Problem is that although you clearly said that - noone has any way of knowing whether you meant that or (perhaps more importantly) whether those without YABMC shares but an interest in BTC.CO may, of their own initiative,  choose to vote in favour of BTC.TC in the poll.  But as I mentioned previously it's better it's in the open than being done quietly behind the scenes without anyone even considering the possibility of the vote being rigged (and for all any of us know, the vote may have been illegitimate well before your post).

I'd actually make a case that, in theory, if the best interests of YABMC investors were to be met then a vote such that as this would be best served by having votes not just from investors but also from those who would like to BUY the shares (investors who want to sell are best served by whichever platform will give most buyers).  But that's in no way achievable (no way to determine who genuinely would like to buy) unfortunately.

I didn't properly address this.

Shares don't vote (or abstain).  Share-holders vote.

Those shares have no ownership so no vote (there's noone with the entitlement to vote with them).  In the same way treasury shares don't vote.  They could be considered as belonging to the fund as a whole - in which case their voting should reflect the desire of the fund as a whole (i.e. all other votes).  But in that case them voting only reinforces a decision already made - and adds nothing to the voting process.

There wouldn't be anything wrong in principle with a board voting with those shares - but then you get into the messy situation of how the board votes: and making sure that control of the company can't be obtained by a minority of shareholders who get to control board votes.  In practice it's too large a chunk of votes to give control to a small board without effectively removing all voting power from normal shareholders.

Boards should make recommendations, shareholder approve those recommendations.  The person (or group) making a proposal shouldn't also be given the power to enact it.

Still not heard ANY explanation of what useful function those shares offer.  Some while back there was some vague "they'll be useful in the future" type comment - but with no attempt to define that usefulness (and, more specifically, why it needs shares to exist) at all.  You can keep dodging that issue all you want - but the most significant answer to your latest question ("How do we sell more shares?") lies in providing the transparency and equity the topic of the thread claims.  So either explain how those shares benefit investors or get rid of them (the shares, not the investors).

I'm now putting a motion up for vote:

The following motion is being put up to vote on :

--- MOTION BELOW THIS LINE ---

This motion is to make an addition to the contract for LTC-ATF:

A new section to be added to the contract as follows:

PASS-THROUGH OPERATION

The fund manager is authorised to run pass-throughs on LTC-GLOBAL to securities issued on exchanges other than LTC-GLOBAL. 

Costs associated with creating these pass-throughs will be charged to the fund and treated as an non-realisable asset depreciated to zero over a period not exceeding 20 weeks.  No additional management fee may be taken for administering these pass-throughs (any profit from them would be treated as normal LTC-ATF profit and management fee applied as usual).

The following restrictions are placed in respect of these pass-throughs:

1.  With a single exception LTC-ATF must always hold at least as many units of a security to which a pass-through operates as (units outstanding + units for sale).
a)  The exception is that this may briefly be theoretically broken whilst buying back pass-through units from an investor.

2.  No pass-through may offer any guarantees in respect of the performance of the underlieing asset.  Specifically, no guarantees may be offered by the manager in respect of either future prices or dividends of any security to which a pass-through is operated.

3.  Risk of failure of any asset to which a pass-through is operated, along with risk of failure/default of any platform on which those assets are held or transacted MUST be passed on to purchasers of units of the pass-through.

Manager has authority to define the detail of how pass=throughs will be managed as he sees fit within the above parameters.

--- END OF MOTION TEXT ---

As with bonds I've kept detail out of the motion - so as to avoid the need for modification of the contract if any minor change needs to be made to current or future pass-throughs.

At present it is my intent only to offer pass-throughs to investments on MPEx - starting with S.DICE and S.BBET.  These will be purchased vis CoinBR - where we now have a working account and can trade MPEx securities on behalf of the fund as well as for pass-throughs.

I am proposing the following fees on them:

1.  A spread of around 2.5% on buys/sells.  Around 1% of this will be eaten up by fees to us (transaction fees, currency conversion fees, currency movement fees).
2.  A fee of 2% on dividends.  These would be converted based on exchange-rate mid-point, meaning we actually only make around 1% ourselves sometimes - depending on whether we need to actually convert currency or not.

The biggest potential profits come for LTC-ATF in the following situations:

1.  The traded range of a security to which we run a pass-though moves significantly and we can either sell or buy on the pass-through at a significant profit compared to buying/selling the underlieing asset.
2.  We manage to buy shares at Bid price then sell them on the pass-through at Ask price.

The risks to LTC-ATF are two:

1.  There is little/no interest in something we run a pass-through to - and we lose the 250 LTC ticker fee for it.
2.  We buy shares to sell in a pass-through and their price drops before we sell them, forcing us to sell at a loss.  This is balanced by the chance that we buy and the price rises before we sell - allowing us to sell at more than our standard 2.5% markup.

CoinBR has a 0.09 BTC per month fee (plus 0.5% per transaction).  We need to trade a volume of about 5 BTC in total pass-throughs per month to cover this.  As we'll be trading on our own behalf anyway this is largely irrelevant.

To cover the costs of a ticker for a pass-though, my estimate is that we need to trade around 25 BTC-worth of that security.  That could be 25 BTC of sales or 12.5 BTC of sales and 12.5 BTC of buy-backs.  Provided I pick securities with decent value I don't see that being a problem - there's a lack of good investment opportunites on LTC-GLOBAL right now.

Our actual margins are slightly lower than those of most pass-throughs (when you take into account that we're absorbing exchange-rate conversion fees and movement fees) which will hopefully make our offerings fairly attractive: our profit will hopefully come from volume and from smart trading on my part to increase our actual profit above the headlined 2.5%.

There is no guarantee the motion will pass - I currently personally hold just under 50% of units in LTC-ATF (I sold some recently at steep markups to NAV/U and bought a chunk of our bonds) so at least one other investor will need to vote yes for the motion to pass.  If there's any significant opposition (No votes) then I'll vote No myself anyway and run the pass-throughs personally (I have no inclination to drive out long-term investors by making changes/extensions to what the fund does against their wishes).  If the motion passes then, as with the previous motion, I'll offer a buyback above NAV/U for a week afterwards for anyone who disagrees with it (that option has been available for a while anyway - with buys over NAV/U up from myself and others).

We already have an account on CoinBR - setup last night - and have some funds there (and orders up).  I moved funds from BTC.CO to there (as we had most spare funds there and there was no fee for the transfer).  Will sell some more bonds now to replace the BTC.CO funds - even if we don't go ahead with the pass-through we'll still want to trade on CoinBR/MPEx.

One last unrelated point - I've now received confirmation that we do actually hold 10 units of ASIC-MINER.  Had been hoping we held 16 - but the 10 in spread-sheet was correct: we must have sold some shortly before GLBSE went down (explaining the extra 0.7 BTC we received as I'd guessed).

I'm not a lawyer - nor have I ever claimed to be one.

I wouldn't suggest guaranteeing anything - and didn't do so.  Though I can see how you got that impression.  What I'd suggested was that the contract end after 6 months if total dividends exceeded initial investment - but continued if they hadn't.  At that stage they would continue until either initial investment was repaid OR there was no longer any production (which would happen eventually anyway - as your new contract doesn't guarantee fixed payments).

Obviously you could add some other clause - such as being able to liquidate the hardware if mining became unprofitable and making a final payment.

The key really is whether your goal is either:

a) To guarantee significant profit for yourself,
b) To try to ensure minimal chance of loss for investors and no loss for yourself.

Obviously those two sets of objectives aren't compatible in some scenarios (e.g. where the first wave of deep price-cuts on ASICs occur early leading to heavy new influx of ASICs with smaller capital costs to recoup, driving difficulty up and profitability down).  I'd argue your current contract is very heavily weighted in favour of a) - making sure you get to keep the hardware after a period of time irrespective of how well/badly investors have done.  You CAN reduce risk to investors without exposing yourself to risk of loss - but at the risk of significantly lower profit for yourself if things go badly.

As for "My plans include all Gigaminers" - whether that's true or not depends on what you consider to be Gigaminers.  Nothing in your plans so far includes those who bought a few contracts on GLBSE where the value of those contracts is less than the cost to them of obtaining Apostille.  Are those people Gigaminers? 

Well you could make a pretty simple change to ensure noone actually makes loss.

Make the duration of it the LONGER of X months (currently 6) and the time taken for investors to receive back their initial investment in dividends.

So if it gos well and they make a profit eearly then contracts end after X months.  If it doesn't go well you keep paying dividends until they've received back their initial investment. 

There's then the issue of calculating what initial investment is.  That's not too hard - just means valuing gigamining shares with a residual value of their IPO cost less dividends paid to date.

Obviously you can only go this sort of route if you genuinely believe investors are likely to make a profit in 6 months and VERY likely to make a profit in a year or so (beyond that there'd be no significant returns anyway).  But that's what you believe, right?

I certainly agree doing the vote by email would be best way - that way weighting can be applied (based on number of shares held) as should be done in any share-holder vote.

Whilst I agree, in principle, that finding out if any sock-puppet accounts voted would be desirable I don't think it's actually all that practical.  Mods would have to identify 'suspicious' accounts (e.g. ones registered in last few days) but then have to do a LOT more work to determine whether it's actually a sock-puppet.  How do you prove an account isn't a share-holder?  Do Mods have to be given a list of email addresses of all investors - then ask each account they're suspicious of what email address they used to claim from GLBSE and see if it's on the list?  If someone doesn't want to reveal that are they automatically assumed to be a sock-puppet?

Then what happens IF a sock-puppet account is found?  Say one was found and it voted for BitFunder (or for BTC.CO - works same either way).  How do you determine whether it was voting to help the site it voted for or to discredit it (by making it appear they were supported by sock-puppets)?  And does the account get a scammer tag or banned - for voting in a poll made open to the public?

Having any kind of share-holder vote/poll in a public forum is just a bad idea in the first place.  At least this time burnside's comment made the fact it was terrible obvious - it would actually be far worse if noone mentioned it then one or other party quietly amassed votes with sock-puppets (or legitimate accounts that supported them) without any suspicion of vote-fixing.

How do businesses that aren't online accept bitcoin payments in the first place?

Exchange-Rate : 0.00448

Adjusted NAV/U : 22.66454
Bid at : 22

We've made a decent start to the week - though not quite as spectacular as the growth may at first seem to show.  Although on first glance we're up over 5% a decent chunk of that is due to LTC falling significantly vs BTC (with ~25% of our holdings BTC-denominated a drop in LTC/BTC rrate of 10% converts into a rise of ~2.5% in NAV/U).  If we look at actual trading profits we're only up just over 3% - which is still reasonable for only being 1 day into the week.  We'd be up more if I hadn't had to liquidate a holding at a loss to avoid exposure to bASIC (where there's now significant questions over when and even IF their ASICs will be available).

I'm out for most of the rest of the day - will see about making some progress on getting our pass-throughs sorted tomorrow.

Where is it you think the funds from the IPO are supposed to go that it would be bad for investors if they were gambled on the site?

Hint: the funds raised from the IPO are NOT meant to be going into the company wallet (it's not a house that's being bet against - so it doesn't NEED large cash reserves in the way S-Dice does).

He was getting confused.

The shares on LTC GLOBAL are $0.25.
The ones on BTC.CO are $10.

WEEKLY REPORT




We ended the week with a trading profit of just over 14%.  At one stage it looked like we may not make any profit at all (the CryptoStock scare) then shortly after that it looked like we may make almost 20% (LTC dropped heavily for a while before recovering today).  I'd estimate that we make 2-3% trading profit per week from normal buying and selling of shares - with good weeks (such as this one and last) coming when I manage to get one or two highly profitable deals in addition to the normal fare.  Don't assume that I always make profit on deals either - there have been a few occasions when I've had to sell off assets for less than I bought them for (one this week I sold at a loss about 5 minutes after I noticed my buy order had been filled) or have had to mark assets' value down in the book.  In general I'm more aggressive about marking things down in value than marking them up - I'd rather undervalue our holdings than overvalue them.

I've given plenty of consideration over the past week about how to resolve our current surfeit of LTC-denominated capital.  My suggestion last week was to dividend some of it out - then replace it with more BTC-denominated bonds (either directly allocated to investors in lieu of dividends or just sold on the open market).  That still remains a feasible option - however we then run the risk that if our need for capital grows we could reach the point where we can't sell more bonds without massively exposing ourselves to heavy losses if only 1 or 2 investments go bad.

What I'm now considering is expanding our operations a bit.  Specifically, I'm looking into this fund running some pass-throughs (on LTC-GLOBAL).  The two assets I'm considering for initial pass-throughs are SatoshiDice and BitBet.  Both of these are listed on MPEx - I wouldn't bother running pass-throughs to anything on BTC.CO/BitFunder as there's no barrier of entry to anyone just making an account there and buying the originals themselves.

The fund would:

Cover the costs (ticker for each and  0.09 BTC/month brokerage fee)
Buy the shares that were then sold in the pass-throughs

All profits from the pass-through (cut of dividends plus margins made on buying/selling) would be treaeted just like any other profits the fund makes.

There's two specific risks the fund takes on if we do this:

1.  That we buy shares then their price collapses and we either can't sell them or have to sell them for less than we buy for.  This is actually almost irrelevant - as it's precisely the risk we take on in every trade I make already.
2.  That there's insufficent interest in the pass-throughs to make back the cost of tickers and cover broker fees.

Risks that we DON'T face are:

1.  Exchange-rate exposure,
2.  Changes in value of the underlieing assets.

All sold shares in the pass-throughs would give neither of the above risks to the fund - as the liability due to the investors in the pass-through would be exactly matched by the value of the underlieing assets we held.  And the two would move in tandem.

As both of those assets are BTC-denominated, the capital used to buy them would be largely bond-raised - but it would still soak up some of our surplus capital.  The actual capital needed would be pretty small - as we'd be buying small batches as and when needed: not buying some huge chunk then praying we could sell them.

I need to do some proper calculations to work out exactly what level of interest we'd need to make this a profitable proposition for the fund - and obviously won't intend to proceed unless I'm confident the fund will make some extra profit from it.  Any thoughts/feedback on this are welcome.  Note that I COULD just run the pass-thoughs myself and keep all profit (or loss) for myself.  I'd prefer, however,  to have everything run from one account - and to be able to use all funds where they're needed rather than keeping seperate wallets and having to do pointless currency conversions.

Management fee this week is 6 units (rounded down from 6.07) which will be transferred shortly after posting this.

I've updated the OP of this thread with up to date results history and have also updated the indication of where our funds are typically held.

Looks like Crypto situation is resolved.  BTC withdrawals have been reenabled and are working there and on Vircurex (same problem and same owner).  Seems like they lost some funds but are covering it themselves.  Obviously I can't be sure they actually have enough cash to cover all deposits - but I could never be sure of that anyway (and same's actually true for ALL exchanges we operate on - none have public segregated deposits on display).

I withdrew just under half our balance on there anyway (as for a semi-related reason we don't need quite so much there) leaving us with just 3 BTC there.  I'm now trading again on there.

Exchange-rate : .00495

Adjusted NAV/U : 21.5477
Bid at : 21.0

The LTC/BTC exchange-rate has seen a lot of movement in last few days (prompted undoubtedly by BTC rising vs USD which nearly always triggers a fall in LTC/BTC due to arbitrage - with the low level of orders making the price fluctuate around a bit before settling). Will almost certainly do our weekly report tonight as not sure how much I'll be around tomorrow.  With crypto back functioning it's definitely been a very good week for us.

So what's the incentive for early investors?

Right now they can either:

a) Invest with you.  You then deposit in BitFinex and they get 90% of profits.
b) Invest with BitFinex.  They get 100% of profits and no exposure to risk of you taking their money.  Then they can invest with you later when you diversify if they choose.

Not seeing how a) offers any advantage over b).

The above shouldn't be taken as a recommendation by me to do b) nor as indicating that I believe a) and b) are the only options available to potential investors.

How's it a crash?

BTC has been rising vs USD so LTC is BOUND to fall vs BTC (unless there's some other factor acting significantly in the other direction).

If you can't see why then consider how people arbitrage across the BTC/LTC, BTC/USD and LTC/USD pairs - and what impact that must necessarily have on BTC/LTC given the small volume.order book there compared to BTC/USD (think through how a profitable arbitrage would work - and which side of each book it would be removing orders from).  If you can't work that out then you'd be better off spending your time trying to understand it than making pointless threads.

Think #3 here is the big one.  Some of the owners of the shares on Bitfunder are funds that are closing down and have to sell their assets.  Others will be people who want to sell and only now have the chance.  Havelock doesn't have people who wanted to get out of owning the shares - so there's no supply to compete with that being issued by the asset owner.

And #1 is also a significant factor.  If you only get 95% of dividends and have no means of converting to the 'real' shares then it's hard to justify a price over 95% of the MPEx price (if some clear means of converting was provided then arguably price should be very near to 100% of MPEx - depending on what it cost to convert).

Not such good news today I'm afraid - whether it's bad news or not isn't yet clear.

At some point overnight the wallet on Cryptostocks was compromised (not OUR wallet - the site's own one).  At present there's just a news item up saying "Withdrawals are currently deactivated."  When I first logged into the site maybe an hour ago there was a longer news item saying that their main wallet had been compromised and that everyone would need to use new deposit addresses and that withdrawals would be suspended.

No information has been provided on how much (if any) actual funds were stolen/transferred.

At present our balance on Cryptostocks is 5.982 BTC and we hold no other assets there (the 1.15 BTC increase in this since last report is the profit we'd made on there so far this week).

Obviously worst case is the site is bust and we lose that ~6 BTC.  Best case is they only lost a small amount (or nothing) in a hot wallet and our funds are intact.  If a clear (and credible) statement is made that all depositors' funds are intact then we'll continue trading there as before.  If withdrawals are reactivated without any such statement then I'll immediately withdraw all our funds.

For now I'll be placing Bids by the fund as though the money had all gone - but I doubt that's actually the case.

In the absolute worst case (funds there totally worthless) it basically just wipes out this week's profits.  So I've already decided that even in that event, all of the loss would be applied to the fund - and the face value of bonds would not be reduced.  I've also checked and even if those funds were totally vanished we already still meet all necessary targets for servicing the bonds - i.e. we still have sufficient BTC-denominated capital etc.

Exchange-Rate : .00499

Adjusted NAV/U (assuming funds on Crypto intact) : 21.364
Adjusted NAV/U (assuming funds on Crypto gone) : 19.1349

Bid at : 18.7

Trading is possible as normal on Crypto (and our balance shows as intact) - but I won't be buying anything until the status of funds is clear.  I'm performing a clear of all orders on LTC-GLOBAL so noone is left with a bid over NAV/U up that they wouldn't want up with this new information.  I'll then place a bid with my personal funds at just over full NAV/U - so any smaller investors who want out can get out.  I personally expect our funds will become available in full - but have no right to make others act on that belief: hence the fund's own bid being placed conservatively as though the funds will not be returned (so there's no risk of dilution of value for investors if some sell out).

Obviously I am making no trades myself on LTC-ATF until after I've cancelled the order book.

Yeah - I had a look around online earlier at various sources relating to KYC in the US.  Seems the general principle is identical to in the UK and other countries:

1.  If you require KYC you MUST make that plain BEFORE entering into a contract.
2.  If you use a third=party to handle sales you CAN delegate KYC requirements to them BUT if you do so you MUST make sure they comply with the KTC policy that applies to you.
3.  If a potential client refuses to provide KYC your options are either a) Refund them any funds paid to you or b) Raise an SAR with relevant authorities.  There's no option c) of threaten to hold their funds but don't raise an SAR.
4.  If you require KYC information then you MUST have a written policy in respect of it and a named compliance officer.  If KYC requirements are delegated to a third-party then THEY must have a written policy and compliance officer.

It's also not clear on what basis giga is claiming he needs KYC information.  From what I can see, similar to in the UK, businesses that must obtain KYC information need to be registered wuth a supervisory/regulatory authority.  I see no statement from giga or his lawyer as to where they're registered as business meeting the conditions such that they need to obtain KYC information.  Are they, for example, registered as a Financial Services provider?  Any such registration should be disclosed to customers.

The above is important as - if he's claiming legal necessity for his actions then rather obviously:

1.  He needs to meet the relevant legal requirements on his end,
2.  If his failure to proper understand HIS position has led to the problem then any burden of cost in rectifying HIS mistake (in not making plain at the start the need for KYC information - a requirement where such information is needed) should fall on him.

There also appears to be a bait and switch on two specific factors:

1.  Giga is now claiming all deals were with an LLC.  But no disclosure was made that commitments on his end were restricted by limited liability when entering the deal.  Any limited liability needs to be disclosed in advance - it can't later be claimed.

2.  The contracts/bonds were transferrable/tradable.  Now, apparently, they aren't.  That's a very clear reduction in their value - with, as far as I can see, no agreement to such a change ever made by investors.  You can't start changing a contract unilaterally just because it's inconvenient for you to honour it as agreed.  If he's saying he can't honour the original agreement for legal reasons then it would be reasonable to allow him to cancel the deal - refunding amounts paid less dividends paid to date.

Here's some more info on it from a while back (this relates to the LTC versions of the bond):

http://forum.litecoin.net/index.php/topic,915.0.html

There's no such examples - as no regular company puts aside shares just to calculate what 30% of revenue is.

I've still to hear any reasoning on why those shares need to exist at all - what is it they allow the company to do that it couldn't do without them?  What benefit do they offer to compensate for the mess they make of voting?

Would suggest you read the prospectus - he can't just dump them at a low price.