Moxie Marlinspike, the founder of the hugely popular encrypted communications app Signal, announced today in a blog post that he is stepping down in a move that he says has been in the works for several months.
While unexpected, the move isn’t a shock to industry observers who have been watching the rise of MobileCoin, a cryptocurrency startup that counts Marlinspike as its earliest technical advisor.
Last spring, eight-year-old Signal, which has more than 40 million monthly users, began testing out an integration with MobileCoin, which says it’s focused on enabling privacy-protecting payments made through “near instantaneous transactions” over one’s phone. But as Wired reported last week, a “much broader phase of that experiment has quietly been underway since mid-November. That’s when Signal made the same feature accessible to all of its users without fanfare, offering the ability to send digital payments far more private than a credit card transaction—or a Bitcoin transfer—to many millions of phones.”
MobileCoin founder Joshua Goldbard told the outlet that the rollout has spurred massive adoption of the cryptocurrency, telling Wired that “there are over a hundred million devices on planet Earth right now that have the ability to turn on MobileCoin and send an end-to-end encrypted payment in five seconds or less.”
Notably, one needs to load one’s wallet with the cryptocurrency first, and as Wired notes, it is listed for sale on only a few smaller cryptocurrency exchanges, including FTX, and none yet offer it to U.S. consumers. (FTX founder and CEO Sam Bankman-Fried is one of many investors in MobileCoin through his quantitative trading firm and cryptocurrency liquidity provider, Alameda Research.)
Even Americans will have access to the currency shortly, however, Goldbard told Wired, pointing to recently signed agreements, including with the cryptocurrency payment processor Zero Hash, that should allow U.S. residents buy MobileCoin within the first few months of this year.
In the meantime, going worldwide has been good for MobileCoin, which last summer raised $66 million in Series B funding at a $1.066 billion valuation and, according to sources close to the company, is in the process of raising a Series C round at a valuation that one source describes as “in the high single-digit billions” of dollars.
MobileCoin’s growth has also raised questions about Signal and about Marlinspike, who has seemingly tried to maintain some distance between himself and MobileCoin. One apparent reason why centers on Signal employees, some of who told reporter Casey Newton last year that they viewed Signal’s exploration of cryptocurrency as risky and an invitation for bad actors to use the platform.
A potentially bigger, but related, concern of critics is that integrating a privacy coin could legal headaches for Signal. As Matt Green, a cryptographer at Johns Hopkins University, told Wired last week, “I’m very nervous they’re going to get themselves into a problematic situation by flirting with this kind of payment infrastructure when there’s so much legislation and regulation around it.”
It’s a valid concern. As we’ve noted previously, cryptocurrencies and messaging apps haven’t historically mixed well owing to nervous regulators. Kik Messenger, the mobile messaging app founded by a group of University of Waterloo students in 2009, created a digital currency called Kin for its users to spend inside the platform. The project ultimately led to a years-long battle with the Securities & Exchange Commission that nearly decimated the company. Telegram, a much bigger messaging app than Signal — it claims more than 500 million monthly active users — similarly abandoned plans to offer its own decentralized cryptocurrency to anyone with a smartphone after years of battling with the SEC.
Even Facebook hasn’t been able to gain much with its own cryptocurrency project, with the longtime leader of that effort, David Marcus, announcing back in November that he was leaving the company.
If Marcus shows up at MobileCoin, we wouldn’t be surprised, but we’d be even less surprised to see Marlinspike get more involved in some capacity.
Neither Goldbard nor Marlinspike have responded to our requests today for more information, but asked if Marlinspike might consider taking over MobileCoin as CEO (the company doesn’t have one), a source close to him says he is “not doing that” and right now just “taking a break.”
We’ll see. We aren’t promising to eat our shoes if we’re wrong. (It happens!)
For now, Marlinspike writes in his post, he will remain on Signal’s board while Signal’s search for a new CEO continues. Its executive chair, WhatsApp cofounder Brian Acton, will serve as Signal’s interim CEO in the meantime.