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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 app
by BWStearns 9y ago
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.
- pbiggar 9y agoGood point. Yet another reason to stay the fuck away from this space.
- BWStearns 9y agoThis also makes me wonder about another "scam". * 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.
- asperous 9y agoNo one will return you the original number of BTC for refunds for this reason. But if they did then this would work.
- BWStearns 9y agoThe hardest part of that would definitely be finding the counterparty.
- taurath 9y agoI’m sure there’s a government or two that insists paying back exact currency amounts.
- tyingq 9y agoThey would if BTC had dropped in value though. That's the rub. They choose the refund currency at refund time.
- deleted 9y ago[deleted]
- 0x00000000 9y agoScenario 3: ETH crashes hard and is worth close to nothing so you refund the ETH amount that people invested. Basically zero net loss!
- klipt 9y agoBasically, they got investors to give them call options on ETH for free.
- loudandskittish 9y agoIsn't that basically how short-selling works?
- BWStearns 9y agoThe 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.
- pishpash 9y agoIn straight short selling, no you don't. Your broker gets paid though.
- BWStearns 9y agoBut 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.
- socialist_coder 9y agoThis 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!