I don't think that the 'we both made a mistake' idea is helpful here. Obviously they both made a mistake.
If they both made a mistake, and that mistake caused a loss, then they should split the loss.
When, I lend to someone and 'we both made a mistake', it is the debtor's responsibility to take the hit for the creditor.
No, that's not so. If the creditor makes a mistake, the creditor is responsible for the harm that mistake caused the debtor.
If I make an equity investment and 'we both made a mistake', then the investor takes the hit.
It depends who makes the mistake.
If so, I have some 'mistaken' student loan debt to clear. Is there a court of JoelKatz available somewhere?
If both you and the entity you borrowed from made a common mistake that caused the loss, then you should split the mistake. It doesn't matter if it's student debt or not.
I'll have to disagree with you here JoelKatz.
The contract was made on assumptions that Patrick made, sure. But that doesn't mean he can back out of his contract scot-free just because his assumptions were wrong.
They're not "assumptions that Patrick made". They're beliefs that both parties to the contract had, without which neither of them would have entered into the agreement. And I never said he could "back out of his contract scot-free".
If the bank loans me $1,000, and I wanted to use that $1,000 to invest in a business that I assumed to be risk-free, but it turns out the investment DID have risk, and I lost the $1,000, would the bank just let me off the hook? Nope, they'd still want me to pay back the loan, regardless of what my assumptions were and how those assumptions turned out. Would they hit my credit score when I failed to pay the loan back? Of course they would!
Right, because that's not a common mistake. That's a mistake made by only one party. I'm talking about a common mistake. (Please see my example of the contract to purchase a partial interest in a car.)
We're hitting Patrick's Bitcoin community "credit score" because he failed to hold up his end of the bargain. It doesn't matter that he didn't realize he was investing in BS&T passthroughs - that was a failure on his part to do due diligence, and it is his responsibility to own up to that mistake and still make payments according to the contract.
That's ridiculous. Those lending to Patrick made precisely the same failure with precisely the same consequences.
Now, if he had worded the contract with a clause something like "If my investments fail, then your investment with me is worth nothing," then I can definitely see a case for NOT giving him a scammer tag. Otherwise, this is nothing more than him failing to hold up his end of the agreement, and he should get the scammer tag until he makes good on the promises made to those he contracted with.
The contract couldn't have had such a clause because neither side believed that situation was possible. The contract simply doesn't say what happens in that case. There is no equitable reason Patrick should take the entire hit. It is only equitable to split it. Both parties are equally culpable, both parties made the same mistake. The contract doesn't say who bears the costs because neither party thought that would happen.
If there's evidence that either Patrick or his lenders believed this outcome was reasonably possible, then my argument doesn't work -- it's not a common mistake. But it's quite clear that Patrick would not have loaned money if he believed this was possible. It's idiotic -- he'd just invest in Pirate himself. And similarly, his lenders would not have lent to him if they believed this was possible -- they'd just have invested in Pirate themselves. Both parties were victims of dishonest borrowers.