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Before asking this question, I should say some words. Because this question seems similar to another question I asked, I worry someone may mark this as a duplicate without understanding - In fact, they were different.

Disclaimer: This is only an educational case. I am neither the scammer, the victim, nor someone scheming to scam.

Let's say, Tom was scammed by a "bitcoin mining website", the website owner, say, Bob, was a scammer.

Suppose that Bob and Tom are all in the US, and are all under the jurisdiction of the US.

Below is how this thing happened:

One day, Tom opened Bob's website while surfing Google. The website said:

"we have a software, which mines bitcoin at a very fast speed - because it uses new technology to mine bitcoin."

"It is more than 1000 times faster than traditional mining."

Tom was allured by the "potential wealth", so he downloaded the software, and went through the setup, and installed that alleged "New Technology Bitcoin Miner".

The software was made by Bob, too. During the setup, there was a window of "terms of use", written by Bob. At the very end of the "terms of use", Bob wrote down this:

Our bitcoin mining service has been already suspended in xx/xx/2019, due to legal and financial reasons. You can still use this software, but it will only work as a simulation, therefore, it will not produce real bitcoin.

Agreement to this term of use means that any payment you make in the software is regarded as payment for the simulation.

However, Tom was too hurry, so he didn't read the tedious "terms of use". He straight clicked "Agree" and installed the software, a/k/a "New Technology Bitcoin Miner".

Then, the software began asking for payment. It said to Tom: If you want to mine bitcoin, you should pay $999 for our service first.

So, Tom paid $999 and started "mining bitcoin" in this alleged "New Technology Bitcoin Miner". The software simulated the mining process. At last, Tom got no bitcoin into his wallet.

(And, in fact, the alleged "New Technology Bitcoin Miner" didn't do real mining at all.)

Tom felt he was defrauded, so he was about to report the website owner, Bob.

My questions:

  • From the perspective of US law, is Bob doing this regarded a fraud?

  • Is this a criminal case, or a civil case?

  • What evidence can Tom provide to support the lawsuit?

Community
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gudako
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2 Answers2

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A contract can’t legalise illegality

Let’s assume that absent the “simulation” disclosure in the ToS, this would be fraud.

The question then becomes, does making the disclosure make it not fraud?

Fraud requires dishonesty and deception. These are measured by what a reasonable person would determine from the overall conduct so a small piece of truth in amongst a web of half-truths and outright lies is still dishonest and deceptive.

  • From the perspective of US law, is Bob doing this regarded a scam?

No, but only because “scam” isn’t a legal term - it’s slang for fraud and this is fraud

  • Is this a criminal case, or a civil case?

Both

  • What evidence can Tom provide to support the lawsuit?

Whatever he has. However, in practice, these types of fraudsters are rarely ever caught and it’s even more rare for the victim to recover their money. They are usually off-shore in countries with either poor rule of law or which will not extradite their nationals.

Dale M
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is Bob doing this regarded a scam?

No. Tom has no viable claims and therefore he has no case in civil court (nor is there a criminal case).

Being "at the very end of the 'terms of use'" likely renders Tom unable to justify his unawareness of the disclaimer. That would defeat his claim of breach of contract. When he entered the contract, he knew or should have known about the disclaimer. The disclaimer is an update that renders pay-to-mine directions obsolete, and the disclaimer was presented to Tom first.

Being in a hurry is unlikely to justify Tom's unawareness of the disclaimer unless the circumstances are tantamount to hardship or coercion.

Likewise, Tom will have a hard time proving reasonable reliance, one of the prima facie elements of fraud. It is widely known that nowadays much of "traditional mining" involves technology with which an average computer cannot compete (think of ASIC and specialized hardware).

Moreover, comparisons about the pace of "traditional mining" are meaningless because it is also widely known that the difficulty of bitcoin mining is adjusted periodically (and dynamically) for the purpose of maintaning a somewhat steady rate of speed with which new bitcoins are created.

Thus, Tom's basis for purchasing the software is too naive (that is, for the average aspiring miner of bitcoins) to meet the criterion of reasonable reliance on Bob's advertisement.

Iñaki Viggers
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