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Aaron Greenspan sues Facebook, Sequoia, Andreesen, YC, others

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Re: Aaron Greenspan sues Facebook, Sequoia, Andreesen, YC, others

#11
lol

78. Defendant Yishan Wong, in response to an article authored by Plaintiff on the website Quora, wrote the following comments (among others) indicating his knowledge of payments-related laws and regulations on June 15, 2011:

“Yeah, I am constantly amazed at how people haven’t yet learned that the paymentsindustry is really hard to get into. It was okay for first-wave companies like PayPal to besurprised by it, but anyone who does their due diligence before starting a paymentsstartup should know everyone – literally everyone, including regulators and thegovernment – is going to be working against you. If you can’t take the heat, get out of the kitchen and go start a photosharing startup.”

“Payment startups face a far more adversarial environment, including utter and totalhostility. It was okay for PayPal to whine about this (though they didn’t), because itwasn't known. But now it’s known. If you run a payments startup, you are fightingagainst thugs, actual criminals – both real ones and government ones. It is not normalbusiness. It is like trying to start a business in an actual warzone. Complaining aboutthis is just whining. There is no actual solution than to win. Anything else is, in fact, justwhining.”

Presumably with the hope of “winning,” Defendant Wong proceeded to invest his own personalfunds in Unlicensed MSB Defendant Balanced (part of a $3.4 million seed financing round)

Re: Aaron Greenspan sues Facebook, Sequoia, Andreesen, YC, others

#14
Reason for including YC in this nonsense:

The YCFunds share common management and are venture capital funds invested in a number of unlicensed money transmitters.

Can that really hold up? Can an investor be held liable for the decisions of a company they invested in? By that logic, what's to stop someone from suing Facebook shareholders?

Re: Aaron Greenspan sues Facebook, Sequoia, Andreesen, YC, others

#15

Reason for including YC in this nonsense: The YCFunds share common management and are venture capital funds invested in a number of unlicensed money transmitters. Can that really hold up? Can an investor be held liable for the decisions of a company they invested in? By that logic, what's to stop someone from suing Facebook shareholders?

Presumably if individual Facebook shareholders had real influence over Facebook's actions you could sue them. I would guess the justification here is that YC's partners/etc have a real, tangible influence on the companies they invest in so they do bear some share of the responsibility.

Re: Aaron Greenspan sues Facebook, Sequoia, Andreesen, YC, others

#16
Pretty weird. On the one hand, there clearly went some effort into this. On the other hand, they are not represented by counsel (p.36), which makes the likelihood of the case being thrown out for procedural reasons regardless of the merits around 99%. All in all I'm leaning more towards publicity stunt...

Re: Aaron Greenspan sues Facebook, Sequoia, Andreesen, YC, others

#17

Reason for including YC in this nonsense: The YCFunds share common management and are venture capital funds invested in a number of unlicensed money transmitters. Can that really hold up? Can an investor be held liable for the decisions of a company they invested in? By that logic, what's to stop someone from suing Facebook shareholders?

It's regulated by criminal law, not civil code. The complaint quotes the law:

"Whoever knowingly conducts,controls, manages, supervises, directs, or owns all or part of an unlicensed money transmitting business, shall be fined in accordance with this title or imprisoned not more than 5 years, or both."

Re: Aaron Greenspan sues Facebook, Sequoia, Andreesen, YC, others

#19

I don't have time to read much of the lawsuit, but is Think Computer suing for some sort of injunction to require all the companies listed to use Face Cash as only it has a California Money Transfer Act license? And for those double taking at the name, Aaron Greenspan is the CEO of Think Computer. http://www.thinkcomputer.com/

It seems strange to me that he would have standing to sue for the state to enforce its own laws, but IANAL

Re: Aaron Greenspan sues Facebook, Sequoia, Andreesen, YC, others

#20

It seems strange to file one suit against a ton of defendants, making it more likely that they will pool resources for defense. Or is that not possible in this context because of the nature of the complaint?

I don't think Greenspan actually cares about winning anything. This is about making everyone play by the same rules -- bringing attention to the fact that California makes it near-impossible for a startup to get licensed as an MTA, essentially shut down his company for trying to get licensed, while all these other startups just ignore the problem and operate illegally.
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