Crime and Punishment 3.0 | WSC Beijing Alpacas

Overview of Business Scams

• Theranos:

  • Promised revolutionary blood testing with minimal blood samples.
  • Founded by Elizabeth Holmes, raised $700 million, valued at $10 billion.
  • Technology was false; faced legal challenges.
  • Holmes and Sunny Balwani charged with fraud, wire fraud.
  • Holmes sentenced to 11 years; Balwani to 12 years and 11 months.

• Nikola Motors:

  • Promised zero-emission trucks, but prototypes were not functional.
  • Founder Trevor Milton misled investors, sentenced to four years for fraud.
  • Attempted to cut hydrogen fuel costs, lacked evidence.
  • Company pivoted focus to Nikola Two.

Case Studies in Business Failures

• Quibi:

  • Short-form streaming platform founded by Jeffrey Katzenberg and Meg Whitman.
  • Raised $1.75 billion, shut down within a year due to low subscriptions.
  • Content sold to Roku for under $100 million.

• Miray Life at Sea Cruises:

  • Promised inaugural three-year voyage, canceled due to lack of ship and investor issues.

• Luckin Coffee:

  • Expanded rapidly in China, overtook Starbucks.
  • Accused of inflating sales; filed for bankruptcy.
  • Emerged from bankruptcy under new management.

Cryptocurrency and Financial Schemes

• Bitconnect:

  • Promised high returns via Ponzi scheme.
  • Value crashed from $525 to under $1.
  • Founder indicted for $2.4 billion fraud.

• FTX:

  • Major crypto exchange collapsed due to embezzlement.
  • CEO Sam Bankman-Fried sentenced to 25 years.
  • Co-founder Gary Wang testified against him.

Cryptocurrencies and Fraud

• Rug Pulls and Ponzi Schemes:
  • Rug Pulls: Developers abandon projects after inflating token prices.
  • Pump and Dumps: Influencers raise coin value for profit, leaving investors with losses.

Legal and Regulatory Challenges

• Wire Fraud Statute:

  • Used by DOJ to prosecute fraud without digital asset classification.
  • Applied in NFT rug pull cases (Frosties, Baller Ape).

• Jurisdiction in Space:

  • Issues with criminal law application in space.
  • Suggestion for specialized jurisdictional regimes.

Technology and Copyright Issues

• AI Detectors:

  • Shown to be biased against non-native speakers.
  • Current detection methods unreliable.

• Reverse Engineering and Jailbreaking:

  • Reverse engineering legal within limits, not in patent law.
  • Jailbreaking circumvents manufacturer restrictions, legal implications.

• Ad Blockers and Legal Concerns:

  • Legal but controversial, conflicts with site defenses.

• Fansubbing:

  • Illegal without rights holder permission.

• Printer Ink Monopolies:

  • HP accused of creating ink monopoly via firmware updates.

• DeCSS and Copy Protection:

  • DeCSS allowed DVD playback on unauthorized systems; legal battles ensued.

• Hackintosh:

  • Unauthorized macOS on non-Apple hardware, legal restrictions.

• YouTube-dl and Copyright:

  • Tool for downloading videos faced legal challenges.
  • RIAA takedown led to Streisand Effect; eventually reinstated.