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Ethereum 'ICO architect' arrested over alleged $12M cryptocurrency extortion
Two individuals in the US, including a former advisor to various blockchain projects including Ethereum, ETH have been arrested for their alleged role in a series of multi-million dollar cryptocurrency extortion.
According to a Department of Justice statement, former Ethereum advisor Steven Nerayoff and Michael Hlady were arrested after supposedly threatening to "destroy a startup cryptocurrency company if they were not paid millions of dollars" worth of Ethereum.
"As alleged, Nerayoff and Hlady carried out an old-fashioned shakedown, to be paid off with 21st century cryptocurrency," United States Attorney Richard Donoghue said in the statement.
The targeted company was an unnamed Seattle-based startup that uses cryptocurrency to reward customer loyalty. The unnamed company makes blockchain-based products for those looking to generate and reward user traffic.
The allegations are being lodged against Maple Ventures, an offshoot of Alchemist LLC, a blockchain consultancy founded and headed-up by Nerayoff, CNBC reports.
It's also worth noting that Nerayoff was pivotal in constructing the legal architecture behind Ethereum token offerings. On his own website he claims to have been called the "Architect of the ICO." One of his most recent ventures, – which he co-founded – CasperLabs, debuted its scalable, proof-of-stake blockchain on its testnet earlier this year.
(Score: 3, Informative) by JoeMerchant on Monday September 30 2019, @08:09PM (1 child)
Island Life
Bob and Rita live in a small house with a big mango tree and a patch of grass just outside the Valley. Rita works in the supermarket and Bob has a grill cart that he keeps mostly down around Sandy Ground and George Hill. Bob has two grown daughters: Sharon and Karen who live in the Valley. When the big cruise ship is in Bob takes his cart down to Eddie's bar and cooks up a mess of curry goat to sell to the guests. Sharon has a car that she drives as a taxi, so she'll usually give Bob a ride and pick up folks from the dock who want to tour the island or get a quick ride up to the Reggae Shack. Eddie's bar is pretty far up the beach from the dock, but Charlie the launch captain tells the guests that it's worth the walk for Bob's curry goat, and Eddie has a great place with tables in the shade and a good breeze.
In May when Rita's mangoes get ripe, they all get ripe within about 2 weeks. The tree is probably 80 years old and there are so many mangoes - she takes some to work, but mostly locals shop in the Valley supermarket, mangoes aren't anything special to them. Karen works in the hospital and she takes a couple of bags to share with her co-workers, but again they're mostly locals. Through Karen's co-workers some of Rita's mangoes end up in local restaurants, and of course Bob offers sides of mango with his curry goat. The guests rave about Rita's tree ripened mangoes when they get them, but the season for fresh tree ripened Haden* mango is very short.
Island Blockchain Genesis
One slow October day Eddie, Bob and Gene were hanging out and Eddie was talking about the bankers like Walter trying to make their next billion using blockchain. Bob said: "I wish I had their problems, I just want EC$3K so I can pay Dave to put an electric motor on my grill cart - if I could get up and down the hill easier, I'd sell a lot more curry goat." Gene is an old computer geek and he said: "you know, Bitcoin didn't start out as a billionaire's game, it got going as a grassroots project and grew up into what it is today - there are some kinds of blockchain that work well for smaller applications." Bob: "Yeah, how's that going to help me?" Gene: "Well, if you had your own blockchain and sold shares as promises for plates of curry goat, you could raise the money for your electric motor now, and deliver the goat later." Bob: "That sounds like too much contract and obligation for me, man. I sell my curry goat when it's ready, not on somebody else's schedule." Eddie: "Hey, I see how this could work. Bob doesn't need to promise the goat on any particular day, just that when somebody shows up at his grill cart and he's got curry goat ready, they can trade a pre-purchased promise for a plate of curry goat. Bob, I know you're almost always here when the Odyssey is in harbor, I'd front you EC$2000 against 100 plates - you move like 150 plates a month just at my place, right?" Bob: "yeah mon, you know I get EC$25 per plate at your place, too." Eddie: "I know, and I don't even ask for a cut because you help me sell drinks, but I also know when you roll that cart up the hill, you're getting more like EC$10 per plate up there. Plus, I'm fronting the money, there's still risk here even though I know you're good for it."* Bob was still skeptical: "I don' know man, puttin' chains on the workers don' sound good to me." But the more Bob thought about it, the more sense it made.
Bob talked it over with Rita, and she was very excited about the idea. She invited Gene over and asked him how she might use blockchain to help her get her mangoes out to the resort restaurants when they are ripe, but not yet rotten. Gene thought for a minute and decided that Rita might make a conditional option the basis of her blockchain, so whoever holds mango credits in Rita's chain has the right to buy that amount of her mangoes at a fixed price, when they're available. Maybe Rita can find people who are willing to pre-pay a little now to get her mangoes for a good price when they are ripe. Since the whole blockchain is an open record, people purchasing mango options can check whether or not Rita has over-sold her tree's likely crop for the year. The option price can be EC$1 for a small mango, EC$2 for a large, the supermarket charges more than that for ordinary mangoes, and the resorts will pay much more for good quality fruit. Each credit on Rita's blockchain* is worth either one large or two small "mango options." It's all a little foreign to Bob and Rita, but Rita was enthused enough that she took a class at the community college in contracts and finance to learn more and maybe help her explain to people who might purchase mango options from her. For Rita, even if people pay almost nothing for her options, it gives her a way to find mango lovers when the fruit is ready.
So, Gene and his friend Faythe set up a pair of recording servers. They set up Bob's blockchain to represent 1000 plates of curry goat. Again Bob was skeptical, he didn't want to ever be owing anybody 1000 plates of goat, but Rita explained how having too few shares avaialble would hurt market liquidity. Gene explained that Bob doesn't have to sell any plates of goat he doesn't want to, and when plates do change hands* there is a small transaction fee that is shared equally among all shareholders, so if Bob holds the majority of the shares he also gets the majority of the benefit from trading fees. Also, those trading fees will help to cover the costs of running the blockchain servers. Now Bob is really skeptical, but Gene tells him not to worry: for the first year he'll take one plate of curry goat a month to cover the server costs for him and Faythe, and after a year they can look at the real costs and see what makes sense. Bob says: "oh, now I get it, you want your curry goat for free! O.K. - I'll play this game for a year and we'll see what happens." Rita offers Faythe some mango options for her trouble, Faythe graciously accepts two mango option-credits per month even though she's allergic to mangoes.
ICO: Initial Curry Offering
Eddie makes good on his word and purchases 100 plates of Bob's curry goat for EC$2000. Eddie has a deal with Charlie already set up and he sells Charlie 50 plates for US$500. All that Bob and Gene know (at first) is that Eddie has split off 50 of his plates to someone else, since Charlie didn't identify himself in the transaction and he paid Eddie in cash. Charlie is happy because he has a similar system setup on other islands where guests going ashore give him some money up front and he gives them credits in an app in their phone. Then, when they are at participating places like Bob's grill cart, they can exchange their credits for services and goods like a plate of curry goat. Charlie is charging guests US$12 (EC$32.40) per plate of Bob's curry goat, but they're still happy with the system because they don't have to carry a lot of cash, and they can learn something about the places they are going to before they get there. For instance, Bob isn't 100% reliably available every time the Odyessy comes into harbor, but with the phone-app guests can check to see not only if he's there, but also when he's running low on goat and his best guess of when he'll be closing up shop for the day.* Bob has also completed some food safety and guest relations classes at the community college with great grades, and Gene linked evidence of these in Bob's blockchain which the guests' apps can verify against the college's open records, which include photos of a much younger Bob... So, now when they hit the dock and see Oscar's rusty grill right there, they can have more confidence spending their time walking up to Eddie's place to get the preferred curry goat plate from Bob, when he's around.
http://mangocats.com/ao/IslandLife.html [mangocats.com]
🌻🌻 [google.com]
(Score: 2) by hemocyanin on Tuesday October 01 2019, @05:44AM
Ummm -- I read it to the end, glanced at the link -- wondering exactly what about this is informative?