END GAME 3:
When you reopen the KellyBank and start selling KellyCoins with no limit to the number you are willing to sell, you keep the KellyShop open but increase the price of the iPads, so that they are now $500 more than on the open market.
As long as the KellyShop never promises to always sell iPads at a certain price, increasing the price later on should not be fraud.
And if you do the above, it seems that (1) No new users will want to buy more KellyCoins and (2) Users who already have KellyCoins will either hold onto them with the hope of a future price reduction, or simply buy lots of iPads in order to cash out their KellyCoins at a loss, to get back to USD.
This way, you make money from the people who cash out at a loss.
At any rate, given that people are suckers enough to go for things like the pay-to-bid auction sites–and that those sites have been getting away with it–I think it’s clear that KellyCriterion’s idea has real potential.
If I’m understanding correctly, the KellyStore remains open in both end games, it just doesn’t sell KC$500 iPads anymore. Maybe it only sells KC$20 pencils or something. But the owners of KellyCoins still have something they can buy with their Kelly Coins. And I’m assuming that you actually stand ready to sell some item to anyone who wants it (i.e., you haven’t taken all the money to the Greek Isles–you will fulfill any order for an item from the Kelly Store).
As long as all terms are fully disclosed to buyers of Kelly Coins, I don’t see how any law has been broken (as long as my assumptions above are correct).
ETA: You could still make money on this scheme by simply later reverting to selling iPads at the regular market price. You’d just have to manage things so that you’d get to hold on to people’s money for a few days. There are many types of businesses that make shitloads on “the float” (i.e., holding someone else’s money for short periods of time.
