Robinhood's Brand Fake vs. PayPal's Crypto Corruption

Gunnar Larson g at
Tue May 10 14:08:28 PDT 2022

Wire Fraud

*By FindLaw Staff <> |
Reviewed by Evan Fisher, Esq.
<> | Last updated December 27,

One of the most common federal criminal charges is wire fraud. The "wire"
is any form of telecommunication: phone, fax, text message, radio,
television, internet message, social media message, email, or any other
form of airwave or cable communication. "Fraud
<>" involves
the use of intentional deception for monetary or personal gain.

Like the mail, telecommunications is an instrument of interstate commerce.
That means the crime of wire fraud can be charged at the federal level. It
is typically investigated by the Federal Bureau of Investigation (FBI) or
the Federal Trade Commission, but state laws can also result in criminal

This article explains the crime of wire fraud and provides examples of this
state and federal crime.
Definition of Wire Fraud

The definition of wire fraud is broad and includes any writings, signs,
signals, pictures, or sounds that are transmitted.

The U.S. Department of Justice wire fraud statute (18 U.S.C. 1343
cites these four elements of wire fraud:

   - The defendant created or participated in a scheme to defraud another
   out of money or property
   - The defendant did so with the intent to defraud
   - It was reasonably foreseeable that the defendant would use wire
   - The defendant did, in fact, use interstate wire communications

Federal wire fraud charges are used to prosecute perpetrators of both
white-collar crimes and organized crime. Scams that take place over
interstate wires include (among other things) telemarketing fraud,
phishing, identity theft, and spam-related financial crimes
Penalties for Wire Fraud

Persons found guilty of wire fraud under federal law face the following

   - Fines up to $250,000 for individuals
   - Fines up to $500,000 for organizations
   - Imprisonment of not more than 20 years

There are additional penalties of 30 years imprisonment and a
million-dollar fine if the wire fraud is related to a presidentially
declared major disaster or involves a financial institution.

These penalties are per count, which means that each phone call or email,
or other electronic communication can be considered separate counts. For
instance, if an individual makes three phone calls regarding the fraud,
there may be three counts of wire fraud. Each count would potentially be
subject to the maximum $250,000 fine and a 20-year prison sentence for a
total of $750,000 in fines and 60 years in prison.
Wire Fraud SchemesThe Nigerian Prince Scam

One of the early and infamous examples of email fraud is the story of
the Nigerian
In that scam, the sender claims that he is a Nigerian prince who has been
exiled and needs to transfer millions of dollars out of the country. He
asks the reader for help in doing so, for which they will be lavishly
rewarded. The reader only needs to provide the Nigerian prince with his
bank account details so the money can be transferred. The scammer then uses
that information to access the reader's money.

The newest version of this scam, as reported by the Better Business Bureau,
involves scammers creating fake bank websites to add credibility to their
stories. The victim can then access the fake bank account to see the
millions of dollars "available" to them. They enter their own bank routing
information and the scammers have what they need.

People who commit wire fraud are frequently looking for their victims'
personal information like credit card information, passwords, and financial
information like bank account numbers. "Phishing" is the practice by which
a scammer will send out an email that looks official but is not. The email
requests personal information from the reader.

In 2018, real Nigerian nationals, Olayinka Olaniyi and Damilola Solomon
were convicted in federal court of conspiracy to commit wire fraud,
computer fraud, and aggravated identity theft. They led a phishing scheme
that tricked employees at several American universities into sharing their
computer log-in and password.

Once they had that information, they used it to deposit payroll checks into
bank accounts they controlled. They also gained access to W2 forms. They
used those forms to file fraudulent tax returns.

These fraudsters used yet another fraudulent scheme to complete the theft:
a romance scam. They used dating sites and apps to lure in trusting love
interests. At some point, they would ask the new partner if they could wire
transfer money into their bank account for safekeeping. They would then
transfer the money from the universities into these American accounts
before forwarding it to their own accounts in Malaysia and other countries.
Telemarketing Fraud

Another common example of wire fraud cases, this one using the phone,
is telemarketing
In 2020, Sahil Narang
one of six conspirators convicted of a telemarketing scheme that originated
in India. Their targets? Mostly elderly Americans who owned computers but
were hardly tech-savvy.

Narang pled guilty to conspiracy to commit wire fraud and ten counts of
wire fraud. The scheme was called "Tech Fraud" and it involved routing some
20,000 phone calls regarding computer tech problems to call centers in
India. More than 7,000 callers stayed on the line, allowing the scammers to
remotely access their computer for "repairs." That misrepresentation
allowed computer criminals in India to download their banking information.

Worse yet, a follow-up "Refund" scheme involved calling the victims of the
first scam to tell them they were eligible for a refund. Of course, they
needed to provide their banking information so the money could be forwarded
to them. Eager to be refunded, the victims handed over their account
information and were defrauded a second time.

*Robinhood's Brand Fake vs. PayPal's Crypto Corruption

*Graduate research conducted over the last five years by preeminent global
industry scholars, who embody a strong sense of integrity and pride in the
social importance and credibility of good institutional design, tease out
the following incidents.*

With friendly intentions, there is no way out of us moving forward.

Corruption occurs when the private search for economic advantage and
personal advancement clashes with laws and norms that condemn such
behavior. Further complicating the picture, some illegal corrupt
transactions drain public resources away from education, health care, and
effective infrastructure—the kinds of investments that can improve economic
performance and raise living standards for all.

It is easy to prove Robinhood Markets (the financial services company) is a
brand fake. Perhaps even more significant, there is no reason to think that
PayPal, one of the more convenient and commonly-used online payment methods
out there, will behave any better given their clear anti-cryptocurrency
policy history. Paypal will likely further exploit their monopoly position
and risk undermining a pure environment that maximizes the socially
beneficial conditions of virtual currencies.


   Our estimation strategy so far has been predicated on the assumption
   that political and legal institutions affect sustainability directly and
   that the effect of corruption can be estimated conditionally on the
   institutional context.

   As we previously reported
   it is perhaps no coincidence that the systemic risk to cryptocurrency and
   blockchain systems are tethered to activities of BitLicensees.

   The cost of corruption is greater than the sum of lost money:
   distortions in spending priorities undermine the ability of the state to
   promote sustainable and inclusive growth. This is possible in a framework
   already characterized by "weak law" that creates both a certain alteration
   of the rules of the market and perverse dynamics distorting the economy and
   inhibiting free competition.

*Robinhood’s Brand Fake *

The legend of Robin Hood portrays a man who robbed the rich and gave to the
poor. His partisanship of the common people and his hostility to the
Sheriff of Nottingham branded Robin Hood as one of the world’s best known
folk heroes.


   According to a Forbes investigation
   this month, despite its proclamations about democratizing finance,
   Robinhood's entire business has been built since its inception on selling
   its customers’ orders—known as “payment for order flow”—to Wall Street’s
   most notorious sharks, accounting for 70% of its $130 million in revenue
   during the first quarter of 2020.

   Robinhood’s SEC civil fraud investigation more or less points out the
   essence of potential brand fakery.

   A Robinhood spokeswoman declined to comment on the investigation or any
   talks with regulators, but stated: “We strive to maintain constructive
   relationships with our regulators and to cooperate fully with them.”

*PayPal’s Crypto Corruption*

The heads of enterprises must curb corruption by setting a clear tone at
the top. A statement from the founding CEO of Paypal Holdings Inc., Bill
Harris, described Bitcoin as a “scam” and a “colossal pump-and-dump
scheme”. “I’m tired of saying, ‘Be careful, it’s speculative.’ Then, ‘Be
careful, it’s gambling.’ Then, ‘Be careful, it’s a bubble.’ Okay,I’ll say
it: Bitcoin is a scam,” he wrote in June 2019

Later in October 2019 Fortune asked PayPal’s current CEO
<>, Daniel
Schulman if he could share some details of the projects Paypal is working
on. However, he replied: “Yes and no. Some of this is competitive, and we
don’t really want to,” but noted that what Paypal is working on is “not
necessarily competitive with Libra.”


   Emphasizing that cryptocurrency is “still very volatile,” the CEO
   revealed, “we don’t have much demand for it by merchants because merchants
   operate on very small margins.” He continued: “Until it becomes less
   volatile, it won’t be a currency that is widely accepted by merchants on
   the web — not the dark web, but the web.”

PayPal’s fundamental longtime assault on the crypto industry
was to freeze user accounts connected with any cryptocurrency-related
activity. While some people may consider this to be borderline illegal, the
company can close user accounts or freeze funds for extended periods of
time whenever they feel the need to.

In less than a year, everything changed for PayPal with the October 2020
announcement of achieving another regulatory first: through Paxos, PayPal
has been granted the first virtual currency conditional license
the New York State Department of Financial Services. It seems that PayPal’s
dance with “regulatory arbitrage” now engages the ability to provide crypto
to their customers.
Turn this matter as we will, and look at it from any side whatsoever, and
it presents the appearance of anti-competitive behavior. PayPal’s deception
and corruption in building its crypto business infrastructure now acts as a
cartel sponsored by regulators.


   PayPal forbids user access to their own private keys. What’s more, users
   will not be able to transfer their crypto holdings out of their PayPal
   account, nor will they be able to send crypto to other PayPal users.

   In other words, PayPal more or less dictates what users can do with
   their cryptocurrencies, and could presumably freeze accounts if they see

   Additionally, merchant processors exist to assist merchants in
   processing transactions, converting bitcoins to fiat currency and
   depositing funds directly into merchants' bank accounts daily. As these
   services are based on Bitcoin, they can be offered for much lower fees than
   with PayPal or credit card networks.

*Note, however, that this potential monopoly could arise not from
corruption but simply from a revenue-maximizing government that does not
factor in the social benefits of competition or of effective natural
monopoly regulation. Second, the hope of corrupt gains might lead
government officials to privatize the wrong firms. That is, regulators may
grant license(s) to firms that are operating at a high level as state firms
and so appear valuable to private markets.  *
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