And just to be clear, I'm not bashing TH on this. I'm not saying they're bad, or scamming people, or anything of the sort. This whole situation falls almost 100% on Bitsyncom.
I say almost 100% because TH made a few very grave mistakes and put themselves in this position.
First mistake - starting a business with customer money. They took a huge order from the one company (I forget the name right now) and used the money to order chips.
Second mistake - not getting a legally binding contract specifying that the customer could not cancel the order once the chips had been ordered, or at least specifying that the customer's recourse would be that they would be given ownership interest in any judgment obtained against Bitsyncom in the event of non-delivery of the chips.
Third mistake - when they got a cancellation demand, opening pre-orders to more people to get funds to cover their refund and their first 2 mistakes, kicking the can forward and putting themselves in an untenable position. Honestly I don't even see how they could have thought that was a good idea. Surely you'd see that this is just below the lip of a very very slippery slope. You've already had one person cancel and put you in a bind, how do you think it's not going to happen again? How do you think it's legal, or even right, to take other people's money and use it to pay your previous customers knowing damned well that if it goes bad you'll be unable to refund the new customers? Do you know what that's called? A ponzi scheme. Even though it's not investing, it's the same principle. Using new customers to pay out earlier ones.
I don't believe there was any ill intent on TH part; I don't believe they intended to do bad here. They were inexperienced, and they allowed their desire to make a profit cloud their judgment and they did things that were bad.
If I started a business without the capital to do so, and used people's preorder money to develop or build my product, and a supplier went bad on me I would 100% expect my customers to demand refunds and fight for them, including suing me for them. Would it suck? Would it ruin and bankrupt me? yes. I would have to go after my supplier to try to salvage my finances. That's the way business works, and it's why you NEVER start a business with customer money. You come up with the capital, you find a way to get what you need on credit, you find a way to get an income to the business without the merchandise (through services or other products that you can deliver) first. If you can't do that, you admit to yourself that you do not have the resources to undertake the venture.
EDIT: The above is also why a lot of business ventures go looking for venture capital from investors. That way they're not using customer money to fund the business, they're not doing something illegal. The investors aren't customers and know there is a real risk of losing all of their money and having nothing to show for it. They're compensated by ownership interest in the venture.
The voice of reason!
It boggles my mind why this type of a write up is even required. These are the absolute most basic of fundamentals when it comes to starting ANY business.
Let me put it another way, there is a legal difference between a customer and an investor and a companies responsibility to both are VERY different. The risk level of both is also legally VERY different. What the vast majority of ASIC start ups currently on offer are asking for is investomers, but guess what the law doesn't allow for investomers. According to the law you are a customer (shopping/purchasing for a good(s) or service(s), and have the appropriate risk/reward structure and protections) or you are an investor (funding the business in exchange for future considerations ie royalties, equity etc etc).
Until the BTC community starts to think like the real world on the most basic of levels these companies will continue to operate this way.
Please people stop giving away all your power (read: money). As is clearly evident from the likes of BFL and Avalon (obviously there's others) once you pre-pay in full 99% of your power is out of your hands and the 1% you have left is most likely a long, expensive battle to recoup pennies on the dollars in a worst case.
