What happens if a debt is denominated in something that does not have a clear value? If I understand correctly, any debt in the US can be paid in paper US dollars. If the denomination of the debt is Bitcoin, gallons of gasoline, ounces of gold, pallets of smartphones, or anything else, it can be paid with the fair market value of the items in paper money. How does this work if the debt has no clear monetary value? If I create a cryptocurrency (ABCcoin) and my friend creates another (XYZcoin), I mine some ABC and he mines some XYZ, and we sign a contract to trade 50 ABC for 100 XYZ, that is the only transaction involving the currencies, so it sets the market value at 1 XYZ = 2 ABC. However, neither currency has a value in US dollars. What if I decide I want to keep my ABCcoin and pay my friend in US dollars instead? How would the value of ABCcoin in dollars be determined with no market to determine a market value?
I think that you are distorting the legal situation by describing it as a debt denominated in XYZcoins. According to the LII page &quot;Debt&quot;: Debt is a financial liability or obligation owed by one person, the debtor, to another, the creditor. Note that a debt is a financial liability. That means that it is payable in money, in some recognized currency. In the XYZcoin case, there is not a debt, but a contract of exchange. It can only be satisfied by handing over the cryptocurrency specified in the agreement, unless the parties agree to change that. When a person signs a contract to sell a house, for example, that person does not owe a debt denominated in houses. Rather, that person has agreed to deed over a specific house on specific terms. If the seller refuses to close the deal and the would-be buyer brings a legal action, the judge may order specific performance, that is, order the seller to sign the papers needed to transfer title to that specific house. A similar remedy may be available on a contract to sell a painting or other object that is unique, and cannot be replaced easily by a different object of the same type. Something similar may occur with a contract to sell or trade stocks not listed on any exchange, where there is no clear market value, and the purchaser wants shares in that particular company, not a sum of money.
No LLC or corporate entity exists around or in relation to SoftDAO. That's a bad thing, not a good thing, to those involved. Mr. Founder is obviously liable. When he wrote the DAO, he intended that it compete with IncumbentCo, and thus almost certainly intended that the software would violate the patent. And it doesn't matter that he's not the majority owner - he's still a part owner, meaning he's profiting from the infringement. Furthermore, he promoted the scheme, and according to 35 U.S. Code § 271(b), "Whoever actively induces infringement of a patent shall be liable as an infringer." Mr. Large, and any other identifiable part owner, is liable. Mr. Large did not commit a crime himself and generally is a good citizen. Good for him. But lots of people get sued that never committed a crime. Suing Mr. Large is like suing an Enron shareholder for owning Enron shares. Typically we do not sue shareholders. But he isn't a shareholder, and that's critical. If you want the benefits of a publicly traded company, you need to actually make a publicly traded company. Mr. Large is being unfairly targeted simply because he is a public figure with association with the project due to the Fortune Magazine article. Yes, he's being sued because of the article, but so what? It's like saying the police unfairly targeted you for an underage drinking citation because you were dumb enough to post yourself on Facebook. That argument won't fly in court. IncumbentCo can pick who they want to sue. It is nearly impossible to prove that Mr. Large is the 30th largest owner of SoftCoin. Court warrant allowed the Court to find some of Mr. Large's public keys on the SoftCoin blockchain, but the blockchain says he is actually only the 100th largest owner now. It doesn't matter. He's a part owner, by his own admission and by the blockchain evidence. The developers are also liable, also potentially for the whole amount. They created software that infringed a valid patent, and profited from it. If they can't shut it down, they can't shut it down, but they're going to be paying. I'm thinking this is a case where joint and several liability applies; IncumbentCo can go after any particular one of the owners and developers for the entire amount if they feel like it, and then it would be up to that person to then sue anyone else he thinks is partially liable. If Mr. Large is a billionaire and could pay the entire judgement himself, they might just do that. They'd probably go after Mr. Founder for as much as they thought they could get out of him, though. The users are also liable, since the law provides that using a patented invention without authority is infringing. But they're only liable for their one copy, and IncumbentCo may not bother with them, at least initially. However, the SoftDAO owns no assets No, but IncumbentCo is going to seek injunctions against selling SoftCoins or running the software. Could some people slip through the cracks? Sure. People infringe copyright all the time online, and only some get caught. You could easily imagine someone selling pirated software in exchange for cryptocurrency. This would be little different.
Whoever buys it. When a company declares bankruptcy then its assets are owned by its creditors, as compensation for the standing debts. Since usually there are multiple creditors, what happens is that its assets are sold/auctioned, as money is easier to divide between the different creditors1. A logo or a trademark is an asset like any other and can be sold separately. If nobody did come forward for the logo, then one of the creditors could accept it as part of its repayment. 1 If a company is in bankruptcy it means that its assets cannot cover all of its debts, so creditors are usually paid only a part of their debts.
This would be wire fraud, which is any type of fraud committed using electronic communications (the term originally comes from the use of telegrams to commit fraud... just like how &quot;wiring&quot; money devised from paying the bill at one telegram station and having the bill collector take an equal amount of money from a different station.). Wire Fraud is basically a fraud crime over electronic communications, so it doesn't matter how you defraud someone, the fact that you did it in this manner is guilty... using a bank system to fraudulently create more money in your digit account would qualify. The bank would be the victim since it does have a set amount of money in assets that it owes to its customers (account holders) and Federal Insurance (which prevents the Bank Run scene in &quot;It's a Wonderful Life&quot; from happening) requires the bank to carefully keep books. Additionally, Wire Fraud comes with a $100,000 fine against the perpetrator for committing the crime where a financial institution is a victim, so it's in the Bank's interest to report a sudden income surge of fake dollars to the authorities lest they have to pay the fine out of their own pocket, risk their federal insurance, or lose their consumer confidence with account holders (who will pull their money and go to a more honest bank).
Florida Title XXXIX, chapter 687 of the 2022 Florida Statutes covers usury. The technical definitions of what it is are earlier, but the punishment is as follows (I skipped the couple of exceptions to it) 687.04 Penalty for usury; not to apply in certain situations.—Any person, or any agent, officer, or other representative of any person, willfully violating the provisions of s. 687.03 shall forfeit the entire interest so charged, or contracted to be charged or reserved, and only the actual principal sum of such usurious contract can be enforced in any court in this state, either at law or in equity; and when said usurious interest is taken or reserved, or has been paid, then and in that event the person who has taken or reserved, or has been paid, either directly or indirectly, such usurious interest shall forfeit to the party from whom such usurious interest has been reserved, taken, or exacted in any way double the amount of interest so reserved, taken, or exacted. So basically the lender can only collect the original amount loaned, no interest, and if they already collected some of the interest, they have to return that at a 2 for 1 rate. It's a civil law, so I don't know if that's what you meant by &quot;breaking the law/illegal&quot;, but they can go to court to recover the interest doubled. The contract wouldn't change anything, as you can't enforce the terms of an illegal contract.
The creditor must prove the debt with evidence In order to collect a debt, either: the debtor has to agree the debt is owed - straight up or after some sort of non-binding ADR, like mediation. the debtor has to prove the debt in a binding forum - either a court or binding arbitration Details vary by jurisdiction but a court case: starts with a statement of claim where the plaintiff (debtor) sets out their case against the defendant (creditor) the defendant can: ignore the claim - in which case the plaintiff seeks a default judgement and, providing they have a prima facie case, they will get it. They can then recover the debt. admit the claim and pay the debt raise a defence - in which they set out why the don’t owe the money in part or in whole. each side provides evidence to support their position the court considers the evidence and arguments and decides if the plaintiff has proved their case on the balance of probabilities if they have, they receive judgement which the can enforce (subject to appeals) if they haven’t there is no debt (subject to appeals)
In contract law in the United States, this is a "liquidated damages" clause. It provides that when one side breaches the contract, it has to pay a certain amount of money to make up for it. Normally this is done where it is difficult to calculate the actual damages in the event of a breach, or where the parties would rather avoid calculating the actual damages--a common example is where you put in an earnest money deposit on a house and then forfeit the earnest money if you do not buy. However, there are restrictions on what kind of damages are permitted. Notably, a "penalty" usually refers to an unreasonable amount that is unenforceable as against public policy. It would ordinarily be unreasonable to make someone pay a hundred million dollar penalty for breaking a ten thousand dollar contract, for example. Liquidated damages clauses frequently say "this is not a penalty" and "the parties agree this is reasonable" to make it harder to invalidate them on public policy grounds. Instead, if the liquidated damage payment is a payment meant to reflect actual damages that are just hard to calculate, it is much more likely to be enforceable. You would need to research liquidated damages and penalties in the state whose law governs the contract to determine whether the particular clause is permissible under state law. See https://www.google.com/search?q=restatement+of+contracts+penalty&amp;ie=utf-8&amp;oe=utf-8
Given that you're centrally keeping customer financial assets, you're looking at a banking license. At that point, the question is not whether you need a lawyer, but how many. "Note that the issuer/bank would not itself offer currency exchange". Neither the Fed nor the ECB do, and quite a few smaller commercial banks also do not offer currency exchange. Doesn't matter, still banks. How many of the banking laws apply would depend on the customers, and services offered to these customers. So far you've only excluded currency exchange, which means that pretty much every banking law might still apply. You seem slightly hung up on the digital part. That's not how the law works. You'll need a banking license where you're operating your bank, not where its infrastructure is located. And yes, not meeting the requirements for registering a bank (whether financially, regulatory, or legally) will stop your idea in its tracks. This is one of the cases where "talk to a lawyer" might not be the appropriate response, but "hire a legal team".