back to article Cyber-coin crackdown continues: Commission charges couple crypto-currency company chiefs concerning 'conned' customers

The US Commodity Futures Trading Commission (CFTC) is the latest financial watchdog to haul into court companies in the virtual currency space. On Friday, the CFTC, which oversees the derivatives markets in America, announced a pair of civil lawsuits against businesses it claims defrauded customers out of their hard-earned …

  1. Bob Vistakin
    Pint

    Clearly a comical currency conundrum

    That do?

  2. Palpy

    Uh...

    Awesome alliteration amplifies angst, and awes allegedly almighty a**holes?

    1. I ain't Spartacus Gold badge

      Wot no B's

      Bonkers Blockchain Bubble Brouhaha Becomes Breathtakingly Bad Before Bust! Brown-trousered Bankrupts Bemoaning Bad Bets.

  3. onefang

    Clever c-word captioning, congratulations. Commentards continue cryptic creativity concerning crypto currencies. Crappy CabbageTech company cowers.

    1. DJO Silver badge

      "Alliterations are absolutely awful, always, and all attempts at amusing alliterations are assuredly abysmal."

      Aaron Aardvark.

  4. Neil Barnes Silver badge

    Swisscoin

    Not surprised, to be honest - I can't be the only person to have had literally dozens of 'invest now' swisscoin scam/spam emails last week before the filters caught up.

    1. MonkeyCee

      Re: Swisscoin

      " had literally dozens of 'invest now' swisscoin scam/spam emails"

      In much the same way that legitimate pharmaceutical suppliers rarely resort to spam or untargeted ads, any ICO being pumped the same way usually stinks to high heaven.

      I'm yet to see any actual ICO result in any real world product. There seem to be a lot of promises made by people who don't have the technical nous to even make their own coin, so they have to piggy-back on an existing one.

      1. katrinab Silver badge

        Re: Swisscoin

        And all the “we’re launching a new currency to buy x” ICOs:

        Do we really want a whole load of different currencies to buy different things rather than a £, €, $ or whatever that can be used to buy everything?

        At least with the dot.com bubble, the concept was fine even if the individual business plans were not, and the valuations were way off.

  5. Anonymous Coward
    Anonymous Coward

    Aren't all Crypto Currencies

    Ponzi Schemes ?

    1. MonkeyCee

      Re: Aren't all Crypto Currencies

      Ponzi schemes are specific form of scams.

      Generally things like pensions or social security are not considered to be a Ponzi, despite the fact that there are more liabilities than assets and they only survive by a flow of new money and increasing their future liabilities.

      Even things like commodity markets which are 90%+ paper* are not considered Ponzi schemes, despite the potential similarities. Because you can, in theory, convert your paper gold/beef to a real one.

      Just because something is a speculative investment does not inherently make it a Ponzi.

      In general it's only a Ponzi scheme if it follows this pattern:

      1. Investors are promised returns based on the company doing x with their capital

      2. The money invested is *not* used for x

      3. As there are no actual returns from x, any payouts come from the invested capital

      If at stage 2 the money is invested in x, and then all the money is lost, then it's not a Ponzi. It's just a failed investment.

      I for one am glad that the SEC et al are treating crypto as an asset, and ICOs getting the proper amount of scrutiny that anyone asking for investment from the public should do.

      Also kudos to the reg for finding an actual Bitcoin Ponzi, as compared to a normal Ponzi which used Bitcoin as it's "we're investing in x".

      * for every steer sold, there are about twenty beef futures. For every physical ounce of gold traded, about sixty ounces of paper gold are traded, and so on

      1. Doctor Syntax Silver badge

        Re: Aren't all Crypto Currencies

        "Generally things like pensions or social security are not considered to be a Ponzi"

        That's because governments are running them and prosecuting themselves would be so embarrassing. The consequent problems are political rather than legal.

      2. katrinab Silver badge

        Re: Aren't all Crypto Currencies

        When you buy a beef future, it is matched by someone selling a beef future to a bank. This could be a farmer who wants to guarantee a price for a baby calf that’s on the farm, a perfectly legitimate hedging strategy, or someone who wants to place a bet on the movement of beef prices.

    2. Sorry that handle is already taken. Silver badge

      Re: Aren't all Crypto Currencies

      Technically, no, but they certainly appear and behave very similarly.

      1. Terry 6 Silver badge

        Re: Aren't all Crypto Currencies

        The typifying Ponzi behaviour is that the "investment" of the new mugs is used to pay the previous layer's "investors" and so on - until it collapses under its own weight. Does a crypto-currency act like that? Hmm interesting question.

        1. Anonymous Coward
          Anonymous Coward

          Re: Aren't all Crypto Currencies

          I guess while Crypto Currencies are similar to a Ponzi scheme, they are specifically different in that they are looking to replace cash/trading value. Not as an investment scheme themselves. Just many are using it as a Ponzi/tulip/bull market type investment currently.

    3. a_yank_lurker

      Re: Aren't all Crypto Currencies

      Cryptocurrencies themselves are not Ponzi schemes as their value fluctuates with the market though as an investment I would class them tulip bulbs. The problem is there many schemes that claim to invest in cryptos with guaranteed rate of return (one characteristic of the classic Ponzi scheme) but there is no way they can actually guarantee future returns. These schemes rely on the 'investors' vague knowledge of cyptos and how they work but awareness of them.

      What Charles Ponzi's scheme was to make a plausible sounding line about buying a real financial instrument and using arbitrage to make money (he guaranteed a specific rate). But instead of investing in the actual instrument, use new money to payoff previous 'investors'. The classic Ponzi scheme eventually falls apart because there are a finite number of potential investors. One of the 'insights' Ponzi had was to reason a real financial instrument that people would be aware of but vaguely understood how it worked. It worked in the 1920's and similar scheme work today.

    4. Anonymous Coward
      Anonymous Coward

      Re: Aren't all Crypto Currencies

      No, that is just something spouted by those envious of those that got in early, got out at the right time and paid off the mortgage...

      1. Terry 6 Silver badge

        Re: Aren't all Crypto Currencies

        The only difference then is whether you can get out before the collapse. Anyone who was in a Ponzi scheme early on and somehow escaped/made lots of money before it imploded will have every reason to congratulate themselves ( excluding the originators, it they are behind bars,of course).

      2. Sorry that handle is already taken. Silver badge

        Re: Aren't all Crypto Currencies

        No, that is just something spouted by those envious of those that got in early, got out at the right time and paid off the mortgage...

        So... just like a traditional Ponzi scheme.

  6. Anonymous Coward
    Anonymous Coward

    This could be a farmer who wants to guarantee a price for a baby calf that’s on the farm, a perfectly legitimate hedging strategy

    Although he then takes on the risk that if his calf doesn't survive, instead of simply not getting income from the cow, he's also lumbered with having to buy himself out of a futures contract. Effectively it's a big bet against foot & mouth, so he needs to take out additional insurance against that.

    Probably better to leave farming altogether and move into finance or insurance. He'd get more money for less work anyway...

    1. PaulVD
      Thumb Down

      He always needs insurance against the loss from his calf dying (or he takes the risk himself). The hedging contract gives him insurance against changes in market prices, nothing else. If he hedged the risk with an option, he can walk away from it at no cost. If he took out a futures contract, then with no calf to sell he becomes a speculator: he pays out for the difference between the contracted price and the market price at the intended delivery date (and if that is in his favour he wins money back).

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