Bitcoin Forum

All the fact are in the forum posts by me and multiple other people, who git fed up with constant BS.

Misvalued assets - yes
Tried to use company assets to pay off a personal loan - I can not recall at the moment all the details. Dig the forum, it's all here :)
Deleted material evidence supporting this activity to cover up this activity - yes. This has been proved in forums to ad nauseum  
And refuses to supply specific facts to support his claims and instead spAms the threads - yes. This has been proved in forums to ad nauseum  

1.  Did you lose any funds as as result of usgai misrepresenting his various businesses and assets? - yes, because information published (now deleted by usagi) was constantly wrong - that was discovered later.

2. What facts can you provide that may support or refute these claims - it's all in the forum post.

Here's the first of my allegations against usagi - a failed attempt to steal hardware belonging to BMF.

Sorry if it's confusing in order - the posts comes from various threads.

The Case of the Vanishing Hardware

First a quick bit of background on BMF.  I don't believe usagi will disagree with any of this.

BMF started out as purely an investment vehicle - its sole role was to invest in securities (can't remember whether it was only mining-related ones or mainly mining ones).  At some stage after pirate had happened, usagi suggested that the company cut out the middle-man and move into mining themselves - so they no longer had to pay a percentage of revenue to an operator.  I believe this was approved in a vote by investors.

BMF was given (I believe - not sure on this) a mining rig by usagi, raised some funds and pre-ordered more mining gear.  This was listed in the asset spreadsheet for BMF.

Then GLBSE shut-down.

In a thread, usagi made the following post (below is only first 2/3 of it - the last 1/3 is irrelevant to my point.  Follow the link if you want to see whole post.


The original embedd edusagi quote says that ALL his companies had gone.  Puppet asks if that means usagi will keep investors coins.  Usagi then (amongst the usual insults) claims that "everything we had was invested on GLBSE".

This puzzled me - as how could BMF's mining rigs/pre-orders be on GLBSE?  Maybe it was just a typo and he meant to say "Most of our assets are on GLBSE but I'll distribute the proceeds from sale/cancellation of the mining rigs" - but accidentally mistyped a few words.

So I asked :


Surely now, usagi will just say "Oops - forgot about those - obviously the proceeds from those will go back to BMF investors.".  Well, that's not exactly what he said:


Well OK - obviously he doesn't like me very much, but at least now I've reminded him about the mining rigs.

But what's this?  Oh a scammer thread about me (and others).  I can't quote the thread - as usagi locked it to prevent those he accused from responding (and in the hope his theft attempt wouldn't be noticed).  But here's a link to it:

https://bitcointalk.org/index.php?topic=127096.0

In brief he alleges that I (and others) made false accusations against him to try to ruin his business.  Amongst the ones against me is #10:

"10. https://bitcointalk.org/index.php?topic=114820.msg1271394#msg1271394
"You've said a few times in this thread that EVERYTHING you had was invested on GLBSE - yet that isn't actually true is it?"
During the times BMF had hardware on order I had never failed to mention that. A shareholder motion was created over the issue of buying hardware. I made a very public series of posts about it. I never once tried to hide the fact we had a small amount of hardware. I mentioned it several times in PM to various creditors."

This is wierd - my post he links very clearly quotes a post in which he says ALL his assets are on GLBSE and he's now accusing me or attempting to defraud him by saying that's not true.  So is he saying BMF doesn't have any hardware any longer?

Later in the thread the truth starts to come out:

https://bitcointalk.org/index.php?topic=127096.msg1349684#msg1349684

If you read this post you immediately see the problem of arguing with usagi.  Usagi states they had hardware (so what I said was correct - it was untrue to say all assets were on GLBSE) then says : "If you weren't lying, just go away. if you were lying.. just go away. "  Given that the issue I was accused of lieing about was whether BMF had assets non on GLBSE, and given usagi had in that same post said BMF had hardware, how can there possibly be ANY confusion over the fact that I was telling the truth?

So: It was just a misunderstanding - and usagi now has been reminded about the hardware.

But wait - what's this? (from the last linked post):

"I confirmed in private to loan-holders hardware had arrived. one offered to exchange the single for the debt. I turned him down until I get the info from nefario."  So usagi was considering giving the single to loan-holders when the info from nefario arrived.  That's strange - as the hardware belongs to BMF and the loan is guaranteed by CPA/usagi personally, not by BMF (if disputed can dig out the loan thread).

A bit strange that usagi had been discussing the hardware with loan-holders (who have nothing to do with BMF) but then he accused me of scamming when I said he had hardware.  Kind of looks like he realised he couldn't get away with pretending the hardware didn't exist any longer so gave up on it - and then locked the thread accusing me, so I couldn't even reply any more (temporarily unlocking it very briefly to post an "update" in which the village idiot Augusto stated usagi was innocent).

But that's not the end of it.  Now lets look back 2 days previous to the scammer accusation by usagi (only part of post quoted):


So 2 days previously they had 2 pre-orders and no physical assets.  But ""I confirmed in private to loan-holders hardware had arrived.""

Remember for later the claim "we also ordered 2 FPGA singles. So besides that everything we held was on the GLBSE."  

Fast forward a few days and we have this:


Now lets put these things in date order:

Nov 18th: "we also ordered 2 FPGA singles. So besides that everything we held was on the GLBSE.

So, first of all, I do not have any kind of massive amount of bitcoins, nor do I have any physical assets that are owned by anyone."

Nov 21st: Accuses me of attempting to defraud when I said he had assets of BMF's that weren't on GLBSE.  Then changes his mind (but STILL claims I was lieing) and says:

Nov 21st : "I confirmed in private to loan-holders hardware had arrived. one offered to exchange the single for the debt. I turned him down until I get the info from nefario."

So one of the 2 FPGA singles must have arrived between 18th and 21st.  Usagi won't use the singles to pay off CPA debt until  info has arrived from nefario.

Nov 21st : In same post usagi again iconfirms the hardware is only FPGA singles : "Look if I said that it means either the FPGA singles we now have on order either weren't ordered yet or hadn't arrived. "

Nov 22nd : "GOOD NEWS! Loanholders have announced interest to buy:

a) the guitar and amp I am selling
b) the hardware I have recieved

These loanholders have also given me permission to confirm that I have done this once the deals have gone thru and equipment has been verified working."

That's strange - as no info had arrived from nefario.  On 21st he rejects the offer and on 22nd he announces it?

Now onto a different thread and Nov 26th:


Suddenly 2 FPGAs (on the 18th that was the only pre-orders and they had no hardware) has become "a few FPGA and ASIC singles".  And usagi is helping himself to one to pay off a CPA debt (note: usagi later claimed this would be deducted from CPA's share of BMF settlement so it's NOT necessarily an attempt to scam).

Are we really expected to believe that on 18th usagi only rememberd 2 singles, on 21st he forgot and he had any hardware at all (and accused me of lieing when I said he had assets not on GLBSE) then on 26th he suddenly remembers there's some other hardware as well?

Or could it be that he on 18th he tried to pretend BMF only had preorders for 2 singles, he then agreed to give one to a CPA debtor and was hoping noone would notice when he started claiming ALL his assets were on GLBSE.

Then on 21st he took his attempt to steal them a stage further - accusing me of lieing when I said he had assets that weren't on GLBSE.  Look carefully at the wording:

"During the times BMF had hardware on order I had never failed to mention that. "  Past tense - "had never failed to mention it" - not "have failed to mentioned it."  He is saying that I was lieing when I claimed he still had assets not on GLBSE and that when he did have pre-orders, he disclosed it.

Later same day he realises the game is up and admits to having 2 FPGA singles - then locks the thread in the hope it'll die and noone will notice how he was attempting to steal from BMF.  Note that we KNOW he hadn't got rid of the single then - as on 22nd he announces it's going to be used to pay off a CPA debt.

He very clearly was pretending not to have any mining hardware -  to the extent of lodging a complaint over my 'lies' in the scammer forum.  Why did he then admit to having them?  Can only speculate on that - but most likely he realised he'd previously been quoted as having them (and had mentioned it on the 18th) and, whilst he can delete his own posts/website showing what his companies had, he can't delete other people's quotes of his posts.

And how do you forget you ordered an ASIC (and 2 jalapenos) whilst remembering the 2 FPGA singles?

Not only did he try to scam - but when I pointed it he had the bare-faced cheek to accuse ME of trying to defraud him in exposing HIS scam attempt.

If it's of any relevance, the pre-orders he actually had (or claimed to have) less than a week before GLBSE closed were:

2 Bitforce Singles
2 Jalapeno
1 Bitforce 'SC' single

Accepted. This will be enough for me to close this thread.

Thank you! I'll update post #2.

As we say in Japan, どうも　ありがとう　ございます ^^

Dear ShadowAlexey, Ciuciu, jborkl and Anonymous #19 (You know who you are!);

Thank you very much for helping us out on this. If you would like me to rate you on OTC for this transaction please send me a message on the forums with your OTC name (i.e. #bitcoin-otc).

As a thank you gift I hereby issue each of you 1,000 options to buy CPA at 0.05 per share (expiring after 2013). Right now these options are worthless because the price of CPA per share is about 0.033. However, one day, I expect CPA to return to it's former glory. At that time, you may very well wish to exercise your options. How to do this is simple. At a later date, just ask me, and I will sell you the shares via transfer. if CPA rose to 0.1 per share for example, this would save you 50%. Typically people do this by flipping shares and that is an option too. if you wish I will send you the price difference and keep the shares myself. Good luck and thanks again. This thread was a success ^^

Hello! I'd like to make a quick update.

The three people who were applying to loan us have for one reason or another been unable to complete the transaction. At this point we have taken on 338 BTC of liability, with approximately 180 to 200 BTC remaining.

We have repaid the investors we signed for the first week. If you are waiting for us to repay people before signing a loan with us please consider the fact that we have paid out 2800 BTC on YARR, we paid out 1400+ BTC on pirate insurance, 250 BTC on matthew's default, we've paid out on several options contracts (check my OTC rating). Actually my OTC rating is a good indication of my trustworthyness too.

Ok, thanks and good luck.

This is why you should ignore puppet. He's full of it. NAV of NYAN.A down -38%?

What?

The guy's a looney :p

 ;D

Confirmed. Thanks. I'll put your repayment address in post #2. Your first payment will be sent this coming Sunday. Thank you and good luck.

Right. Ok I'll offer him the terms everyone else got. I suspected I should anyway. It's only fair that way. If he doesn't accept, then it should be ok with the others. Thanks.

Hello everyone! Quick announcement time.

I have received four offers, listed above (and edited into post #2).

I've decided to accept them all with the exception of #4 -- I'm not sure if I should accept this one. First it would be unfair to the others and second I don't really need the money. I can do it, we make enough to cover the interest, but I have to ask myself if taking this money would be honest. I mean, I'm not here to just take money take money I have to run a business too. Hmm.

Thoughts? I gave him a deposit address, but I feel a little odd about it. Maybe I should counter-offer to just pay the original terms? If you have any comments please advise. Thanks guys, I was feeling really pissed until I saw these offers. I'll keep doing my best!

This is an example of why you should ignore puppet. When I did the ASICMINER trade, I was the 60% majority shareholder in DMC. Now I am under 20%. That's right I approved a deal that made me lose majority ownership. Ask yourself why. Second point, the deal was discussed and accepted by Nefario and ColdHardMetal live, in IRC, as it was going down.

Puppet is a worthless troll and if everyone reports him maybe we can finally get rid of him. I wish Theymos would ban idiots like him once and for all.

Guys I suggest we ignore Puppet, he follows me around and makes stupid comments on my threads.

Anyway back on point, Nebulus has been repaid. I'm a little upset at him, he told me he wanted the money back to play Satoshidice. Guys, please don't step into this if you're just going to ask for your money back after 3 days.. I was able to pay back goat's 200BTC and nebulus's 50BTC but now we're back in square one with no free floating capital. If you're going to agree to depositing with us, please try to stick to the terms in the OP unless it's an emergency, from now on. Thanks.

You are welcome!

Due to this event there is now an opening for an additional 200 to 300 BTC worth of investment. Anyone who would like to participate please post here or in PM, or contact me in e-mail or IRC. Thanks for helping :)

I've decided to allow it. Sure, i'll give you the same terms as goat.

This does present a problem for CPA as we now are having problems with liquidity again.

We're looking to borrow up to 350 BTC now :/ Thanks if anyone can lend us a hand, see OP for terms.

Nope, it's up to me to allow the early repayment or not. I'll just wait for someone who can do the 6 weeks. We'll be ok I guess :/

Sorry I was at work ^^ Confirmed! I also updated the 2nd post to show your repayment address. Thanks.

I am ID verified on the GLBSE. I'm not willing to identify myself publicly because several asset issuers have recently received death threats (both Obsi and DeaDTerra, among others) due to recent market losses, liquidity crises, or flash-crashes being perceived as bad management. I am, OTOH, willing to do video chat with Nefario or ColdHardMetal to verify I really am who I am in my photo ID.

https://bitcointalk.org/index.php?topic=110122.msg1197935#msg1197935

Confirmed!

I am usagi and I run BMF, the largest mining fund on the GLBSE. I also run NYAN, the largest general purpose fund on the GLBSE. I also run CPA, an insurance company (which despite all appearances is doing fine and has paid out on each and everyone one of it's contracts in full).

As a result of all this I hear things. Not important things or secret things but for example I get to do bulk purchase deals. So anyways I talk shop and do business with people like Diablo all the time. But regarding Diablo specifically I want to tell the diablo story from my point of view.

First off I respect Diablo as a coder. He did write Diablominer and it's quite a nice piece of work. He's also a forum mod (admin here) and from what I hear he does an OK job. So when I hear about DMC, that he was starting DMC, I bit into it wholeheartedly. Since day 1, BMF has been a major shareholder in DMC. At the peak it was worth almost half of our portfolio. That was in the beginning.

Over time I began to realize that Diablo didn't really know what he was doing as a trader or fund manager. For example, he and I would do small time trades, like 100 shares of BTC-MINING for 100 shares of DMC. Which was a fair trade at the time. I remember one day we did this trade and instead of going back to my other screen and coding or trading I hung out in the channel. I was mortified to see what happened next. He sold the shares into the market amd bought up something else -- again into the market. Both ways he lost 15-20%. I was speechless. I asked him what the hell he was doing and I can't remember what he said, but it seemed to assauge me somewhat at the time. I was left with the impression he was a poor trader though and left it at that.

However over the course of the next month DMC slowly started to drop in value. First to .80 then to .70 then to .666 then to .60 and .50. Then the .40s. I began to realize what was going on-- what he did was trade the shareholder equity down in his company in order to grow. For example let's say his shares were worth .75 each. He would offer 100 shares for 70 BTC worth of a mining company. The company was getting bigger, yes, but shareholder value was slowly being chipped away. I remember arguing with him in #bitcoin-assets for WEEKS about this. We had a major argument over this. He wouldn't listen to me. I don't know if it was his ego or if he just didn't understand. BMF eventually lost over 1,000 bitcoins because of him. I still don't know how the heck I managed to trade my way out of that but for the record BMF did better than the market (i.e. GIGAMIING went from 1.50 to .50 (lost 67%) but BMF only lost 40%). But this isn't about BMF.

So anyways I kind of back away from DMC after the arguing. I leave him to his own devices. DMC is worth about .50 or .60 at this point. Then it went to .40.

Around this time ASICMINER came out and I had bought around 5,000 shares in total at the bulk purchase price of .09 for BMF and NYAN. So Diablo was, at the time, trading his shares for MHASH. Not value. Which technically.. I mean if you think about it -- I mean think about it really, ok, GIGAMINING has 5mhash/share, DMC had 4. So why was DMC .50 and GIGAMINING was 1.20 at the time. Why? it didn't make sense. So Diablo's plan sort of made sense you see. If you thought about it. But then things went horribly wrong.

He approached me for a deal for ASICMINER. ASICMINER, you see, was going to get 155mhash per share once they started mining for themselves with their own ASICs. Ok, fine. Makes sense, I thought. No really. Trade a few months of dividends for the future value of ASICs now. It makes a boatload of sense if you think about it (no really, think about it)--sell out mining bonds NOW while they're overvalued and get in on ASICS. Versus losing 90% of your value and THEN trying to move into ASICS. So I traded approximately 500 shares of ASICMINER for approximately 4,500 shares of DMC. I think we did a second trade a short while later for 300 more shares of ASICMINER. The point is, we bought into DMC for thousands of shares at 0.0111111 per share.

Please keep in mind we were always the majority shareholder of DMC. We has 60% of DMC's shares at the time. And when all was said and done a lot of people did this trade with DMC. In fact we were no longer the majority shareholder. So this isn't our "fault". Plus look what happened after the trade. It was like a new deal for DMC. The plan was finally working. We had bought in at 0.011111 per share and DMC was going up, up, up. 0.03. 0.04. 0.05. 0.06. 0.07. 0.08. I even sold some shares for close to 0.1. Finally Diablo's genius was paying off. Then the accusations of scam started because of the asicminer trade and things started to go south. I don't know what happened after that because I was no longer a majority shareholder. I has in fact sold out several thousand shares for 7x my money. NYAN profited from the deal, I won't deny it. But things finally seemed to be turning around for DMC, despote the accusations of fraud (there was no fraud).

However during these last few weeks since I did the ASICMINER trade Diablo has been seeming increasingly panicky.

he has been proposing ridiculous deals to me every day and while it's true we did talk about insurance he has rejected my offers so far.

Ok so I will cut this short now.. but first let me say this. I believe in Diablo's vision. I believe that he can do this. But I also believe he cannot do it alone, and must be held responsible for breaking his contract. Diablo should have bought mining hardware by now. He has 1600 BTC in assets. He could easily buy 20 singles. But he won't. That's my primary complaint as a (former) majority shareholder. All the talk about solar panels, or building dedicated web hosting with customer's money, broke the contract. Many times Diablo said he was going to take the money and build a solar farm or a webhosting company. And I am very depressed, please believe me, I am horribly depressed to have to say this. But if Diablo has taken money from DMC as he seems to have said above, and started a web hosting company --- if he has assets gathered from DMC shareholders which he does not intend to return as a direct consequence of NEFARIO'S DECISION -- I believe he should recieve a scammer tag.

Diablo please listen to me. Let me help you. First, Apologize. Second, I believe if you share your vision.. if you just tell people what you are trying to do.. I believe, I really believe they will support you. Just tell people why you do things the way you do. Just tell people what's in your heart. I am seriously friggen depressed at this situation and not because I am a big shareholder in DMC. But because I am emotionally involved. I wanted DMC to succeed so bad and I feel like crying now that it has come to this.

Please just tell people your dream..

1.

2.

3.

4.

5.

POSTSCRIPT:

Nefario has advised me that I may need to give back some shares of DMC. I don't mind doing that. However everyone needs to be aware of the situation. When Diablo did the ASICMINER trade I was a 60% shareholder and there were 2500 shares of DMC out. I traded for 4500 shares of DMC or maybe 5000 or so. That means he traded around 14,500 shares with other people, presumably for the same amount. I don't mind returning shares as long as it is done fairly and equallty among those who did trades with diablo. Secondly, since I have the 4,500 shares of DMC essentially still sitting in NYAN.B, I would want my 500+ shares of ASICMINER back. See, this is the problem; the trade was done with too many people and too long ago. Reversing the trades now is probably not feasable fairly. I have already returned the value of these trades to NYAN.B shareholders as well; my personal profit from the deal was zero since I take no management fees from NYAN.B. (really. I take a small management fee of 5% of profits from NYAN only, not the component funds).

So WRT returning ASICMINER shares, I will respect and follow Nefario's final decision without complaint. I only ask that it be done fairly and equally among everyone who traded, and that we recieve back what we traded for. If that's impossible then we just deserve an equal right to the assets of DMC like every other shareholder. Me especially, being 50% majority holder or more from day one. But that's not really relevant I guess, every shareholder is equal. So, I will leave that decision to Nefario.

P.P.S.
I have exact records for every trade done in NYAN, BMF, and CPA. I can provide and explain these records upon demand, as anyone else who did the trades would be expected to do. For one, everyone has the .CSV files available from GLBSE. So there will be no issue with fairness and accountability, on either side of this.

This is why you shouldn't listen to EskimoBob.

Theymos.

Usagi is a scammer. Please tag him. Every step of this investigation has show that usagi consistently misrepresented the value of his assets.  This fact has been pointed out again and again by numerous other community members. And when individuals make claims against usagi he makes scammer complaints against them.

Distraction is a technique in which the argument is a diversion to another question, to a side issue, or by irrelevant objection (pp 44-48) (link (http://www.hebrew4christians.com/Clear_Thinking/Informal_Fallacies/Tricks/tricks.html)) and the approach to deal with this is to refuse to be diverted from the original question, but stating again the real question at issue, therefore I state I refuse to answer questions which do not directly relate to evidence presented in your locked thread.

You're welcome.

Thanks. And now, to avoid the issue of distraction, I will continue to respond to your accusations in the order I have mentioned. It's late now, it's 4am in japan as I type these words. So I really need some sleep. I have some free time tomorrow, and I'll have a look at another one of your accusations.

Some friendly advice. If you really are trying to help this get resolved fairly, then do yourself a favor; do not post too many "small" accusations. It will detract from the biggies.

For example, do you really want to make an issue out of whether I live in Korea, Japan, or China? What's the point? Maybe you feel there is a point. But I feel the CPA/BMF contract is a much bigger issue. If you do not trust me, then do not give me the chance to fillabust by responding to small issues first. It's just a thought.

FWIW if you can't make 10% or more in today's market you really should let someone else handle your money for you..... really.

Name:   The Crimson Permanent Assurance
Summary:   The plan basically boils down thus: 1. Raise funds to be used to compensate users of a service in the event the service defaults. 2. Charge services a monthly fee for this coverage. That's about it.
Percent of majority   
to change contract:   60
for general motion:   60
to issue shares:   60
Contact email:   usagi@tsukino.ca
Website:   http://www.tsukino.ca/cpa
Accounts:   http://www.tsukino.ca/cpa/accounts
Twitter:   
Blog:   http://www.tsukino.ca/cpa
Full contract:

Contract:
1. Investment Hypothesis
1a. Reward
THE CPA exists to provide shareholders with exposure to all profits associated with writing insurance on customer assets, based on the war-chest method of dividend distribution as outlined above.

1b. Risk
THE CPA exists to provide shareholders with exposure to all losses associated with writing insurance on customer assets. Our value may decline dramatically in the event of large or widespread default.

1c. Commitment to 100% backing
All insured securities are 100% backed by segregated asset accounts for their exposure unit group. These segregated accounts will have no other customer claims applied against them. This means we won't leverage our assets to cover two separate types of contracts at once, but we may pool resources to cover similar contracts (see: "1. Large number of similar exposure units" in customer contract preamble).

2. Dividends
Dividends will be paid according to the following schedule:
2a. On or before the 7th of each month, 90% of net earnings for the previous month will be placed into "the war chest".
2b. We then pay pay 10% of this war chest as dividend and at management's discretion a further 10% back to the company for growth and expansion.
2c. Assets which have been released from backing a customer's contract are considered earnings and will be placed in the war chest as per 2a.
2d. THE CPA reserves the right to issue special dividends from the war chest at any time.

3. Disclosure
Full and timely disclosure will be provided regarding any material change in the company's net worth or business activities.

4. Issuance & buyback
We may issue new shares in order to support a private placement and from time to time as the company grows in size. We may issue a buyback for outstanding shares at 200% of the highest trading price over the previous year to date.

5. Risking & de-risking of the company's assets
5a. Acceptable Assets
THE CPA will use shareholder equity to back assets and synthetic instruments as THE CPA sees fit to write.

5b. These assets and instruments held by THE CPA will be pledged to back customer assets on a 100% convertible into bitcoins basis. This means we won't invest in leveraged securities thus causing us to break 1c.

5c. Bitcoins only
We will never convert assets to or from FIAT of any kind. We will never insure an asset class with assets from the same or similar sector. We will never back a writing with an asset 100% pledged to back another writing. Assets used to back our writing will be moved into a segregated account for holding for that purpose.

5d. limited segregatability (de-risking sector default/widespread default)
To mitigate the risk of the default of an entire sector, THE CPA will seek to issue no more than 25% of it's coverage to any particular sector and will and to not insure assets using other assets from the same or similar sector. For example, we will avoid securing assets of a mining company with assets from other mining companies. In cases where this is unavoidable we will limit segregatability to pay claims on a first-come-first-serve basis, with the actual contract holders for the default event taking first priority.

5e. income stream insurance
THE CPA may from time to time securitize income streams at the precise NPV of such streams at a point in time. For example, the NPV of 10 bitcoins per month at 10% per month for ten months is 61.45 bitcoins, not 100 bitcoins. This is mainly of use for miners who wish to guarantee their dividend in the event of downtime or catastrophic disaster.

6. Working with GLBSE/Customers
We reserve the right to change this contract and bind it at any time. Use of our services constitutes acceptance of these terms. We will provide timely notice and disclosure to our shareholders of any changes to this contract on our website and/or our asset page on the GLBSE.

The intent is to provide 100% backing until we can start figuring out what the rates of defaults (and premiums) are going to be. Right now, nobody knows what these numbers are. It's a good question -- I had added the wording about exposure groups right before I published the contract and yes, the wording is a little open. What it implies by itself is that if I insure 500 bitcoins worth of miners, I can take another miner, or ten, without offering any additional backing. This would be dangerous, of course. I've also prevented it by writing rule 5d. The intent of rule 5d was to provide guidance on just this. Right now I am trying to implement safety procedures and fences against trouble such as over-writing contracts. For now, backing is going to have to be 100%. If you want that specified it can be written into a customer contract without any problem.

5d. limited segregatability (de-risking sector default/widespread default)
To mitigate the risk of the default of an entire sector, THE CPA will seek to issue no more than 25% of it's coverage to any particular sector and will and to not insure assets using other assets from the same or similar sector. For example, we will avoid securing assets of a mining company with assets from other mining companies. In cases where this is unavoidable we will limit segregatability to pay claims on a first-come-first-serve basis, with the actual contract holders for the default event taking first priority.

How this works is to provide three interlocking safety helmets. First, there's a hard 25% limit no matter what the rate of default is. Getting stung on this rule would be akin to 25% of all the cars with auto insurance getting totaled in the same month. Probably not going to happen. But if it does, we can handle it. The second safety helmet is if the entire sector blows up. I think we can both agree on how unlikely this is, but if it does, there is a minimum of 25% backing over at least four sectors (rule 1c forces us to maintain 100% backing over the entire company), so to even get to that point we would need to be equally weighted over at least four different sectors. So even if all the miners simultaneously reported a fire which destroyed their rigs, we would be able to pay out on all of those claims.

The final safety helmet is that we can't back a contract with similar assets. An example? If and when we decide to insure pirate bonds. It does not make sense to insure 400 bitcoins of pirate bonds with securities including 100 bitcoins invested into.... pirate bonds.  If pirate ever defaulted, we would not be able to pay out 100%. So even with 4 sectors covered, the similar-asset rule forces us to maintaining coverage much higher than 25%. The minimum we could get away with if we calculated it is probably 33% over four sectors; we could not actually go to 25% unless we were covering five sectors, so that we could guarantee no asset is being used to insure a similar asset. This is a weak link in the company, but I can personally guarantee you we will not be "whipping out our calculators" and trying to get down to 25% just to be risky. I think a good, safe range is 75% to 100% and will remain there for a long time.

The real issue here is affordable premiums. We want to keep insurance inexpensive. This is why insurance companies exist, like the classic "maritime loans" for exploring the new world; to pool the resources of many investors to protect the one rare case where a merchant loses his goods or his ship. The danger is in some ways more real for the insurance company than for the customer; We stand to lose much more money than one customer's assets if we have to default. These rules exist so that we can continue to provide a valuable service to the community.

I think this is an order of magnitude stronger than what real-world insurance companies provide. A lot of real world companies focus on an entire sector and would blow up if the whole thing required payout.

And yes it's a little difficult to understand, so if you have a better way to word this let me know. I'll be thinking of a simpler wording as well.

FAQ announcement: https://bitcointalk.org/index.php?topic=81993.msg1233186#msg1233186
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1. [TradeFortress]: usagi, I would like to invest in BMF however I'm a bit concerned with the inconsistent dividends (0.001 for a few weeks).. what happened there?

Those were daily dividends which we did as a promotion when we launched BMF. They totalled about 1.5% a week, maybe 2% a week. When the price crash happened, I panicked and launched motion 80 (https://glbse.com/vote/view/80). Note that this motion allowed me to cancel dividends temporarily. I am still, actually, covered by motion 80 and don't have to pay dividends or invest in new hardware. But it turns out this part of the decision killed sales of BMF. No one wanted to invest in a fund that didn't pay dividends. So I experimented with paying various levels of dividends. Investors seem to like daily dividends the best, so here we are, I am paying daily dividends on BMF for at least another 2 weeks. You see I really want to make BMF the best. I have a dream -- I know it sounds corny but I want to run BMF as a company. I want to have an office and a telephone number and a back room with 50 SC singles in it. I know that perhaps I have not always properly communicated with investors and I have assumed that everyone would read the motions, but there it is. If you look at the other things that motion 80 said I think you will realize I want to treat this company like my baby. All I wanted to do was fix investor's loss. I think that going forward, daily dividends, followed by mass hardware purchases (and 0.5%/week divs), will do that.

Essentially, at the start of the week, when BMF is worth say .49, then we make money from our holdings and from our mining operations. Then at the end of the week we're actually worth .51 or .52 -- but then we pay dividends. So we drop back down to .49. If we didn't pay dividends, we would grow the value of the company faster, through acquisitions and hardware purchases. In the future, I'll continue to keep investors informed well in advance of any changes to dividend payment and growth policy, but for now we're paying daily dividends of around 1.5% per week. You can check this on stochastically.com. Thanks for your question.


2) [puppet] Question: Even using your method, it is not difficult to see that your 'real' values are almost always quite above market price (ex. current GIGAMINING price is 5 day average 0.578 | 24h average 0.553 | 'real' value 0.63) do you think the market is really this wrong? And even if it was, don't you think it is quite misleading? How can a share be worth more than X bitcoins, if that much bitcoins could get you one now? Funny is, I was about to include a question about the value of mining gear, but writing question #2 I realized you are actually right about them :) The value should be counted as the price you would pay for them, shipping included; as this is what counts in buying your shares vs. buying the gear and mining directly. As long as that value is less than what you will earn from them, of course, but then if that was the case it wouldn't make sense to buy them in the first place.

Answer: Valuing securities and hardware is an exceedingly complex topic. One cannot just take the spot price or the NAV and say that is the value of a security. You almost answered this yourself with the comment on hardware; If we sell 120 shares at .50 and buy a FPGA single, we have to pay shipping. Now say we were totally honest about the "value" of the company. We could no longer sell shares at .50. This is called cash-basis accounting, and most companies do not use cash basis accounting for this reason. Another kind of accounting is called accrual basis accounting. In accrual basis accounting, which we also use for hardware orders, we count orders made as value even though we do not actually have the units in our possession. For exmaple, BMF has a market cap of about 2,400 bitcoins and about 4,800 outstanding shares (share price ~.50). But we have 343 bitcoins worth of hardware on order. If we tried to value our company as if we didn't actually own those singles, we'd be forced to sell shares at about .42. That wouldn't make sense. So we use accrual accounting for hardware purchases. Yet another form of accounting is called cost-basis accounting, in which the total cost of the asset is counted. This is a common form of accounting as well. You touch on cost-basis accounting when you say "...but writing question #2 I realized you are actually right...," again, if we simply say that a FPGA single we order is worth 50 bitcoins (and not say 62.6699), the value of our shares will drop and this is not logical. This equipment is not like a car or a computer that loses value as soon as you pay for it. In fact, the resale value of FPGA singles is actually much higher than $599. BMF could make money selling these for $799 and they would sell like hotcakes. Why don't we do this? Well, we could. But the point is, that using cost-basis accounting, accrual-basis accounting, and cash-basis accounting in the right places, for what they are intended to be used for, makes sense.

Valuing an asset such as ABM, FPGAMINING, GIGAMINING, BTC-MINING, etc. is even more complex. In many cases we have a list of hardware that the company has. However some companies, like ABM, give investors a share of this hardware, while other companies, like GIGAMINING, do not give investors a share of the hardware. Therefore, 1mhash in GIGAMINING might only be worth .1 per share (and GIGAMINING would be .5/share), but since ABM has the value of a single attached to all it's shares it would be worth the .1/share plus $599+shipping (i.e. ~62.6699 using accrual value accounting) split up amongst 1000 shares. So that will add 0.063 per share, and we might say ABM is worth about .18 per share even though on a mhash by mhash basis it pays out as much as GIGAMINING. There are other factors to consider. Using ABM as an example, it's a company which can accrue value. If PsychoticBoy decides to issue 1000 shares to buy more hardware and he issues at .18, he can buy about 3 more FPGA singles based on the value of his company. So one share of ABM would then double in intrinsic value, but the market would likely price it around the same as it's priced now.

One might point out that the value of the mhash/share is contained in the value of the singles; This is both true and not true depending on the nature of the company or bond in question. In GIGAMINING's case, it is not true; you have no claim to hardware with GIGAMINING, yet the shares are actually worth more than .1/share. What's going on here is that companies are also valued by the income they generate. This is called a P/E (price to earnings) valuation. Right now, P/E values in bitcoin land are completely insane. BMF makes over 2% a week. Were we to give BMF a P/E ratio based on payments of .01 a week and a share price value of .50, we would say BMF has a P/E value less than one; i.e. 0.50 / 0.52 = ~0.96. Real-world companies often have P/E ratios over 10. Many real-world mining companies (coal, natural gas, gold and silver mining companies) have P/E ratios around 50. A P/E of less than one is considered less than liquidation value. Going by income alone, if BMF was a real world company and we valued it's income at 1% a month, which is really the maximum, say for something like a well-run covered call fund or a REIT, then BMF would pay around 1% a month and have a P/E of about 8.5. Even at half this valuation BMF should be worth over 2 bitcoins/share with the income it generates right now. This is using real-world thinking and real-world metrics.

So how do we value a company that generates 0.01 a week per share and costs .35 bitcoins? Do we value it at it's liquidation price? No. At the same time, valuing it with a P/E of 10 might be disingenuos. Do we really know so much about this company to assign it that kind of respect? Maybe no. Most companies on the market now have P/E ratings of about 1. We feel that in general this is accurate. However in some cases, such as comparing ABM to GIGAMINING, or say comparing BTC-MINING to YABMC, we feel that in general, the following is worth more: companies are to be valued more highly than bonds, stable dividends (cash flow is king, not just cash) are worth more than a sizeable growth fund (esp. in a bear market), and a company which is growing is worth more than a company which is not growing. I have tended to be extremely conservative in my valuations and you will find if you look closely we do not always overvalue securities. Although it will of course change from day to day, here are a few current examples:

We currently value JAH at a RMV of 0.125 (spot price using formula is 0.13)
We currently value ABM at a RMV of 0.31 (spot price using formula is 0.35)
We currently value LTC-MINING at a RMV of 0.55 (spot price using formula is 0.57)
We currently value BIF.5-10.MININGBOND at a RMV of 0.75 (spot price using formula is 0.79)
We currently value ZETA-MINING at a RMV of 0.17 (spot price using formula is 0.1777)

In short, using RMV represents our mandate, contained in our contract: The fund is mandated to only invest in bitcoin mining companies listed on the GLBSE and to perform due dilligence when investing in securities on the GLBSE. Emphasis mine. If we did not think carefully about the true value behind a company, and just let the spot price rule the day, we could not make investment decisions based on due dilligence. We feel that the RMV is a large part of the added value BMF provides to it's shareholders and indeed the general market. When you see a large difference, like how we value NASTY at .6 while the market price is only 0.35, you can bet our RMV has been backed up by talking to the asset issuer, investigating the company, looking at the hardware they own and their expansion plans, and so forth. As an example, in NASTY's particular case (because the RMV is so far above the market price) we would justify it by repeating what we said about the operator considering selling hardware to buy back shares. Further, OgNasty has the lowest order number for SC singles and will receive the first 6 such singles shipped by BFL. Overall we just feel NASTY (for example) is worth it. Whew, long answer, but it is important that investors are aware of what we mean when we say "our mandate is to do due dilligence". We really mean that. We're not just an index fund.


3) [Deprived] Questions about BMF's insurance policy with CPA. One, is BMF entitled to claim under that policy now (and previously) with it's NAV/share being under 1.0? If "Yes" then why hasn't it? Second, on September 10th in regards to the policy you said "This was announced, publicized, motioned, voted on and passed two months ago." Where was it announced and publicised? Where can I find the motion?. Where can I see the results of the voting?

Answer: The motion and the vote were in regards to other issues, as can be seen by looking up your quote. The announcement and publishing was done on the day I put the contract up as shown below in the links provided. Why not? There's nothing bad in the contract.

the contract is at http://www.tsukino.ca/cpa/customers/account-12/
the announcement is at https://bitcointalk.org/index.php?topic=81993.msg1070515#msg1070515

Actually there were a few announcements in different places on the forums, I don't really have time to go dig up each and every single reference. That one was on August 2nd. Everyone saw it. No one said anything until you and a few others tried to make it into something nefarious. It's not. It's just a contract for BMF. I was working on what would eventually become the CPA shareholder protection contract. The reason why BMF has not requested any money is simply because I'm confident I can repair the value of BMF by itself within a few more months. Plus, CPA is having obvious financial problems, people have defaulted on us for over 1,500 (hashking alone was 527BTC). We have enough to pay out on the contracts we have because we were careful and smart (a lot smarter and careful than you give us credit for, more than you will ever know probably).. But CPA can't sign any new contracts. So there it sits, in limbo, likely until the middle of next year. FWIW BMF is not paying 5 BTC a week to CPA right now.

Letter to Shareholders for August 2012:

This month saw the fateful crash of CPA share price due to a number of factors. I will briefly touch upon these factors and share with you the future direction of CPA. As always, if you have questions or comments post them here, or email them to cpa@tsukino.ca.

1. Pirate Defaulted
Lo and behold, the inevitable happened. I had been advised by the round table to cut our pirate exposure. As a direct result of me listening to and taking the guidance of the people on the board, we cut 5,000 bitcoins worth of pirate contracts, leaving only one, 1000-bitcoin pirate contract. This was strategic. Our plan was to wait for default and then gain respect and credibility in the community by paying out on that contract.

2. Everyone we invested money in ended up making mistakes and losing all or part of our money.
Everyone except Patrick Harnett. Deadterra's Gamma Bitcoin Fund lost 25% of it's value (or more). Hashking's "guaranteed, insured" fund turned out to be in pirate (hope you're ready for that scammer tag HK). Imsaguy is having liquidity issues; he can probably pay us back and we are working with him on it. It's quite sad actually, that the only possible due dilligence we could have done turned out to be a lie. It's easy to say x y or z in hindsight, but hashking for example was a well-respected member of our community before this. No one can honestly say that this was an avoidable mistake; it wasn't just one lender but almost everyone.

3. We can (and will) pay out on all contracts.
First, YARR has been paid, and there is money sitting in the YARR account right now making bids at 1. Sell now and get your money, no one is going to pay 1.30 for your YARR shares, get over it. Two, we owe one more person about 600-700 bitcoins. We have over 1400 shares of NYAN we are trying to sell to raise the money and to back new contracts. Reports of our demise or lack of assets were pathetically misinformed; People were probably trying to panic you into selling on the cheap. I know some idiot sold over 1,000 shares to me at 0.02. Well done my man, you got manipulated. I have zero sympathy for people who do that, in spite of all the comments and assurances I have made over this issue.

4. CPA dividend estimate going forward
with 50,000 shares outstanding and a monthly income of 70+ bitcoins from premiums and investment income of around 5% monthly, we expect to pay a fat 10% dividend going forward (after the war chest gets filled) making CPA a screaming buy at 0.033. A big laugh goes out at the people who called for our untimely demise including and not limited to the people saying so in this thread. You trolls know jack and think you're important. Why don't you put your money where your mouth is? I can tell you I am personally planning to buy 250 BTC worth of shares next week and I have personally bought 1500 bitcoins worth of CPA at 0.1. I believe in this company and it will succeed despite the ramblings of a couple of worthless internet trolls. I put that on the record.

5. Release of asset info/company policy/spreadsheets

Nahh, I don't think so. When we started YARR, the first, biggest and best (and highest paying) insured pirate passthru everyone took our books and started running their own version of it. Let's be honest, 4 people tried to copy us. We would have broken even on pirate premiums instead of losing about 500 bitcoins in this debacle, had we had more exclusive access to the market. If you think I have no good ideas fine, who cares right? OTOH if you want access to our books maybe you should apply for a job. We can use people for various things. We hired three different people as securities analysis for example, each one who failed miserably and horribly at simple tasks such as "Calculate the market cap for every issue on GLBSE". We also need advertising people. Otherwise there isn't a snowball's chance in hell you will guilt trip us into releasing what amnounts to corporate secrets. you think CPA is a scam? You think we don't know what we're doing? Go run your own insurance company. Setting aside money from your business is not insurance. It can't even compete. It's just some of your profits which are being with-held. Real insurance is capable of paying out 100 bitcoins on 5 bitcoins premium. Just ask Mollison. Psychoticboy. Kakobrekla. Ask them if we paid.

Remember, being able to pay, and to actually have paid in full, does not imply we are OUT of capital. It imples we have MORE capital because we didn't pay "most", we paid "all".

6. Future Direction

CPA will continue to make 10% a month on current NAV and we aim to spend the most effort expanding operations via Nyancat financial. We will continue to sign new contracts after the share sale this week. We have hotwallet as a pet project which has a currently profitable game running (dragon dice). We have a matchmaker service which is fully operational and running now, which is not on the books but which may be added later or spun out as dividend. We also have an online language school in the works with proven software and textbooks which have already been written which we can IPO and make a profit on immediately. There are a lot of ways forward for us. We are also aiming to change BMF's contract, which will be announced next in the BMF thread. BTW, regarding Nyancat Financial, you'll just have to wait a bit more for the weekly letter, the matthew situation demands a full explanation and I am waiting for news from Matthew.

7. My forum rep

Judge me if you want but when the dust settles, it's a real pity more people didn't sign contracts with CPA because we could have helped a lot of people. Most of the people who are attacking us have real sore asses one way or another form the pirate debacle. It's a pity they can't man up and admit they should have trusted CPA in the first place. We will continue paying out on contracts and doing our best and that is what I say counts in the end.

 ===

p.s. goat you brought yourself into this by making a lot of unfounded statements about me and CPA over a period of months... it isn't like we haven't had this chat before so I will cut it short; you don't trust me but you will trust some random idiot that doesn't know anything, you accuse me of running a scam and you turn around and try the same thing yourself (insured pirate) then you claim we have no assets and insinuate that you will invest with us if we did, then change your story to that of general mistrust. Then when pointed out that your position makes no sense since we paid out on everything as we promised (because we are an insurance company) you .... Oh well I said I would cut it short. If you want in to the round table goat you know what you need to do.

Dear BCB;
I will make a response to the evidence you have presented in your locked thread when I have time. I'm busy with other things right now, like closing down my companies and making payments to shareholders. First payments go out tomorrow (friday) actually, as we've gotten paid by a number of companies. Hardware payments will go up soon too, since we were refunded from BFL for 2 jalapenos and a SC single so far.

There are outstanding issues here, and TECSHARE seems to consider my right to a fair process as a "threat". (https://bitcointalk.org/index.php?topic=113708.msg1432468#msg1432468) He's tormenting me over it so I thought I would unlock the thread and provide an update.

Note: this is 4 or 5 months old.

The basic issue here is that TECSHARE has been paid in full for work he did not deliver. In my view his refusal to complete first revision (he promised two revisions and could not complete the first one) was unacceptable -- he said it was 'too difficult' and/or 'didn't look good'. So I fired him and he immediately opened a scam accusation against me.

Matthew N. Wright then stepped up and paid him off for me before I was even able to log on and read what happened. This all happened while I was at work IIRC.

Fast forward to today. I still do not have the hi res art files TECSHARE claimed he completed and has been fully paid for. Frankly I didn't care until he started asking me what my right was to claim the work he was paid for. Then again, how could he have completed it when he did not complete second revision, let alone first? Choosing from a bunch of samples is not a revision.

All I am asking is for TECSHARE to give me the work he says he already completed and has been paid for. If he can't do this and refuses to STFU about it, why not tag him as a scammer? I mean the remedy here is so easy -- either give me the art I paid for and allow me one more revision as was agreed, or give me the money back. It's really that simple.