Bitcoin Forum

Bitcoin => Project Development => Topic started by: Nefario on April 05, 2012, 09:17:45 PM



Title: The last few days on GLBSE
Post by: Nefario on April 05, 2012, 09:17:45 PM
You're all aware of the thing that has been going on regarding Goat and the freezing of his account earlier this week. There are plenty of threads regarding the matter you can find the details there.

Let me put forward the reasons behind our actions.

Before explaining I would like to apologise to shareholders on GLBSE who were adversely effected, those most directly affected were TYGRR-BANK holders who's dividend payment was delayed as a result of Goats non-compliance to our request for ID, as per our terms and conditions.

GLBSE will make an extra dividend payment to TYGRR-BANK shareholders for all the drama and inconvenience over the last few days.

We have just moved to GLBSE2.0 which is an entirely different platform from 1.0 (a proven system). We hold a considerable amount of other peoples money(obviously not in our hot wallet, but offline), if you have an account on GLBSE this means your money. Until GLBSE 2.0 has been running for some time without issue I won't be able to relax, I am paranoid about security, it's something I lose sleep over(when I do sleep).

I'm unable to give exact details (internal GLBSE transactions are not public information) but there was suspicious activity involving Goats account, at the time I put it down to people (Goat) getting used to using the new system and playing around a little. Not long later I was warned about Goats activity on the forums (looking like a classic ponzi scheme).

I've never really dealt with Goat before this event so I didn't know anything about him, neither did anyone I knew.

My greatest concern was the security of shareholders funds on GLBSE, shortly after hundreds of login attempts had been made on Goats account. I immediately locked his account.

I also began to go over some of his threads and they did indeed look like a scam, the amounts involved (in GLBSE) are thousands of bitcoin, shareholders money, I was understandably concerned.

He then contacted me about not being able to get into his account, I asked for proof of ID, that I could verify his account while I got this sorted out (several forms including pictures of passports, phone numbers, work phone numbers, home address, I ask all these things of asset issuers when verifying their ID, all of which he eventually provided to a third party).

Goats reply and immediate actions knocked me back.
Quote
"...Also now my GLBSE account is as safe as this G-mail account I have used all over the world and who knows how many people have this password? You have got to be kidding. I need to pay people on GLBSE tomorrow but I'm wondering if it is really safe to make the account active at this point. You are not going to take responsibility well I am not going to either. To be this lax about security is negligence.

Iím in shock, really."
and

Quote
"Sorry about this but I am not going to take the fall for this if it goes sideways."

This was in reply to me informing him that he could now recover his account via his email(as well as asking for ID verification).

He then began to make posts all over the forum and opened a thread on his perceived worries of GLBSE security.

I admit this made me panic, it is the exact behavior of a scammer. A difficult possition to be in, if Tygrr turned out to be a scam what would it do to GLBSE? What would it do to bitcoin (another bitcoin scam)? To protect GLBSE users I made the choice to be proactive.

In an effort to reduce the possible damage I contacted First Pirate Savings and Trust and asked them to lock goats account so he couldn't withdraw funds (which would mean stolen funds if he was a scammer), until we got it sorted out. The request was denied.

And since that time everything has been all over the forums and most of it you know.

I apologise for overreacting, the combined pressure of launching GLBSE2.0 and the possibility of the Greatest Of All Thefts on GLBSE (though certainly not bitcoin) happening got to me, and I overstepped the bounds of what is appropriate action.

After everything is said and done I don't actually think Goat is a scammer, I would put down his odd behaviour to being...challenged.

I also regret disturbing him in any way shape or form as since I've unlocked his account he hasn't left me alone, making accusations that I'm trying to steal from him, stalking me on Skype, CONTACTING MY EMPLOYER to complain about me and GLBSE, insinuating that they (my employer) are also somehow implicated in this on the forums in what appears to be an attempt to get me fired.

Demanding payments:
Quote
"For the time I did not have access to the money the total will come up to be 11.5BTC."
and making ultimatums:
Quote
"I will give you 24 hours to respond before posting about this on the forum."

What has become abundantly clear from this incident is that the vast majority of the users of GLBSE have never read the terms and conditions for using GLBSE (we have had Terms and Conditions since July 2011). With some even claiming that there were none and then going on to claim that we violated our own terms.

As a result of this incident the way GLBSE is being run will have to change, it can no longer be kept as informal as we have previously enjoyed. It also means that I will not be able to comment as freely as I used to on this forum, this is something I will miss.

Thank you for you time and sorry for the drama.

Nefario



Title: Re: The last few days on GLBSE
Post by: notme on April 05, 2012, 09:24:02 PM
Thanks for all you do.  Do what needs done to move forward.


Title: Re: The last few days on GLBSE
Post by: rjk on April 05, 2012, 09:28:41 PM
I would put down his odd behaviour to being...challenged.
+1 I have yet to do business with Goat, because in every single instance where things were either a) a misunderstanding, or b) didn't go his way, he has reacted irrationally and inappropriately, usually by fear-mongering and digging up information out of context and generally being a royal pain in the ass.


Title: Re: The last few days on GLBSE
Post by: mila on April 05, 2012, 09:44:33 PM
pita royal, made my day.
i think i order some honey from him to have a souvenir of the laugh you caused just now

btw if you can't make up your mind, go for the forest honey, usually darker and smells better


Title: Re: The last few days on GLBSE
Post by: Maged on April 06, 2012, 02:07:54 AM
This is typical of Goat. Don't take it personally.


Title: Re: The last few days on GLBSE
Post by: guruvan on April 06, 2012, 02:36:28 AM
Nefario,

I think you concluding that Goat's offerings and behavior are consistent with "red flag behavior"  was entirely justified. I have had the very same concerns, very much accentuated by the Bot issue. I don't think your actions were justified entirely.

I think you made one action that is 100% not ok with me at all. I understand the reason, and the sentiment behind the action, but locking accounts (and seizing funds comes next, it's a slippery slope!) is the type of action I expect out of an overpolicing government.

Goat, no offense, but you're not doing yourself any favors by freaking out in public. How bad is the next outburst going to hurt your shareholders? I can't understand why people continue giving you money, but....I wish you the best. (I'm no HorseRider!!!!!!!!!1!, I don't think you're everyone's a scammer ;D You're just a high risk investment. That's cool :)

Nefario, honestly - trying to play banker police gives me serious question whether I want to sink one more millibit into GLBSE.

You asking Pirate to lock an account suggests that you would lock someone's GLBSE account on request That's fucked up.

Further, I don't think you can cover the losses from another disaster like this that doesn't go GLBSE's way. Your actions damaged shareholder value in my opinion. IMO, they still are because of this post!

You need to show that you are protected financially.

I don't think you can cover liabilities from a loss that is in fact GLBSE's fault.

A great deal of the lost shareholder value on Goat's issues is on your shoulders, Nefario. You continued the discussion, adding to the failing faith in Goat, then failed to stop trading while the exchange had a public disagreement with a customer! WTF?! We should hold you liable for the losses from your first post in Goat's "Is it safe" thread and the actual public resolution! (Another guy in your position might have been one of those buying up all the undervalued shares now that they're trashed)

It's not that I suspect you of evil. It's that you have not put yourself above and beyond the suspicion of reproach.

I think you personally should be bonded by multiple trusted high profile people. YourAnyone's word isn't worth the number of bitcoin in your control, IMO.

You might think that this issue or that issue is a risk to shareholders, but you are failing to realize that YOU represent the current biggest risk to all shareholders of the GLBSE. Cover Your Ass.


Title: Re: The last few days on GLBSE
Post by: koin on April 06, 2012, 03:00:52 AM
Anyone's word isn't worth the number of bitcoin in your control, IMO.

is it that much?  only the balance available for buying shares is held by them.  if i only hold in there as much as i plan to need for trading i can limit my exposure.


Title: Re: The last few days on GLBSE
Post by: guruvan on April 06, 2012, 03:11:41 AM
no, my point isn't to be hard. It's to point out that words don't cover losses, and unless Nefario (or anyone) wants to show they can cover the losses in a disaster, they should seek additional coverage.

nothing personal AT ALL on Nefario.

You shouldn't be holding other people's money without some protection in case of loss. period.


Title: Re: The last few days on GLBSE
Post by: Nekrobios on April 06, 2012, 03:18:13 AM
Interesting.

I wonder if you demand the same from exchanges such as MtGox, or perhaps E-Wallets? Do they have to have insurance on their hundreds of thousands of BTC as well for you to use them?


Title: Re: The last few days on GLBSE
Post by: guruvan on April 06, 2012, 03:40:01 AM
Interesting.

I wonder if you demand the same from exchanges such as MtGox, or perhaps E-Wallets? Do they have to have insurance on their hundreds of thousands of BTC as well for you to use them?

I'd certainly recommend it. The exchange I'm using covered the losses from a large enough robbery to satisfy my  deposit concerns there. Appears plenty solvent. And, yeah, the exchanges are also more regulated, and have to answer to someone about the money.

I'm not the least bit concerned about some bullshit getting out of hand between and exchange owner and his customer, and tanking the price of BTC either. That's a big difference.

I'm not encouraging government regulation at all, but I think if we want to play like big boys, we need to act like them - and part of that is making sure that your liabilities are covered when you're responsible for other people's money.

EDIT: and in general, have you seen that most e-wallets are secure enough to trust in the first place? Money to trade is risked money in the first place.


Title: Re: The last few days on GLBSE
Post by: the joint on April 06, 2012, 03:46:01 AM
Well now I know who not to do business with.


Title: Re: The last few days on GLBSE
Post by: Nekrobios on April 06, 2012, 03:47:21 AM
So, you trust Bitcoinica, which offers 10:1 leverage for anonymous accounts (guarantee to go in big BTC debt eventually) and had multiple break-ins, but will not trust GLBSE which was never broken in before and which has been running for longer?

If GLBSE gets hacked and covers its losses once, then you will begin to trust it?

EDIT: and in general, have you seen that most e-wallets are secure enough to trust in the first place? Money to trade is risked money in the first place.
What do you think do E-Wallets have that GLBSE is missing? Please tell me more. Your risk evaluation has certainly been comedic so far. ;D


Title: Re: The last few days on GLBSE
Post by: guruvan on April 06, 2012, 03:56:52 AM
So, you trust Bitcoinica, which offers 10:1 leverage for anonymous accounts (guarantee to go in big BTC debt eventually) and had multiple break-ins, but will not trust GLBSE which was never broken in before?

If GLBSE gets hacked and covers its losses once, then you will begin to trust it?

EDIT: and in general, have you seen that most e-wallets are secure enough to trust in the first place? Money to trade is risked money in the first place.
What do you think do E-Wallets have that GLBSE is missing? Please tell me more. Your risk evaluation has certainly been comedic so far. ;D

LOL. You're pretty funny too.

I have no concern about the security of the GLBSE website. I'm not concerned at all that Nefario will lose the money.

This isn't about technology. It's about relationships in business, and how they're handled. I'm not ok with losing my money because two people have to have a pissing match in public, with no regard to the investors. I'll take my chances with thieves, thanks. I know what to expect from them.

EDIT: For that matter, I haven't heard of zhoutong going to mtgox to see if he could have a customer's account locked - If he has, correct me, show me the evidence, and I'll probably find that reason to bail.



Title: Re: The last few days on GLBSE
Post by: phelix on April 06, 2012, 03:00:08 PM
what is all that security worth if any company can default at will without getting into any trouble? there is not much you can do against somebody saying their wallet has been stolen.

it is just not the time for serious money on glbse yet.

it is fun to play but you can easily be burned (the lif.b fiasco clearly showed that to me).



Title: Re: The last few days on GLBSE
Post by: finway on April 06, 2012, 05:14:15 PM
I still think the interest rate are too high, means risks are too high.


Title: Re: The last few days on GLBSE
Post by: Nekrobios on April 06, 2012, 05:18:03 PM
what is all that security worth if any company can default at will without getting into any trouble? there is not much you can do against somebody saying their wallet has been stolen.
Isnít this what verification is trying to combat, so they cannot stay anonymous? If they say their wallet was stolen, itís their fault for lax security and have to cover it obviously.

Thatís why people should invest only with operators they actually trust.


Title: Re: The last few days on GLBSE
Post by: phelix on April 06, 2012, 07:39:05 PM
what is all that security worth if any company can default at will without getting into any trouble? there is not much you can do against somebody saying their wallet has been stolen.
Isnít this what verification is trying to combat, so they cannot stay anonymous? If they say their wallet was stolen, itís their fault for lax security and have to cover it obviously.

Thatís why people should invest only with operators they actually trust.

for peter lambert, operator of the horribly failed lif funds all personal information is available. yet it helps nothing.



Title: Re: The last few days on GLBSE
Post by: ColdHardMetal on April 06, 2012, 11:56:36 PM
what is all that security worth if any company can default at will without getting into any trouble? there is not much you can do against somebody saying their wallet has been stolen.
Isnít this what verification is trying to combat, so they cannot stay anonymous? If they say their wallet was stolen, itís their fault for lax security and have to cover it obviously.

Thatís why people should invest only with operators they actually trust.

for peter lambert, operator of the horribly failed lif funds all personal information is available. yet it helps nothing.



So what do people suggest as a solution. I see people complaining that GLBSE isn't doing enough, and other people complaining that it is trying to do too much. What's the balance? What needs to happen to make people comfortable? I'd love to hear what people think.


Title: Re: The last few days on GLBSE
Post by: FreeMoney on April 07, 2012, 01:19:30 AM
what is all that security worth if any company can default at will without getting into any trouble? there is not much you can do against somebody saying their wallet has been stolen.
Isnít this what verification is trying to combat, so they cannot stay anonymous? If they say their wallet was stolen, itís their fault for lax security and have to cover it obviously.

Thatís why people should invest only with operators they actually trust.

for peter lambert, operator of the horribly failed lif funds all personal information is available. yet it helps nothing.



So what do people suggest as a solution. I see people complaining that GLBSE isn't doing enough, and other people complaining that it is trying to do too much. What's the balance? What needs to happen to make people comfortable? I'd love to hear what people think.

It seems to me that GLBSE or similar can offer real value without verifying companies in any way whatsoever. Let the companies figure out how to build reputations. It might be by levering forum reputation, already running other longstanding business, meeting people in meatspace and pitching your ideas then telling them that they can invest via GLBSE, etc.

As long as the market is clear that they make no promise except that they will care for funds in their control and provide usable software continuously it seems fine too me.

Now if someone found a way to filter for 'non scams' that would be great, but it doesn't have to be the same entity as the market.

To avoid what is essentially spam the exchange could charge a largish fee or deposit for companies before they can make an offering.


Title: Re: The last few days on GLBSE
Post by: ColdHardMetal on April 07, 2012, 01:49:44 AM
It seems to me that GLBSE or similar can offer real value without verifying companies in any way whatsoever. Let the companies figure out how to build reputations. It might be by levering forum reputation, already running other longstanding business, meeting people in meatspace and pitching your ideas then telling them that they can invest via GLBSE, etc.

That has always been our intention. To provide a platform for raising capital. We hoped that a 3rd party would step into the role of verifying/evaluating/rating issuers, but that just doesn't seem to have happened. It really doesn't make much sense for the exchange to do it at all from an objective impartiality point of view. The NYSE doesn't run Moodys or S&P.


As long as the market is clear that they make no promise except that they will care for funds in their control and provide usable software continuously it seems fine too me.

That's right in our terms and conditions, and has been for almost a year.


Now if someone found a way to filter for 'non scams' that would be great, but it doesn't have to be the same entity as the market.

That would be great. As I said I don't think it really _can_ be the same entity as the market operator for any such rating to have true credibility.

To avoid what is essentially spam the exchange could charge a largish fee or deposit for companies before they can make an offering.

That is a step that has been implemented. Originally listing was free, but that really didn't work as it made the barrier to entry for running a scam asset too low. Even sale of 1 share and then running was profitable for a scammer in that model, so it had to go.



Title: Re: The last few days on GLBSE
Post by: BinaryMage on April 07, 2012, 02:00:25 AM
It seems to me that GLBSE or similar can offer real value without verifying companies in any way whatsoever. Let the companies figure out how to build reputations. It might be by levering forum reputation, already running other longstanding business, meeting people in meatspace and pitching your ideas then telling them that they can invest via GLBSE, etc.

As long as the market is clear that they make no promise except that they will care for funds in their control and provide usable software continuously it seems fine too me.

Now if someone found a way to filter for 'non scams' that would be great, but it doesn't have to be the same entity as the market.

To avoid what is essentially spam the exchange could charge a largish fee or deposit for companies before they can make an offering.

+1 to this.

Nefario, you have generally been both professional and responsive, and I have no quarrel with you, but please don't try to put yourself into the role of regulator. It (a) won't work and (b) will destroy GLBSE. More to the point, attempting to regulate Bitcoin goes against the very principles that made Bitcoin what it is.

I agree that Goat's response and behavior were inappropriate, and I understand your desire to protect your shareholders, but protecting against bad investments should not and cannot be your responsibility. Users make the decision to invest, weigh the risk versus reward, and collect the windfall if they pick right and lose a lot if they pick wrong. At GLBSE's beginning both investors and companies were playing rashly, promising things they could not deliver in the case of companies and investing in users who had not demonstrated responsibility in the case of investors. While this resulted in a good amount of pain for everyone involved, it also taught them not to make the same mistakes again. Those who invested in Goat made the choice consciously. They had the necessary information to calculate the potentials of risk and reward. Their investment is their choice and their risk.

I don't feel that you necessarily have to restrict your commenting, nor do I feel that GLBSE has to integrally change. You made what I think you agree was a mistake, took action on that mistake that caused annoyance but no permanent damage, realized you were in the wrong and relented. Goat can hold his grudge if he so desires, but I think the community should and will forgive you on this one, as long as it doesn't happen again.

Charge a fee or deposit if you wish, but don't make it exorbitantly large. One of the great things about GLBSE is how easily a committed entrepreneur with limited capital can launch a company. Ruining that by requiring excessive fees or deposits would make it impossible for many of the companies currently listed on the exchange to exist.

A third party can screen for scammers, but I think having the stock exchange perform that function is a recipe for disaster, as has been seemingly demonstrated in this case. No one should enforce scamming rules, that goes against the point of a distributed system. If a third party screened and provided results to the public, shareholders would have that information in hand when making the decision of whether or not to invest, a decision that should always be theirs.

I'm rather tired and I've been rather long-winded; I hope my points weren't totally obscured. I'd be glad to clarify if necessary. In summary:

(1) Goat's behavior was ridiculous, but...
(2) You cannot and should not regulate this; doing so goes against the very ideal of Bitcoin.
(3) Shareholders reap rewards and should also take the risks.
(4) Don't let this ruin the good parts of GLBSE, notably the ease of launching an IPO.
(5) A third party and not the exchange should screen for scammers.
(6) We (the community) should cut you a little slack as long as this is a one-time occurrence.


Title: Re: The last few days on GLBSE
Post by: Nefario on April 07, 2012, 02:32:50 AM
We will attempt to automate user verification as much as possible so that assets that wish to provide this for their shareholders (ID information held by GLBSE on their behalf) as we have currently been doing.

We actually don't want to do this as it's a waste of our time and effort but there ARE NO THIRD PARTIES OFFERING THIS. If there were we would stop immediately and leave it to them.

Business idea, a trusted member of the community starts a ID verification company that does what we have been doing so far, they could get capital for the project by listing on GLBSE, depending on who does it I would even wave the fee.

We will not be creating a rating agency.

We will be creating a prediction market and building it right into GLBSE for all assets issued on GLBSE (and allow the prediction of things outside GLBSE also).


Title: Re: The last few days on GLBSE
Post by: Nefario on April 07, 2012, 03:11:42 AM
Nefario, I think you over reacted because of your dealings with Lambert and thatís understandable. You want to keep too many incidents like that from happening on GLBSE but you canít! No one blames you for Lambert and no one would blame you for Goat if he ended up being a scammer. I will continue to use GLBSE but I would like you to reconsider using your power to control funds like a Bitcoin regulatory agency. That goes against the reason I use Bitcoin. If I wanted frozen funds Iíd trade auction-rate securities on Wall Street.

I don't know if you read the OP, I apologised, this means it won't be happening again.


Title: Re: The last few days on GLBSE
Post by: mila on April 07, 2012, 06:54:42 AM
Nefario, I think you over reacted because of your dealings with Lambert and thatís understandable. You want to keep too many incidents like that from happening on GLBSE but you canít! No one blames you for Lambert and no one would blame you for Goat if he ended up being a scammer. I will continue to use GLBSE but I would like you to reconsider using your power to control funds like a Bitcoin regulatory agency. That goes against the reason I use Bitcoin. If I wanted frozen funds Iíd trade auction-rate securities on Wall Street.

the part bold is in my opinion at least questionable (read BS). just look at the user that complained about his own actions costing him money. he has sold assets at glbse before getting dividends and also sold cheaper then he bought  ... he would be crying even louder if an asset he owned would turned out be completely worthless.

So what do people suggest as a solution. I see people complaining that GLBSE isn't doing enough, and other people complaining that it is trying to do too much. What's the balance? What needs to happen to make people comfortable? I'd love to hear what people think.

i don't know where to draw the line either. maybe small step to enable asset issuers to promote themselves. let them edit part of the asset description that could be url to a thread/forum, account on facebook, you name it. let people verify for them self and the asset issuer to provide a link. (i see also possible flaws - links edited, removed, pointing to foreign/not-authentic resources; welcome feedback on this)

i think it's impossible to please everyone. keep doing as you think is best, it's you who has to live with the consequences of your actions (and it's your project/server/idea to begin with). if you'd follow external advice against your own accord, you'd be just more disturbed and disappointed.


Title: Re: The last few days on GLBSE
Post by: Sukrim on April 07, 2012, 01:24:18 PM
We actually don't want to do this as it's a waste of our time and effort but there ARE NO THIRD PARTIES OFFERING THIS. If there were we would stop immediately and leave it to them.

Business idea, a trusted member of the community starts a ID verification company that does what we have been doing so far, they could get capital for the project by listing on GLBSE, depending on who does it I would even wave the fee.
The problem is, what makes for example me (without publicly exposing myself a LOT) more trustworthy than anyone else? Writing a couple hundred posts in a niche forum about a niche currency? You'd need a lawyer for this probably and even then people might only trust lawyers from the US/Western Europe...

If on the other hand you have this information, people anyways need to trust you with their money if they want to trade on your platform, so it might be easier for them to also trust that you have verified these IDs.


Title: Re: The last few days on GLBSE
Post by: Coinoisseur on April 09, 2012, 09:27:00 AM
I think a little bit more could be done to make sure people aren't falsely associating GLBSE with the projects/funds listed. Seeing a "Caviat emptor" blurb in the asset area seems like a good idea to me.

I see too much conflicting attitudes, like the one guruvan expressed here. Don't want regulation or government but then suggest you insure against loss, hehe. Not that I want to pick on guruvan. It's one of those traits we humans have to want conflicting things.

Hope you stick it out with GLBSE, Nefario.