R3, startup, which planned to raise up to $200 million to develop blockchain-based financial solutions and unite many of the world's largest banks, could become unprofitable by 2019.

The startup R3CEV was established in 2014, and in September 2015, it launched an initiative called R3. The main task of the consortium is to study the blockchain technology and develop blockchain-based solutions for the financial industry.

The largest financial, insurance and IT corporations of the world began to join the consortium. Among the partners of R3 are such major global financial institutions as Barclays, Bank of America, Commerzbank, Credit Suisse, BNP Paribas, Goldman Sachs, J.P.Morgan, UniCredit, Mizuho Bank, Microsoft and many others.

But in 2016, it was reported that Goldman Sachs and Santander banks decided to leave the consortium. Both banks did not specify the reasons for their decision, but market participants suggested that it was due to the fact that the consortium required from its members up to $150- $200 million in investments.

In April 2016, the consortium introduced a platform for financial operations Corda, which can be used to connect banking operations to both intracorporate and inter-corporate systems. The platform allows to digitize many functions, such as clearing, settlement issues, asset register, financial balances. Corda uses distributed ledger technology, which differs from the public blockchains of bitcoin and Ethereum.

Despite several consortium members decided to leave, the start-up managed to attract about $107 million in investment in May 2017.

One reason for the current worsening financial condition of the organization is high spending on eminent employees, renting expensive office real estate and transport costs.

“Just look at the public information. You see their hiring plan and the number of people on their website,” said one of the former staffers. “There’s also expensive real estate in London and New York.”

Another former employee said that numerous personal meetings between the top managers of the start-up and consultants were paid from the budget. According to him, many of these meetings could be held online and did not require flights in the first class.

One of the interlocutors of Fortune called the salary of R3 CEO David Rutter "outrageous".

“David’s salary is commensurate with market rates for a leadership position and was approved by the board,” said the company in response to an inquiry about Rutter’s compensation.

Charley Cooper, a managing director at R3, disputes the claims. He did not provide any specific figures but told Fortune that the company exceeded its revenue targets last year and will provide an update at the end of this calendar year.