
Reddit Users Lose Real Money After Meme Currency Bot Dies - syntheticnature
http://gizmodo.com/reddit-users-lose-real-money-after-meme-currency-bot-di-1795125165
======
jstanley
> his company is broke, he’s broke, and the bot is broke _because he spent all
> the coins_ , after he himself ran out of money.

(emphasis mine)

How did he think this was remotely acceptable? Jesus Christ! Don't operate
custodial accounts if you don't understand the consequences. You _can not_
just spend other people's money, no matter how broke you are...

If that's your only option, give everyone their money back and declare
bankruptcy.

~~~
greydius
> You can not just spend other people's money

This is exactly how banks operate.

~~~
gnode
This is why banking regulation and licensing exists. It's also well understood
that a bank will do this with your money, while a regular custodian should
not.

If he'd made it clear upfront that the funds would be loaned to a risky
business venture, with no reward, and people still chose to trust him with
money then arguably that would be fine from a moral standpoint, but he didn't,
and I'm sure he didn't because he knew nobody would have agreed to it.

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whack
It's worth pointing out that this fiasco has nothing to do with
cryptocurrencies. In the absence of regulations and legal enforcement, the
exact same thing can happen with any bank or brokerage account. _" We went
bankrupt due to subprime bets, so we're taking all of our customers' savings
to bail ourselves out. Fight club, lol"_.

Given that this was a legally registered business, I hope this scumbag faces
criminal prosecution and imprisonment. It's time we started locking up white-
collar-thieves the same way we lock up burglars.

~~~
tdb7893
I grew up in an upper middle class area and a lot of my friends were a sort of
radical libertarian. The most interesting thing about cryptocurrencies for me
was them slowly realizing why a basic level of financial regulation is
important.

~~~
krapp
>The most interesting thing about cryptocurrencies for me was them slowly
realizing why a basic level of financial regulation is important.

Anarcho-capitalism is all fun and games until you discover you're not really a
wolf among the sheep.

~~~
DougN7
Fantastic way of putting it!

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MichaelGG
What'd he spend it on? Is this really hosting intensive? I'd think it'd fit in
free tier usage or something. And even if not, it can't be more than what, a
hundred or two a month? I don't follow what "creating a business" actually
meant as far as why his costs went up. He was running a bot. So, you get an
LLC, no big deal, it changes nothing. That's like what, 50$ in some states?

What am I missing​? Unless it comes out that he started hiring people (to do
what??) or if he quit his job and started spending people's money for his rent
-- why'd he suddenly incur any serious expenses?

Also what's it got to do with crypto currencies per se? If banks offered some
super easy API for USD-USD transfers and he had shoved all this money into a
WellsFargo account would he somehow not have spent it?

~~~
mcintyre1994
> According to Mohland, in 2015, all Wow Such Business employees were laid
> off, including himself, and he began pouring his personal funds into the
> service to keep the bot alive.

It sounds like at some point, for some reason, he had employees. Unless he's
just using weird wording and he was the only one.

~~~
xigency
Does this mean he was running on wallet funds from the start? It doesn't sound
like he had any investors or any revenue at all.

~~~
MichaelGG
He raised $445K in a seed round. The article is really crap and doesn't fully
explain what he did. [https://dogetipbot.wordpress.com/2014/12/05/on-tipping-
dogec...](https://dogetipbot.wordpress.com/2014/12/05/on-tipping-dogecoin/)

I think this story could have gone "we raised $x million in series A" and have
some sort of exit in some hype-bubble and he'd be lauded as a genius.

Edit: It seems that they built this:
[https://honeyledger.com/](https://honeyledger.com/) \- chargeback free way
for streamers to get money from fans. Not a bad idea.

------
AdamSC1
I knew Mohland and the DogeTipbot project pretty well. He did have a few
employees mostly working in customer support.

He was a stand-up guy and a strong advocate for the Dogecoin community. People
are talking about the fact that he liquidated the assets from user wallets as
a malicious action, and while I agree it was a terrible choice, I see it more
as a bad decision.

Backed into a corner he tried to leverage a businesses asset holdings to keep
it a float in time to recover. Depending on your jurisdiction this is
something banks do all the time as part of your balance is not liquid and
invested elsewhere.

The issue here is his business didn't recover and wasn't ever going to.

Last I heard Josh's plan was to keep the main part of the bot free and charge
for websites and streamers to accept tips from the Dogecoin community. He
wasn't an idiot like this article tries to portray. There was a reason he was
keeping the consumer end of things free. But, the micropayment landscape had
more competitive options than a niche currency.

All in all its sad to see the business fail but this was poor business
choices, not maliciousness nor stupidity like the article tries to claim.

~~~
reverend_gonzo
For what its worth, customers' fund are not "business assets". He had no legal
right to spend that money.

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.

~~~
JustAnotherPat
He didn't spend anybody's money. He spent their dogecoin which is a bunch of
made up gibberish.

~~~
ifdefdebug
FWIW, he had no right to spend his customer's made up gibberish either.

~~~
AdamSC1
Had no moral right. Did he have a legal right? That's more complicated.

(Still don't think he should have)

------
VMG
Sad, but predictable. There's a mantra in Bitcoin: if somebody else has the
private key, you don't own your cryptocurrency.

~~~
mnm2
Any bank could "just" spend your money on your account

The central bank just prints money and​ thus steals 'value' from you
(devaluation)

It's a matter of trust into an entity

~~~
hashkb
Ok, sure. Even if banks can be slimy, they can't be nearly as slimy as
anonymous internet folk working in unprecedented/unregulated legal areas.

All trust is not equal.

~~~
nv-vn
He wasn't anonymous though...

------
r721
The comments from reddit posts are worth reading:

[https://www.reddit.com/r/dogecoin/comments/69vycc/important_...](https://www.reddit.com/r/dogecoin/comments/69vycc/important_im_taking_dogetipbot_to_a_server_farm/)

[https://www.reddit.com/r/dogecoin/comments/6a1eh0/options/](https://www.reddit.com/r/dogecoin/comments/6a1eh0/options/)

~~~
aaron-lebo
Yikes.

 _So, you stole everyone 's money to support your personal business and then
claimed bankruptcy once all of everyone's money was gone. Is that correct?

Then you complain when some hacker takes the money from the ponzi type scheme
your running and now the result of all of it is, everybody lost their money
including you?

Bravo Mo_

How do people like this exist?

------
sarreph
Real shame. As an active community member, I can tell you that mohland was
pretty much revered by the Doge members, because of how influential and
prolific DogeTipbot was across the sub. People were tipping each other on a
huge scale of engagement unseen anywhere else (by me, anyway).

Then, it turns out not even our dev-mascot can be trusted... What a pity.

It's also interesting to see some of the discussions around the creation of a
decentralised tipbot... But it seems like this would not be possible[0],
because the keys to the wallet(s) would always need to be in someone's hands
(or a few people's anyway).

[0] -
[https://www.reddit.com/r/dogecoin/comments/6acho0/a_decentra...](https://www.reddit.com/r/dogecoin/comments/6acho0/a_decentralized_reddit_tipbot_is_not_possible/)

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rjtavares
I had some of those. I didn't really lose "real money".

------
gdulli
Why does it always seem like "Lose real money" is the "E pluribus unum" of
cryptocurrencies?

~~~
mikeash
Because "crypto" is Latin for "things will definitely go wrong" and "currency"
is Latin for "real money."

~~~
mdemare
Crypto is Greek, actually.

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soared
Can someone explain how these coins went from zero value to having value? The
articles kind of skips over that part, saying that getting listed on exchanges
made it worth something.

So simply being able to trade it for real money (+ hype, + limited supply)
made it actually worth real money? The only thing that needs to happen for a
currency to exist is liquidity and x number of people to think its valuable
(who buy/sell it)?

~~~
pjc50
> The only thing that needs to happen for a currency to exist is liquidity and
> x number of people to think its valuable (who buy/sell it)?

Yes? Of course, trading can vanish just as quickly as it came.

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zkms
I knew about exit scams
([https://en.wikipedia.org/wiki/Exit_scam](https://en.wikipedia.org/wiki/Exit_scam))
when it came to illicit sellers/marketplaces for drugs but I'd never thought
that I'd ever see an exit scam for a tip bot for a meme cryptocurrency.

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look_lookatme
> In finance, customer funds are supposed to remain segregated from the
> business’s funds. They live in a separate legal universe, and this rule is
> meant to insulate the business and customer from each others’ failures.

Can we get a source other than Gizmodo?

~~~
pjc50
[https://www.handbook.fca.org.uk/handbook/CASS/7/13.html](https://www.handbook.fca.org.uk/handbook/CASS/7/13.html)

Admittedly that's for serious investment rather than daft things like tipbots.

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mynewtb
I always thought Moolah and Mohland shared a remarkable amount of characters.

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dacox
Wow, the author has a huge chip on their shoulder when it comes to
cryptocurrency. Also, how is Gawker still in business?

~~~
simonw
Gawker was acquired by Univision last year.

