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Headline is misleading: the founder has threatened to doxx and report them to the IRS if they don't return funds which according to the Compound protocol, they
by qeternity 5y ago
Headline is misleading: the founder has threatened to doxx and report them to the IRS if they don't return funds which according to the Compound protocol, they rightfully own anyway.
Notch it up to another first for crypto.
- ed_elliott_asc 5y agoCan’t the people who have the money just pay the tax themselves? Seems like the easiest way to keep the money and stay on the right side of the threat?
- hef19898 5y agoSo it would seem. EDIT: Also profitable, taxes should be less then 90%. Just out of curiosity, isn't DeFi motivating users to defraud the IRS by promising 10% without reporting it as income? EDIT: Come to think of it, if they are offering 10% without reporting to the IRS, which is obviously less than after taxes, would it be reasonable to assume all revenue / profits have not yet been reported to IRS as revenue?
- nikanj 5y agoCryptos used for tax evasion!?
- hef19898 5y agoWho would have thought, right?
- dangerface 5y agoHow tho? How can i get my crypto into dollars without paying tax or using an offshore business that facilitates the tax evasion.
- pc86 5y agoYou're probably unlikely to have anyone knowledgeable lay out the exact means by which crypto can be used to evade income taxes, but it's a pretty well known that it's used that way.
- dangerface 5y agoThey setup a company in an offshore country like vanuatu and use an offshore bank to change the crypto into dollars avoiding capital gains tax etc, but its the offshore company and bank that facilitates the tax evasion. Just because every one thinks they know how it works doesn't mean they know how it works, thats why I am questioning it. The truth is its pretty well known how tax evasion works but it doesn't use crypto.
- joshmarlow 5y ago> it's a pretty well known that it's used that way. Michael Morell, a former acting director of the CIA, has some things to say about the use of BTC in crime: > Based on our research and discussions with industry experts, I have confidence in two conclusions: • The broad generalizations about the use of Bitcoin in illicit finance are significantly overstated. • The blockchain ledger on which Bitcoin transactions are recorded is an underutilized forensic tool that can be used more widely by law enforcement and the intelligence community to identify and disrupt illicit activities. Put simply, blockchain analysis is a highly effective crime fighting and intelligence gathering tool. Source: https://casebitcoin.com/story/former-cia-director-finds-bitcoins-use-in-illicit-finance-to-b https://casebitcoin.com/story/former-cia-director-finds-bitc...
- deleted 5y ago[deleted]
- vmception 5y agoLeshner isnt the “CEO of DeFi” and Compound doesnt represent anything either. Why even bother trying to make a mountain out of a molehill? You are building on a red herring. Anyway thats a lot of idioms
- TedDoesntTalk 5y agoIt’s not revenue and not reportable until you exchange the tokens for fiat currency (I.e. sell it)
- ABeeSea 5y agoThat is completely wrong. Income is anything of value, not just cash. If you find a gold nugget in your yard, you have to pay taxes on the value of the gold even if you never sell it.
- bildung 5y agoThis all depends on juristication. You are correct if you implied the US AFAIK, TedDoesntTalk is right in e.g. Germany.
- deleted 5y ago[deleted]
- qeternity 5y agoYep, nothing stopping anyone from keeping the funds. But we've seen other shenanigans in the past (forks, CEX involvement, etc) to paper over these mistakes.
- bostonsre 5y agoCould the users sell now if they haven't already?
- deleted 5y ago[deleted]
- snarf21 5y agoI thought crypto was censorship resistant? /s
- wyager 5y agoRandom DINO shitcoins certainly aren't.
- noasaservice 5y ago> Headline is misleading: the founder has threatened to doxx and report them to the IRS if they don't return funds which according to the Compound protocol, they rightfully own anyway. That has strong implications the company is not reporting properly to begin with. Wouldnt be a first for the capitalist class, but using your legally required tax as blackmail is... well.. Interesting.
- farmerstan 5y agoI’m pretty sure if I worked for the IRS I would be visiting that company immediately and making sure they are reporting everything properly. Those users will be doxxed anyway, they should just keep the money since they are on the hook for it anyway now.
- jliptzin 5y agoIf someone accidentally wires you too much money, or wires money to the wrong account, is it not illegal to keep the money?
- easytiger 5y agoThat's certainly the case in the UK at least
- elliekelly 5y agoUsually, yes. But banks have a process for reclaiming funds that have been incorrectly wired so it’s pretty unusual for the “legality” of it to be litigated.[1] Blockchain has no such process. By design. [1] A recent high-profile example where the facts and circumstances meant the wrongly wired funds were legally kept by the recipient: https://www.theregister.com/2021/02/19/citibank_money_mistake/ https://www.theregister.com/2021/02/19/citibank_money_mistak...
- gitfan86 5y agoMost things in life are a tradeoff. You can't just get rid of 100% of bad things about regulation and keep 100% of the good things about regulations. It reminds me of people who start open relationships. The upside sounds great, but there is a huge potential for downside and you may not fully appreciate that until it happens.
- silexia 5y agoYet another example of how the speculative bubble of crypto is mostly a scam at this point. Just imagine a bug that granted far more than was granted here. How many of us write software that has occasional bugs? Do you really want to trust your net worth that a software bug won't blow you out of the water?
- perryizgr8 5y agoNot always. Remember the Citibank Revlon case? https://www.cnn.com/2021/02/16/business/citibank-revlon-lawsuit-ruling/index.html https://www.cnn.com/2021/02/16/business/citibank-revlon-laws...
- bostonsre 5y agoPaying taxes on free money isn't the end of the world.
- pawelmurias 5y agoIt's likely those people might already have had a fuck ton of preexisting free crypto-pyramid scheme money lying around.
- ashtonkem 5y agoIt’s not, but “give us our money back or we’ll report you to the IRS” strongly implies that they were willfully assisting in tax avoidance before. It might even legally be blackmail, if they’re aware of any crimes their customers have committed.
- yial 5y agoI think that trying to obtain goods or services through threat of initiating criminal proceedings is usually illegal. Wash. Rev. Code §§ 9A.56.110, 9A.56.130, 9A.04.110 For example
- dnautics 5y agofounder is clearly an asshole but "reporting it as income to the IRS" probably doesn't count as "threat of initiating criminal proceedings" as it's likely something that they are enjoined to do anyways.
- runnerup 5y ago> something that they are enjoined to do anyways. Indeed, this is the key to make it "not blackmail".
- duxup 5y agoAmusing as the founder then would be outright saying he knows what criminal activity has been going on and exactly who is up to it ... and is willing to use that info if he see fit. That would seem to present all sorts of risks for his users, and himself, legal and otherwise.
- Hamuko 5y agoAre all of the suppliers Americans if he's threatening them with the IRS? Also, I wouldn't mind paying taxes on some free money since I still get to keep 66% of it.
- NovemberWhiskey 5y agoEhh, technically any transfer to another where full consideration is not received in return (in either money or money's worth) is a gift. And taxes on gifts are presumptively payable by the donor, not the recipient. Disclaimer: not tax advice, YMMV etc.
- kwertyoowiyop 5y agoI love this thread! And what are the rules for unintended gifts?
- ars 5y agoThe same. You can return or throw out the gift if you don't want it. If you keep it, and it's over the taxable limit, you have to report it and pay tax.
- NovemberWhiskey 5y agoPlease explain why you think the recipient of a gift is the one that has to pay tax on it.
- dnautics 5y agois this generally not understood? For example, if you go on price is right, and you win a nice trip to tahiti, you still have to pay tax on it.
- NovemberWhiskey 5y agoIf it's generally understood, then it's wrongly understood: https://www.irs.gov/businesses/small-businesses-self-employed/frequently-asked-questions-on-gift-taxes https://www.irs.gov/businesses/small-businesses-self-employe... "Who pays the gift tax? The donor is generally responsible for paying the gift tax." >For example, if you go on price is right, and you win a nice trip to tahiti Those are prizes or winnings, not gifts. Totally different tax treatment.
- paulpauper 5y agowhat a weak threat. he should threatened to report the funds to exchanges to be blacklisted, that would be far worse. Technically, they would not pay anything unless they sold it for cash anyway.
- EveYoung 5y agoDoesn't blacklisting funds go against the main idea of a decentralised crypto currency? What's the point of replacing the traditional banking and monetary system with something where funds could be devalued by the decisions of a few individuals?
- cowvin 5y agoYep, crypto is more or less the same as traditional finance in this sense. A few powerful individuals already control a disproportionate amount of the crypto world. Like the sketchy folks who run Tether and Binance at the same time. Or Elon Musk tweets raising and lowering the value of Bitcoin by a significant amount. Even Bitcoin itself is largely held by just a few people. It's just another tool for billionaires to get even richer.
- mdoms 5y agoAs it turns out most users of decentralized currencies don't actually want decentralized currencies when they get a taste of what that really means.
- dragonwriter 5y agoThere's two possibilities: * it was paid under the terms of a valid contract and need not be returned, and therefore is income (as this rests on the existence of a contract embodied by the protocol, it is not a gift, but an exchange for value.) * it was an error and must be returned. This seems to be an offer to settle for the former treatment if the recipients refuse the offerers claim that the latter is correct.
- BTCOG 5y agoThis is nowhere near the first time that this has happened. There have been numerous folks to find bugs in smart contracts around the DeFi/ETH contract space, millions taken "by the code" and owners threatening and throwing various forms of shade, and even offering the exploiters job positions, reneging on said positions, etc.
- NelsonMinar 5y agoCryptocurrencies: all about being libertarian and avoiding government authority right until you need to threaten someone to get your money back.
- masklinn 5y agoTo be fair threatening people when they don’t do what you want is very libertarian.
- 988747 5y agoThreatening that someone with a baseball bat, or a gun would be libertarian. Threatening with reporting them to a government institution is ironic.
- wyager 5y agoShitcoiners are almost completely disjoint from libertarians. Every libertarian I know is only interested in Bitcoin and maybe Monero.
- mfer 5y agoIt’s more complicated than that. Aren’t they required to report this to the US gov? When someone takes out out they would trigger capital gains.
- dathinab 5y ago> which according to the Compound protocol, they rightfully own And that is one of the biggest misconceptions of crypto stuff. Law and contracts (1) determine who owns what, not who happens to currently hold it. That's why the founder can threaten them with the IRS, because they (likely(1)) do not rightfully (as defined per law) own it. This is also why NFTs are kinds stupid, because you totally can sell someone a NFT which "claims ownership rights" without selling them any ownership rights legally seen. Sure it's most likely fraud as you deceived people, but only if. So telling people you sell them the NFT but not the think behind the NFT would make that pretty legal. Like you can sell a certificate about the correctness/quality of a picture without selling (or even having) that picture. (1): Smart contracts are not contracts, they are computer programs. They might also contain contracts, but that doesn't mean that just because something is done in a certain way in a smart contract it is legally binding, legal, or anything (Well, that's also true for contracts themself).
- Qub3d 5y agoThis puts to words the uneasy feeling I've had towards NFTs. The thought experiment that made this concrete was a sort of reductio ad absurdem: Let's say for a moment that NFTs win worldwide support and begin to be used as proof of ownership for everything. As part of this movement, the Louvre registers an NFT signature for each item in their collection. Now, let's say a nefarious actor manages to use social engineering and convince a naive Louvre curator to transfer the NFT ownership of the Mona Lisa. This bad actor promptly goes to Sotheby's and asks them to list "his" Mona Lisa for sale. --- Of course, the Mona Lisa would not go anywhere. The French government would never allow it. This is an extreme example but can be walked back to less and less valuable items: would this work for an NFT of a house, a car, a computer, etc? Unless the state decided to universally and with no exceptions enforce ownership of NFTs, they are ultimately worthless.
- pavel_lishin 5y agoThis isn't completely unlike a deed to a house. People have conned folks out of their deeds to properties, and sometimes the transaction is upheld and the bad actor gets to move into a house, and sometimes the transaction is recognized as invalid, and nobody gets kicked out of a house they've paid for.
- floatingatoll 5y agoThe founder has declared that they are not reporting financial transactions to the IRS that would be of material interest to the IRS, and noted that they will consider providing that material to the IRS only if their conditions are met. It seems likely the IRS will subpoena them for the data regardless, and potentially seek conviction of tax fraud. While I ironically enjoy that he thought the best way to intimidate cryptocoin people was to threaten them with taxation, it does highlight cryptocoin's primacy as a way to acquire nation currency without paying taxes on it.
- 99_00 5y agoDoxing is publicly publishing private information. Reporting someone to legally bound authorities is not doxing. Relying on trigger words and sensationalistic language is a tell for a weak argument/stance.
- betwixthewires 5y agoI like crypto, and decentralized finance is interesting, but I find it quite telling that users are being threatened with having to pay taxes as retaliation.
- allen3 5y agoGiven the IRS backlog on nearly everything I doubt this gets resolved by the IRS.