Now, he may have thought he could use it to float some funds, and put them back, and no one would be any wiser, but that's definitely illegal.
He may not be a bad person, and he may not be an idiot in the larger scheme of things, but this was an idiotic move, and a terrible (and unethical) decision, that may very well have legal repercussions.
This is true, and the comparison with banks fractional reserve isn't 1:1
The banks aren't taking your money to pay their bills, they're using your money along a legally defined path of creating and selling investment products with the government in a well-defined position to protect your savings as a guarantor.
I suspect that the Dogecoin business could have leveraged customer deposits in investment products similarly, but would likely require an insane amount of bureaucracy and i-dotting before they could do it.
As for legality, that depends on jurisdiction. Cryptocurrencies are not recognized as a legal tender currency in many areas. In some areas they are, in other areas they are considered an asset like a stock, in others a collectable and in some places have no more legal rights than the gold you earn in World of Warcraft.
I agree he had no moral right to spend that money, but legal becomes highly debatable. It will be interesting to see if there are any small claims cases that rise out of it as it could actually push forward legislation on crypto.
> no more legal rights than the gold you earn in World of Warcraft
Undoubtedly, if a company offered some sort of account to store that gold, they'd be in deep shit if they took gold from those accounts and sold it to pocket the money.
It doesn't matter if it's cryptocurrency, collectible, stock, etc, it still is not a business asset.
If you've got my Jesus shaped collectable potato chips in storage you can't sell them to keep your business afloat.
If you're a brokerage whom I have an account with for my stocks or asset trading, you can't sell my assets to keep your business afloat.
If you're a bank storing my currency, there are very specific rules that govern you, and my money is FDIC insured. This isn't a bank, period. You can't just change the rules saying "well, banks don't always have your cash on hand, so this guy doesn't have to either". There are rules around how all of that works anyways - and he wasn't operating within them.
This is more akin to paypal, or some type of digital wallet. As it's an "account" where you can "send and receive dogecoins". There is no reasonable expectation that anyone else should have access to the dogecoins in your account. There's weird grey area around that shit, but suffice to say my assets are NOT your business assets.
Further, in many digital assets like world of warcraft technically the creating company (Blizzard) still owns the asset regardless of what you do with it or where it goes.
If you are storing currency, that is legally defined as currency by your legal jurisdiction (usually the state level) then there are very specific rules for money transmission and money service business licensed businesses. And your accounts are insured upto the legal required amount of $100,000 by the FDIC.
However, many states have NOT classified cryptocurrency as a currency nor required exchanges and services operating solely in cryptocurrency to get a license as a financial service (different if it allows exchanging of crypto and traditional currency). Because of this it is unclear what the legal doctrine is that would apply to it.
Now if I had as you said "a jesus shaped collectable potato chip" in storage that belonged to you, can I sell it? That depends. For example, for a storage facility if your payments are late I certainly can. For plenty of digital assets accounts your funds are taken by the company after X days of inactivity. Then you have services like PayPal which terms of service allows them to freeze your accounts and keep the funds for anything that violates their terms of service (rules designed by them, which you agree to on sign up).
So was Dogetipbot in the legal clear for doing this? Probably not. There is some level of negligence, some level of consumer loss and can probably be a tort case. But was it flat out illegal? No. It was at worst a civil case, but that depends on their terms of service and the legal standing of cryptocurrency in various jurisdictions.
Disclaimer: Not a lawyer, not legal advice.
Wrong. If you have money stored in a bank that is insured by the FDIC (and pays depositor's insurance), then you are insured.
If you have a cash deposit with a brokerage that is not FDIC insured, and their CEO spends customer's money (that they are not allowed to), and go bankrupt, you are absolutely not insured by the FDIC, and will have to go to court to try to reclaim assets. This happened, see MF Global. In that case, the CEO (Jon Corzine) was very well connected and was able to sidestep prosecution and jail time.
I'm going to bet that this clown is not well connected. Fortunately for him, all he embezzled was this bullshit toy currency, so hopefully, for him, its so irrelevant that he gets away unscathed.
http://webcache.googleusercontent.com/search?q=cache:ORsA-jt...
With examples that small-fry, you're getting into 'small claims' territory, which basically amounts to you having your little slapfight in front of a judge until he tells one of you or the other to knock it off.
> This is more akin to paypal, or some type of digital wallet
Minus any of the user agreements, established business licenses, regulations, and other financial grunt work that it took to get PP up and running (and even then, they have free reign to freeze your account with little to no recourse if they think you're out of line - plenty of stories of people being burned by this)
This is "more akin to" handing off your trading cards to the guy at work running the betting pool and trusting him not to fuck you over, except (A) trading cards are much easier to explain and (B) in this case you don't even know the guy.
> Minus any of the user agreements...
Exactly. Which is why I think comparing it to anything financial (banks, PP, etc) is silly in the first place.
Replace collectable potato chips with baseball cards and you're back to the example I was trying to portray.
If someone was holding your property (baseball cards) and sold them out from under you, then it seems like there would be good ground for a civil case.
Held legally accountable? Lmao. Guile is part of the game and all your credits belong to Eve.
"But your honor, ISK is part of the EVE Online game, and it's in the nature of the game to build up a bunch of in-game assets and then get screwed out of them by other players. Players find this fun and continue to come back to it.
"Exhibit A is the relevant value-lost-per-day in dumb territory disputes and ultimately meaningless fun-fights. As our expert witness, we're calling a psychologist who can explain the sort of masochism that factors into a person's enjoyment of this experience..." ;)
We've actually had situations similar to this play out.
Star Wars Galaxies had a counterfeiting bug, and Sony responded to people exploiting the bug by zeroing out the money---regardless of whether the holder was a counterfeiter or a victim of a counterfeit---and banning a subset of players who were holding the money.
While the path from "take player money" to "sell the money and pocket the value" isn't direct, deleting money from accounts has the side-effect of making all the remaining money more valuable; in essence, Sony boosted the per-player value of the remaining accounts and future created accounts (though that likely wasn't the intent of their actions; they were just punishing cheaters).
Check the legal history to see what the ramifications were. To my memory: there were none. Game space money bought with real money isn't real money (should it be? Excellent question; I don't believe the law has caught up with that question yet).
Meaning, it's theirs to issue/manipulate it as they please. If a third party did that, it seems as though it would be much different.
But that's not real money. All the protections and rights of legal money do not necessarily apply to cryptocurrencies, bitcoin being the sole cryptocurrency with a degree of legal respectability.
This bot was more like a club where people tipped in to play a game together. It can be argued that it's like you chipped in to buy donuts for your local club to play "pass the donut", and the club later sold the donuts to stay open. The service was free so it's hard to find a breach of contract anywhere, especially if the company went bankrupt.
Such is the joy of "privatized money".
The donut analogy doesn't work, because in your case, you are donating donuts to the club.
This is more like you lend a TV to the club, with the caveat that you still own it, and can take it back at any time.
The club decides to pawn in, thinking it will just buy it back when it has money again, and you won't have any idea. But then it can't, and it sold property that wasn't its to sell in the first place.
The notion that he had any legal rights is a bit vacant. Morally, I think "spreading the risk you've brought upon yourself to your creditors without their knowledge or consent" is generally considered a financial dick move though. ;)
(Still don't think he should have)