Metaverse game CEO loses $2M in bad trades, promises to pay it back

Ragnarok screenshot of players hanging out.
(Image credit: ragnarok)

Update: Fanfaron reached out to PC Gamer after the original article went up to inform us that 90% of the reimbursement had already been made. In regards to the ETH buyback, Fanfaron claims if he didn't make the decision to "stabilize as soon we received our revenue," 60% of the treasury could have been lost. 

When asked where the project currently stands, Fanfaron provided the following statement:

"We came back even stronger as a team after this event and will do everything to deliver on the Alpha of the metaRPG in the next 6-7 months.

This will include 3 universes with fun gameplay, leveling up, interoperability of assets between universes, digital ownership, our own L2, the first version of our economy, and social cities where people can hang out together and do different activities."

Original Story: The CEO of Ragnarok, a multiplayer metaverse RPG currently in alpha, admitted to losing almost $2 million of company money from trading during the most recent crypto crash. In a rare act of transparency, the CEO publicly disclosed the project's earnings and expenses, revealing a huge pay disparity between founder members and the rest of the staff.

The CEO of Ragnarok, who goes by Fanfaron, said on Substack that he made "mistakes by buying ETH (Ethereum) multiple times when [he] thought it was an advantageous investment for the project."

"Then to protect downside risk and with the plan to reinvest at a better time, I sold our position in ETH, multiple times. This led to approximately 1.827M in losses," Fanfaron said (thanks, web3isdoinggreat).

The company started with $1.75 million in seed funding and has made over $17.5 million from NFT sales and royalties. The game, which Fanfaron described as "similar to WoW but everything being digitally owned," has suffered some delays, which were blamed on overexpansion resulting in missed deadlines.

"If I am being honest, running Ragnarok has made me aware of many personal skill gaps, and it is one of the reasons I am prioritizing expanding our team and bringing on domain experts to help lead us into the next phase of growth," wrote Fanfaron. "Ultimately, I own our mistakes as the leader of Ragnarok, and I apologize to the community for the missteps and lack of communication thus far. I cannot promise that we won't make mistakes going forward—we are all human, but I can promise stronger transparency and that we will always act in good faith for our community and this project."

The post includes a breakdown of the earnings and expenses for Ragnarok, including $5.4 million in salaries and compensations, $1.5 million of which was used to buy out a co-founder. For context, the project paid out $1.25 million in wages for 'core team members' over nine months for 56 people, which averages to about $22K a person; meanwhile, $400K in salaries were given to 'founding members' (2 people) for a year.

Ragnarok screenshot of players hanging out.

(Image credit: ragnarok)

Almost $3.7 million in 'post-mint' compensation was paid out to team members and founders. It seems like the lion's share was again given to founders, though exactly how the split works for core team members is not specified.

One of the main reasons for releasing the company's revenue, expenses, and a record of repayments was for "transparency and context." Because, without it, Fanfaron said, the "complex structure of wallets and payments" surrounding the project "can paint a bad picture."

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Though more transparency in Ragnorok's development was promised, this may well be the last time we see such a detailed public financial breakdown since Ragnarok is not a public company. 

Fanfaron says the project's investors still have "full trust and support" for him as CEO. He plans to pay back the $1.8 million lost from the trading and cut his salary from $600,000 to $200,000. He also posted the wallet addresses where the repayments are coming from, including $200K chipped in from a former co-founder. Fanfaron told PC Gamer that 90% of the funds had already been reimbursed. 

This wouldn't be the first time we've seen a metaverse game get hurt because of cryptocurrency volatility, but Ragnorak still has over $10 million available for development and legal costs, according to the post. The roadmap aims to implement more features like combat, quests, and NFT breeding in the coming months. Currently, players can explore the Ragnarok "metaverse" and interact with buildings and other players. 

Correction: A previous version of this article incorrectly stated that Fanfaron made a salary of $1.2 million he cut to $600,000. Fanfaron's original salary was $600,000, which he cut to $200,000. 

Jorge Jimenez
Hardware writer, Human Pop-Tart

Jorge is a hardware writer from the enchanted lands of New Jersey. When he's not filling the office with the smell of Pop-Tarts, he's reviewing all sorts of gaming hardware, from laptops with the latest mobile GPUs to gaming chairs with built-in back massagers. He's been covering games and tech for over ten years and has written for Dualshockers, WCCFtech, Tom's Guide, and a bunch of other places on the world wide web.