I consider every ICO to be a scam and that this sort of thing will become par for the course, with basically every speculator in the space losing money - except those who manage to trick main street investors to cash them out.
However, this is weird: “Within hours they refunded me ethereum with a dollar amount equal to what I had contributed in early September, but since the coin has more than tripled in value since then, they kept the rest of my contribution, essentially stealing quite a lot of money from me.”
Yeah, that's bullshit. They owe you your money back, they don't owe you the gains that you would have gotten if you had speculated in Ethereum instead.
What gains? 1 eth is 1th, there are no gains there. They took something like 1 eth from this person, and gave back .3 eth. That's stealing. (numbers not to scale)
"Purchased using" is not the same as "price tag in". If I'm in the US, and I buy something from the UK, I would have paid GBP. My refund would be expected in GBP and they are not responsible for the currency fluctuations in between.
It seems like the scam went like this: make ICO, invest all the money in ETH. If ETH spikes by the time you are required to perform, you refund with the now appreciated ETH at $ prices and call it good. Otherwise you go ahead with your shitty coin and just deal with investors being mad that they didn't become billionaires.
Edit: so if that is indeed the scam then essentially the claim of wanting the returns on ETH is saying that the mark deserves them because the gains were ill gotten via transferring the risk to the mark.
The person loaning out their shares gets paid for the risk. In this case the investors were effectively conned into being the counterparty on a call option on ETH for no vig.
But your broker is on the hook for the difference if you decide to sell. In that instance they're taking the profit but also the risk. The issue here is that this guy found a way to make someone unwillingly take the risk.
This is the same scam that the companies building BTC miners were pulling on people.
They would announce their miner, get massive presales in BTC, then 6 months later when customers are getting anxious they would start refunds. And, of course your refund is in the USD amount from your BTC at the price 6 months ago, not at current USD price. The miner company just stole your profits!
They should return the currency you used to invest with, though, right? I mean, if I invest 100 US dollar in something, I expect 100 US dollars back if it is returned. You can't say "Well, when you invested, $100 was worth 100 euro, but now you can buy 100 euro for only $10, so here is $10. Look, you can still buy the same amount of euros, so the value is the same!"
If they invested 1 eth token, give them back 1 eth token.
> They should return the currency you used to invest with, though, right?
Depends on the contract potentially. It's why most larger business arrangements that could even possibly include such a refund (as part of the contract), will have specifications covering that. I'm curious what was in their agreement, if anything. For example, if it had a clause that allows for returning the dollar invested sum.
A court will usually find against you if you repay in a debased currency or similar however. If I tried to repay a loan, with no contract, in Venezuelan bolivars based on their former value on the date of the origination of the loan five years ago, that wouldn't get anywhere in a court of law, you'd lose easily.
No sorry if you consider ETH to be a currency and payment was made in that currency then repayment is expected in that currency.
Let's say you borrow US$1000 from a friend. That $1000 would have bought 1000 candies when you borrowed that money.
One year later 1000 of the same candies costs $800 because the USD became stronger. You cannot repay your friend with 1000 candies and say you are good. You took $1000 and your friend wants $1000, not something that was equivalent to $1000 at the time you borrowed the money.
I agree conceptually: if both sides consider the transaction to in ethereum-denominated currency, then there is a logical argument to what you said.
But legally, ETH is not a currency. If they take this to court, the court will award the original USD price. They bought an asset worth $x. They are owed $x.
When we get away from this funny money "we're inventing currencies" bullshit, there is a law of the land. An asset was promised, and they are owed the value of that asset when purchased, in USD.
> If they take this to court, the court will award the original USD price. They bought an asset worth $x. They are owed $x.
That's not true at all, outside of very specific asset-classes.
A better analogy: let's say we make a trade where I pay you in land, and you don't give me what I'm owed in that trade. I would expect my land back, not its dollar-value.
We do things this way, in the case of land, precisely because my land might turn out to e.g. have gold under it that might make it worth 100x more. If you conned me out of the land, and then found the gold, guess what? That's rightfully my gold.
Refunds aren't legally equivalent to suing for damages. If someone doesn't give you a refund for breaking a contract where you transferred an asset to them, your legal fallback isn't suing for damages; it's suing to get a court-order to execute a seizure in order to reclaim your property, or the things it has in turn been traded for by the contract-breaker. (You know, like repo companies do when you buy stuff on a credit card and then let it go to collections!)
You seem to be misinterpreting what the IRS means by "property". It is equivalent to "asset", not to "land". It can mean land, but can also mean a stock, bond, capital good, etc. that you own. See [1] for example usage.
In cases of fraud, the deceived party may also bring a tort, which is awarded in USD. But as for the actual contract, the court would rule that it never occurred, and so in the eyes of the law ownership of the ETH never changed hands.
It gets a little complicated with cryptocurrencies in that they effectively setup a separate ownership structure enforced by cryptography and independent of the laws of any one nation. So the court may rule that the Ethereum never changed hands and so still belongs to the original owner - but the blockchain says otherwise, and good luck convincing 51% of miners (many of whom are not U.S. citizens) that they should mine a transaction just to resolve this one case.
Courts know how to deal with cases where change of ownership (or another tort) is not reversible. It's as simple as if I promised you to pay you $100 for the dinner in your restaurant, ate the dinner and then never paid because I had no money. Obviously I was perpetuating fraud - I knew I have no money and still ate. But I can't return you the ownership of the food I ate. So the court would just assign just compensation (via various mechanisms) for fraud in that case, and maybe something on top to punish me for what I did. The only problem would be collecting it may prove impossible in this case.
I would be interested to see the case law that backs your claim.
As an example, if I give a broker stock and then ask for it back, they have to give me the stock back, not the cash value at the time I handed it to them.
Also, I'd like to see what law you have in mind when you say ETH is not a currency. Is there some special legal recognition for "real" currencies? If so, what law specifically distinguishes them?
Gotta disagree with you on this one, since in your example, 'candies' corresponds with USD in the real situation, while USD corresponds with ETH, which is quite distinctly not a real currency.
I was considering ETH to be a commodity like candies. That might not be technically a fair comparison. Replace candies with another currency. GBP or Euro.
If you were considering ETH a commodity like candies then in your example the person would've been paid $1000 back, which was the currency, in which case there's no point to the comparison.
The gains only come if they exchange the ETH for USD for a profit. If they hold on to the ETH there is no gain hence no tax to be paid. Again it seems the more I read about this discussion the more all of these "cryptocurrencies" sound like securities than currencies.
I'm speaking to those people who have preconceptions. "Oh, that's not how it works (in existing markets)", but are also wanting the brave new world.
As in - how many people are making gains declarations when they liquidate cryptocurrencies? Wanting protections of a system but refusing to participate in some aspects of it is much like having your cake and eating it too.
> if you consider ETH to be a currency and payment was made in that currency then repayment is expected in that currency
Nope. "Legal tender" means just that. If you want to be repaid in something other than a jurisdiction's legal tender, you have to specify that in the contract.
Disclaimer: I am not a lawyer. This is not legal advice.
> payment was made in that currency then repayment is expected in that currency.
The term you are looking for is "legal tender". That's the thing that has the property that if you pay your debt with it, the debt is considered settled. US$ is legal tender, but ETH is not. Of course, one could try to sue for fraud and lost profits and stuff, and may even win if by some weird chance the contract specified refunds in ETH, but then good luck collecting on that judgement. More likely, contract didn't, and then tough luck.
Well said. Legal tender is the difference here, USD comparisons are apples and oranges IMO.
as ETH is a volatile cryptocurrency and not US legal tender at all, while USD is the exact opposite: a fiat currency considered legal tender not only in the US but worldwide.
You lend me 1,000 USD and then demand it back 12 months later. Can I give you 1,000 euro or 1,000 swiss francs instead? I doubt it. You'll want 1,000 USD back, or at least the equivalent to what $1,000 USD is worth now.
So they should have provided ETH back, but didn't because it went up in value. Super dodgy and very convenient. I bet they would have provided it back in ETH had the value per coin fallen.
So I have a startup in France, and you think my FooBars will make a mint, so you invest. I get $1000 from you, and convert that to Euros to do business. Turns out my FooBars are not good, and I can't get a business license in France... so after a years effort we call it off, and you want your money back.
Assuming the euro gained 10% value in the interim, are you claiming as an investor before the investment vehicle was realized that you are rightfully owed $1100? Or the corollary, had the Euro tanked to 10% of value, would you accept $100 back without complaint?
I think you are conflating investment and ownership.
That grown value in Euros is value grown inside a corporation and either you own some of it, in which case you will get dividends, or you made an investment with some limited risk in which case it's your investment value that is relevant. I believe if someone lost your money without completing the terms of investment you would have legal recourse.
Had the ICO people given worthless ETH back they could have been sued for the difference, investment terms willing, IMO as a non-lawyer.
That's very sharp but why do we want to apply the rules of Fiat currency onto BC? Why can't we do transaction and have handshake to return the same "value" later or some percentage of the prevailing value like interest. ?
Last I checked AWS doesn't accept crypto. You can't eat crypto can you? So how was this person expected to build anything using literally only Ethereum(in compensation and in expenses)?
Because the new token is part of the scheme (scam?). It's a core componetent of the inducement, people think/hope they're getting in extremely low on the next moonshot.
> Yeah, that's bullshit. They owe you your money back, they don't owe you the gains that you would have gotten if you had speculated in Ethereum instead.
Consider the equivalent situation in ForEx terms: you pay a Mexican company $10 USD for a product, and then, six months later—when the value of USD/MXN has gone up—you ask for a refund. You'd expect back $10 USD, right? Not some amount of USD equivalent to the amount of MXN $10USD would have bought six months ago.
In this case, they paid in in ETH. So you'd expect that ETH in at point-of-sale, would equal ETH out at point-of-refund. That would be giving the investor their money back—money denominated in ETH.
Depends on where you are. If all the described events happened in Mexico then you'd get back pesos. If all that stuff happened in the US you'd get back dollars. If you had a contract that specified different and it was legally sound then that's what you'd do.
That's how this works. You can call things currencies but that doesn't make it so, the legal system is an arm of he state, and states have one kind of currency, they get to decide what it is, and the they have guns and jails if you don't like it.
> If all the described events happened in Mexico then you'd get back pesos. If all that stuff happened in the US you'd get back dollars.
Say I'm dealing with a subsidiary of a Mexican corporation that operates in the US. They ask for payment in MXN, but both they and I know they're going to send it to their parent corporation, converting it to MXN in the process. They and I also know that, to get the refund, they'll have to pull MXN out of their treasury and convert it back to USD. But I still did pay USD to the subsidiary—my card didn't automatically convert USD to MXN to pay them or anything.
I would expect, in this case, that my refund should happen from the subsidiary, and should be the original USD I transferred, even if that now costs them more to convert back than it was worth going in.
However, I would also expect that if the corporation entered bankruptcy, and was unwinding its debt obligations, then I, as a creditor, would probably only see the current MXN value of the parent corporation's liability to me. (Or rather, the subsidiary—who owes me the money—would unwind with no assets held to pay out, so I would then sue the parent corporation for said assets, and end up with MXN.)
However, this is weird: “Within hours they refunded me ethereum with a dollar amount equal to what I had contributed in early September, but since the coin has more than tripled in value since then, they kept the rest of my contribution, essentially stealing quite a lot of money from me.”
Yeah, that's bullshit. They owe you your money back, they don't owe you the gains that you would have gotten if you had speculated in Ethereum instead.
I agree. If it had gone down instead of up, he'd have kept his trap shut on this matter instead of being upset.
The fun thing is, everyone here is calling this a scam, and while its clearly not what the investors intended, being able to park crypto funds in a way that is indexed to a specific USD amount is a legitimate service that has value: see the idea (but not the execution) behind Tether.
If he had just come out and said 'give me Ethereum and I'll give it back in 6 months at the same USD exchange rate' there are a non-zero number of people who would have taken him up on that, maybe even paid for the service.
If you went to a Seed fund and tried to pitch them your idea (whitepaper) with no working prototype 99 out of 100 times you wouldn't get any funding. After you have your MVP then they will start asking you for traction. Again 98 out of 100 times not getting any funding.
Here you can raise a tremendous amount of capital, given that the majority of seed rounds are $500k-$3MM, and with an ICO entities are raising tens of millions of dollars to build something that again has no actual working mvp to show usage.
Doesn't really seem like a sound investment ;)
Tokens have already been in use for a long time with chat sites, I suppose if one of them decided to re-create their tokens on the blockchain and offer an ICO they could make more money during this period than actually operating their service.
At least that would have some basis in reality in that there is an existing site that is generating revenue, profit, and visitors.
Not necessarily. Companies still need to charge you for a service, so instead of buying something directly you buy tokens from them and then use them.
That has been in use by companies for quite some time, just that the tokens were primarily used to actually work with the companies service, rather than trade them as an independent entity.
I could see how that could work in theory (and I'll be excited if that's actually happening!), but aren't most of these ICOs for products that don't exist yet? It seems like the token buyers take on risk as if they are investors in the company without getting a stake in the upside.
Any ICO from a newly formed company is entirely at risk. An ICO from Kik or Telegram is different to an extent in that there is already an entity behind it.
Of course if there were no "blockchain" they would simply issue tokens like everyone has in the past, where you exchange money to get a token, that you can use in the app, and that token is locked into that app. So you can't use it elsewhere, but it still has some value as long as the app and users exist since you can sell your tokens to other people if you no longer need them, assuming that transferring of tokens is allowed / acceptable.
But then it wouldn't be block chain, and it wouldn't get any hype =]
Games have been using this for years and years, so there's really no difference here.
One side likes to point out the internet bubble, the other side likes to say well look at the internet now. What's missed though is the massive companies that were built in the middle, that really changed our daily lives. Amazon, Google, Facebook, Apple, etc, these companies changed how we live our lives and then Banks and everyone else realized the benefits of offering connected services directly to a PC or a phone and again there were tremendous benefits to consumers and end users.
At the moment, there is no benefit, outside of a large remittance and some tax avoidance that can be accomplished through cryptocurrency, and certainly there's no functional product company in the crypto space, outside of the exchanges which make money through people simply trading currencies, but returning no real value back to the world.
It is completely disgusting. We started by calling our ICO an IPO and making a note that we are selling shares, not tokens. But people still want to see a whitepaper and hear about tokens. And despite clearly saying we accept physical dollars [cash] for payment of services, people still think we are selling tokens to buy stuff with and comment how little sense that makes.
In the end, we decided to go along with the ICO terminology because it was too hard to fight perception. We still do the right thing: We're selling an unregistered security, shares in our company, and will pay dividends.
In short though, people trying to do the right thing are punished, and the people that overhype and do the ridiculous approach are highly rewarded.
Exactly. People don't realize that the "product" (if you can call whitepapers that) is completely decoupled from the Token s value. Of course the product could indeed use the Token but they don't have to and it doesn't make sense in most cases either.
I am wondering if 2018 will bring a deflation, maybe even a burst to the crypto bubble. It's all fairy dust right now anyway.
Fiat currencies today are issued and backed by governments. When the government fails and the country falls into deep debt or other issues, they currency becomes devalued.
So everything is ultimately backed by something to an extent. In this case if it's an ICO it is used for transact with this company on their product, which is the underlying backing. So if the company falls apart, it would stand to reason that the coin would drop in price, since it isn't backed by anything.
Not saying they are the same, simply pointing out that there is a link.
You can also look at the currencies of countries and their value compared to other currencies when they go through various economic turmoil.
Agreed. The whole point of owning a token is the idea that some person will eventually demand it because they require it for something they want. Either some transaction in the token ecosystem, a dividend, or _something_. I find it really hard to believe most of these tokens will have long-term demand.
Fiat currencies are issued and backed by banks that lend that currency to nation state governments. There are only two countries left on the planet still in control of their currencies...Iran and North Korea.
> Fiat currencies are issued and backed by banks that lend that currency to nation state governments
There are three types of money: central bank reserves, physical currency and commercial bank money. The U.S. government (Fed and Treasury, respectively) directly controls the first two down to the cent. Commercial banks "make" the final one, but to get the right to do that they have to agree to Federal Reserve jurisdiction (internationally, this happens with central banks entering into swap agreements with the Fed, i.e. opening "accounts" with the Fed into which the Fed deposits U.S. dollars whose--since this needs to be said--quantities it gets to track).
My understanding is the 'Federal Reserve' is a collection of private corporations/banks founded in 1913 who lend money to the US treasury at interest paid as dividends.
> My understanding is the 'Federal Reserve' is a collection of private corporations/banks founded in 1913
A common misconception, but incorrect [1]. The Federal Reserve was created by an act of the Congress in 1913 [2]. Part of the confusion arises from private banks holding "shares" in their respective regional reserve banks. These "shares" are less "share of stock" than "you are regulated by us" membership accounts with an archaic label.
The history you mention, of a private organization gradually falling under the purview of public regulation, is closer to that of the Bank of England's [3].
> who lend money to the US treasury at interest paid as dividends
American banks are required to hold a lot of their capital in safe assets, i.e. U.S. Treasuries and things that look like Treasuries. So yes, banks lend money to the government and then get back interest. If you'd like, you can do this too [4].
While economics teaches us that past performance is not an indicator of future performance it concurrently teaches us that history is the only clue we have as to the future so, what follows is a fictional rewrite of a not so distant history; Maybe it's canals, not tulips...
"For each cryptocoin, a unique software protocol and accompanying network was necessary to enable its implementation, and as people saw the high incomes achieved from sales to fiat currency, mining and transaction fees, coin proposals came to be put forward by investors interested in profiting from coins, at least as much as by developers seeking to facilitate egalitarian movement of financial value and flexible independent storage of wealth.
In a further development, there was often out-and-out speculation, in which people would try to buy coins in a newly created coin simply to sell them on for an immediate profit, regardless of whether the network was ever profitable, or even built. During this period of "coin mania", huge sums were invested in coin infrastructure, and although many schemes came to nothing, the coin system rapidly expanded to nearly 4,000 coins in everyday circulation."
For each canal, an Act of Parliament was necessary to authorise construction, and as people saw the high incomes achieved from canal tolls, canal proposals came to be put forward by investors interested in profiting from dividends, at least as much as by people whose businesses would profit from cheaper transport of raw materials and finished goods.
In a further development, there was often out-and-out speculation, in which people would try to buy shares in a newly floated company simply to sell them on for an immediate profit, regardless of whether the canal was ever profitable, or even built. During this period of "canal mania", huge sums were invested in canal building, and although many schemes came to nothing, the canal system rapidly expanded to nearly 4,000 miles (over 6,400 kilometres) in length.[1]
I don't agree, if it gets to the point where multiple currencies are exchangeable independently (Swap protocol for example) then I can see a use for different variations that have different properties, you may choose one that offers the highest security model and most stable price for savings and another that allows for fast transactions with a reduced security model.
It's all gone a bit crazy recently and it's hard to see through the noise, but I do believe that something will come of this technology!
quite, I recall quite vividly 1994, arguing with my father who was a chemical engineer working for a blue chip in the city that the Internet had anything to offer the business world, 'the fax is fine, no one will ever trust anything that's not on paper', I feel the same about 'blockchain' technology, I've been following cryptographic currencies since it was science fiction, I've survived E-gold and Beenz, Mt-Gox and Butterfly labs and emerged into a new wild west. Winding back the clock not so far, emerging websites were all well and good, yet it was combining them with the power of databases that really drove the expansion of possibilities, I feel the same about distributed ledger technologies, while I would certainly not bet the house on any current implementation, the novel uses that the technology enables are only just being explored.
On its face . . . just the idea . . . how could anyone look at that one, out of all of the ICOs out there, and not think twice before sending in their money?
Can we put the FMtokens cryptocurrency name in the title? This may scare people who invested in other adult entertainment coins such as SpankChain (https://spankchain.com/)
The real tragedy here is that an instant, anonymous, feeless, global cryptocurrency would form the absolute ideal medium of exchange between online sex workers and their patrons. Sites such as ManyVids, et al. probably see on order of $100K per week in transactions. Although the cryptocurrency community may balk at the association. The benefits of decentralization in this particular milleu are self-evident. Its possible it may even become the driver of significant transaction volume growth!
It really would make a perfect fit. Then again site owners might face legal challenges as there would be no age verification built into the payment system. I guess there is still space for a player in that market.
Unless the token / currency is purchased with cash, or using something like Monero, then you don't have the benefit of anonymity with cryptocurrencies. All payers can be traced back to some fiat account.
This is why we are not launching our ICO until after we have a working service. We are raising some money in a pre-ICO (Series A) but given the scams, we felt it was best to deliver before going public.
Of course, we are not a typical ICO. We are selling an unregulated security: equity in our company and we will pay dividends. We are only going this route because we are an extrajurisdictional company and traditional fundraising is incredibly difficult for such a setup.
Unless you and the people in your "company" can pay for your food, rent, and bills directly with Bitcoin or Ethereum, I don't see how this works. You have to convert it to fiat somewhere, and that's probably going to be through a bank. Then you're in for a lot of trouble if you get investigated, audited, or whatever.
So who would be liable in the case of somebody suing you? If the company has no legal existence, then would the individuals involved be liable, and without the protections of limited liability?
The correct phrase would be "organized crime" or "criminal conspiracy". They're a prostitution/human trafficking startup billing themselves as the solution to human trafficking.
We facilitate sex work, yes. We do not support trafficking, we verify IDs first, and we will use pattern recognition to detect trafficking/pimps and ban them from our platform. This is not perfect, but it is a great improvement from where things are today: Backpage actively fighting to keep underage listings on their site!
We are very much open to hearing of suggestions on how to improve things. Let us know: humans@pinkdate.is.
This is such a great/terrible example of the absolute arrogance in the tech industry. I really do try to defend tech in general, but then something like this comes along.
Your claim is that you can enter into an industry literally thousands of years old and use a little algorithmic magic to prevent sex trafficking where the world's collective police departments have consistently failed. And it's all done by an anonymous bunch of dudes. Pretending that they have an "extrajurisdictional company". Which, yes, is a criminal conspiracy. Except conducted on the web, and funded by an illegal securities sale.
I am not pretending algorithmic magic will prevent sex trafficking. I am saying that, to the best of our abilities, we will ban it from our platform. At least for underage trafficking, by checking IDs we are already far better than classifieds.
So we will do our part to fight against and not enable trafficking. We are not a free-for-all marketplace.
That is the extent of my claims!
Police are ineffective because they do not control the marketplace, unlike us. If governments wanted to shut down trafficking they have the option to legalize and regulate. That would harm illegal operations.
Oh, so "pattern recognition" means you will... look at things? Gosh, how impressive. I'm sure that will get you really far when dealing with career criminals, as they have never really tried deceiving anybody before.
More accurately, you will do your part to fight trafficking as long as it doesn't get too much in the way of making money for yourselves and your investors. That is, people looking to profit off prostitution.
For the record, I'm entirely in favor of legalization and regulation. Which is why I think an international criminal conspiracy with a high-tech gloss is an absolutely terrible idea.
No, a company is any business organization. Corporations, partnerships, LLCs, etc., are particular legal vehicles, each of which is a kind of company. But a company need not have a particular legal vehicle.
Do you have a reference for that? I have never heard of a company that wasn't some specific legal vehicle. Wikipedia defines it specifically as a legal entity. It's not clear to me what a "business organization" means if it's not defined under law, in that it would otherwise seem to be a bunch of individuals coordinating their activities, not a formal entity in its own right.
Google's dictionary in search defines it as “a commercial business”, dictionary.com defines it as “a number of persons united or incorporated for joint action, especially for business”;
Wiktionary has both a business definition “Any business, whether incorporated or not, that manufactures or sells products (also known as goods), or provides services as a commercial venture” and a law definition “An entity having legal personality, and thus able to own property and to sue and be sued in its own name; a corporation.”
FindLaw’s law dictionary gives “an association of persons for carrying on a commercial or industrial enterprise”
> It's not clear to me what a "business organization" means if it's not defined under law
It's a vague, broad category; the law mostly concerns itself with more specific categories.
I agree what you're saying could be seen to fit inside some formal definition, although I'd see that as more a lacuna in a definition than proof.
Do you have examples of things that are talked about as companies that are not also legal entities? I have been reading the business press for decades, and I don't recall ever seeing it.
> Do you have examples of things that are talked about as companies that are not also legal entities?
Sole proprietorships are not legal entity. (Their owner is a “legal entity”, but the business itself is not separately.)
Partnerships were not generally legal entities in the US prior to states adopting 1997 revisions to the Uniform Partnership Act model law (only 37 of 49 states who adopted the original law, apparently, have adopted the 1997 revision); I'm not sure if any of the states that don't use the 1997 RUPA still don't make partnerships legal entities.
The rampant scam ICOs, nonsensical coins, and other funny business surrounding the cryptocurrency scene is practically begging for regulators to barge in.
Yet they haven't, despite the fact that this phenomenon has persisted for over a year. Either 1) regulators see some practical difficulties in enforcing regulation, or 2) there is some counter-incentive / counter-pressures / lobbyists forces out there deterring regulatory action. I wouldn't be surprised if these scams are allowed to go on for another year.
I'm not surprised. Two out of five of the top coins by market capitalization right now are fake crypto-currencies. Cardano literally doesn't exist at all yet and is a white paper and Ripple to be considered a crypto-currency requires a serious stretch of the imagination. Neither are mineable. Also we are approaching $2 trillion USDT floating around.
The number of ICOs I see being advertised all around the internet, all with the familiar marketing gimmicks ("coin for marijuana! celebrity founder!") makes me doubt pretty much every ICO.
I'm yet to see a single real-world use case for crypto. Pretty much everything is hinged on the "promise" of crypto.
BTC itself seems to have zero momentum in actually implementing it for payments. All the stories I see about it are about its price as an asset.
I see an analogy with prostitution: prostitutes get away with a lot of cheating, because their customers are embarrassed to report anything (except perhaps in countries where it's fully legal).
Therefore, a good rule of thumb is: the more embarrassing a service is, the more cheaters it will support.
Quite the opposite plenty of escorts get fucked around. That’s why they developed market solutions such as screening clients and widely used black lists .
I don't think this is mutually exclusive. Both parties cheat, because the topic is awkward and not treated seriously, especially in more conservative states.
True, I can't edit my comment, but yes it happens both sides. The nature of markets forced to be black. It's not mutually exclusive in any black market, both sides have to have self defensive tactics outside of the state.
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[ 4.5 ms ] story [ 175 ms ] threadHowever, this is weird: “Within hours they refunded me ethereum with a dollar amount equal to what I had contributed in early September, but since the coin has more than tripled in value since then, they kept the rest of my contribution, essentially stealing quite a lot of money from me.”
Yeah, that's bullshit. They owe you your money back, they don't owe you the gains that you would have gotten if you had speculated in Ethereum instead.
[edit: I've changed my mind. They bought an asset for $x in USD, they are owed $x in USD]
Do you know where this was posted? I'd love to read the wording.
Edit: so if that is indeed the scam then essentially the claim of wanting the returns on ETH is saying that the mark deserves them because the gains were ill gotten via transferring the risk to the mark.
* Buy some of coin X
* Use that to buy some cash equivalent good that has a return policy (longer the better)
* If X appreciates by the time the return policy is up, you return the goods, collecting the gains.
* If X depreciates you sell the goods for cash in USD which likely won't have varied much in the intervening time.
* Repeat, and you will have effectively captured 100% of the increase of X while completely derisked.
They would announce their miner, get massive presales in BTC, then 6 months later when customers are getting anxious they would start refunds. And, of course your refund is in the USD amount from your BTC at the price 6 months ago, not at current USD price. The miner company just stole your profits!
If they invested 1 eth token, give them back 1 eth token.
Depends on the contract potentially. It's why most larger business arrangements that could even possibly include such a refund (as part of the contract), will have specifications covering that. I'm curious what was in their agreement, if anything. For example, if it had a clause that allows for returning the dollar invested sum.
A court will usually find against you if you repay in a debased currency or similar however. If I tried to repay a loan, with no contract, in Venezuelan bolivars based on their former value on the date of the origination of the loan five years ago, that wouldn't get anywhere in a court of law, you'd lose easily.
All indications are that they're going to view these as securities.
But legally, ETH is not a currency. If they take this to court, the court will award the original USD price. They bought an asset worth $x. They are owed $x.
When we get away from this funny money "we're inventing currencies" bullshit, there is a law of the land. An asset was promised, and they are owed the value of that asset when purchased, in USD.
Legally I am with you 100% that the investors are out of luck. That's the price of "investing" in a highly speculative vaporware "currency".
That's not true at all, outside of very specific asset-classes.
A better analogy: let's say we make a trade where I pay you in land, and you don't give me what I'm owed in that trade. I would expect my land back, not its dollar-value.
We do things this way, in the case of land, precisely because my land might turn out to e.g. have gold under it that might make it worth 100x more. If you conned me out of the land, and then found the gold, guess what? That's rightfully my gold.
Refunds aren't legally equivalent to suing for damages. If someone doesn't give you a refund for breaking a contract where you transferred an asset to them, your legal fallback isn't suing for damages; it's suing to get a court-order to execute a seizure in order to reclaim your property, or the things it has in turn been traded for by the contract-breaker. (You know, like repo companies do when you buy stuff on a credit card and then let it go to collections!)
[1] https://www.irs.gov/taxtopics/tc703
https://thebusinessprofessor.com/knowledge-base/voidable-con...
In cases of fraud, the deceived party may also bring a tort, which is awarded in USD. But as for the actual contract, the court would rule that it never occurred, and so in the eyes of the law ownership of the ETH never changed hands.
It gets a little complicated with cryptocurrencies in that they effectively setup a separate ownership structure enforced by cryptography and independent of the laws of any one nation. So the court may rule that the Ethereum never changed hands and so still belongs to the original owner - but the blockchain says otherwise, and good luck convincing 51% of miners (many of whom are not U.S. citizens) that they should mine a transaction just to resolve this one case.
As an example, if I give a broker stock and then ask for it back, they have to give me the stock back, not the cash value at the time I handed it to them.
Also, I'd like to see what law you have in mind when you say ETH is not a currency. Is there some special legal recognition for "real" currencies? If so, what law specifically distinguishes them?
Not exactly an apt comparison.
Or is it "all privilege, no responsibility"?
As in - how many people are making gains declarations when they liquidate cryptocurrencies? Wanting protections of a system but refusing to participate in some aspects of it is much like having your cake and eating it too.
Nope. "Legal tender" means just that. If you want to be repaid in something other than a jurisdiction's legal tender, you have to specify that in the contract.
Disclaimer: I am not a lawyer. This is not legal advice.
The term you are looking for is "legal tender". That's the thing that has the property that if you pay your debt with it, the debt is considered settled. US$ is legal tender, but ETH is not. Of course, one could try to sue for fraud and lost profits and stuff, and may even win if by some weird chance the contract specified refunds in ETH, but then good luck collecting on that judgement. More likely, contract didn't, and then tough luck.
as ETH is a volatile cryptocurrency and not US legal tender at all, while USD is the exact opposite: a fiat currency considered legal tender not only in the US but worldwide.
That's a huge "if".
You lend me 1,000 USD and then demand it back 12 months later. Can I give you 1,000 euro or 1,000 swiss francs instead? I doubt it. You'll want 1,000 USD back, or at least the equivalent to what $1,000 USD is worth now.
So they should have provided ETH back, but didn't because it went up in value. Super dodgy and very convenient. I bet they would have provided it back in ETH had the value per coin fallen.
Both EUR and CHF are currently worth more than USD, so that might not be the ideal example to make your point.
Assuming the euro gained 10% value in the interim, are you claiming as an investor before the investment vehicle was realized that you are rightfully owed $1100? Or the corollary, had the Euro tanked to 10% of value, would you accept $100 back without complaint?
I think you are conflating investment and ownership.
That grown value in Euros is value grown inside a corporation and either you own some of it, in which case you will get dividends, or you made an investment with some limited risk in which case it's your investment value that is relevant. I believe if someone lost your money without completing the terms of investment you would have legal recourse.
Had the ICO people given worthless ETH back they could have been sued for the difference, investment terms willing, IMO as a non-lawyer.
Consider the equivalent situation in ForEx terms: you pay a Mexican company $10 USD for a product, and then, six months later—when the value of USD/MXN has gone up—you ask for a refund. You'd expect back $10 USD, right? Not some amount of USD equivalent to the amount of MXN $10USD would have bought six months ago.
In this case, they paid in in ETH. So you'd expect that ETH in at point-of-sale, would equal ETH out at point-of-refund. That would be giving the investor their money back—money denominated in ETH.
That's how this works. You can call things currencies but that doesn't make it so, the legal system is an arm of he state, and states have one kind of currency, they get to decide what it is, and the they have guns and jails if you don't like it.
Say I'm dealing with a subsidiary of a Mexican corporation that operates in the US. They ask for payment in MXN, but both they and I know they're going to send it to their parent corporation, converting it to MXN in the process. They and I also know that, to get the refund, they'll have to pull MXN out of their treasury and convert it back to USD. But I still did pay USD to the subsidiary—my card didn't automatically convert USD to MXN to pay them or anything.
I would expect, in this case, that my refund should happen from the subsidiary, and should be the original USD I transferred, even if that now costs them more to convert back than it was worth going in.
However, I would also expect that if the corporation entered bankruptcy, and was unwinding its debt obligations, then I, as a creditor, would probably only see the current MXN value of the parent corporation's liability to me. (Or rather, the subsidiary—who owes me the money—would unwind with no assets held to pay out, so I would then sue the parent corporation for said assets, and end up with MXN.)
Yeah, that's bullshit. They owe you your money back, they don't owe you the gains that you would have gotten if you had speculated in Ethereum instead.
I agree. If it had gone down instead of up, he'd have kept his trap shut on this matter instead of being upset.
I agree. I wonder if the average take of each new ICOs is decreasing as awareness of then generally being scams increases?
If he had just come out and said 'give me Ethereum and I'll give it back in 6 months at the same USD exchange rate' there are a non-zero number of people who would have taken him up on that, maybe even paid for the service.
Here you can raise a tremendous amount of capital, given that the majority of seed rounds are $500k-$3MM, and with an ICO entities are raising tens of millions of dollars to build something that again has no actual working mvp to show usage.
Doesn't really seem like a sound investment ;)
Tokens have already been in use for a long time with chat sites, I suppose if one of them decided to re-create their tokens on the blockchain and offer an ICO they could make more money during this period than actually operating their service.
At least that would have some basis in reality in that there is an existing site that is generating revenue, profit, and visitors.
You're conflating the economics of currencies with the economics of companies.
If enough people make Pascal’s Wager, then god effectively exists.
That has been in use by companies for quite some time, just that the tokens were primarily used to actually work with the companies service, rather than trade them as an independent entity.
Of course if there were no "blockchain" they would simply issue tokens like everyone has in the past, where you exchange money to get a token, that you can use in the app, and that token is locked into that app. So you can't use it elsewhere, but it still has some value as long as the app and users exist since you can sell your tokens to other people if you no longer need them, assuming that transferring of tokens is allowed / acceptable.
But then it wouldn't be block chain, and it wouldn't get any hype =]
Games have been using this for years and years, so there's really no difference here.
One side likes to point out the internet bubble, the other side likes to say well look at the internet now. What's missed though is the massive companies that were built in the middle, that really changed our daily lives. Amazon, Google, Facebook, Apple, etc, these companies changed how we live our lives and then Banks and everyone else realized the benefits of offering connected services directly to a PC or a phone and again there were tremendous benefits to consumers and end users.
At the moment, there is no benefit, outside of a large remittance and some tax avoidance that can be accomplished through cryptocurrency, and certainly there's no functional product company in the crypto space, outside of the exchanges which make money through people simply trading currencies, but returning no real value back to the world.
In the end, we decided to go along with the ICO terminology because it was too hard to fight perception. We still do the right thing: We're selling an unregistered security, shares in our company, and will pay dividends.
In short though, people trying to do the right thing are punished, and the people that overhype and do the ridiculous approach are highly rewarded.
I am wondering if 2018 will bring a deflation, maybe even a burst to the crypto bubble. It's all fairy dust right now anyway.
Fiat currencies today are issued and backed by governments. When the government fails and the country falls into deep debt or other issues, they currency becomes devalued.
So everything is ultimately backed by something to an extent. In this case if it's an ICO it is used for transact with this company on their product, which is the underlying backing. So if the company falls apart, it would stand to reason that the coin would drop in price, since it isn't backed by anything.
Not saying they are the same, simply pointing out that there is a link.
You can also look at the currencies of countries and their value compared to other currencies when they go through various economic turmoil.
There are three types of money: central bank reserves, physical currency and commercial bank money. The U.S. government (Fed and Treasury, respectively) directly controls the first two down to the cent. Commercial banks "make" the final one, but to get the right to do that they have to agree to Federal Reserve jurisdiction (internationally, this happens with central banks entering into swap agreements with the Fed, i.e. opening "accounts" with the Fed into which the Fed deposits U.S. dollars whose--since this needs to be said--quantities it gets to track).
A common misconception, but incorrect [1]. The Federal Reserve was created by an act of the Congress in 1913 [2]. Part of the confusion arises from private banks holding "shares" in their respective regional reserve banks. These "shares" are less "share of stock" than "you are regulated by us" membership accounts with an archaic label.
The history you mention, of a private organization gradually falling under the purview of public regulation, is closer to that of the Bank of England's [3].
> who lend money to the US treasury at interest paid as dividends
American banks are required to hold a lot of their capital in safe assets, i.e. U.S. Treasuries and things that look like Treasuries. So yes, banks lend money to the government and then get back interest. If you'd like, you can do this too [4].
[1] https://www.frbsf.org/education/publications/doctor-econ/200...
[2] https://en.wikipedia.org/wiki/Federal_Reserve_Act
[3] http://www.intriguing-history.com/bank-of-england-history/
[4] https://www.treasurydirect.gov/indiv/research/indepth/tbills...
"For each cryptocoin, a unique software protocol and accompanying network was necessary to enable its implementation, and as people saw the high incomes achieved from sales to fiat currency, mining and transaction fees, coin proposals came to be put forward by investors interested in profiting from coins, at least as much as by developers seeking to facilitate egalitarian movement of financial value and flexible independent storage of wealth.
In a further development, there was often out-and-out speculation, in which people would try to buy coins in a newly created coin simply to sell them on for an immediate profit, regardless of whether the network was ever profitable, or even built. During this period of "coin mania", huge sums were invested in coin infrastructure, and although many schemes came to nothing, the coin system rapidly expanded to nearly 4,000 coins in everyday circulation."
Inspired by the original;
https://en.wikipedia.org/wiki/History_of_the_British_canal_s...
For each canal, an Act of Parliament was necessary to authorise construction, and as people saw the high incomes achieved from canal tolls, canal proposals came to be put forward by investors interested in profiting from dividends, at least as much as by people whose businesses would profit from cheaper transport of raw materials and finished goods.
In a further development, there was often out-and-out speculation, in which people would try to buy shares in a newly floated company simply to sell them on for an immediate profit, regardless of whether the canal was ever profitable, or even built. During this period of "canal mania", huge sums were invested in canal building, and although many schemes came to nothing, the canal system rapidly expanded to nearly 4,000 miles (over 6,400 kilometres) in length.[1]
It's all gone a bit crazy recently and it's hard to see through the noise, but I do believe that something will come of this technology!
All these ICOs are pump and dump schemes at best. This guy just seems to have ditched the formalities and simply stolen the money.
On its face . . . just the idea . . . how could anyone look at that one, out of all of the ICOs out there, and not think twice before sending in their money?
[1] https://www.bitfinex.com/t/SPK:USD
It happens at a disturbing rate these days. Is it just me growing old(er), or is the world really becoming more and more unreal?
Of course, we are not a typical ICO. We are selling an unregulated security: equity in our company and we will pay dividends. We are only going this route because we are an extrajurisdictional company and traditional fundraising is incredibly difficult for such a setup.
Without a legal company, it would seem that under the law you are just some individuals conducting business. Is that not the case?
It won't shut down the operation because a successor will restore from backups and move on. But it will make me unhappy.
Yes that is accurate. This endeavor relies on me getting our opsec right.
We are very much open to hearing of suggestions on how to improve things. Let us know: humans@pinkdate.is.
Your claim is that you can enter into an industry literally thousands of years old and use a little algorithmic magic to prevent sex trafficking where the world's collective police departments have consistently failed. And it's all done by an anonymous bunch of dudes. Pretending that they have an "extrajurisdictional company". Which, yes, is a criminal conspiracy. Except conducted on the web, and funded by an illegal securities sale.
It of course brings to mind this classic bit from the Wire: https://www.youtube.com/watch?v=pBdGOrcUEg8
I am not pretending algorithmic magic will prevent sex trafficking. I am saying that, to the best of our abilities, we will ban it from our platform. At least for underage trafficking, by checking IDs we are already far better than classifieds.
So we will do our part to fight against and not enable trafficking. We are not a free-for-all marketplace.
That is the extent of my claims!
Police are ineffective because they do not control the marketplace, unlike us. If governments wanted to shut down trafficking they have the option to legalize and regulate. That would harm illegal operations.
More accurately, you will do your part to fight trafficking as long as it doesn't get too much in the way of making money for yourselves and your investors. That is, people looking to profit off prostitution.
For the record, I'm entirely in favor of legalization and regulation. Which is why I think an international criminal conspiracy with a high-tech gloss is an absolutely terrible idea.
No, a company is any business organization. Corporations, partnerships, LLCs, etc., are particular legal vehicles, each of which is a kind of company. But a company need not have a particular legal vehicle.
Google's dictionary in search defines it as “a commercial business”, dictionary.com defines it as “a number of persons united or incorporated for joint action, especially for business”;
Wiktionary has both a business definition “Any business, whether incorporated or not, that manufactures or sells products (also known as goods), or provides services as a commercial venture” and a law definition “An entity having legal personality, and thus able to own property and to sue and be sued in its own name; a corporation.”
FindLaw’s law dictionary gives “an association of persons for carrying on a commercial or industrial enterprise”
> It's not clear to me what a "business organization" means if it's not defined under law
It's a vague, broad category; the law mostly concerns itself with more specific categories.
Do you have examples of things that are talked about as companies that are not also legal entities? I have been reading the business press for decades, and I don't recall ever seeing it.
Sole proprietorships are not legal entity. (Their owner is a “legal entity”, but the business itself is not separately.)
Partnerships were not generally legal entities in the US prior to states adopting 1997 revisions to the Uniform Partnership Act model law (only 37 of 49 states who adopted the original law, apparently, have adopted the 1997 revision); I'm not sure if any of the states that don't use the 1997 RUPA still don't make partnerships legal entities.
I'm yet to see a single real-world use case for crypto. Pretty much everything is hinged on the "promise" of crypto.
BTC itself seems to have zero momentum in actually implementing it for payments. All the stories I see about it are about its price as an asset.
Therefore, a good rule of thumb is: the more embarrassing a service is, the more cheaters it will support.