchain technology services to a group of large banks. The initial strategy of the company consisted of a version of Blockchain, which could be used by financial institutions only by invitation, to make transactions in a faster and safer way.

The project had a rapid start, since J.P. Morgan and Goldman Sachs agreed to be founding members of the group. Meanwhile, R3 developed Corda, its own version of a Blockchain. The company, which prefers to use the term "distributed general ledger technology", quickly reached a list of dozens of new partners.


 
However, the R3 suffered a setback in 2016, when some of its front-line members, including Goldman Sachs and Santander, left the consortium. At that time, Goldman informed Fortune that the bank chose to let its membership expire, in part because it did not anticipate that the group would multiply to 70 members, which made the agreement less attractive.

However, these departures did not dissuade R3's ambitions, and the start-up triumphed in a fund raising round of USD $ 107 million in May of last year. By then, it was also suggested that the round was only the first tranche of a larger project to attract a total of USD $ 200 million as the consortium developed.


 
However, this plan seems to have fallen short. Reuters reported last week that R3 raised another USD $ 15 million from financial services provider CLS and two other companies, news that came after repeated frantic efforts to raise a much larger round, according to the former employees. These informants, like other sources of the story, asked to speak from anonymity to preserve their professional relationships.

In a statement via email, R3 reported that the $ 200 million figure, which appears in numerous media, was based on a single plan to sell a stake in a research subsidiary, but that R3 subsequently abandoned this project.

In this same line, a former employee added that the original figure of USD $ 107 million was overestimated because it included consultancy fees from previous years that R3 reclassified as equity, according to the terms of the contracts with its partners. The company confirmed to Fortune that only USD $ 98.2 million of the USD $ 107 million were new revenue.

Former employees also claim that R3 has largely breached the internal financial targets established a year ago, with an estimate that revenues are "10 times lower", and that another source describes it as a "ridiculously lower" figure.

Charley Cooper, director and manager of R3, questions the claims. Although he did not provide specific figures, he assured Fortune that the company exceeded its revenue targets last year and will present an update later this year.