Arcade City’s leadership has rebranded into a separate entity, something its founder is not happy with.

In an effort to bypass a controversial past, Arcade City, the Ethereum-based ride sharing project that generated great buzz in the Blockchain world before hitting delays late last year, has split. The council and several key community members have rebranded and formed a new entity named Swarm City, which will have the use of the funds raised in the ARC token sale.

However, Christopher David, Arcade City’s founder and sole owner of Arcade City, Inc., is not happy with the rebranding and does not believe that the crowdfund should be used to power what he views to be a competing entity.

Rebranding meant to cut out controversial founder

Bernd Lapp, the former mayor of Arcade City and the current head of Swarm City, says that the rebranding was, in part, an effort to distance from David’s influence as well as the baggage he had accrued over the years:

“We have a different understanding of decentralized organizations and he had previously made commitments that we could not fulfill. Therefore, it was important for us to separate from him and his organization Arcade City Inc.”

Since its inception, Arcade City had a background surrounded with controversy, as some former employees and collaborators alleged shady dealings on David’s part. The rebranding, therefore, was meant to continue the project from a fresh slate.

Arcade City’s founder sees the split as fraudulent

However, complications have already arisen from the rebranding. David, who is still committed to furthering the Arcade City brand, takes issue with the split. In particular, he sees the use of funds raised in the ARC token sale to be problematic, as they were raised to support the development of what he sees to be an entirely different project:

“They are using money raised specifically for one project to launch a separate project. I believe that is called "fraud”.”

Lapp, however, sees no issue with the rebranding, noting that David stepped down from the Arcade City council of his own will, under the stated goal to launch a supporting business centered around the decentralized platform:

“Christopher stepped down to create value for his own company by contributing to the sharing economy platform that we are building now (see his tweet from Nov. 8). In my opinion, nothing has changed for him on that. Even more so, now he can use the name Arcade City for his own projects that could fit right into Swarm City...just like everyone else has the opportunity to create products around our platform in the future.”

The split has caused a rift in the community

Whatever the intentions of the founders of both Arcade City and Swarm City, the project has split in two, with camps of supporters forming around both projects. David believes that few community members were in favor of the rebranding, especially those who had invested resources in building their own businesses around the Arcade City brand:

“The only people happy with the split are those being paid from the token sale. Community feedback was overwhelmingly negative about the idea of a rebrand. Certainly, none of our active riders or drivers wanted one, especially not our thousands of happy users in Austin. The idea didn’t come from the community, it was pushed by certain people on the “Arcade City Council” who were new to the project and wanted to start with a clean slate, minus me and the other stakeholders of Arcade City, Inc.”

Lapp acknowledges the challenges presented by a change in brand, but maintains that these will be temporary and the move will pay off in the long run:

“In the beginning, it was not well received, especially by the people within our own group who have worked hard in the last year to build the Arcade City brand. Once we came up with the name, referencing what they always referred to themselves as being the “Swarm” and giving credit to their past by adding “City,” it was easier. And still we hear voices that dislike the new name, sometimes because a business was already built (Business cards printed, etc), or because they simply dislike the name, like a few in the Ethereum community that refers to the Ethereum Swarm (a tool in the Ethereum Stack) already being around.

Overall, these are still early days for the Arcade City brand, creating a new brand with a new more global community is still timed right and will not take that long to create. Especially with the right people on board.”

The Swarm City council maintains that it is in compliance with the original whitepaper

The funds raised in the initial Arcade City token sale remain a key sticking point for disagreement. Lapp explains their use consistent with the original whitepaper:

“As the whitepaper states, we offer 476,253 ARC tokens (5 percent of the total tokens raised) to all Arcade City investors who want to tokenize. We invite them to step forward to with a proposal that has consensus with the signatories of the proposal showing the division of tokens each should receive within 12 weeks from now. After the 12 weeks, will send the tokens to the signatories’ ether addresses. Furthermore, we offer 1/3rd of 1 percent of the tokens to the janitor of Arcade City according to the vesting terms in the white paper.”

Regarding Swarm City’s position on the legitimacy of using the funds for a project with a new name, David disagrees:

“It fulfills one basic promise from the whitepaper while avoiding the more important fact that those funds were specifically promised to build an Ethereum app for Arcade City, not launch a competing project.

If your convenience store gets robbed and the thieves throw you a purse of coins from the window of the getaway car, would that make you feel good about the theft?”

Swarm City rebranding the only way forward?

Despite additional controversy arising from hard forking a project that has already gathered a considerable community and amount of buzz, Lapp believes that the rebranding was the right move, and the only way forward for a project that he views as more important than merely a brand name:

“The new brand is a solution to a technical roadblock that kept the team from continuing development. Having control over the brand is necessary to execute the white paper. When we look at investors we have identified at least three different types of investors. 1. Early investors that hold shares in Arcade City Inc.; 2. Early investors that receive token through the token sale (SAFE Investors that receive 5 percent of tokens as stated in the white paper); and 3. The token backers that participated in the token sale. We are complying with the white paper, which covers the SAFE investors and the token backers. Overall, we are creating the sharing economy platform for which the token was created.

I do not believe that the token backers have invested in the brand name, but rather the concept described in the white paper. Shareholders in Arcade City Inc. need to ask their CEO how he will create value in the ecosystem of the sharing economy platform, just as Christopher stated in his tweet. Until we have a product out and people can see and feel it, I can tell investors as much as I want...but it's the product that will be most telling.”