Syscoin Threatens Moolah with Legal Action Over Missing Funds

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judge-squareThe Moolah scandal has captivated the cryptocurrency world over the past several days. However, one of the more troubling stories has flown under the radar. Moolah is currently holding ~$285,000 in escrow for the Syscoin community, and the company has not responded to requests to return the money. Syscoin is now threatening Moolah with legal action over this breach of trust.

Also Read: Dogecoin Creator Responds to Moolah Bankruptcy with Additional Concerns.

Overview of the Moolah Scandal

On October 14, the cryptocurrency company Moopay LTD announced it was declaring bankruptcy and that its subsidiaries–namely Moolah and Moofarm–would cease operations and that MintPal would transfer to new management. This prompted Bitcoin Foundation member Brock Pierce to reach out to Moolah, and before long the company had reversed course, stating that the company had found a way to continue some of its operations. It is unclear whether or not this reversal had anything to do with Brock Pierce reaching out.

Many MintPal users were incensed at Moolah, fearing their coins held on MintPal were lost. Thankfully, MintPal has been manually processing withdrawals, and many users have reclaimed their coins.

Nevertheless, Moolah’s troubles were not over. Several prominent Dogecoin community members–including founder Jackson Palmer–released documents alleging Moolah CEO Alex Green was a known scammer who had stolen at least 500 btc from customers. Several sources came forward with further documents confirming the allegations, which prompted Alex Green to resign from Moolah (although he maintains the allegations are false).

Syscoin Threatens Moolah with Legal Action Over Missing Funds

Syscoin Moolah
Syscoin has given Moolah a deadline to return the 750 btc the developers placed in escrow. If Moolah does not return the funds, Syscoin may pursue legal action.

Somewhat lost in the Moolah scandal has been the fact that Moolah had neglected to return the funds Syscoin had placed in escrow. Syscoin’s presale had been conducted through the Moolah platform and Syscoin had entrusted the presale funds to Moolah’s escrow service to promote investor confidence.

Even before the Moolah scandal broke, the company had missed its October 14 deadline (coincidentally the same day Moopay announced bankruptcy) to disperse 50 million escrowed syscoins to the coin’s developers. Once the news broke about Moolah’s insolvency and Green’s shady past, Syscoin requested Moolah return the entire escrow fund. According to Syscoin developer “danosphere,” Moolah did not respond to Syscoin requests to return the funds.

Syscoin upped the ante by threatening Moolah with legal action. Eventually, the company returned the more than 50 million syscoins developers had bought as buy support during the coin’s early days. The 250 bitcoins used to purchase those syscoins came from the funds Syscoin raised during its ICO presale. However, Moolah did not return the 750 btc in Syscoin funds they were holding in escrow and Syscoin has given Moolah a deadline to return the funds or else face litigation.

We have given Alex/Moopay LTD until 21:00 BST Oct 17, 2014 to release the entirety of the Syscoin escrow fund in order to prevent litigation. We have provided him with the contact for our legal counsel in the interim- we have not started litigation yet, but are fully prepared. We have not contacted UK Police as of yet. We will continue to keep the community posted on the action being taken here.

Later in the thread, danosphere elaborated on Syscoin’s position.

Our understanding is that he [Moolah CEO Alex Green] is currently in Singapore with a business associate. Regardless of where he is or why he is– we’ve made our position very clear. We will contact authorities in whatever locales necessary and provide them with any/all identifying information (including pseudonyms, past names, and business associates he may be staying with in Singapore) to authorities in the appropriate locales. If the BTC is not disbursed to the Syscoin team this amounts to theft- plain and simple; and no small theft at that (~$285k USD).

If/when we enter into litigation we will also be seeking damages for the depreciated funding, time, effort, and legal fees associated with this initiative. In that figure we will also take into consideration how this has negatively impacted investors and Syscoin’s progress as a whole.

Moolah now has just a few short hours to release the funds or else face a lawsuit. CCN will continue to track this story and provide updates to any relevant information.

Update: Syscoin Files Legal Action Against Moolah

The deadline passed, and Moolah did not return the Syscoin funds. Syscoin announced on Twitter that they have officially pursued legal action against Moolah.

 

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What do you think of the Moolah saga? Comment below!

Images from Syscoin and Shutterstock.

Disclosure: The author is paid in and holds investments in bitcoin. He is not invested in or affiliated with any of the altcoins discussed in this article. Any advice contained in this article is solely the opinion of the author and does not reflect the views of CCN. Neither the author nor CCN is liable for your investing decisions, so do your homework and never invest more than you are willing to lose.

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Josiah is an assistant editor at CCN. A former ancient and medieval literature teacher, he has been reporting on cryptocurrency since 2014. He lives in rural North Carolina with his wife and children. He holds investment positions in bitcoin and other large-cap cryptocurrencies. Follow him on Twitter @Y3llowb1ackbird or email him directly at josiah.wilmoth(at)ccn.com.