^^^^ This

I came to the conclusion a while ago that Josh invented Paycoin to give him a way to exit the Hashlet scam.  Since people "voluntarily" exchanged Hashlets he can then claim there are no damages from his original scam.. and Paycoin is just an alt-coin that failed. 

We need a word that encapsulates "cavalier" and "desperate" in the same concept.  I can't think of a single word that fits.  Josh certainly is unique, if nothing else.

BitJohn,

I appreciate your attempting to answer questions here.  So here are the questions that matter most IMHO from an ethics perspective:

As of today, how many XPY does Cryptsy or Project Investors LLC, or any of its or their respective officers, directors or shareholders/members hold (excluding only coins held for unaffiliated customers of Cryptsy)?  How were those XPY acquired, when and (if not acquired on an open exchanged) from whom?

What entity gave/sold the PC to Cryptsy?  Are there any "strings" (terms, conditions, contract, expectations, or requirements) relating to the "gift"? 

Does Cryptsy, Project Investors LLC, or any of its or their respective officers, directors, or shareholders have any existing business or personal relationship with H.J. Garza, GAW, Stuart Fraser, or Cantor Fitzgerald?

Did "Sara" really just moderate a Paycoin hangout in her bed, wearing a lace camisole that looks like it came from Fredericks of Hollywood?  I am all for informality, but these folks really think that they are going to be taken seriously?  It is like some Saturday Night Live skit.  I had to turn it off after 2 minutes.

Maybe they should just merge Paycoin with Sexcoin and be done with it.  Then they could do fully naked developer hangouts.  It would give us all something to laugh at after the Breaking Bad 2: Hashking season ends.

You can be forgiven for not following along 100% in this saga, but Coinfire.io was hacked repeatedly, and its editor and some writers were threatened and stalked (my words; actual facts as I understand it was dead rabbits were sent).

Coinfire's Mike (I believe the owner of the BTC handle) has said that he, and the persons at CF who were threatened, will no longer write articles due to the fact that they have been actively assisting with the investigation in order to protect their own lives and well being.

It is hard to argue with that, and the fact that they have (at least ostensibly) walled off the folks involved in the investigation for journalistic credibility purposes shows they follow basic journalistic ethics. 

As someone else mentioned, what is so amazing is how many of the educated guesses, "FUD", and speculation on this thread turned out to be 100% spot on (including the fact you mentioned above).

Eric, prior to the 5 Ph/s (or was it 4.5 Ph/s? whatever ..) order from Bitmain, what was the actual scope of the scrypt and sha256 operation?  That is an important question and nowhere in any of the email leaks or elsewhere have I seen any firm numbers.  Assuming you are coming clean as you now seem to be, you must have some pretty good idea about the hash rates that were in existence in September/October/November while the whole hashlet thing was getting pumped.

I call BS.  I know Josh is not the brightest bulb, but I repeatedly see him playing the dumb innocent victim now... he is setting up for others to take the fall.

Hope you are right.  A civil case, I would agree. Criminal he just needs to create reasonable doubt.  Many of the witnesses against him could be biased; the former lover accountant; fired former employees; Jessica who is mad about the accountant affair; Adam who may have invested church funds in the scheme; some employees appear to have taken BTC payments to evade taxes; etc. So many unclean hands.  Is there anyone associated with this who is clean?  Maybe Jonah, IDK.  I am just saying, conviction on "he said, she said" is hard when everyone has an axe to grind.  Evidence is king.

I tihnk you are both wrong.  From reading his emails, I would bet you 10-1 odds he will proclaim his innocence and lay the blame on others (Joe, Eric, the accountant whose name I keep forgetting, Jonah, Adam from the Church, hell maybe even Jessica, etc.).  He has already laid the groundwork in the emails if you read carefully between the lines.  He will say that he told Joe or Eric to spec out the data center large enough to support all the hashpower needed; he will say that he was shocked when he discovered that some hash power was "virtual" and that was why he initiated the 5 Phs order with Bitmain; former employees were robbing him, taking out BTC for phony cash advances; Stuart will have lied to him about Cantor's valuation and support for the coin; etc etc.

If any of you think that convicting Garza will be easy, think again.  There are some smoking gun emails, but nothing that he can't explain away and/or blame on others.  Of course, the feds have access to stuff we don't so they may be able to trace BTC to wallets controlled by Garza or have other evidence that is damning .. but from what I have seen a conviction (beyond a reasonable doubt) is not a certainty yet.. and the credibility of testimony from his former employees and cohorts will be critical.

Still looking for sellers at the above rates.  I have been able to complete one sale, looking for more to fill out my rack.

Especially interested in trading the S5 or C1 units .. I will give a better deal to someone who can do that trade, as I cannot use the S5/C1's in my data center and they are sitting around doing nothing now.

I have to object to this and other posts that attribute Garza's Brilliant Cock brain to a mere mental illness.  A person with bipolar disorder, ADHD, or even Narcissistic Personality Disorder could not use people, lie, scam and evade prison as long as Garza has.  Even with Narcissistic Personality Disorder, chaos would have taken over his life long before now. 

I used to think that maybe his behavior could be accounted for by some mental illness... constantly screwing up, overshooting his abilities, failure to plan, failure to execute could all be attributed to some mental illness like bipolar or severe ADHD.  If you look at my earlier posts, I used to believe it was equally likely that GAW could be explained by massive incompetence and I kind of felt sorry for Garza, and even at one point early on wanted to help him.

His emails though show his real self though ... tracking his wife, outbursts aimed at his closest associates for no discernible reason, threatening anyone who shows the slightest disloyalty, scamming even the scammers, using faked emotional relationships to help hide his scam (Stuart Fraser; the accountant and her possible love child, discarded when she became a threat; the coin developer referred to as his"pumpkin" etc.) ... all point to something a lot worse than a mere mental illness.

I am really glad that he cut me off early on, before I could offer to help out or I might have gotten sucked in too. Normal people who want to help others are at greatest risk to be taken in by this kind of person.

So please, don't disparage those with mental illnesses by ascribing Garza's behavior to something like that.  He is beyond mental illness and it does a disservice to people with real, treatable, mental illnesses.

I agree with Paul Revere on that point also... https://bitcointalk.org/index.php?topic=1033894.msg11155942#msg11155942

As long as Garza or GAW has any ability to dump more coins from the pre-mine or hyperinflation PCs, Paycoin should die.  So in the end, we may all be in full agreement because PaulRevere may be correct that there is no feasible way to blacklist all Garza controlled wallets.  My only point was that IF it could be done, I am not at all troubled by the legal or moral implications of blacklisting Garza controlled wallets in a hard fork ... not in the least if it could be done.

In any case, I have thick skin so I don't mind being skewered for things I actually say (as opposed to some who have made up or assumed things I did not say).   Not sure why you think I am particularly sensitive to criticism but in any case that is not true and I think you may have confused me with some other poster.

Taking a stab at summarizing as objectively as possible here:

Issue: Is it a good idea to replace Paycoin or fork Paycoin in such a way as to substantially reduce or eliminate the control and economic interests of Homero Garza and GAW?

Arguments in favor (in outline format):

1) There is a large and dedicated (some might say too dedicated) community of newbies holding Paycoin who have lost tons of money and will turn their backs on crypto forever if Paycoin is not saved for them in some form.

2) There are a number (not sure how many) of active developers in Team Paycoin who want to make this work, so why not let them try?

3) If successful, it would at the very least eliminate or reduce Garza's ability to profit further from the scam by selling off his pre-mined coins and hyper-inflationary Prime Controllers in the future (past is done, nothing we can do about that).

Cons - arguments against:

1) It was not just Garza, he had help and there is suspicion that some or all of the very developers trying to save Paycoin are doing so for their own benefit, so that they can reap the benefits of the Prime Controller hyperinflation and pre-mined coins for themselves.  This allows the scam to continue albeit with possibly different "owners"

2) The coin was a scam coin, and allowing it to continue to exist in any form is bad precedent/will encourage more scam coins

3) It is impossible to eliminate all of Garza's stash of pre-mined coins and hyperinflation generated coins since he has been mixing and transferring these amongst thousands of wallets, intermingled with customer hot wallets, etc.

4) Eliminating Garza's stash, even if possible, violates a fundamental moral premise underlying crypto that coins should not be destroyed or banned

5) Arguably, eliminating Garza's stash, even if possible, would be illegal as theft or conversion of property rights (this is the main subject of the exchanges between PaulRevere and myself, as I disagree with this particular point strongly).

I think that summarizes the main lines of argument, if I missed an argument let me know and I will add it.

FWIW, my position for clarity's sake is: ONLY IF all or substantially all of Garza's stash can be eliminated, and IF the centralized control and hyperinflation associated with Prime Controllers can be entirely eliminated (no Prime Controllers, every wallet stakes the same), then it could be worth doing if only to show the Paycoin holders that the larger cryptocommunity is not like the scammers they have been dealing with.  I do not, however, know whether that could be done.  Paul Revere's points about the impossibility of blacklisting all of Garza's wallets are sound and his blockchain analysis over the past few weeks has shown a lot of mixing and obfuscation; and if there is **any** possibility that Garza could end up benefiting from Paycoin 2.0, then it should not be done. But I don't see any harm in exploring ways that the community might be able to identify an blacklist Garza's stash, to see if there is some feasible alternative.

Note: The discussion presumes that in its original incarnation, Paycoin was a scam coin that was designed to and did result in a massive pre-mine and massive hyperinflation that benefited disproportionately Garza, GAW and the holders of so-called Prime Controllers, to the detriment of everyone else who merely bought Paycoin; and that Garza and GAW were integral to the exploitation of this scam.  Posts debating *that* presumption should be had in the original thread.

This will probably get the anti-lawyer folks up in arms, but here it goes:

A lawyer's primary duty is to his or her client, not the public and certainly not a potential defendant.  Except for certain limited instances, a lawyer is not required to fact-check a client to ensure that they are on the up and up.

The exceptions to that are:  (1) when a lawsuit is filed, because courts do not want to waste their time dealing with half baked  unsupportable claims, a lawyer must conduct a reasonable investigation to confirm facts and law, (2) a lawyer cannot provide advise or assistance to knowlingly aid a client in fraud or the commission of a crime (with apologies to Saul), (3) a lawyer must be honest and civil in deals with third parties (a lawyer could not lie in a C&D; for example, could not say "I have reviewed the Amazon agreement" etc.)

There are a few other very limited exceptions but those are the big ones.  That is **only** the ethical duty, however, not whether its a good idea to proceed to a C&D on the word of your client alone.

As far as whether it was a good idea for BM to proceed to a C&D without conducting an investigation, that is a different question as I said above.  It is **not** a good idea for three reasons at least.  

First, it does a disservice to the client IMHO.  When the bluff is called, the client (and law firm) lose a lot of credibility when they fail to follow through with a lawsuit.  Clients frequently ask me to send C&Ds to try to bully smaller companies, and I always say the same thing: I will only send a C&D if you are able to provide a sufficient retainer to pay my fees throughout a lawsuit, and you are ready, willing and able to initiate a lawsuit if there is no compliance by the deadline.  No bluffs, they are bad for the client's and the firm's reputation.

Second, sending a C&D without an investigation for any kind of internet activity risks a major backlash (as happened here).  It is a pretty common defense to simply post the C&D for the world to see, and let the public response do its job.  Absent a real wrong, most people hate it when lawyers send C&Ds (especially to journalists or web sites) .. doing so almost ALWAYS backfires badly, and I personally have dissuaded several clients from making this mistake.

Third, for the reasons above, if I send a C&D client I need to be ready to follow through with the lawsuit.  Which means, I won't send a C&D without first making sure I can sign my name to a lawsuit.. which in turn means I have to conduct an investigation anyway because filing a lawsuit requires such.  But that is just my practice (and the practice of most top lawyers I know), not an ethical requirement.

I am not aware of any lawsuit actually filed by Garbozo or GAW or any affiliate against Mike/Coinfire.  I think Mike stated very recently that he was initiating a lawsuit and criminal complaints against those involved in the DDOS and hacking and threats against him and his staff, but I do not recall seeing or hearing about any subpoena or civil discovery.  I may have missed something.

There are two different issues here.

1) How much due diligence should a lawyer do, as a matter of best practices, before sending out a C&D?  My answer to that is a lot more than BM did here.  If they had insisted on seeing all communications and contracts supporting GAW's claims they probably would not have sent the letter.  I would not send a C&D without conducting the same level of diligence that would be required before filing a lawsuit (which is to say, I need to be convinced myself that there is a good case). 

2) How much due diligence is required, as an ethical matter, is a different question and, unfortunately, there is not a lot of diligence required.  As far as I have ever seen in ethics opinions, a lawyer sending a C&D is generally entitled to rely on his client's affirmations without further investigation.    Actually filing a lawsuit is a different matter, as the lawyer is obligated by both federal and state law to conduct an independent investigation.

I hope you are not suggesting that I am involved in any way in XPY.  I have been calling this a scam since the original thread, and I even predicted back in October that Josh would exit the scene and blame it the SEC and FinCEN!

I hold exactly 1 XPY and 1 Hashtaker, which I bought only to create a second account on Hashtalk when my first account was shadowbanned (for asking difficult questions about the pre-mine).  I have used my account on Hashtalk to ask questions and try to bring some light to this scam as best I could without getting shadowbanned again.

My belief is that it might be a good idea to fork XPY to get rid of all Prime Controllers and get rid of wallets known to be associated with Josh/GAW.  You can question that all you want, but if you want to try to make me a part of this scam you better have your facts straight.

I will be happy to compare qualifications to make this statement with yours.


Really?  So in your crack legal analysis, all coin ICOs must be public, open to all?  You cannot limit for accredited investor status?  You cannot limit participation by criminals?  You cannot simply pick your friends?  This is a new legal idea, the ICo must be open to all.  Please enlighten us on the laws which require such.

I agree with your point that it is probably impossible to identify all of the criminals, shysters, fraudsters, aiders and abetter, etc. in this scam so maybe its a moot point.

However, you keep saying that forking the blockchain and blacklisting coins in the process would "take or destroy" someone's property.  You are conflating "taking or destroying" of certain XPY coins (the private keys proving ownership of a coin) with taking or destroying one's ability to use and commercially exploit that same.  Conversion/theft is only concerned with the former, not the latter.

That is way too simplistic (and wrong).  I am not going to argue the moral/ethical issue, just the legal point.

1) First, nothing would be "taken" from the possession of GAWCEO.  Conversion (which is the legal cause of action for theft), whether civil or criminal, requires that the wrongdoer take from the rightful owner possession of the property.  The loss of a possessory right is central to a claim of "theft"/conversion.  A fork in the blockchain would certainly interfere with GAWCEO's ability to use that which he possesses, but would not deprive him of possession of anything.  Comparing GAWCEO's possession of XPY and wallets a microsecond before and after the blockchain fork, there is no loss of any possession. 

2) You are really making an expectations argument (estoppel) or an implied contract argument (breach) I think, but that is not a theft or conversion issue.  And I think any claim by Josh on an estoppel theory would fail (he cannot assert an equitable argument because he has "unclean hands"), and an implied contract claim would fail for the reasons previously stated (new contract, new consensus does not breach old contract).

Consider this:  If instead of hard forking, the same folks get together and create a new coin called Paycoin Redux (PAX).  They do an ICO in which any holder of XPY can obtain equivalent value pro rata percentage of PAX coin by exhanging their XPY for PAX; except Josh and any person or entity that can be identified with Josh as an affiliate or family member is banned from ICO participation.  The XPY exchanged is destroyed.  The result of this would be exactly the same as a hard fork, but you cannot possibly claim anything morally, ethically or legally wrong with that.