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.
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!
* 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.
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.
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!)
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?
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".
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.
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.
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.
Both EUR and CHF are currently worth more than USD, so that might not be the ideal example to make your point.
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.
That's a huge "if".
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.
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.
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.
I agree. I wonder if the average take of each new ICOs is decreasing as awareness of then generally being scams increases?
[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.
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.