So that's where Mordica appears

Joe Mordica (1201) $8,307.00

$100k isn't great for a CTO, but it could be with the right bonus structure and/or crypto payments.

As soon as hosted miners went "virtual," they became an unregistered security, a securitization of whatever operations were generating the income.

We now know all Hashlets were unregistered securites, too.

I don't think Paycoin is. If it is, that means bitcoin is, which means a world of hurt for any legit bitcoin company.

I imagine after he's convicted, there will be a civil suit. I'm not sure how enforcing a judgement/settlement works, but it may be difficult for him to extract money if he owes it in a court action. Coinbase and Cryptsy are both US Companies. He'd have to find a venue for selling his BTC/XPY, and the email record shows that he's burned a lot of those bridges.

They sell ASIC miners, and they treat consumers professionally? What is this craziness?

Good job, Bitmain, doing exactly what a legit company should be doing, asking for a waiver to disclose the purchase and whatnot.

I don't think this covers everyone. Mordica, Pease, and others aren't on here, for example.

This does, however, match the format of the leaked Garza paystub that has him making $350,000/yr in raw salary.

Also, I believe Lucas is their lead developer, and he's paid $70k/yr. No wonder their software was shit. Just try getting a solid senior developer for $70. ($90 would be like a bottom for someone doing the job he appears to be doing - assuming he's the "Evan" that keeps coming up in the emails.)

Also note, Capuano, a total insider, was on normal payroll making $70k. Was he being paid in Bitcoin off the books, too? If not, $70k/yr hardly seems worth defrauding customers. I'm still curious about how that meeting went down, but as soon as someone said, "We'll be selling these miners, but buying X instead of hosting the miners they paid for," I'd be out. There are some situations where I'm not sure whether I'd do the right thing, but this one seems pretty slam dunk.

I spit out my coffee laughing at that one. Nice.

His card was declined on a $23 charge. Talk about maxed out. He really needs to find a way to sell his 10,000 BTC now that he's lost his coinbase account.


That's the rub. If the coin is salvaged, Garza extracts even more cash from his scam.

Why so mean? I'm sure everybody here hopes you're legit and hope your business plan works. It's just that there's been so much deceit and fraud surrounding this coin, and the business plan seems so unlikely to work, that we're going to be a little skeptical.

Yeah, it's hard to think of a shorter statement that proves fraud. Sometimes Garza can be very efficient.

There are plenty of much more clear-cut examples of fraud. Like, for example, selling people physical miners supposedly being hosted but don't actually exist at all. Selling somebody something that doesn't exist is about as fundamental as fraud gets. It's hard to prove intent to defraud with the 911 Hashlets.

But if what he loses in discount is less than what he gains by pumping up the coin, he can make a ton of money quickly. He just can't stay open very long.

This PaycoinGold idea is a nifty pump-and-dump variation.

1) Buy a lot of whatever crypto cheap on the open market.
2) Make those into a kind of exclusive token to get a discount on a product. The price will rise as people want to buy the coin to get the discount.
3) Dump your coins.
4) Close up shop.

The people who are stuck are the ones who didn't get a chance to buy with their coins. If you're a sleazeball, you could do

5) Refund the last set of orders saying you're out of inventory.

But that's really optional.

So, I think this guy will stay in business less than two weeks. He should make a solid profit.

"every commitment I ever made"

"should have delivered in the first place"

So, Garza releases ... the Vaultbreaker.

He'll take Paycoins for it at $30/coin, thus making it likely that XPY's value goes past $20.

He'll sell it on Amazon as well, thus executing that partnership.

He'll offer consistent upgrades so that it's never obsolete.

And you can use it as collateral for a secured credit card.

I hope they're the same attorneys who were shipping out bullshit legal threats the past few months.

I'm not defending anything, and I don't know how you got that impression. He did a bad thing, and the question is if he can be held accountable for it. Bad people get away with horrible stuff all of the time. It doesn't make it right.


Well, the difference here is that the money from the cookies went into the same wallet that their mom used when cashing her paycheck. Then the mom overspent her paycheck thinking there was more money for her to use than there actually was. So the charity is owed $10,000, but that $10,000 doesn't exist anymore. Who's at fault? The kids who put it in the same wallet? I imagine that would be some kind of accounting negligence. The mom who overspent (Josh)? It would be hard to show that she knew that some of the money in her wallet had already been promised to charity.

A person with ethics would make up the difference, but is it a crime not to?

Actually, it does. Fraud requires intent, as does illegal misappropriation.

To clarify, this is fraud in the way that all hashlet sales are fraudulent, but I don't see the evidence that he intended to defraud a charity. I don't think there's any additional fraud going on beyond what occurs during an ordinary hashlet sale. I think it's a fuck up followed by an ugly resistance to make up the difference. There were a lot of really incompetent people making a lot of poor decisions (like the entire concept of Paycoin) and making a lot of mistakes. This smells like a fuck up.

The charity thing is probably a legit mistake. I have a vague recollection of an email chain where he asked how many 911 hashlets were sold, someone told him the number, and he was like, "o shit."

Fraud has to be premeditated. Misappropriation is intentional. I don't think this was either. He probably botched the part of the system that was supposed to put a cap on the sales, and he probably had all sales money go into the same account as regular hashlet sales. By the time he realized that he sold too many, the money was spent, and all he had left was the $10k he actually did set aside for charity.

Yes, and Garza also started giving away web apps, firing employees, and divesting his company of all assets.

I'm pretty sure he saw The Producers and figured he could grant as much equity as he wants as long as the company ends up being worthless.

What nonsensical garbage. He sold "securities" the second he sold those blades without the hardware to back them up. Basically everything from that until HashStakers was a security. He was selling shares in a revenue-generating enterprise. Dot.

Since the purchaser puts his own coin in, HashStakers could conceivably be defined as leasing wallet space and taking a share of the staking yield as payment in addition to the initial cost. But every hosted equipment sale from the switch to VIRTUAL (said it) onward and every hashlet sale is the sale of a security. Until the email leak, I kind of thought that only Zen Solos and Primes were securities. Nope. All of them are.

There's no way to define what was sold as anything but securitization of something, be it mining operations, open market trading, the sale of new securities, or whatever. How else would you define, say, a Vaultbreaker?