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Fake-Cryptocurrency Ponzi Scheme Lands Creator in Prison

posted by Fnord666 on Sunday September 16 2018, @03:13PM   Printer-friendly
from the different-kind-of-bars dept.

MrPlow writes:

Submitted via IRC for SoyCow1984

A man who, according to federal authorities, ran a fake cryptocurrency Ponzi scheme and pleaded guilty last year to one count of wire fraud is now headed to prison.

On Thursday, Homero Joshua Garza, also known as Josh Garza, has now been sentenced by a federal judge in Hartford, Connecticut, to 21 months in prison, three years of supervised release, and more than $9 million in restitution. The news was first reported Thursday by CoinDesk.

In their sentencing memorandum filed before the hearing, prosecutors were blunt in their assessment of Garza, saying that he "lied to investors and customers and took their money" to the tune of $9 million in losses spread across thousands of people worldwide.

Source: https://arstechnica.com/tech-policy/2018/09/man-who-swindled-9m-in-wannabe-bitcoin-ponzi-scheme-headed-to-prison/

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  • (Score: 3, Insightful) by Thexalon on Monday September 17 2018, @01:43AM (3 children)

    by Thexalon (636) on Monday September 17 2018, @01:43AM (#735819)

    1. The guy in question was convicted not of mining cryptocurrency, but of pretending to mine cryptocurrency while in fact doing no such thing.

    2. Bitcoin isn't a Ponzi scheme. It's a different kind of scam akin to Tom Sawyer's fence-whitewashing operation: "He had discovered a great law of human action, without knowing it – namely, that in order to make a man or a boy covet a thing, it is only necessary to make the thing difficult to attain." Bitcoins have value to Bitcoin believers because there was substantial expense in obtaining them (either by purchase or mining).

    --
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  • (Score: 2) by FatPhil on Monday September 17 2018, @08:09AM (2 children)

    by FatPhil (863) <reversethis-{if.fdsa} {ta} {tnelyos-cp}> on Monday September 17 2018, @08:09AM (#735897) Homepage
    Bitcoin only has value because of the premise that it will have greater future value. In other words, on the premise that people in the future will go through exactly the same thought processes as you, but with higher expectations. So if there's a chance you're wrong, let's say you have a trait that might be called "idiocy", then you're relying on the existence of what we might call "a bigger idiot". The only way that doesn't hold true is if you're *all* completely correct, in which case, there needs to be an infinite continuation of exponential growth. In which case, none of you understand exponential growth, in which case you're idiots. Therefore, with the exceptions of those who got in sufficiently early, you're all idiots relying on future bigger idiots to sell to. That is the very definition of a Ponzi scheme.
    --
    Great minds discuss ideas; average minds discuss events; small minds discuss people; the smallest discuss themselves

    • (Score: 2) by All Your Lawn Are Belong To Us on Monday September 17 2018, @06:23PM (1 child)

      by All Your Lawn Are Belong To Us (6553) on Monday September 17 2018, @06:23PM (#736105) Journal

      How is that any different from any other form of investment?

      That's not a flame attempt. All investing is done on the premise that what is being invested in will carry greater future value. Is Bitcoin different because there is no apparent intrinsic value to it and no governmental authority declaring it has fiat value? Or some other quality that differs Bitcoin from, say, gold?

      --
      This sig for rent.

      • (Score: 2) by Thexalon on Tuesday September 18 2018, @01:48AM

        by Thexalon (636) on Tuesday September 18 2018, @01:48AM (#736330)

        Is Bitcoin different because there is no apparent intrinsic value to it and no governmental authority declaring it has fiat value? Or some other quality that differs Bitcoin from, say, gold?

        Yes, there are differences.

        Regarding the "intrinsic value" issue: Bitcoins have a cost to obtain, via mining or purchase. Bitcoin believers think this gives them intrinsic value, but they are wrong about that, because the Bitcoins don't have any useful application - you can't use them to make anything. By contrast, gold you can use it to make things like jewelry that won't tarnish easily, and electronics.

        Regarding the "government authority" issue: Fiat currency is required to pay taxes, and is also considered a legal offer of payment of debt. In both cases, anyone doubting those factors can expect a visit from people with guns to explain matters to them. Bitcoins, not being fiat currency, don't have the organized group of people with guns backing them up.

        --
        The only thing that stops a bad guy with a compiler is a good guy with a compiler.