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BitConnect Closes Exchange as States Warn of Unregulated Sales

(www.bloomberg.com)
389 points JumpCrisscross | 42 comments | 17 Jan 18 01:04 UTC | HN request time: 1.232s | source | bottom
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ve55 ◴[17 Jan 18 01:56 UTC] No.16164829[source]▶
For those unaware, Bitconnect was a Bitcoin-based ponzi-scheme that had operated 'successfully' for quite some time. I don't say 'ponzi' as an insult in the way some do for cryptocurrencies, it was quite literally just a bare-bones ponzi scheme, where you deposit your money (Bitcoin) on their website, buy their token, 'lock' your funds for some amount of time, and you are promised very high interest rates while encouraged to re-invest your returns.

What has happened today is Bitconnect has closed the exchange on their website, and so users flocked to some of the only other exchanges (of dubious reputation, since no reputable exchange wanted to list the BitConnect coin) in order to sell their now-worthless tokens, resulting in losses of around 90% today: https://coinmarketcap.com/currencies/bitconnect/

Many famous Youtubers and other individuals with influence convinced hundreds of people to put their money into BitConnect in order to profit off of referrals, leading to a lot of unfortunate losses and a lot of delusion and misinformation among devoted investors. The general sentiment towards those that lost money due to BitConnect has been a mocking attitude in the cryptocurrency investment communities, as BitConnect has been referred to by many as a blatant ponzi scheme for months.

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JumpCrisscross ◴[17 Jan 18 02:03 UTC] No.16164865[source]▶
> Famous Youtubers and other individuals with influence convinced hundreds of people to put their money into BitConnect in order to profit off of referrals

If you lost money in this scheme and are in the United States or Canada, contact your state securities regulator [1]. Mention any such referral sources. Those individuals may be liable for securities fraud under state and federal law.

If you're in the United States, send a copy to the SEC [2]. If you lost more than a token amount, I would also recommend contacting an attorney.

[1] http://www.nasaa.org/about-us/contact-us/contact-your-regula...

[2] https://www.sec.gov/complaint/select.shtml

Disclaimer: I am not a lawyer. This is not legal advice.

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1. closeparen ◴[17 Jan 18 02:36 UTC] No.16165014[source]▶
Doesn’t fraud require deception? Wasn’t this pretty upfront about being a Ponzi scheme?
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2. Iv ◴[17 Jan 18 02:46 UTC] No.16165061[source]▶
To have that line of defense, the youtubers would have had to phrase their claims very carefully. I am willing to bet a fistfull of dogecoin that this was not the case of all of them.

Make them discover these actions have consequences, I can only see good sides to this.

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3. JumpCrisscross ◴[17 Jan 18 02:51 UTC] No.16165083[source]▶
> Doesn’t fraud require deception?

Ponzi schemes are illegal [1]. Receiving transaction-based compensation to promote a Ponzi scheme is the likely securities fraud.

[1] http://www.acfe.com/ponzi-schemes.aspx

Disclaimer: I am not a lawyer. This is not legal advice.

4. JumpCrisscross ◴[17 Jan 18 03:28 UTC] No.16165228[source]▶
> the youtubers would have had to phrase their claims very carefully

Ponzi schemes are one of those things you can't disclose your way out of.

Sort of like HIPAA [1]. If you violate HIPAA, "we disclosed our non-compliance to the patient" is an inadequate--and borderline aggravating--excuse.

[1] https://en.wikipedia.org/wiki/Health_Insurance_Portability_a...

Disclaimer: I am not a lawyer. This is not legal advice.

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5. everdev ◴[17 Jan 18 05:47 UTC] No.16165764[source]▶
Ponzi scheme work because people believe the fraud (promise of high returns).

If they said, deposit your money and we'll pay you back only if enough people after you also deposit their money then you'd have an interesting point, although I'm sure it's still illegal even if you announce your intentions before doing something illegal.

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6. conanbatt ◴[17 Jan 18 06:11 UTC] No.16165846[source]▶
> Ponzi scheme work because people believe the fraud (promise of high returns).

Lotteries work the same way and are legal.

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7. haimez ◴[17 Jan 18 06:49 UTC] No.16165990{3}[source]▶
Lotteries are also illegal to operate privately, which makes them completely irrelevant to this conversation.
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8. roel_v ◴[17 Jan 18 07:10 UTC] No.16166074{3}[source]▶
Remind me, because your comments in this thread don't make it quite clear to me - are you a lawyer? Is this legal advice?
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9. Marazan ◴[17 Jan 18 08:26 UTC] No.16166361{4}[source]▶
I believe the reasonable person test would result in a court coming to the conclusion that he had presented himself as neither a lawyer nor that he was giving legal advice.

However, I am not a lawyer and this is not legal advice

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10. skgoa ◴[17 Jan 18 08:31 UTC] No.16166380[source]▶
With Ponzi schemes the situation is even wrose for the perpetrator: they are explicitely illegal and you can't get out of legal ramifications even if you are completely honest and upfront.
11. aiCeivi9 ◴[17 Jan 18 08:46 UTC] No.16166447{3}[source]▶
Is disclosing yourself as not a lawyer enough to excuse from giving legal advice?
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12. JustFinishedBSG ◴[17 Jan 18 09:21 UTC] No.16166595[source]▶
No, Ponzi schemes are illegal. Even if you write in huge bold red letters "HEY THIS IS A PONZI SCHEME" before people "invest" it wouldn't change anything legally.
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13. beefield ◴[17 Jan 18 09:22 UTC] No.16166599{3}[source]▶
My understanding is that lotteries are quite open about the expected return that is heavily negative (and most people do understand that the expected return is negative). So they do not work the same way.
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14. beejiu ◴[17 Jan 18 09:30 UTC] No.16166630[source]▶
> Even if you write in huge bold red letters "HEY THIS IS A PONZI SCHEME"

Remember a few years ago the service ponzi.io, a openly transparent Bitcoin ponzi scheme. Here's the discussion from back then: https://news.ycombinator.com/item?id=7202182

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15. Y_Y ◴[17 Jan 18 10:11 UTC] No.16166809{4}[source]▶
It's nonsense about letting people claim they thought you were their lawyer. Like the myth about cops not being allowed to lie about being cops.

I am a lawyer, this is legal advice and you are now my client

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16. daemin ◴[17 Jan 18 10:14 UTC] No.16166817{4}[source]▶
I got told this from a friend that studied law (but is not a lawyer). That to put a disclaimer of "I am not a lawyer" when giving opinion about legal matters is so that they will not be prohibited from practising law in the future, or prosecuted for misrepresenting or impersonating a lawyer.

I guess someone that has studied law more or is an actual lawyer can weigh in on this in an unofficial capacity (because we are not paying them for advice!).

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17. JustFinishedBSG ◴[17 Jan 18 10:30 UTC] No.16166871{3}[source]▶
I unfortunately know all too well considering I own a very similar domain name haha.
18. avip ◴[17 Jan 18 11:05 UTC] No.16166995{5}[source]▶
I think one should say "neither he had... nor was he giving..."

However, I am not a native English speaker and this is not a grammatical advice

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19. TeMPOraL ◴[17 Jan 18 11:36 UTC] No.16167102{5}[source]▶
I always assumed that the "this is not legal advice" part (and similarly, "this is not medical advice") are meaningfully used by actual lawyers (or doctors), so that you can't sue them for malpractice over something they said that was tangentially related to what they do for a living.
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20. roma1n ◴[17 Jan 18 12:07 UTC] No.16167239{6}[source]▶
this is not grammatical advice (uncountable, no 'a')

Disclaimer: I am not a native English speaker and this is not grammatical advice

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21. JumpCrisscross ◴[17 Jan 18 12:10 UTC] No.16167253{6}[source]▶
It’s less CYA than a reminder that one should seek legal advice if the subject matter is personally relevant. I would hate for someone, who watched a YouTube video and then lost more than they could afford to BitConnect, to mis-step because they mistook my Internet comments for authoritative advice versus banter and commentary.
22. skrebbel ◴[17 Jan 18 12:29 UTC] No.16167332{5}[source]▶
Comments like these makes me sad I don't get a monthly supply of extra upvotes.
23. arethuza ◴[17 Jan 18 13:03 UTC] No.16167525{5}[source]▶
I'm pretty sure a real lawyer would have ended that with "... and here is my bill" ;-)
24. saas_co_de ◴[17 Jan 18 13:21 UTC] No.16167637[source]▶
Realistically nothing will happen. Law enforcement only deals with financial crimes where they have assets to seize or their is some PR benefit. They will probably take action against a few people at the top, especially if there is a pot of gold at the end of the rainbow for them, but low level shills are not worth the effort.
25. saas_co_de ◴[17 Jan 18 13:26 UTC] No.16167670[source]▶
> Ponzi scheme work because people believe the fraud

That is not always the case. Sometimes you have a Ponzi like Madoff where it may seem legit to investors but most ponzis are blatant and the people involved know it is a ponzi but think they can profit by selling it to greater fools.

Of course they will all express shock and feign ignorance when they are trying to get their money back or defend themselves from the angry people they hustled.

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26. paulie_a ◴[17 Jan 18 14:03 UTC] No.16167918{3}[source]▶
Off topic: why do people put "I am not lawyer" disclaimer on posts?

Ive rarely seen that sort of disclaimer about any other occupation

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27. ncallaway ◴[17 Jan 18 14:17 UTC] No.16168024{4}[source]▶
Because in many jurisdictions it is illegal to represent that you are a lawyer or provide legal advice if you are not a lawyer.

http://hirealawyer.findlaw.com/do-you-need-a-lawyer/what-is-...

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28. Sean1708 ◴[17 Jan 18 14:25 UTC] No.16168065{4}[source]▶
> Lotteries are also illegal to operate privately

I didn't know that. Does that mean that raffles are technically illegal? Or is there some kind of special-case about winning money?

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29. mannykannot ◴[17 Jan 18 14:30 UTC] No.16168102{3}[source]▶
In the US, as the Madoff case showed, if it can be shown that you are a sophisticated enough investor to realize that it is probably a Ponzi scheme, your profits can be clawed back and used as partial restitution for the victims. Any scheme that is upfront about what it was doing would significantly lower the bar on making that case.
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30. paulie_a ◴[17 Jan 18 14:35 UTC] No.16168145{5}[source]▶
But that doesn't require a disclaimer, if anything that just requires you to not claim to be a lawyer. Additionally: what recourse does someone have even if they read a random internet comment as legal advice. Pretty much zero.
31. 52804375092485 ◴[17 Jan 18 14:51 UTC] No.16168281{4}[source]▶
When actual attorney's are talking about legal issues, they'll usually say something like "I am not your lawyer" as a defense against entering into an attorney-client relationship which creates a bunch of complications.

So I guess the "I am not a lawyer" is sort of a corruption of that, a magic spell invoked by not-lawyers to save themselves from not-problems.

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32. amdavidson ◴[17 Jan 18 14:54 UTC] No.16168308{5}[source]▶
Raffles guarantee a winner. Picking a single person from a group of people have a very different probability profile than picking a number from a set of numbers that may not have associated lottery tickets.
33. nkrisc ◴[17 Jan 18 15:06 UTC] No.16168437{5}[source]▶
Lay people can comment and give their opinions on matters of law. They just can't claim to be or represent themselves as a lawyer if they're not.

Of course that opinion is worth the paper it's printed on.

I am not a lawyer.

34. Nursie ◴[17 Jan 18 15:13 UTC] No.16168532{5}[source]▶
In the UK there are special rules about raffles and lotteries on a small scale, and apparently they are only legal when for "a good cause" - http://www.gamblingcommission.gov.uk/for-the-public/Fundrais...
35. tialaramex ◴[17 Jan 18 15:29 UTC] No.16168665{5}[source]▶
In different places (states, countries) there are a variety of rules, the goal of which is generally to let people have things like a fun Xmas raffle without opening up the opportunity to run "The Numbers Game" or similar.

To allow a raffle, dodges often enshrined in law include:

* Very low prize limits (e.g. max $100) but donated prizes don't count towards that limit. So your local charitable raffle has no problem getting a nice bottle of Scotch, dinner for two with wine at a nice place, family portrait, whatever local merchants want to donate, and it's all fine, so long as they don't buy it.

* Exemptions if you can only buy tickets in one place, or if you only sell them to members of your organisation that exists for some other purpose (e.g. a local church, employees at a factory)

* Exemptions if the profits of the gambling go to a recognised charitable organisation.

* Exemptions if there's no profit at all, all is spent on prizes that go to ticket buyers randomly, so the whole operation only moves money around randomly inside a group of participants.

36. Crespyl ◴[17 Jan 18 16:16 UTC] No.16169074{5}[source]▶
I always understood it to be a caveat that the speaker does not have much or any formal legal education (much less in the specific state/country relevant to the conversation) and that nothing should be taken as actual legal advice by the reader, even if their situation seems similar.
37. Anderkent ◴[17 Jan 18 17:01 UTC] No.16169554{7}[source]▶
Your advice was grammatical, actually.

Disclaimer: I am not a native English speaker, and this is advice about grammar.

38. sseveran ◴[17 Jan 18 17:45 UTC] No.16169998{4}[source]▶
In fact this is the case even if you are not a sophisticated investor, since the profits are not yours and are really just stolen property.
39. dragonwriter ◴[17 Jan 18 19:59 UTC] No.16171225{5}[source]▶
Practicing law without a license is an offense in many jurisdictions; providing legal advice is in some cases within the scope of legal definitions of practice of law. (For people in certain roles outside of but around the legal profession, even implicitly holding oneself out as a lawyer or person qualified to practice law may have additional concerns.)

While public comment for which no one has been charged money may be outside of the bounds of what would be covered by most such laws, some people view it as best to be clear (and, in any case, such a disclaimer served as meta-legal advice that the matter at hand is one on which you should consult a lawyer if you have critical concerns.)

And, there are other concerned for lawyers in communications that might be mistaken for providing legal advice.

All that combined to justify disclaimers that include some or all of, as applicable:

I am not a lawyer.

I am not your lawyer.

This is not legal advice.

(Incidentally, I am not a lawyer, I am not your lawyer, and none of this is legal advice.)

40. snowwrestler ◴[17 Jan 18 21:12 UTC] No.16171874{5}[source]▶
It's an attempt to inoculate against the charge of practicing law without a license--which might seem incredibly unlikely, but that's how they got Ulysses Everett McGill.
41. conanbatt ◴[17 Jan 18 21:43 UTC] No.16172217{4}[source]▶
Even if you are open to being a Ponzi, it is illegal in the U.S.

As another user says, the only legal Lottery is the one that is run by the State.

Isn't it interesting.

42. dang ◴[18 Jan 18 09:14 UTC] No.16175747{4}[source]▶
This crosses into incivility and offtopicness. Please don't; it leads to junk, as the subsequent comments here demonstrate.

https://news.ycombinator.com/newsguidelines.html