Bitcoin Forum

Cognitive is operated by Garr255
Nasty mining is operated by Og Nasty
CPA/BMF is operated by Usagi.
GLBSE was operated by Nefario.


My question is by owning shares in them should you have unlimited liability if the operator goes rogue ?

There seems to be some illusion that owning shares in one of them in particular is a different animal than all the rest when there is no actual difference being that the operator controls the day to day operations and the shareholders have very little power to change anything. What can you do when they effectively steal the company and cause massive losses to its customers ???

Are you supposed to be treated like a leper because you invested in any of these companies which for all intents and purposes are exactly the same ?

If this is the case we are going to have to rethink shareholder agreements in the bitcoin  world. Because if an operator issues a security which makes the buyer liable for massive losses that is unacceptable.

Nothing. Sue them?
Nothing. Call the police?
Nothing. And that's the lesson.

I should spend thousands of dollars on a lawsuit because I bought a few shares ? Surely there is a better solution.

In the real world laws are quite clear about this. Your liability is limited to the worth of your shares.

I have not heard of any examples of people trying to get money from shareholders? Your loss is limited to the amount you put in.

In the real world, distinctions are made between shareholders, directors, investors, partners, actual management staff (such as CEOs), etc and the legal responsibilities of those people are different.  A great deal depends on what people actually do in respect of a company's operations rather than the title they hold - many protections from liability only apply given certain circumstances (for example, not being an "official" director generally won't protect you from liability if you've been undertaking the activities a director undertakes, investors are often only protected if their role is restricted to "safe harbour" activities).

A lot of Bitcoin enterprises represent themselves as "companies" and use the language associated with companies when in fact they are sole traders (which appear to be the case with usagi) or general partnerships (which appears to be the case with BitcoinGlobal and GLBSE) - entities which are totally different in terms of liability.

That's of course correct. In my head I was confusing "Babbys first company" with real stock market companies again. Must be all of the cult speak.

Its been said many times that the glbse shareholders are liable for nefarios actions.

I am saying that I am essentially being treated on the same level as Nefario. I may as well have a scammer tag because people misunderstand the roles of shareholders and operators. I have been called a scammer and a "co conspirator".

Someone offering a security without a proper shareholder agreement is essentially entrapping the unwary and people need to be aware of it.

You were partner, but now you like to call yourself shareholder. How convenient! Haven't seen any of you suing Nefario. Nobody knows his whereabouts. You all must have been the stupidest shareholders!

Nope.  People understand that GLBSE is most likely really a general partnership, which means that its "shareholders" are actually ordinary partners and therefore jointly and severally liable.  It would be different if GLBSE was an actual company or an actual limited liability partnership, but everything that's been posted indicates that it's not and therefore the protections which would be available to shareholders/investors (from what you've said the role the "shareholders" played was more like that of investors in a limited liability partnership than that of shareholders in a private company) aren't available to you.

I owned bitcoinglobal shares on glbse and went to shareholder meetings. I also own telstra shares in Australia and go to the annual general shareholder meeting. Exactly what different level of liability does that imply Im not aware of ?

You can find the info yourself its not that hard. Hes not hiding in anyones basement.

As for being a stupid shareholder ask the same thing of enron shareholders.

You had voting decision and you took BTC out of GLBSE. You did not take any safeguards to not let this happen! In my eyes you are liable, your actions will cost me money and reputation.

Telstra is a public company for a start and not even comparable to a private company.   It is an entity which has a separate legal existence from its owners and operators.  BitcoinGlobal is neither a private company, a public company nor a limited liability partnership - literally none of the protections which are available to shareholders/investors in those kinds of legal entities are available to you.  

It doesn't matter how wrong I think Nefario's conduct is - and I do think it's wrong - it's ludicrous not to get legal advice before going into business with someone.  The onus to be aware of the legal implications of investing in BitcoinGlobal rested with what you insist on calling the "shareholders" (who were either investors or partners, depending on what kind of legal entity you believe BitcoinGlobal most resembles).  Stop trying to draw comparisons with Enron and Telstra when you know for a fact that they are not valid.

I dont give two hoots about what random people "understand". There was a BG asset on glbse which only the shareholders had access too, but it was listed along with all the other shares I owned like cognitive. The fact cognitive didnt have shareholder meetings and glbse did is a moot point.  The fact BG didnt use glbse for motions and cognitive did is arbitrary.


If GLBSE is a partnership so is cognitive,nasty mining,CPA and every other stock on glbse. People can believe otherwise but thats my view of the situation.

The fact I get treated differently than an investor in any of those is bullshit and hypocritical.

I voted to sack Nefario. What do you expect to accomplish with 2% of the vote ?

You should have made a motion to have a copy of the database at all time, to protect your investment and mine. Lucky for all of you, you didn't.

I think the reason people keep telling you you were in a partnership is because GLBSE was not formally incorporated.  It's the act of incorporating and operating within that structure that grants you limited personal liability.

Nefario screwed you more ways than you realize by leading you to believe you had shares in a company, when in reality you were buying into a partnership.  Sorry man.  :(

Perhaps this is part of why Nefario got cold feet all of a sudden.  He may not have realized that he had personal liability until he went and talked to his lawyer.

I will note that this is a consistent issue which I see happening again and again... MPEx has in it's contracts "MPEx, an unregistered company."  Satoshi Dice... "SatoshiDice!, an unregistered company", and so on and so forth.  Most likely nearly all of the issues on MPEx and CryptoStocks have this problem... In most countries until you formally register your corporation, you do not have any of the legal benefits of a corporation!  Did MPEx relay to the owner of SatoshiDice that in reality he's now in a partnership with all of these people?  I highly doubt it.  Do all of these shareholders (partners) realize they're on the hook for anything illegal SatoshiDice participates in?  I doubt that too... Scary really, when you think about it.

BTC-TC and LTC-GLOBAL attempt to avoid this issue and protect everyone by stating in the ToS that if an issue fails you agree that you have zero recourse because, after all, it's all virtual.  Does this mean that we'll lose out on "real" business.  Most certainly.  However, I would also strongly encourage any such "real" business to also look at the alternatives closely.  As they are almost certainly not even legal to use in most jurisdictions.

Ugh... the whole situation sucks horribly.   >:(

I asked MPOE before if Mr Popescu goes off the deep end are the "shareholders" liable and got no answer. I think you just confirmed my suspicions.

Scary.

Edit : perhaps you can write a guide explaining how you go about setting up a corp in belize. For dummies :D

Your view is fine, but it's irrelevant to the legal realities.  Your view is a reflection of how you believe things should be in the world of toy businesses.

I doubt that anyone is going to sue the "shareholders" of BitcoinGlobal.  In the "real" world, if they did then it would be up to whichever shareholders ending up paying out the judgement/settlement to try to recover funds from Nefario and/or the other shareholders.

I doubt that anyone is going to sue usagi, either, even though he's improperly using what should be secured assets for personal advantage.  In respect of usagi's ventures, it seems much more clear cut that his shareholders are not partners and that he's essentially operating as a sole trader (which would make him the only one legally responsible for any debts). 

In that case I also see no difference in owning shares in MPEX which would mean buying even 1 share makes you liable for all its debts public and private and satoshidice since both are "unregistered companies"

The fact they are misleading people into unlimited liability is unfortunate.

I honestly don't know how they're set up, so I hope that MPOE-PR will come along and clarify that.  There are ways you could set it up so that only some shareholders had liability without setting up a company (by issuing different types of shares, for instance, so that investors were basically limited partners) but as a general rule you need to take an action of some kind to limit liability.

It bothers me that so few enterprises do go to the trouble of incorporating because it's not particularly expensive and a lot of Bitcoin enterprises find themselves controlling large amounts of other people's funds within months of opening.  When enterprises are skimping on standard business start-up costs, it always makes me wonder how else they're cutting corners.

Its a form of entrapment whether unintentional or not.

BitcoinOZ You ASSHOLE.

Dear forum readers:

BitcoinOz has decided to try and get out of the following agreement we made in PM:


This contract is valued at ~100 bitcoins. So, what happened? 5 days later BitcoinOZ sees a way he can avoid paying me. He starts stitting up shit (https://bitcointalk.org/index.php?topic=113708.msg1359288#msg1359288) on the scammer accusation forum (and here (https://bitcointalk.org/index.php?topic=113708.msg1359530#msg1359530)) and then tries this shit:


I mean seriously, WTF?

And then when that doesn't work (https://bitcointalk.org/index.php?topic=113708.msg1360667#msg1360667) he does this:


What a fucking slimeball. Now that he has decided not to transfer the shares to someone else at my request because he has decided to only transfer them to me so that he does not become an accessory to a... financial crime? Huh?

And in the message up he claims I'm asking him to do extra work assigning it to someone else other than me?

BitcoinRS is a real jerk. Unlimited liability my ass. He's just a big jerk.

Youre the only one being an asshole. The "contract" was for 2000 shares in the asset not 100 bitcoins. You can claim them by getting an exchange account and Ill transfer them.

Stop being obtuse.

Stop being an asshole on the forums because you decided to get out of something you agreed to do:

1. Stop accusing me of committing financial fraud.
2. Stop questioning the validity of the loans CPA took.
3. Stop stating CPA was trading while insolvent.
4. Stop saying CPA is/was insolvent.
5. Stop saying BMF is/was scamming people
6. Stop being a jerk.

If CPA is solvent you shouldnt need to sell personal property to cover its loans. It means the company now owes you the money not the person you gave the loan too. Just because you gave the company a loan doesnt remove it from the books.

Im sure you would know this, since you're such a wonderful company director. Such things should be reported on the financial statements as a liability.

Bzzt. I can think of 10 different reasons why I would need to/want to do it this way. You know what? Why don't you make a scam accusation thread against me regarding this?

You know, lay out your case... clearly state what I did as if you know what I did, and see how far it gets? Why not? If I am a scammer and you have proof, the mods usually handle it within a couple days.

Anwyays as I said over in the S.A. forum I'm going to ignore you for a couple days as it's clear you've become unstable. If you make a scam accusation thread tho I'll post in it. Good luck with that. (Oh, and you realize that NOT making such a post will make it look like you have shit for proof and don't have the guts to stand by what you say, right? I'm waiting.)

I assume you have financial records and they clearly show the liabilities ? That is about the only way to prove whether a company is solvent or not.

You need to do an independent financial audit report. Im not qualified to do such things but since you claim the company ios solvent an independent audit should clear it right up. I'll make a scam accusation  when you get an independent audit done and it shows the full state of the "company"

Bullshit.  The onus is always on the buyer/investor/business partner to seek their own independent advice.  What do you think the requirements for product disclosure statements and prospectuses, partnership agreements and the like are all about?  You're supposed to read them and obtain independent advice before making an investment - it's not someone else's fault if you don't do your due diligence.  

If you were blatantly lied to and there is no way that appropriate due diligence could have revealed the lie, then you can start talking about "entrapment", but being too lazy to do your homework doesn't and shouldn't excuse you from the consequences of bad decisions.

Why should we be surprised you get financial advice from the SA forums....

You are intentionally misrepresenting the nature of your position as a "shareholder". You were NOT a "shareholder" in that sense, and you KNOW it.

Please allow me to quote from the Bitcoin Global Governing Bylaws:


You were a MEMBER. And as you had voting rights during minutes, this "member" means "member of the board".

That's point one.

Point two is, as a member of the Bitcoin Global board, have you ever agreed to cover up a crime for the purpose of financial gain? Think about that one.

I think he means the "Scam Accusations" forum.  The goons in BF&C would eat him alive.

What crime.

For the record in your thread you are proposing a financial crime by preferencing some shareholders over the others. I didnt say you were a criminal. Am I supposed to just ignore that ?

Nice one, trying to pass a doe for a hen.

People weren't after you for "being a shareholder". People were after you for being a partner of a partnership. Different story.

But MPEX is pretty much the same setup. An unregistered company offering shares which in fact will make you a partner and liable for all the company actions.

Thats the point I am making here.

Except not at all, but by all means carry on trying to wash things that don't wash. It's how reputations get ruined (not much of a concern for you, obviously).

Naturally I speak for myself and my company, but this is the same sort of thought process I had back when GLBSE was still around and people had securities on it. When things started to take a turn for the worse with them, I started to really reconsider the direction of my company.
That's why I went legit, in the full sense of the word. I registered my company in the state of Vermont and all normal Federal organizations, as well as the IRS. I spoke with lawyers and drafted up legal documents that tie my Fund with my company. And yes, they are in fact LEGAL and BINDING.



That said, it would be very unwise for me to "go rogue". In that event, I could (more than likely, would) be sued by any investor. Stipulations within my contracts require me to cover the costs associated with the return of the investors money in this event as well.


Part of why I did this was to stand out from the rest...I didn't want to be just another "Mining Fund". I'd like to think formalizing and legalizing the process has helped.

That doesnt answer the question.

My guess is that it also helped you gain a more concrete understanding of your rights and responsibilities and what's potentially at stake, making you far less likely to proceed with the business if you're not willing to accept those responsibilities.

It pisses me off no end when people claim that they "can't afford a lawyer" when they start a business.  It tells me that they don't care about understanding and meeting their legal obligations or protecting their own or their customers' interests - why the hell would I want to do business with someone like that?

It definitely takes money to make money.

If you're going to start up a business you need a good chunk of savings or an investor lined up that is willing to pay out some significant $$ so that you can get things rolling with an accountant and a lawyer.

Oh hell yes. Seeing the hurdles in front of me before I started had me seriously contemplating the value of it all. My faith in bitcoin as a means for virtual transactions is a substantial aspect that helped me go through with everything.



Couldn't agree more.



This is true to an extent. I'm not wealthy by any means, nor did I have any outside investing to get me started (though that option is available to me). I did most of my work through LegalZoom for my business..for their "Business Advantage" I was a part of, they give you free access to a CPA and Business Attorney.
The expensive part on my end was talking with a Securities Lawyer here in Burlington. At $250 a hour, his advice didn't come cheap.

if you were a partner (not a shareholder) in GLBSE then you are liable for the actions of GLBSE, which you allowed Nefario to run.  If GLBSE was registered as a corporation or a limited liability company, then you would only be liable for what you put into GLBSE.  If  you just opened a general partnership, well then you are fucked.

This much has been established earlier in the thread.  :)

I do wonder what legal recourse you have (if any?) if you are lied to when you make the investment?  If someone tells you they are a company, (company = incorporated) and you invest, do you still have this liability?

I've bought a lot of stocks on etrade and I don't think I've ever dug up their actual incorporation paperwork.

Generally speaking, you're expected to conduct due diligence.  Generally speaking, those making an offering should provide sufficient information for you to do so relatively easily - company numbers, licence numbers, etc.   You can very often verify basic information about a company free of charge, so it's becoming more and more difficult to justify not doing due diligence.  

A blatantly false claim - saying that Microsoft has invested in a company, for instance, when they haven't - designed to mislead investors into a false sense of security can shift liability, though, especially if it can't be easily verified.  At that level, though, you're often looking at investors wanting to examine the company's books before making an investment so it's a different ball game (and at that level, the amount of due diligence expected is considerable).

It's probably also worth pointing out that the extent to which you're involved in company activities often determines liability.  "Investor" is a generic term and the means and manner of investment often have a great deal of bearing on liability.

I know, it just pisses me off that anyone could open a business and not know the risks involved.

I agreed to the bitcoinglobal bylaws which didnt say anything about being a registered company or approaching a lawyer. As far as Im concerned they ceased to exist and the "partnership" was nullified as soon as Nefario stepped into a lawyers office.

Thats why he has a scammer label. he didnt have permission to even speak to a lawyer in the first place. The correct way to do it would be to dissolve BG before ignoring the contract. Doing the opposite nullified it entirely.

You cant quote the fucking contract at me when its been broken by one party to it.

As far as I'm aware, holders of unregistered securities - which is what MPEX is set up as - don't generally have unlimited liability in the US. (Setting up an unregistered security is of course illegal in the US and many other countries, but it happens fairly frequently.) It's a good thing too, because otherwise that'd make it a lot easier for scammers to operate.

The reason you're probably in deep shit is because GLBSE/Bitcoin Global has effectively been operating like a partnership. MPOE/MPEX shares are non-voting and their owners have no say in how the company's run, whereas from what I can tell you've been taking an active role in day-to-day operations.

Oh? That isn't the information I have received. The information I have states that Nefario quite clearly announced the need to discuss things with a lawyer because he had legal advice that running the GLBSE was going to land him in Jail. Oh, and all the other reasons for going legit. Such as the number of companies from the conference that wanted to list, including the "big secret" that Nef said "don't tell". Oh, and the theft/ponzi scheme thing. According to the information I have received, this was all discussed well in advance and you had plenty of time to voice any discontent. You knew it had to be this way for quite a number of reasons. Do not now claim that this was never discussed at a meeting and that Nefario did this against the wishes of the other members. You know full well why he went to a lawyer and you know full well that a majority of the members supported this decision. Legitimizing GLBSE was a pre-announced motion in the minutes and was a major topic of discussion. I cannot believe you would try to lie and twist your way out of that fact.

Shutting down the GLBSE is another matter entirely and I am not talking about that at all. Yes, that was probably a bad move on Nef's part. But that is not what I am talking about. Don't get confused. All of this information is on record. A lot of people have access to this information, so I don't see why you are trying to worm your way out of it by lying.

usagi, were you a partner or shareholder in GLBSE?

The reason I ask is because you seem to have information that was not disclosed to the public. If it was, please post a link. How did you receive this information?

Ummm, he didn't need anyone's permission to speak to a lawyer.  It's the manner in which he acted on the advice he claims to have received which is at issue, not his right to seek that advice in the first place (which was absolute).

No, I was not. I wanted to become a shareholder before GLBSE shut down, though. I was planning on buying shares and holding them in NYAN. It really would have made what I was doing unique. Unfortunately that didn't turn out too well and GLBSE shut down.


Lol. To your detriment I assure, you really don't respect who you troll nearly enough. No, you are not asking me because I seem to have info. You are asking me because you are digging for troll ammo. So no I do not have any information that was not disclosed to the public. Not sure where you got that idea. GLBSE minutes were posted to Nefario's scam accusation thread.

Bitcoin Oz, why don't you have a scammer tag by now?

Incorrect.

Usagi was on Nefario's secret panel to approve glbse assets. They had more access to him than the shareholders did.....

Not a scammer sorry.

http://thenextweb.com/au/2012/11/29/largest-data-breach-investigation-ever-undertaken-by-australian-law-enforcement-leads-to-a-bust-in-romania/  if you think a Romanian exchange operator is out of reach of western authorities you are kidding yourself.

Wrong. This is why I asked you:


So you did have access to information that was not disclosed to the public.

But I was never on any sort of secret panel. I offered to help nefario organize what was supposed to become a public, community panel, independant from the GLBSE. I did this because he was doing a lot of stupid things like with DMC and kludge and goat and with alberto's ID/info. But he didn't listen to anything I said and the panel was never actually set up. Nefario refused to give control to anyone. So twisting this and claiming it was secret and that I had access to Nefario "more than shareholders" is an extremely dishonest thing. You do get this, don't you? That you (deeplink and bitcoinoz) are the bad buys here?

The real issue here is that any bitcoin service that tries to "go legit" is going to have the exact same problems glbse did.

Doesnt it bother anyone that any online bitcoin service you use can be targeted like this ?

Its becoming increasingly clear that people are going to have to choose one side or the other and crossing over from "non legit"  to "legit" is for all intents and purposes impossible.

Whaaaaaaaaat? No, the real issue is how you have tried to drag me into your personal shitstorm and how you have been attacking me and others in an attempt to obfuscate your own problems.

https://bitcointalk.org/index.php?topic=128630.0

Next time don't use company resources to troll and defame.

BTW, here's a hint. If you're going to set up some kind of strawman about how the "real choice" is deciding to side with the law or remain "non legit" it looks like a) an admission you've done something illegal and b) are now asking people to side with you (i.e. conspire). Do you really think everyone is going to stand up and say "Hey let's all agree (i.e. conspire) to break the law with bitcoinoz!!" yeah that sounds like a great argument. Do I need to tell you what side I've chosen? Sheesh.

I hope coinabul; sues your ass off because I have nothing to do with the company.

Retard magnet.

http://www.linkedin.com/pub/david-hollis/3b/6a3/880

So you didn't claim to be a Marketing Executive at Coinabul? That's odd.


In the post above you said I had the wrong linkedin profile. So that's not you then? David A. Hollis? Of Victoria, Australia? Who is a member of the bitcoin community? And has worked for Coinabul?

Why would Coinabul sue me because you misrepresented yourself as a Marketing Executive who is still working for them, and who is a Financial Services Professional, when the truth is you were an unpaid intern for around a month last year, and you currently work in a restaurant? They're not going to sue me.

Please. Just apologize for what you have said about me and leave me alone. Do it in PM if you won't do it in public, then leave me alone.

I have about 30 facebook accounts and 25 twitter ones and 4 or 5 linked in profiles. That particular linked in account is inactive and has been that way for months.

If you dont believe coinabul when they say I have had nothing to do with them for months that's your problem not mine.

Setting up fake social network accounts /= scammer.

Are you aware that misrepresenting yourself as an agent of Coinabul opened you up to being sued by them?

Are you aware that misrepresenting yourself as a Financial Services Professional is illegal in Australia? For example of what happens to even registered financial services professionals in Australia who engage in misleading and deceptive conduct please see:
https://www.asic.gov.au/asic/asic.nsf/byHeadline/12-296MR%20ASIC%20bans%20financial%20adviser%20for%20failing%20to%20comply%20with%20financial%20services%20laws?opendocument

Look, don't you think this crap has gotten way, way out of hand? Why don't you just apologize to me for what you've said against me?

No. You get nothing.