If we had a list of "companies that have accepted at least 1000 bitcoins", that might be useful. Below that threshold, it's just something being toyed with as a promotion.

Oh, that guy.

The long term trend since the bubble popped looks like this:

Bitcoin, last 3 months, with 30 day trailing moving average.

Now that's a trend, not wishful thinking and fantasy line drawing.

Since I posted that a few minutes ago, somebody did trades that brought Mt. Gox and Tradehill back in sync. Mt. Gox now at $4.18, Tradehill at $4.21. No more arbitrage opportunities for now.

Where are the arbitrage bots? There's a huge spread between Mt. Gox and Tradehill right now, which is exploitable. Maybe the 'bots ran out of cash buying on Mt. Gox and can't get money out of Tradehill fast enough. (That's a big problem with arbitrage between Bitcoin markets; getting cash out of the exchanges quickly and reliably is like pulling teeth.)

One thing that does it is that there's a high frequency trading 'bot which trades on several exchanges and, presumably, arbitrages between them when there's an exploitable difference. This has two effects. First, it tends to lock the prices on the different exchanges together. And, indeed, the spreads between exchanges are smaller than they used to be.  Second, it makes the inertia of each market behave as the sum of the inertia in all the markets. Any sudden move in one market that creates a difference between markets big enough to make arbitrage profitable will immediately be picked up and profitably exploited, pulling the markets back together.

 

You can see this happening on today's charts.  There's Tradehill in black and Mt. Gox in blue, never more than 1.5% apart, even briefly. The difference has to be at least two commissions for a trade to be profitable, so once the spread gets above a threshold, which seems to be about 0.7%, the 'bot should make a trade. That's automated arbitrage in action.

The minor exchanges don't track as closely, indicating that the 'bot doesn't trade on them much, if at all.  Not enough liquidity, most likely.

Due to lack of interest, the rally has been cancelled.

The "glbse.com" domain is owned by

James McCarthy, White Rock Cottage, Hacketstown, Carlow, IE.
+353.13870661095

That's a real house in Ireland, owned by Frances Hackett, email "mccarthyfrances@gmail.com". Might be a relative. Ireland is in the European Union, so European securities laws apply.

Ireland has a tough legal code in some areas. Bankruptcy in Ireland is severe.. A creditor can force an individual into involuntary bankruptcy if they owe more than EUR2000 and can't pay. "All the debtor’s assets and property vest automatically in the Official Assignee. The Bankruptcy Act 1986 allows the  bankrupt to retain “such articles of clothing, household furniture, bedding, tools or equipment of his trade or occupation or other necessaries for himself, his wife, children and dependent relatives residing with him, as he may select, not exceeding in value [€3,175] or such further amount as the Court on an application by the bankrupt may allow."

For the next 12 years, an Irish bankrupt cannot "act as an officer of or directly or indirectly take part or be concerned in the promotion, formation or management of any Irish company or even of any foreign company which has an established place of business in Ireland. " The bankrupt's name and other information is published in newspapers. And they can't borrow more than EUR630.

I once had to collect a few hundred thousand dollars from an Irish company. They paid once I mentioned involuntary bankruptcy. Merely being far away does not insulate you from debt collection any more.

The amounts involved on GLBSE are currently tiny. The SEC probably won't bother. However, many US states have their own "blue sky" securities laws, and some of them will prosecute little guys, especially if they rip off individuals for a substantial amount and someone complains.

(Mt. Gox, on the other hand, is now moving around enough money that they really need to get their act together, register as a money transfer service, and comply with Japan's financial regulations. If they did that, they'd probably be having less trouble with HSBC, Technocash, and Paxum.)

It's not hard to understand.

The investment-club exemption doesn't apply here; that requires a real voting membership organization set up as a formal partnership. Some people here may be accredited investors, with net worth over $1 million, but an offering made to anyone doesn't qualify for that exemption. There's also a short form SEC registration for small offerings, but that requires a filing with the SEC.

People have tried to come up with scams that don't fit the definition of "investment" and "security". In SEC vs. Howey, the Supreme Court basically said that if something not listed in the Act acts like an investment, it is.

It's worth looking into the AdSurfDaily case. The guy behind that acted like his scheme wasn't subject to regulation. He made noises about "sovereign citizens".  Didn't work.  $80 million in forfeitures pried the money out of the scam and DoJ has a claim program to give it back to the investors.  The people behind the scheme have been indicted and are going to trial soon.

GLBSE sets itself up like a stock exchange, and encourages people to buy and sell their stocks. Arguing that those aren't securities is not going to fly.  Sorry, guys.

How many alpaca socks can you use?

They thought of that back in 1934:

A security is "any note, stock, treasury stock, security future, bond, debenture, certificate of interest or participation in any profit-sharing agreement or in any oil, gas, or other mineral royalty or lease, any collateral-trust certificate, preorganization certificate or subscription, transferable share, investment contract, voting-trust certificate, certificate of deposit for a security, any put, call, straddle, option, or privilege on any security, certificate of deposit, or group or index of securities (including any interest therein or based on the value thereof), or any put, call, straddle, option, or privilege entered into on a national securities exchange relating to foreign currency, or in general, any instrument commonly known as a 'security'; or any certificate of interest or participation in, temporary or interim certificate for, receipt for, or warrant or right to subscribe to or purchase, any of the foregoing; but shall not include currency or any note, draft, bill of exchange, or bankers' acceptance which has a maturity at the time of issuance of not exceeding nine months, exclusive of days of grace, or any renewal thereof the maturity of which is likewise limited." - Section 3a item 10 of the 1934 Act.

There's no mention of "money" being required. Courts have since ruled that new financial gimmicks invented after 1934 should be considered securities if they look or work like anything in that list. Bowdoin, the AdSurfDaily guy, made the argument that a share in an web ad-rotator wasn't a security. The court didn't buy it.

That Bitcoinica has high margin requirements and takes positions very cautiously is encouraging. The big problem with options in an unregulated market is getting paid when the counterparty takes a loss.

Loans, bonds, options, and investments, all of which require payback, require enforcement to be viable. Anonymous finance only works for immediate transactions.

Oh, quit whining. Someone else's short-term trading system is better than yours. It's not a Government conspiracy. Deal with it.

Nor is the 'bot driving the market either up or down. What it seems to be doing is arbitrage between the different exchanges, which has the effect of pulling those exchanges closer together. That's a good thing. It helps stabilize the markets.


Bitcoin/USD at 15 minute interval scale.

Large spikes are rare now. High frequency trading is damping out short term noise.

It's the offering of securities to Americans that triggers SEC jurisdiction. The offeror has to comply with US law to do that. Many of the GLBSE listed "companies" are in the United States.

GLBSE itself is hosted in Portugal, not China. Portugal is part of the European Union, and so the common European regulations on securities, enforced by the European Securities and Markets Authority, apply.

Mt. Gox's management has to pay losses out of their own capital invested, not customer funds. If they dip into customer funds for that, it's theft.

For US persons and companies, raising money on GLBSE is a felony under the Securities Act of 1934. To create a publicly traded investment, you have to register with the Securities and Exchange Commission first, and file forms like SEC Form 1-A.

This form starts with:

ITEM 1.
Significant Parties
List the full names and business and residential addresses, as applicable, for the following persons:
(a) the issuer’s directors;
(b) the issuer’s officers;
(c) the issuer’s general partners;
(d) record owners of 5 percent or more of any class of the issuer’s equity securities;
(e) beneficial owners of 5 percent or more of any class of the issuer’s equity securities;
(f) promoters of the issuer;
(g) affiliates of the issuer;
(h) counsel to the issuer with respect to the proposed offering;
(i) each underwriter with respect to the proposed offering;
(j) the underwriter’s directors;
(k) the underwriter’s officers;
(l) the underwriter’s general partners; and
(m) counsel to the underwriter.

You don't get to issue securities anonymously in the US. The usual penalty is 5 years in prison.

Here's a typical FBI report of a conviction for selling unregistered securities.. One of those people gets out of the Federal pen in 2015.

Operating entirely on line won't help. An online unregistered securities operator who ran AdSurfDaily is was arrested and is facing felony criminal charges. If you're wondering what the legal definition of a "security" is, see this court decision against the operator of AdSurfDaily. The terms for AdSurfDaily sound a lot like the ones for many GBLSE investments. Here's what AdSurfDaily advertised:

   Rebate Distribution: Ad purchase sales and banner ad sales on the Cash Generator and the sale of ebooks will be totaled at midnight each night and 50% of the gross sales will be rebated to add purchasers. Fifty percent of the commissions that the Cash Generator earns from their sister site, “Attract Marketing System,” will also be paid as rebates to ad purchasers on the Cash Generator.

Every night at midnight the number of eligible ad packages will be totaled and divided into the total ad package sales, banner ad sales and ebook sales to determine the amount of the rebate for each ad package. That amount will be multiplied by the number of ad packages in each advertiser’s account and the total will be credited to his/her cash balance account. Rebates will show up in your account after midnight EST.

Sounds like a lot of GBLSE offerings, doesn't it? That was held to be an "investment contract" requiring SEC registration in UNITED STATES OF AMERICA v.THOMAS ANDERSON BOWDOIN, JR., Defendant, Criminal Action No. 10-320 (RMC), United States District Court, District of Columbia, March 18, 2011. Mr. Bowdoin is looking at 125 years in prison, max.

I suspect a cash shortage at Mt. Gox. They're supposed to have 100% of the customer's cash that they claim to have on deposit.  Maybe they don't. 

As a money transfer service, not a bank, under Japanese law they're required to keep customer cash separate. Failing to do so is theft.

It's not a much of a barrier any more. The price has been around $5 +- $0.20 for two days now, crossing the $5 mark repeatedly.

Bitcoin, last 3 months.

As I keep pointing out, much to the annoyance of the more delusional enthusiasts, Bitcoin has dropped $4 per month for 3 months now. The 30-day moving average is close to a straight line. There are never more than 3 "up" days in a row.

When Bitcoin hits $3, it will be down 90%, which is effectively dead.

Get your cash out of Mt. Gox. They might not have enough at the end.

"gobankingrates.com" isn't "press".  It's a scraper site for a lead generation service.