"Your honor, my client did not defraud the plaintiffs with a financial crime. It was a parody financial crime but the plaintiff mistook the parody for sarcasm and genuinely bought the parody product. This case should be dismissed based on the parody financial crimes precedent set by Virginia v. Horwitz Brothers"
I called the SEC last year and selling a coin claiming it'll go up in value without registering as a security is illegal, even if it's a joke. Even if you don't say it'll go up in value but people believe it will, it's illegal.
I'm sure there are legal implications of running a Ponzi scheme too. I'm positive that telling someone about the illegal thing you're doing does not absolve you of responsibility.
> I'm sure there are legal implications of running a Ponzi scheme too. I'm positive that telling someone about the illegal thing you're doing does not absolve you of responsibility.
In the specific case of a Ponzi scheme, which by definition is a scam where “investors” are decieved as to the nature of the operation, disclosing the mechanics make it not a Ponzi.
It does seem to still be an illegal pyramid scheme, though it doesn't rely on an entrants recruiting their own downline, instead having a shared downline.
Yeah I'm a lawyer and we represent ICOs and have defended various blockchain crypto clients in admin actions and SEC problem. Looks like I'll have a new client soon!
Not to mention the author also seems to work at Stripe (a financial institution). I hope they would have a good enough sense of humor to take it as a joke only.
(Also not a lawyer) But, I've wondered about this with various other cryptocurrencies + ICOs. They all seem have TOS clauses that give them very generous outs and that are often in direct conflict with their marketing messages.
In most US jurisdictions, gambling is generally prohibited, though there are generally some specific exceptions (often with licensing requirements). So...probably. But this seems to be illegal independently of gambling laws.
> The problem with ponzi schemes is the fraud. It is not the gambling part of it.
Pyramid schemes that aren't Ponzi schemes are also illegal; while it's called PonziCoin, it's actually more of a (passive) pyramid scheme.
A Ponzi scheme cannot be transparent; if it's transparent, it's probably a pyramid scheme. A Ponzi is something where the victims are duped into believing there is something else being invested in, while early entrants are paid with funds from later entrants; a pyramid scheme is where the early entrants know their money comes from later
entrants (and usually, though this isn't critical, are actively involved in recruiting.)
Clearly this person has minimal experience in fraud, this is a horribly set up ponzi scheme. The investors can make a profit purely with their own actions, and remove any ETH that is currently in there. I thought about doing it, but don't feel like getting into cryptocurrencies and putting up $30K to get a positive return.
The way you can rip this off is buy a bunch of coins at once, push up the value, and then sell them all. You have to buy a maximum of 400 PonziCoins before you can start making a profit, but then the more you buy, then cash out, the more profit you make.
This is if the current price is .02 ETH per PC, which I've heard it's not anymore.
Worst case scenario is the price has just gone up, and you need to buy 100 PC to make the price double. But immediately you can sell for half your cost, instead of 1/4 because you made the price double. Do this again, but now you have twice the number of coins to sell, you are already breaking even on your first batch. Next round you make money on your first batch, break even with the second, lose with the third. But the fourth round you are making so much from the first and second rounds, breaking even with the third, and only losing half of your fourth, that you come out ahead.
You can't make money forever, you will just take all ETH that has been put in before, which will be a small amount. Then nothing is left and it will be bankrupt until someone else puts money in. But it's a guaranteed way to get your own money back, if you can afford to go at least 4 rounds, if it works exactly as the site says, and if no one cashes out coins before you do. The risk is that someone waits and cashes out after you put your money in and before you have cashed out, you have to do your transactions all at once to be successful.
I don't know how this works behind the scenes, I don't advocate for any of this, and I won't be trying it myself. I also am a little disappointed to realize I may have provided the best argument yet to make this thing go. So don't put your money in there, you are probably going to lose it.
> This has gotten crazy out of hand, I apologize but we will no longer be selling PonziCoin on this site because this was a joke. I cannot terminate the contract but I will not be selling any coins that I own.
The Buy button is disabled on the site. Also, if you checked the eth contract you will see it has basically $0 in it, down from over $175,000. I think what happened is that the BUY button was disabled on the site, the message added, and then people started dumping their coins and it was all gone.
Etherscan has an option for linking the source [1], in which case they compile it and verify the result against the bytecode that's publicly available.
Edit: the source itself is based off of [2]. The custom part is ```contract PonziCoin...```. It's well written in the way that all Solidity code is well written...
Great news. I have always believed Ponzi and alike schemes should be as legal and available as any other kind of gambling and lottery as long as the people introduced are well informed abut the nature of the scheme and the risks it means. I know some people who had participated in a distributed Ponzi scheme consciously and with notable success while I don't know a single person who had won anything above $2 in a lottery.
> I know some people who had participated in a distributed Ponzi scheme consciously
Unless they were running the scheme, it can't have been a Ponzi if they, as participants, were aware of its structure. Presumably, you mean a pyramid scheme.
Yes, a pyramid scheme, but Wikipedia still calls it a Ponzi scheme. I mean this one: https://en.wikipedia.org/wiki/MMM_Global I don't recommend it, I also know many people who have lost their money of course though I still think it's much better than a lottery: the whole thing about profiting from it is investing humble amounts you can afford to loose and withdrawing at the right moment, that's a lot like fishing or trading BitCoins.
Arrest founders, freeze exchanges and seize their ether or cash proceeds of ether sales recently completed. Subpoena their records and trace ownership to natural persons; if they don’t surrender their ether or pay a fine they go to jail. Trace IP addresses to scare a few more people; rinse and repeat periodically. Bonus points if you do it only for ether, thereby giving people an exit to other cryptocurrencies and allow people to voluntarily surrender ether for a token, capped tax write-off.
The U.S. government has lots of experience thoughtlessly banning things in an overreaction, and with limited exceptions (e.g. the war on drugs) it’s more or less worked.
The Ponzi schemes on Eve Online only pay out ISK, which is an in-game currency. Is that illegal? ISK is basically pegged to real-world currency through the sale of game-time codes.
I mean, a real decentralized ponzi should not have a centralized founder. It should randomly reassign the owner of the contract (is that possible?) or at least the premined to a random member.
Contracts don't have a native concept of ownership, but you can code access controls that are keyed to a variable that contains the allowed account address.
I made a spreadsheet to figure this out and the reason I dont mention that risk more is that is only at risk of happening after around 900 tokens are sold - until then the contract will always enough ETH. If 900 tokens are sold, the contract will have over $100k worth of ETH which I really hope never happens.
It could be emptied out after 400 coins, not 900. If there is already money in there it would take a little more, not much. Unless my math is wrong. https://news.ycombinator.com/item?id=16226641
Reproduced here with more columns, assuming initial price of .02 ETH per coin:
Any lawyers want to weigh in on whether you have some sort of first-amendment right to parody crimes?