Skip to Content

Ex-employee: Reddit notes is “not going to happen” (Update: Reddit replies)

Reddit mascots are displayed at the company's headquarters in San FranciscoReddit mascots are displayed at the company's headquarters in San Francisco

Social news site Reddit last month announced that it was creating something called “Reddit notes,” which would be used to help the company allocate around 10% of its company equity to active users. The giveaway had been something Reddit had originally promised to do upon raising $50 million in new venture capital funding in the fall.

At the time, I suggested that other startups should pay close attention to how Reddit structured these “notes,” particularly as a method for rewarding customer loyalty.

But now the Reddit “notes” seem to be on hold.

Earlier today, Reddit fired Ryan X. Charles, who it had hired last September as its cryptocurrency engineer. The company had hinted that notes would be at least partially based on cryptocurrency technologies, so I asked Charles what his departure meant for the program. His reply:

Notes over and not going to happen at all due to the legal difficulties and disinterestedness in bitcoin of the new execs… I don’t think they understood the legal difficulty in December. Until recently, they had not seriously thought about the project at all.

I have reached out to Reddit co-founder and executive chairman Alexis Ohanian for comment, and will update this post if I hear back.

UPDATE: Ohanian has responded, by saying the following: “We will be issuing redditnotes; our research leads us to want to wait until the law and technology around cryptocurrency are further along before deciding exactly how. We want to make sure we can give the community the full value of the equity when they receive it in the future, and today we haven’t been able to find a way to do that within existing regulations.”

Sign up for Term Sheet, Fortune’s newsletter on venture capital and private equity.