Things haven’t been going particularly well for PayCoin, lately. In what was seen as a dramatic move to many in the cryptocurrency community, altcoin exchange Shapeshift.io has removed the ‘troubled’ altcoin from its platform due to what the exchange is calling a ‘broken promise,’ where customers could purchase PayCoins at $20 each.’
ShapeShift made the ‘official’ announcement via a Reddit post, saying:
ShapeShift.io added support for Paycoin (XPY) a couple weeks ago, upon the request of our users. The coin was quite popular (both for buyers and sellers). The software itself worked as advertised, so we were happy to integrate it.
In general, ShapeShift is “coin agnostic” – we have no idea which digital assets will endure for the long term. If the market is excited about a certain asset, we work to integrate it into our platform, and so we did with Paycoin. We do not “endorse” any coins, nor do we heavily vet the prospects of any asset before we integrate it. We simply listen to the marketplace – unfortunately the marketplace can be a confusing and cacophonous arena.
For the last few days there has been intense scrutiny over Paycoin and its creator, Josh Garza and GAW, with many calling the coin an outright scam.
While we understand that a community which advocates a free and open market needs to be diligent about self-policing, scam accusations are made routinely, often without actual proof or even evidence. People should generally be a little more careful with the word, but we understand why the crypto community reacts so strongly against perceived scams.
And indeed, there are scams out there, and we must all be diligent in building an honest, professional, and productive ecosystem. Looking out for each other is good business.
We’ve looked further into Paycoin, and while there are some criticisms that are superfluous (a coin being “premined” does not necessarily make it a scam, for example), there is one particular issue that we cannot ignore. Josh Garza and the Paycoin admins made a very clear promise – a guarantee – which is that when Paybase opened (a Paycoin marketplace), that Paycoins would be bought there for $20 each. That was a factual promise, made by the creator of the coin.
Anyone who studies markets should know that guaranteeing the price of anything is a fool’s errand. But indeed, if Garza had his alleged $100m in capital he could perhaps back the value of Paycoin at $20 per and actually make good on the promise. It’s unlikely, but possible.
And yet here’s what happened: not only did Garza not fulfill his promise to back the value of Paycoin at $20 per coin, but himself and his administrators seem to be actively re-writing history, scrubbing their forum of any mention of that promise. This moves it from fool’s errand to the realm of deception.
The coin now sits around $5, and Garza is claiming he never promised $20. We believe this satisfies a high threshold of evidence as fraud, and so we have decided to remove Paycoin from www.ShapeShift.io
The market has spoken. We will be at the Miami Conference if anyone would like to discuss this issue further with us.
According to the ShapeShift.io, not only is Paycoin creator Josh Garza breaking his promise (the coins now sit at around $5 each), but it appears that he and his team are trying to dissolve any history that mentions such a promise.
“For the three months or so Hashpoint mining was available, Garza claimed that Paycoin would have a $20 floor (essentially that GAW would buy up any coin sold below $20 to keep the market place there or higher),” writes Redditor iTipBitcoin. “Now, however, they’ve purged their censored forum of such claims so all that remains are screenshots as proof. Here’s a few: https://i.imgur.com/YFXJiKB.png and https://i.imgur.com/HnotyMB.png Paycoin was traded at about $20 for a very brief period of time, but since then it’s been dropping steadily, trading at just above $6/ea currently. Garza has done nothing to rectify the situation since.
Exchanges Cryptsy and Bittrex process most PayCoin trades. However, PayCoin has a guaranteed exchange presence even if other exchanges follow ShapeShift’s decision and remove the Paycoin from their platforms. Josh Garza recently acquired Coin-Swap, and it is unlikely that public pressure could dissuade him from listing his own coin at Coin-Swap.
In response to all the claims of fraudulent activity and the attitude of distrust towards PayCoin, Josh Garza will be participating in a special Q&A session on January 16th, 2015 at The North American Bitcoin Conference in Miami (TNABC), where he will likely address the scam allegations and defend PayCoin’s status.
However, there are a lot of people now who want to have Josh Garza removed as a speaker and PayBase removed as a sponsor, writes CrytoCoinsNews. The community’s concern has caused large amounts of discussions on BitcoinTalk, Reddit and HashTalk.
On January 3rd, 2015, Miami Bitcoin Conference Organizers posted via Reddit the second response to Josh Garza/GAW/ Paycoin concerns:
We suggested to give him an extra 30 mins Q&A and the amount or constructive feedback this has generated has made us rethink this solution. We do not want to give so much air time to Josh / GAW / Paycoin / Paybase – but we do think it is important that we have this public discussion with Josh. We believe that “sunlight is the best disinfectant” and if there is proof that shady business practices are taking place, he should be confronted.
We think that a Q&A period, moderated by someone you choose, will provide the proper forum for people to make their voices heard. We think that this layout, instead of a speech, is the appropriate forum.
Erik Voorhees, co-founder of the Bitcoin company Coinapult, made a reddit post about not boycotting the conference and how conferences can do more harm than good:
The recent move to boycott the Miami Bitcoin Conference, merely because Garza is speaking there, is going too far. We do not need to fear speech, even the speech of alleged fraudsters. Are we so gullible that we’re worried his silky words will convince us all to dump our BTC for sparkling Paycoins?
Garza may be a terrible person with a terrible scheme to defraud his cult. But whatever damage he does to the people who follow him without rational skepticism, let’s not make that damage worse by destroying an important industry event.
The argument that if Garza speaks, he’ll damage the credibility of our entire industry is a stretch.
But what may actually damage the credibility of our entire industry is if people visit /r/Bitcoin and feel like it’s just a bunch of adolescent witch-hunters.
Let Garza speak, and let there be a healthy Q&A session for him to confront legitimate, professional questions about the viability of his projects. Don’t bring down what will be an invaluable conference over the controversy surrounding one speaker.
What do you think about all these – Paycoin/GAW Miners/Josh Garza? Will you visit the Miami Bitcoin Conference? Tell us in the comments below.