Headline is misleading: the founder has threatened to doxx and report them to the IRS if they don't return funds which according to the Compound protocol, they rightfully own anyway.
> which according to the Compound protocol, they rightfully own
And that is one of the biggest misconceptions of crypto stuff.
Law and contracts (1) determine who owns what, not who happens to currently hold it.
That's why the founder can threaten them with the IRS, because they (likely(1)) do not rightfully (as defined per law) own it.
This is also why NFTs are kinds stupid, because you totally can sell someone a NFT which "claims ownership rights" without selling them any ownership rights legally seen. Sure it's most likely fraud as you deceived people, but only if. So telling people you sell them the NFT but not the think behind the NFT would make that pretty legal. Like you can sell a certificate about the correctness/quality of a picture without selling (or even having) that picture.
(1): Smart contracts are not contracts, they are computer programs. They might also contain contracts, but that doesn't mean that just because something is done in a certain way in a smart contract it is legally binding, legal, or anything (Well, that's also true for contracts themself).
> That's why the founder can threaten them with the IRS, because they (likely(1)) do not rightfully (as defined per law) own it.
This statement is nonsensical - the IRS has no enforcement mandate for theft/fraud, nor does it have any authority to return stolen property. All the IRS would do is say "Hey, I heard you got an extra $NN last year - please pay your taxes on it".
It could even be argued that by reporting people the the IRS, the founder is implicitly admitting that the current possessors actually do own said crypto, otherwise they wouldn't owe any tax on it.
Illegal activities. Income from illegal activities, such as money from dealing illegal drugs, must be included in your income on Schedule 1 (Form 1040), line 8, or on Schedule C (Form 1040) if from your self-employment activity.
>Stolen property. If you steal property, you must report its fair market value in your income in the year you steal it unless you return it to its rightful owner in the same year.
> This is also why NFTs are kinds stupid, because you totally can sell someone a NFT which "claims ownership rights" without selling them any ownership rights legally seen.
It seems that the only thing you own when you purchase an NFT is the NFT itself. Not a little jpeg that it points to; just the bit of code on the blockchain.
It's kind of tautologically stupid. You buy a receipt that states you own that very receipt.
It’s more like a deed. Even if you possess the deed, someone can still take you to court because they actually own the property. But a deed can still be a useful tool if most of the time whoever possesses a deed owns the house.
But if people buy deeds instead of the house itself (i.e. most NFTs) then the link becomes broken and the signifier of “ownership” is less useful.
Deeds are legally binding, NFTs are nothing at all. You can make as many or as few as you want, and they come with anywhere from 0 to full rights to the underlying. Also the "underlying" is literally just a URL with no restrictions. What it points to could just disappear one day and SFYL. Should have checked the JSON blob you were buying to make sure it pointed at IPFS or something.
Possession of a deed is not legally binding — if someone robbed your house and took your deed, clearly they don’t own your house.
The deed is only a signifier of ownership, nothing more. If you can prove in court that the possession of the deed itself was improperly transferred, the state will return the deed to the rightful owner. Or annul the old deed and create a new one. (At least in the US.)
Sorry for the delay, what I meant is that the concept of NFT has no protection under law whatsoever. It means literally nothing. It's a bearer instrument for nothing.
As you say, a deed is not a bearer instrument but the concept of home ownership which it symbolizes has legal protection.
> But if people buy deeds instead of the house itself (i.e. most NFTs) then the link becomes broken and the signifier of “ownership” is less useful.
And as it is used for digital goods, the signifier of “ownership” is already broken, as multiple people can have a copy of the item without their being any ownership conflict, unlike a house.
NFTs likely make sense in a context like a metaverse where the bit of code is the law, and owning a digital item is the equivalent of owning a physical item within the metaverse.
> That's why the founder can threaten them with the IRS, because they (likely(1)) do not rightfully (as defined per law) own it.
This seems wrong. Here's the quote from the founder:
> Otherwise, it's being reported as income to the IRS, and most of you are doxxed.
It seems to be "return it or else it will count as your income," which seems... weird. Do most crypto people just not pay taxes on crypto? How is this a threat?
Most of the people I know that make any serious money on crypto definitely do report it, which made the founder's IRS thread confusing to me as well. If anything, I'd be more likely to keep it after hearing him say that (go ahead, report me to the IRS, I was already planning on paying taxes on it).
In fact, that threat almost makes returning it the riskier move. Are they going to report all of these transfers to the IRS? Will the IRS consider it income, and then a gift back to compound if I return it?
This puts to words the uneasy feeling I've had towards NFTs.
The thought experiment that made this concrete was a sort of reductio ad absurdem:
Let's say for a moment that NFTs win worldwide support and begin to be used as proof of ownership for everything. As part of this movement, the Louvre registers an NFT signature for each item in their collection.
Now, let's say a nefarious actor manages to use social engineering and convince a naive Louvre curator to transfer the NFT ownership of the Mona Lisa.
This bad actor promptly goes to Sotheby's and asks them to list "his" Mona Lisa for sale.
---
Of course, the Mona Lisa would not go anywhere. The French government would never allow it. This is an extreme example but can be walked back to less and less valuable items: would this work for an NFT of a house, a car, a computer, etc?
Unless the state decided to universally and with no exceptions enforce ownership of NFTs, they are ultimately worthless.
This isn't completely unlike a deed to a house. People have conned folks out of their deeds to properties, and sometimes the transaction is upheld and the bad actor gets to move into a house, and sometimes the transaction is recognized as invalid, and nobody gets kicked out of a house they've paid for.
Most developed contries have digitized their deed system, so I am not sure how you can con someone out of their deed.
Also, back when we did use physical deeds, there generally was owner’s copy and land office’s copy, and on the back of the deed would be the transfer history.
So to con someone out of their deed, you would not only need to get the owner’s deed, but you would also have to get your name added to the land office’s copy.
> Most developed contries have digitized their deed system, so I am not sure how you can con someone out of their deed.
Not the US*. I mean I guess they are digitized in the sense that records are typically published online electronically, but it is all still based off these bits of paper going back and forth, there is not like a database of ownership.
> Most developed contries have digitized their deed system, so I am not sure how you can con someone out of their deed.f
"Digitizing" something doesn't make it invincible to con artists - there's really no difference between me conning you into signing over a deed if it's paper or digital.
Nobody on Alpha Centuari cares how much Jeff Bezos owns either. All ownership is contextual, it only looks like we have universal rights enforcement because of the powerful state acting as middleman.
Therefore I have to conclude that NFT usage is an extremely radical act against state power, because what it says is that the state doesn't matter, this blockchain(the one you are using at that moment) does. And you are accepting that your rights end where it does, too, so you had better trust the community.
Thats not different than other forms of proof of ownership on paper or in some database. If somebody steals or defrauds you, you can go to the authorities and they might act on it. That does not make those instruments useless.
Compound protocol is not a legal person thus has no rights. The VC governance voters (Polychain Capital) should be responsible for pulling the trigger and sending the tokens to random people around the world. More here, plus the actual bug post mortem
That's why the community is talked about so much with regards to NFTs, because if you get the right community leaders, like Snowfro from Artblocks, you know you're in good hands with an ethical player. But to buy stuff from some random creators no one's heard of, can get you into sticky situations. And photo NFT's are even more troublesome.
...and this is supposed to be the better alternative to something like central banks with leadership appointed by elected governments! Because you can never trust any institution!
It’s not, but “give us our money back or we’ll report you to the IRS” strongly implies that they were willfully assisting in tax avoidance before. It might even legally be blackmail, if they’re aware of any crimes their customers have committed.
Except that recent events regarding Citigroups incorrect $900M payout on the Revlon bond shows that in fact grown up finance will sometimes say, actually, the law is the law and the contract doesn't cover this, so thanks for the money.
This was a case where the bond holders did have some claim to the money, but it was clearly an error.
> This was a case where the bond holders did have some claim to the money, but it was clearly an error.
You refer to recent events, and I don't know how recent, so maybe I missed something; but my understanding was that the finding was that it was reasonable for Revlon to believe when they received the fund that it was a legitimate payment, not just an error. Of course in retrospect (e.g., when Citigroup calls and says so!) it is clear that it was an error, but the legal argument, whether or not you buy its truth, was that it was not clear at the time. I think that this sort of finding in which both grown-up financiers decide not to be chummy about misplaced funds, and the law sides with them in not requiring them to do so, is comparatively rare.
I'm a little foggy on details, but I remember reading that the bond holders had been kind of mistreated before all this. Something to do with reorganizing or splitting off valuable parts of the company. The bond holders weren't too happy as it was beginning to look like they might not get their money back. So it makes sense why they would not be quick to cooperate and return what they initially thought were early payments.
"Better" is debatable. If you've ever actually wired money to scammer, you'd know that the banking system isn't one giant kumbaya circle run on gentlemen's agreements to Do The Right Thing, and you were rolling your eyes through the whole thread[1].
At most, it works like that for anyone rich or working on behalf of a big firm, which isn't exactly a ringing endorsement. And don't you worry, cryptocurrencies are just as capable of reversing transactions of those with the real power! [2]
I think what that twitter thread points out is that #2 is harder and less common in crypto (for better or worse) in the current state. What would be a trivial correction in the normal system isn't here.
There are also a lot more ways for regular people to reverse transactions, but I take your point about how hard it is to reverse wires to scammers.
founder is clearly an asshole but "reporting it as income to the IRS" probably doesn't count as "threat of initiating criminal proceedings" as it's likely something that they are enjoined to do anyways.
Amusing as the founder then would be outright saying he knows what criminal activity has been going on and exactly who is up to it ... and is willing to use that info if he see fit.
That would seem to present all sorts of risks for his users, and himself, legal and otherwise.
Not really? There are things that you're not required to report to the IRS that others can use to underreport income -- for example, the identity of which contractor you made small cash payments to. Reporting their identities to the IRS is not illegal, but neither is failing to.
(Also, I assume you mean tax evasion? Avoidance is the legal one.)
Not sure that makes any sense... if users held the assets before, they have an asset with unrealized gains. When it transfers ownership, those gains are realized.
> [...] strongly implies that they were willfully assisting in tax avoidance before.
It does nothing of the sort. It's a enormous leap based on an assumption of bad faith to go from expecting protocol users to sort out their own personal tax situation to "willfully assisting in tax avoidance."
> It does nothing of the sort. It's a enormous leap based on an assumption of bad faith to go from expecting protocol users to sort out their own personal tax situation to "willfully assisting in tax avoidance."
There are obviously lots of subtleties here, including places where no-one knows how the legal implications will shake out, but "expecting … users to sort out their own personal tax situation" isn't always an option; for example, my bank isn't allowed to assume I'll sort out my own personal tax situation and must report my interest earned, whereas, say, Amazon is allowed to make that assumption, and so need not report the items that they have sold to me. It could be that this is a more Amazon-y situation, but it could also be that it's a more traditional-bank-y situation. Probably even the IRS and Leshner, but definitely those of us who aren't involved in the situation, don't know which it is.
Precisely, which is why the jump to "strongly implies willfully assisting in tax avoidance" comes off so poorly. In my opinion, it not only mischaracterizes what is happening, it imputes ill intent to boot. Guidance for DeFi apps is poor currently and policy in this area is actively being legislated. In the meantime, shifting the onus for tax reporting back onto individual users !== willful assistance in tax avoidance any more than companies not witholding income taxes from payroll pre-WW2 was willful assistance in tax avoidance.
Further, since these transactions are all captured on a public ledger, anyone using this for tax avoidance is really just electing to pay their taxes later with massive penalties and possible jail time once the IRS gets around to tying addresses with unreported transactions to fiat on/off ramp transactions that are KYC'd.
> Paying taxes on free money isn't the end of the world.
Playing devil's advocate: it's not exactly "free money", it's free "tokens" of some kind, which might not be convertible to money at the same rate which was used to estimate the tax. If the tax amount was assessed at the value the tokens were supposed to have today (based on what they recently traded for at some exchange somewhere), but you were too slow and only traded the next day and the price paid for these tokens has fallen heavily, you might have to pay more in tax than the money you can get from these "free tokens". So yes, it's not hard to imagine a situation in which paying tax on that "free money" can be "the end of the world" for some.
Agree fully with this point if it is considered income and not a gift.
Let's assume the income case, a qyestion:
What would happen if someone took these coins then transfered them to a new wallet while claiming that their private key was compromised. So "theft" essentially. Would they still be on the hook for taxes?
The real downside to crypto to me is that there is no ownership, only proof of authentication credentials ownership.
From position of ignorance, I assume broadly same as being paid and than saying dog ate your cash on way Home. Crypto is not the first opportunity for dishonest actors to do dishonest things (it's just more fun to watch as they proclaim princioles and future and innocence :-)
So just offload ~35% or whatever it is to cover the taxes in anticipation that they're reporting it to the IRS. Not sure if it qualifies as a gift though, which may be taxed different than income.
The giftor pays the tax in the US, not the person receiving the gift. And only under certain scenarios. Practically speaking, "gift tax" is usually not a thing for what most people would consider gifts, but always speak to a CPA and probably attorney, etc. etc. etc..
In the US, you only pay taxes on income and gains. In other words, you’re not going to pay taxes on those tokens until you redeem them for fiat currency. The tax is an percentage of the fiat currency you receive, not the token value.
Just like stocks (you don’t pay for any changes in value to the stock until you sell it for fiat currency).
Crypto is taxed as income. Everything is taxed as income. You are only taxed on gains if you have a cost basis and are trading the tokens, but otherwise if you are compensated via tokens you owe income tax on that whether or not you convert it to fiat.
Yep, not just stock grants, but anything. For example you find a bug in an airline, and report it and they compensate you as a thank you with 200k airline miles... you now owe income tax on those miles.
Based on the value of the "item" for example airlines will assign a value to these miles ie (100,000 miles worth $1200) - or something like that. Otherwise, I don't know. I'm not an accountant/cpa, but I know that this stuff is taxable whether it's tokens or ketchup packets.
Imagine that, they tax you on a special “number”! Do they accept Crypto? If not, please point to the money they want to tax.
They can’t have it both ways. Either crypto is an equivalent to money or it isn’t. If it is, accept it. If it’s not, tax it when the money “appears” out the other end.
The government does not accept RSUs at tax payment. Instead, you pay tax as if you were paid the amount said RSUs are worth at the time you received them.
Basically the current trade value for the non-dollar item is your income on it.
There are some exceptions like exercising stock options where you’re taxed for the difference between the strike price and the fair market value at the time of exercise (I’m not sure why the law is this way).
The difference between the strike price and market price is the value of the option--its the money you otherwise would have had to pay to buy the stock if you didn't have the option. That's why it is so.
So tax the gain on sale of the stock - there's no good reason to tax it on exercise (especially when the stock is illiquid and the price can still go down).
Because your trading thing A for thing B. Suppose you could trade stock for a Yacht without income taxes applying. That’s the kind of loophole everyone buying a yacht would use, especially if you could use a near cash equivalent like gold instead of barter.
The difference between stock and stock options might not seem like enough to matter, but it’s simply the same generic rule applying.
I'm not sure this follows in the case of options? You have a contract to buy stock at X price. You do this at a discount and get the stock. You could just tax the gain on the stock on its sale with existing tax law and you could do this specifically for options if having some broad law would create weird exceptions like you suggest.
ISOs existed to correct for this failure in options, but the income at which AMT removes that protection hasn't been updated substantially since it was created so this protection no longer really covers exercise. I also don't really understand how it could be abused.
My change would be to have option exercise pay no tax on the spread, with all taxes payed on gains on sale.
As it is, people with massive wealth can exercise when there is no spread (because they have lots of cash already when the shares are granted to them) or they get special early exercise via the 83b election with the IRS and special access from their startup.
The people that get hit hardest by this are regular employees starting out that don't have lots of cash to exercise when the spread is zero.
Changing the law would of course change the system but paying people with options has significant economic and political implications. The current solution is for companies to agree to buy back enough shares to cover the tax burden when people exercise their options.
It might even be the best way to legitimize (legally launder?) the money.
If I receive $XX, would happily pay %Y of that to stay above board. If the IRS wanted to audit me, my personal war chest is now $XX-%Y greater than it was before and more than adequate to cover whatever past (accidental) tax errors I may have had in the past.
Can’t the people who have the money just pay the tax themselves? Seems like the easiest way to keep the money and stay on the right side of the threat?
EDIT: Also profitable, taxes should be less then 90%. Just out of curiosity, isn't DeFi motivating users to defraud the IRS by promising 10% without reporting it as income?
EDIT: Come to think of it, if they are offering 10% without reporting to the IRS, which is obviously less than after taxes, would it be reasonable to assume all revenue / profits have not yet been reported to IRS as revenue?
You're probably unlikely to have anyone knowledgeable lay out the exact means by which crypto can be used to evade income taxes, but it's a pretty well known that it's used that way.
> it's a pretty well known that it's used that way.
Michael Morell, a former acting director of the CIA, has some things to say about the use of BTC in crime:
> Based on our research and discussions with industry experts, I have confidence in two conclusions: • The broad generalizations about the use of Bitcoin in illicit finance are significantly overstated. • The blockchain ledger on which Bitcoin transactions are recorded is an underutilized forensic tool that can be used more widely by law enforcement and the intelligence community to identify and disrupt illicit activities. Put simply, blockchain analysis is a highly effective crime fighting and intelligence gathering tool.
They setup a company in an offshore country like vanuatu and use an offshore bank to change the crypto into dollars avoiding capital gains tax etc, but its the offshore company and bank that facilitates the tax evasion.
Just because every one thinks they know how it works doesn't mean they know how it works, thats why I am questioning it. The truth is its pretty well known how tax evasion works but it doesn't use crypto.
That is completely wrong. Income is anything of value, not just cash. If you find a gold nugget in your yard, you have to pay taxes on the value of the gold even if you never sell it.
Yep, nothing stopping anyone from keeping the funds. But we've seen other shenanigans in the past (forks, CEX involvement, etc) to paper over these mistakes.
This is an interesting case because presumably they would want to write this off as a loss (in a theoretical world where they were paying US taxes) so it’s not a gift.
Technically the profits are a result of the computer code of the system, though. If they want to stick to their arguments that smart contracts are the law, then it’s just a regular payout from the system according to the rules of the system. Business as usual.
However, I suspect when the losses are in the tens of millions they’ll drop the pretense of “code is the contract” and start pursuing other legal avenues. The loss was about 1% of the total money locked in Compound.
You can make erroneous money transfers and it doesn't automatically count as a gift, the receiver can be liable if the amount makes it obvious it's an error for example and she won't return it. I'm sure this differs between jurisdictions in the details though..
No, of course a mistaken payment isn't a gift, and there's an appropriate mechanism for retrieving mistaken payments through the civil courts (if necessary).
But a mistaken payment is also not income and threatening willfully to mis-file a 1099 is completely inappropriate.
If they want to get the mistaken payments back, they can ask nicely, they can send threatening letters, they can sue in court; but they can't use the IRS as their cat's paw because the only tax situation that fits the facts here is gift.
It's not a gift - if you take the position that a smart contract is a binding contract, then the payment is pursuant to a contract that itself was entered into for full consideration. Nobody knew how the contract would develop, but the same applies for many contracts - eg options trading.
If one wants to claim it's a mistaken payment, then the recipient needs to return the tokens - their legal ownership was never conveyed.
Additionally, you can tell the intent is not that of a gift because the transferrer immediately wants it back.
But does anyone take the position that a smart contract is a binding contract? I believe even Nick Szabo regrets coining the term since its just a program that can transfer value so including it term “contract” is misleading.
No, because when you give me $10K because I made you a website, you're obviously paying me for my work. The IRS is not stupid, and doesn't look at the form you claim, it looks at the actual factual situation.
* it was paid under the terms of a valid contract and need not be returned, and therefore is income (as this rests on the existence of a contract embodied by the protocol, it is not a gift, but an exchange for value.)
* it was an error and must be returned.
This seems to be an offer to settle for the former treatment if the recipients refuse the offerers claim that the latter is correct.
This is nowhere near the first time that this has happened. There have been numerous folks to find bugs in smart contracts around the DeFi/ETH contract space, millions taken "by the code" and owners threatening and throwing various forms of shade, and even offering the exploiters job positions, reneging on said positions, etc.
But isn't the whole point of crypto to throw off all these inconvenient and unjust regulatory shackles? That technology has perfectly solved transacting in a trustless way, so that we no longer need or want agents of the state threatening citizens with violence in order to compel actions from them?
Usually, yes. But banks have a process for reclaiming funds that have been incorrectly wired so it’s pretty unusual for the “legality” of it to be litigated.[1] Blockchain has no such process. By design.
You can't just get rid of 100% of bad things about regulation and keep 100% of the good things about regulations. It reminds me of people who start open relationships. The upside sounds great, but there is a huge potential for downside and you may not fully appreciate that until it happens.
Yet another example of how the speculative bubble of crypto is mostly a scam at this point. Just imagine a bug that granted far more than was granted here. How many of us write software that has occasional bugs? Do you really want to trust your net worth that a software bug won't blow you out of the water?
No one knows for sure. This question is still not answered in the judiciary (of any country afaik) when it comes to cripto contracts and protocols. It is not as simple as "money wired to a wrong account", those protocols are based on smart contracts, and the concept that the code is the contract (something that also is not tested in court). So a bug in the smart contract code would be akin to signing a contract without properly reading it, and it ends up having a clause you didn't originally want (but you did sign), that kind of "buggy" contract may be 100% enforceable or not depending on the country and the situation.
Other analogy that may be relevant are cases where casinos had slot machines with bugs awarding more prizes than the casino intended. In some cases/jurisdictions the courts ruled in favor of casinos, that the money was awarded incorrectly and should be returned; but in other cases/jurisdictions favored the winner, saying that the winner did everything right according to the rules of the game and should keep the winnings.
Also the Pepsi 349 Scandal in the Philippines in 1992 comes to mind [1]. In that case courts side with Pepsi, but I suspect that money has some inertia in Judges minds, so it was easy to side with Pepsi when it haven't paid yet. I suspect that if all that money had actually been automatically transfered to the many winners, then Pepsi would have a much harder task to convince the judges to make everyone transfer the money back.
I'm going to add smart contact providers have a strong incentive not to get the concept of smart contact tested in court, as if invalidated it would render them unfit for their purported use.
But in this case the Compound contract specified this was intended to happen, therefore it's not an accident nor was the money transferred to the wrong account. The whole point of the contract is that it's a perfect, unambiguous, clear representation of intent.
Yes, exactly. If it's specified in the smart contract, that's what everyone signed up for, even if they didn't understand the bug.
If people signed a paper contract and a software system was designed to implement the contract, but the software system erroneously (through a bug) did something that went against the contract, that would be an erroneous payment.
But if the code is the contract in a smart contract, bugs aren't contract errors.
A wire transfer involves a money transmitter, who provides a service according to some terms & conditions. In case of a dispute, a court will have the final word. None of this applies to cryptocurrencies, because cryptocurrency transactions are final. They can't be overridden by a judge. If they could, they wouldn't be censorship resistant. You can have censorship resistance or rule of law, choose one.
They can be overridden by the judge in the same exact way cash transactions are: by forcing the offender to make a transfer in the amount that they owe, and/or selling off their other property to pay that debt.
The thing about crypto and ownership is that the blockchain is not the final arbiter of legal ownership, and that qualifier matters in a lot of cases.
Just because there’s technically no mechanism within the protocol to reverse the transaction does not suddenly make it legal to keep the money right? You could spend all the money accidentally wired to you and have nothing left to your name, but you still owe that money. So you could keep the ill-gotten crypto but still be liable for civil or criminal charges.
You'd be making the argument that the contract was followed perfectly, and it decided that you should have the money. If the code is the contract, the bugs are what everyone signed up for.
I believe the US law inforcement will criminally prosecute you if you receive money you have no reason to believe it should be yours (money mule laws, using stolen property, etc.).
Yes. In 99% of cases it is illegal. There are some cases when it ok to keep it (like if one pays off their loan too early [1]) but you will be criminally prosecuted if you do not return money you have no reason to believe it should be yours [2].
I'm not sure about the 'wrong account' scenario, but there was a case last year where Citibank accidentally paid off 'too much' of an outstanding debt to one of their creditors, and tried to recoup the money in court. They lost. But of course, they legitimately owed the money.
In the Citibank case, the beneficiaries were entitled to the money because they were the original lenders, and did not know that (what appeared to be) the repayment had been accidentally wired.
Correct. This is equivalent to you paying your bills early. Sure, it sucks to be stuck in a money crunch if you found it out later, but your financial mismanagement doesn't automatically mean that the you have the right to ask your utilities to return the money.
hmm i don't know. generally speaking, money today is not the same as money tomorrow. and so,
if you think about money as a commodity, to be consumed, transformed, redeployed, similar to let's say... corn. what would you do, as a grain processor, if your supplier decided to show up with 500k bushels six months too early?
I think that the analogy is reasonable, mainly because both examples are the type of debts that can be serviced (i.e. repaid) anytime (unless your utilities needs to be pre-paid before you can use it, which in case it breaks down because it becomes a bought thing, not a borrowed thing). There are recommended schedules to pay them, as well as a hard deadline, but you can usually pay them early (and sometimes those early payments can be rewarded, for example by reduced interests).
Your example mainly deals with futures (a type of financial instrument), mainly because you have agreed to pay within a tight schedule, which does not allow you to service them too early nor too late. Also, you forgot that money was invented to be widely fungible (okay, you can argue if this is true in this age but I argue it's still largely is) meaning that it can be (relatively speaking) easier to convert to corn, stocks, or generators (for example), which is different from corn which is only usable to a subset of people, meaning that you can only deal with those people which needs or wants corn (for example, you cannot easily get generators with corn).
a couple thousand dollars here and there might be fungible, but at some scale it's not true that money today is money tomorrow. there generally needs to exist some method of transforming money today into money tomorrow, through various mechanisms that are broadly called "carry", and there also exists the possibility that these mechanisms become momentarily unavailable.
additionally, the lenders to revlon took on both an expectation on money in the future and a non-zero default probability. maybe you can say it is fine for money in the future to be money in the present, making the layman assumption that the carry mechanism exists every single day from the date of accidental payment to the date of actual payment, but the lenders cannot also give up the non-zero default probability. that's their obligation in return for full future payment. but since payment and the obligation are inseparable, i personally see no difference between early payment with no obligation and shylock's taking of a pound of flesh and all the blood along with it.
If you think of money as corn, then of course you get a different answer. But money is not corn; it is money.
Money is not a commodity; it's a quantity of fungible tokens (plus the other stuff that makes it money). Money doesn't expire; the closest thing is tax. Yes, it's worth a different amount as time goes on, but debts are generally money debts rather than value debts.
I like crypto, and decentralized finance is interesting, but I find it quite telling that users are being threatened with having to pay taxes as retaliation.
The founder has declared that they are not reporting financial transactions to the IRS that would be of material interest to the IRS, and noted that they will consider providing that material to the IRS only if their conditions are met.
It seems likely the IRS will subpoena them for the data regardless, and potentially seek conviction of tax fraud.
While I ironically enjoy that he thought the best way to intimidate cryptocoin people was to threaten them with taxation, it does highlight cryptocoin's primacy as a way to acquire nation currency without paying taxes on it.
what a weak threat. he should threatened to report the funds to exchanges to be blacklisted, that would be far worse. Technically, they would not pay anything unless they sold it for cash anyway.
Doesn't blacklisting funds go against the main idea of a decentralised crypto currency? What's the point of replacing the traditional banking and monetary system with something where funds could be devalued by the decisions of a few individuals?
Yep, crypto is more or less the same as traditional finance in this sense. A few powerful individuals already control a disproportionate amount of the crypto world.
Like the sketchy folks who run Tether and Binance at the same time.
Or Elon Musk tweets raising and lowering the value of Bitcoin by a significant amount.
Even Bitcoin itself is largely held by just a few people. It's just another tool for billionaires to get even richer.
Doxing is publicly publishing private information. Reporting someone to legally bound authorities is not doxing. Relying on trigger words and sensationalistic language is a tell for a weak argument/stance.
> Headline is misleading: the founder has threatened to doxx and report them to the IRS if they don't return funds which according to the Compound protocol, they rightfully own anyway.
That has strong implications the company is not reporting properly to begin with.
Wouldnt be a first for the capitalist class, but using your legally required tax as blackmail is... well.. Interesting.
Notch it up to another first for crypto.