Pyramid schemes are illegal iff the creator defrauds the "investors."
On the legality of Bitcoinduit roundsThe only two commonly voiced objections I have heard thus far are the following:
> All Ponzi/Pyramid schemes are scams
The truth: Only schemes that promise huge profits to "investors" are scams. Our site is legitimate because everyone knows what they're getting into. Every players acknowledges that they may not get paid out at all when they bet on this site. It would only be scamming if I were to
guarantee the return on investment to every investor.
> Internet gambling is illegal
The truth: Firstly, it may be debatable whether Bitcoinduit constitutes a "gambling site" legally. Though we do call our depositors "bettors," this does not mean that they are truly betting on any one event. Secondly, referring to
http://pub.bna.com/eclr/1321a.htm, we note that a United States court has ruled that the Wire Act, the act commonly used to disrupt internet gambling operations, "'in plain language' does not prohibit Internet gambling on a game of chance." Thirdly, the Unlawful Internet Gambling Enforcement Act of 2006, the only other act which refers to internet gambling that I am aware of, does not expressly prohibit internet gambling itself, but rather prohibits financial institutions from transferring funds to gambling sites. As Bitcoin may or may not be considered as "funds" and a decentralized P2P system may or may not be a "financial institution," the Act has an ambiguous position on Bitcoinduit as far as I can see.