When the Rules Are Legal but the Game Is Rigged
Governments Often Fail to Protect Citizens from Financial Discrimination
One of the most powerful ideas behind cryptocurrency was the promise of equality. Be your own bank they said.
In traditional financial systems there is a clear hierarchy. Banks control the software, the rules, and the settlement systems. Customers simply use them. Whether you are sending money through SWIFT, Visa, Mastercard, or a commercial bank, you operate within a structure where the institution holds ultimate control.
Blockchain technology changed that model.
If you run a node on a blockchain network, you participate on the same protocol as everyone else. The system does not distinguish between rich and poor participants. Every node validates transactions using the same rules. You essentially became your own bank.
The problem
Is that that equality is rare in traditional financial systems. And when we step outside crypto and examine the broader economy, a troubling pattern emerges. Across multiple sectors the same structural issue appears repeatedly.
Consumers, small investors, or individual property owners are placed at a lower level of asset seniority, where they can legally be disadvantaged by those with more power.
These situations are rarely illegal. In fact, they are often designed carefully to remain within the law.
But they expose a deeper failure. Governments often fail in their basic duty to protect citizens from structurally unfair systems that allow powerful actors to extract value from weaker participants.
Below are several case studies that illustrate this pattern.
Case Study 1: BrewDog and the Illusion of Equity Crowdfunding
In the early 2010s the Scottish brewer BrewDog launched an equity crowdfunding campaign called “Equity for Punks.”
Thousands of retail investors bought shares in the company. The marketing suggested that investors were becoming part of a community and could eventually benefit from a large exit such as an IPO.
However, the structure of the shares raised significant concerns.
Many early investors held non-standard share classes with weaker rights than institutional investors who came later.
In 2017 private equity firm TSG Consumer Partners invested roughly £213 million for a 22 percent stake, valuing BrewDog at around £1 billion.
Private equity investors often negotiate liquidation preferences, meaning they are paid first if the company is sold. Retail investors typically do not receive these protections.
In practical terms this means:
- Senior investors get paid first in a sale ( The CEOs cashed out here giving them little incentive to continue )
- Junior investors may receive little or nothing
- Founders can structure deals that dilute earlier shareholders ( Why even allow this or at least make it clear that they will likely loose everything)
Reports from investors and campaign groups suggested that many crowdfunding shareholders later discovered their shares had limited liquidity and uncertain exit options.
None of this was necessarily illegal. But the structure meant that investors who believed they were partners in the business were actually holding a junior asset class with far weaker rights. It was grey it was dodgy some investors didn’t care but some did and felt defrauded.
This is a classic example of asset seniority discrimination.
Historically, the concept of share ownership was simple. If two people owned shares in a company, they were proportional partners. Modern financial engineering allows companies to create multiple share classes with different voting rights and liquidation privileges.
The result is an environment where retail investors can participate in funding a company while remaining structurally disadvantaged.
Funfact the Brewdog Ceos girlfriend may have made more from brewdog then the investors did as she cleared around £700,000 Ex-girlfriend of Brewdog boss James Watt cleared of criminal fraud
Case Study 2: Snapchat and Non-Voting Shares
A similar situation occurred during the 2017 IPO of Snap Inc., the parent company of Snapchat.
Snap’s public offering was historically unusual because it sold shares with no voting rights at all. I head about this and was like id rather own Bitcoin. The current value is around $5 per share sold at $17 dollars per share at IPO.
Snap could still be a great investment in terms of price for investors, nothing illegal was done but this is not what we are concerned with its the share holder discrimination trend we focus on. I would even go further and argue there should be a right for people to invest freely into these kind of assets however there need to be way more controls. The inability to stop dilution is key NOT the control on the direction of the business.
To a laymen these imposter shares felt like normal equity.
Founders Evan Spiegel and Bobby Murphy retained near total control through super-voting shares.
Key facts:
- Snap raised $3.4 billion in its IPO in 2017.
- Public shareholders received non-voting shares.
- Founders retained control through shares carrying up to 10 votes per share.
Several major index providers responded by excluding companies with non-voting shares from their indices. For example, FTSE Russell introduced rules requiring minimum voting rights for inclusion.
Why does this matter?
Because ownership traditionally implies governance rights. When investors buy equity but cannot vote or influence the company, they effectively hold a financial instrument rather than true ownership.
Again, the structure is legal. But it places retail investors at a lower level of asset seniority compared with insiders.
Case Study 3: Leasehold Property and Service Charges in the UK
Asset discrimination also appears in property markets.
In the UK many homeowners technically own their property through leasehold agreements rather than freehold ownership.
Under a leasehold system:
- The homeowner owns the property for a fixed period (often 99 to 999 years)
- The freeholder owns the underlying land
- Leaseholders pay ground rent and service charges
This system has faced heavy criticism mostly because you have the obligations of a freeholder but none of the rights its pure fraud.
A 2019 investigation by the UK Competition and Markets Authority found evidence of:
- escalating ground rents
- unclear service charges
- restrictive lease terms that trapped homeowners
Government estimates suggested around 4.8 million homes in England were leasehold properties. Both the conservatives and Labour promised to stop it but then did nothing 
because they are both corrupt. Claiming they where protecting private property rights however they actively discriminate against the rights of those individual investors while protecting the rights of collective investment groups. >.> exactly the same pattern as with snap and brewdog.
Service charges can sometimes include large fees for maintenance services that residents have little control over. Leaseholders often cannot easily replace the management company that charges those fees.
The result is a property system where the individual homeowner carries the financial burden while the landowner or managing company retains structural power.
Even more controversial are estate management fees charged to freeholders, sometimes called “fleecehold.”
In these developments homeowners technically own their property outright but must still pay ongoing private estate charges for roads, landscaping, or maintenance. The council purposely doesn’t adopt them even though the residents are paying full council tax so those homeowners essentially pay council tax which covers those costs and an additional fee for nothing that goes directly to a collective investment group that offers nothing of value notice a pattern here?
Critics argue that these fees can be difficult to challenge and often lack transparency.
Case Study 4: Geographic Price Discrimination in Consumer Goods
Price discrimination across countries provides another example.
Large manufacturers sometimes sell the same product at very different prices in different countries.
If markets were fully competitive, entrepreneurs would exploit this difference through parallel imports, buying products in cheaper markets and selling them in more expensive ones so why don’t they ?
However, companies sometimes try to block this.
In 2018 the European Commission fined several companies for restricting cross-border sales of consumer goods within the EU.
A notable example involved AB InBev, which was fined €200 million for restricting cheaper beer sold in Belgium from being resold in the Netherlands.
The EU argued that these practices violated the single market by preventing traders from exploiting price differences.
While the EU occasionally enforces these rules, enforcement remains inconsistent. When restrictions succeed, consumers in higher-priced regions effectively subsidize those in cheaper markets.
Again the pattern appears.
Corporations attempt to protect price discrimination, and regulators intervene only occasionally.
Case Study 5: Sovereign Wealth Funds and Unequal Tax Treatment
Another form of structural imbalance appears in taxation.
Many governments operate sovereign wealth funds that invest in global markets.
One of the largest examples is the Government Pension Fund Global managed by Norges Bank Investment Management in Norway.
This fund manages over $1.4 trillion in assets.
In many jurisdictions sovereign investment funds enjoy tax advantages such as:
- exemptions from capital gains tax
- exemptions from dividend withholding tax
- preferential treaty treatment
Meanwhile individual investors often face:
- capital gains tax rates up to 20–30 percent
- dividend taxes
- transaction taxes
When a state invests with tax exemptions but taxes its own citizens heavily for similar investments, the playing field becomes uneven.
This creates a paradox where governments can claim superior investment performance while benefiting from structural tax advantages unavailable to ordinary investors. Ever wondered who runs and benefits from these funds? The families, groups and people running these funds stay the same for generations Some people are more equal then others.
Discrimination Beyond Identity
Discrimination is usually discussed in terms of race, gender, or social identity.
But the same structural principle appears in financial systems.
When investors or consumers are placed in lower tiers of asset seniority, they are effectively treated as second-class participants in economic systems.
Just as societies reject discrimination based on race or sex, it is worth asking whether economic systems should tolerate discrimination based on financial hierarchy embedded in contracts.
The reality is that many modern financial structures depend on it. This is interesting since its a key weakness in so called capitalist systems however when you look deeper you see a lack of execution from the state and purposeful discrimination against individuals the exact opposite of capitalism.
The Role of Government
In theory capitalism requires strong institutions.
Markets do not function properly without rules that prevent fraud, collusion, and abusive power structures.
Economist Adam Smith himself warned about this problem. In The Wealth of Nations he wrote that business interests frequently conspire to restrict competition.
Modern regulators such as the Competition and Markets Authority in the UK or the European Commission in Europe exist precisely to prevent these outcomes.
However, regulatory capture, lobbying, and political incentives often weaken enforcement.
The result is a grey zone where practices may be technically legal but still systematically disadvantage ordinary participants.
Why we love Crypto & Causevest
This is where cryptocurrencies introduced a radically different concept.
Well designed blockchain systems operate on transparent and deterministic rules.
If a network is decentralized:
- anyone can run a node
- anyone can verify transactions
- ownership rules are visible in code
- asset rights are identical for every participant
This does not eliminate risk. Markets still fluctuate, projects can fail, and technology can break.
But within the system itself the rules apply equally.
The protocol cannot silently introduce a new class of shares or give special privileges to insiders.
That principle of equality is one of the most important innovations in digital finance.
For example, in the Causevest ecosystem every XCV coin carries the same governance rights, regardless of whether someone holds one coin or one million.
Participants vote on network direction and the distribution of network fees under the same protocol rules.
That is a very different structure from traditional corporate governance.
A Pattern Worth Paying Attention To
Across multiple industries the same pattern appears:
- Retail investors receive inferior share classes
- Homeowners are forced into contracts with face opaque property fees and discriminatory relationships with the sellers.
- Consumers are discriminated against in some places and pay higher prices due to restricted competition
- Governments give themselves advantages unavailable to citizens discriminating against them
Individually these cases may appear small or technical.
Collectively they reveal something more important.
Many modern economic structures operate in a legal grey area where consumers technically consent to contracts that place them at a structural disadvantage.
When governments fail to intervene, the burden falls on individuals to understand complex financial systems that are often deliberately designed to be opaque.
The result is predictable.
Consumers, small investors, and ordinary property owners frequently end up holding the weakest position in the system.
And that raises a fundamental question.
If capitalism is meant to reward fair competition, who is ensuring that the rules of the game remain fair? Who monitors their results ? How do you ensure they are not captured ? If you cant trust them why even bother ?