Quote from: imp0ster on October 22, 2014, 01:21:49 PM

I am still wondering about the legal aspect of this, are investors actually punishable by law? And if they are, are the site owners punishable for running off with the funds?(I'd imagine so)

Investors did commit a crime (technically) by investing in the site. Gamblers committed a crime by gambling on the site. These are minor crimes, but they are still crimes, which is why there is no civil remedy for you to sue to recover your funds. I don't see authorities being concerned with charging any gamblers, they'd be more concerned with going after the guy running the gambling operation.

On that side of things, the site owner committed many crimes: running an unlicensed gambling site, selling unregistered securities, and ultimately conversion (theft) of investor and gambler money.

There's basically three ways I can see to pursue this. Civil remedy (suing in court for money), administrative procedure (SEC or state regulatory agency gets involved for selling unregistered securities and conversion of investor funds), and criminal charges.

As I've already stated, civil remedy is out. You can't sue to recover funds involved in illicit activities.

On the administrative procedure front, there are several problems. One problem is you don't have an identity, and you don't have proof of a security. If this was a straight unregistered securities case, you could go to the SEC and say "This guy sold me securities, here's the written promises he made (the contract or security), my proof of ownership, and by the way he's also run off with my money." The SEC (or a state securities agency) would probably take up the case and investigate, then charge him with various securities violations and then seek a court order to disgorge his ill-gotten gains and seek to return that money to burned investors, and also slap him with a civil fine for breaking securities laws. Then they may refer the case to the State's Attorney to pursue criminal charges. BUT, without documentation and contracts and all the very basic things that accompany even an unregistered securities case, I can't fathom any regulatory agency even pretending to waste their time on this. With no identity, contract, or proof a security existed, you're basically just a guy who gave some stranger on the street some cash, and then got mad when he didn't give it back and ran away. That's likely why there's no regulatory agency that would touch this.

Finally, on the criminal side, you have that this guy ran an unlicensed casino and also stole money. Without an identity, it's hard to see cops taking this seriously. If you loaned 20 bucks to your friend and he never paid it back and you called the cops, they would tell you it's a matter for the courts. They won't arrest him, because it's a civil matter, it's for the courts to determine a loan/contract existed, that the guy didn't pay you back, and that you are entitled to the money, and they would issue an order for him to pay you back. As I've already discussed, civil remedy is out. That basically leaves running an unlicensed casino. This is probably your best bet, but again, without an identity, I don't know how seriously any law enforcement agency is going to take this.

That's not to say don't try any of these options. Just temper your expectations about how much recourse you actually have. If you had an ironclad identity, I would go to the FBI and say this guy was running an illegal bitcoin casino and he stole the money too. Of any agency, it would most likely be their jurisdiction, because they're a federal agency and the gambling laws are probably federal. With just suspicions on who the identity is, I can't see them launching an investigation into this, but I could be wrong!

And of course, my base assumption here is whoever this guy is, he was US-based. If he was foreign, this analysis is moot.