Bond has now been unlocked for Moderator approval on LTC Global.  Will update when (if?) it gains approval and the initial tranche of bonds are released.

[[COPY OF CONTRACT]]

DEFINITIONS

(The) Issuer / The fund trading with the ticker LTC-ATF on the Litecoin Global
Exchange.

(The) Manager : The individual controlling the user account
with the name "Deprived" on The bitcointalk forums.

The Bond : The security offered on Litecoin Global Exchange using the ticker
LTC-ATF.B1


OVERVIEW

LTC-ATF.B1 is a bond issued by the LTC-ATF.  It is a sort of hybrid lieing
somewhere between a regular bond and a 'perpetual' bond.  LTC-ATF is issuing
this bond rather than raising new capital via sale of additional units for two
primary reasons:

1.  To allow LTC-ATF to trade in BTC-denominated securities without massive
exposure to the LTC/BTC exchange-rate.
2.  To reduce the portion of future profits distributed to new investors - and
hence increase the profit retained by early investors.  This increase in
retained profits comes with an associated increase in accepted risk (by existing
LTC-ATF investors, not bond holders).

The bond is primarily transacted in Litecoins (LTC) but has a face-value
denominated in BTC.  Dividends are paid based upon this face-value.  This means
that bond-holders are effectively making a BTC-denominated investment - with
transactions just happening to occur in LTC.  This has advantages and
disadvantages for both investor and issuer - which should be carefully
considered before investing.

The bond pays a fixed-rate of interest weekly.  This rate may be increased
without notice by the issuer but may not be reduced once increased.  Bonds will
initially be offered paying a 0.6% per week dividend - then the rate will be
gradually increased as necessary until demand meets supply.  Any such increases
apply to ALL outstanding bonds, not just to new ones sold after the date such
increase is announced.


FACE VALUE

Each bond will begin with a face value of 0.01 BTC.  All Asks and Bids placed by
the issuer will be at approximately this face-value less (or plus in the case of
Asks) a 1% administration fee.  The exchange-rate used by the issuer when
placing such orders will be the rate available for immediate conversion (i.e.
buying or selling into existing orders) on the BTC-E exchange.

In general the face value of bonds will not change.  The exception to this is if
a platform on which LTC-ATF operates defaults, is hacked or otherwise loses
assets rightfully belonging to LTC-ATF.  This is dealt with in more detail in a
later section of this contract.


REDEMPTION OF BONDS

The bonds have no expiry date - that is they are perpetual in nature.  However
provision is made to allow redemption at any time (subject to certain
provisions) by holders.

Issuer undertakes to attempt to redeem at least 10% (or 1 BTC worth - whichever
is higher) of outstanding bonds on any calendar day on demand.  This will be
conducted through two primary mechanisms:

1.  Issuer will regularly check the LTC Global market for any Asks which are
priced at 99% of face value or less.  Any such orders will be filled.
2.  Any bond holder may directly redeem bonds provided at least 100 bonds are
redeemed in a batch.  This is done by transferring the bonds to the manager
(DeprivedAsset).  When manager notices such a transfer he will sell an amount of
BTC on BTC-E equivalent to the face value of the transferred bonds then transfer
99% of received funds (in LTC) to the holder.

Unfortunately, due to the bonds being valued in BTC but transacted in LTC it is
not possible for issuer to leave standing bids up on LTC Global in the manner
that is used to provide liquidity for LTC-ATF.

At his discretion manager may agree to redeem bonds by means of a transfer of
BTC on the BTC.CO exchange.  Where this occurs, such redemption will be made at
99% of face value (with no exchange-rate relevant).  This would need to be
arranged in advance and it established beyond doubt that the nominated BTC.CO
receiving account is indeed controlled by the same indivual as transferred the
bonds on LTC Global.

Manager may at his discretion sell bonds at below face value to existing bids on
the market.  This would only be done if there were a specific very profitable
(and with short-term availability) opportunity available.


DIVIDENDS

Dividend payments are due at a nominal time of 23:59:59 GMT each Saturday.  In
practice the dividend payment will be made at some time on either Saturday or
Sunday - typically just before weekly results for LTC-ATF are published.  It is
not possible to schedule dividends in advance as the amount of the dividend (in
LTC) cannot be calculated without knowing the exact exchange-rate available at
the time of payment.

Dividend will be a fixed percentage each week.  This percentage will be set at
0.6% per week when the bond is first placed for sale.  Thereafter the rate may
be increased at any time without ntoice by the issuer.  The rate may never be
decreased by the issuer whilst there are any outstanding bonds.  Changes to the
interest rate will be published in the official threads for this security and in
the LTC-ATF threads.  Any increases in interest rate apply to all oustanding
bonds, not just to ones sold after such increases.

When a dividend is paid the following procedure will be used to calculate the
amount to be dividended:

1.  The BTC value of the dividend will be calculated - the number of outstanding
bonds multiplied by their individual face value multiplied by the current
interest rate paid.
2.  a)  If the issuer does NOT need to convert BTC into LTC to pay the dividend
then the exchange-rate used to calculate the LTC to pay will be the mid-point
between highest bid and lowest ask on the BTC-E LTC/BTC trade list.
    b) If the issuer DOES need to convert BTC into LTC to pay the dividend then
an amount of BTC equal to the due dividend will be used to purchase LTC on
BTC-E.  The LTC received from this transaction(s) will be the amount dividended.
3.  The full amount of LTC calculated (or obtained) will then be dividended out.
 No admin fees or transfer fees will be deducted from it.


MANAGEMENT FEE

No management fee is taken for maintaining operation of these bonds.  The
manager expects to gain his reward from increased profitsfrom his personal
LTC-ATF units and his 10% fee on LTC-ATF earnings.

The admin fees charged on purchases and sales are to cover (or reduce) the
various transfer and exchange-use fees necessary to conduct such actions.


RISK EXPOSURE AND MITIGATION

In general bond holders have senior claim against all assets of LTC-ATF (up to
face value of the bond).  Most risks associated with LTC-ATF's operations are
carried by LTC-ATF rather than this bond.  There is one specific risk which is
shared with bond-holders - the full or partial default of a platform (e.g.
exchange) on which LTC-ATF holds funds.  This particular risk is share with
bond-holders for two reasons:

1.  There is nothing LTC-ATF can practically do to mitigate this risk.
2.  Bond-holders already accepted this risk when they deposited funds to LTC
Global to invest.

In the event that a platform on which LTC-ATF trades (or holds funds) loses (or
ceases to make available for use) assets belonging to the fund then the face
value of bonds shall (at the discretion of manager) be reduced by a percentage
equal to the percentage of asset value controlled by LTC-ATF lost (or made
unusable).

So if (for example) BTC-E vanished with all our funds on there, and those funds
amounted to 10% of the total assets managed by LTC-ATF then the face value of
all bonds would be reduced by 10% to 0.009 BTC.

If such a reduction occurs and LTC-ATF continues trading (rather than closes
down) then half of all future profits made (after payment of bond dividends and
before management fee is taken) would be applied to increasing bond face value
back up towards its initial value of 0.01 BTC.

Other than the above, all risks associated with trading (prices crashing, typoed
orders that lose money, investments that turn out to be scams etc) are carried
by LTC-ATF and do not affect the face value of bonds or the dividend payments
due on them.

So there are precisely two risks bond-holders have (other than that the issuer
scams them) :

1.  Losses caused by default/theft from an exchange used,
2.  That the value of LTC-ATF assets falls to a level such that the total assets
of LTC-ATF are less than the face value of issued bonds.

Here are specific risks associated with point 2 - and how they are addressed:

Exchange-rate changes : If all of LTC-ATF's investments were in LTC-denominated
securities and LTC suddenly tanked against BTC then LTC-ATF could end up with
insufficient funds to cover the face value of outstanding bonds.  To counter
this the fund must maintain BTC-denominated assets such that outstanding bonds
amount to a liability of no more than 90% of such assets.  So if we have 90 BTC
face-value of outstanding bonds then we must hold at least 100 BTC of
BTC-denominated assets.  Funds will be exchanged between currencies as needed to
maintain this minimum ratio.  This percentage will be included in LTC-ATF's
regular reports (usually, but not always, produced weekly).

Trading Losses : It is possible for LTC-ATF to accumulate trading losses such
that it no longer holds sufficient assets to cover outstanding bonds at face
value.  This cannot be totally removed as a risk (as exchange-rate could) but is
very heavily mitigated through a few methods:

1.  Every effort is taken to spread exposure rather than allow a single point of
failure (one asset issuer) to be able to cause massive losses to LTC-ATF.  As
LTC-ATF expands back into BTC-denominated investment the range of securities we
can trade grows - and we can reduce exposure per security.  Prior to bond launch
LTC-ATF has targetted a maximum exposure of 20% of assets to a single issuer.
After significant bond sales this target will fall to 10% (until a significant
number of bnds have sold this risk is irrelevant unless every investment
collapses at once).  That's a target - not a firm commitment - but one taken
very seriously.  Exposure to a single asset issuer includes indirect as well as
direct exposure - so holdings of investment companies traded ARE taken into
account.  LTC-ATF never trades securities of investment companies that don't
disclose their holdings.

2.  A limit is placed on the number of bonds that LTC-ATF may have outstanding.
 This limit is defined as bonds with a total face value of 150% of LTC-ATF's own
NAV.  So if LTC-ATF had 100 BTC of assets without any bonds then maximum bonds
it could issue would be 150 BTC worth.  This ratio will also be included in all
regular reports of LTC-ATF.  If this ratio ever rises above 150% then manager
will promptly ensure that it is reduced below 150% by either issuing more units
of LTC-ATF and/or repurchasing bonds from the market.

In practice there is no plan to ever intentionally get close to the two limits
defined above.  However the first likely will on occasion need to be corrected
(if a few BTC investments suddenly fall heavily in value).  The second is only
likely to need adjustment if LTC falls very heavily against BTC.

Despite the above mitigating actions risk cannot be totally eliminated.  To
claim otherwise would be ignorant and/or deceitful.  Investors should always
consider potential risks before investing - that is the case here as it is
everywhere else.


BOND RECALL

The issuer has the right to forcibly recall all outstanding bonds at will.  This
must be done at 105% of face value - with the LTC payment made defined as the
LTC obtained by selling 105% of total bond face value (in BTC) on BTC-E.  No
admin fee or transfer fees may be deducted from this.

Whilst there's no intention to ever do this, this right has to be reserved in
case trading conditions become such that supporting outstanding bonds can no
longer be justified.  An example would be if BTC-denominated exchanges closed
down but LTC Global remained open - where LTC-ATF could continue but there'd be
no need or use for BTC-denominated capital.


FUND CLOSURE

In the event of LTC-ATF closing operations all outstandings bonds will be
redeemed at 100% of face value - with the LTC payment made defined as the LTC
obtained by selling the total bond face value (in BTC) on BTC-E.  No admin fee
or transfer fees may be deducted from this.

Dividends remain due every week until such time as LTC-ATF is able to make such
a final payment.

If fund closure is announced then LTC-ATF may not repurchase any units or make
any payments of settlement to LTC-ATF investors until all bonds have been fully
redeemed.  Bond holders have absolute seniority over LTC-ATF unit holders in all
claims on LTC-ATF assets in such a circumstance.


GENERAL ISSUES / FINE PRINT

In various places this contract refers to BTC-E when discussing currency
exchange.  Whilst at the time of making this contract that is the exchange used,
such use is not intended to restrict issuer from using other such exchanges.
All occurrences of "BTC-E" should thus be read as "BTC-E (or such other exchange
as the issuer chooses to use)".

Changes may only be made by issuer to this contract if either:

1.  There are no outstanding bonds,
2.  A vote is passed approving the changes with 100% of bond-holders voting yes.

LTC-ATF may not hold outstanding LTC-ATF.B1 bonds itself (this is impossible to
do without use of a proxy account anyway).

For the purpose of this offering, BTC and LTC are considered virtual currencies
with no intrinsic value (akin to currencies in online games).  This fund is
being run for the entertainment of the manager and investors with no expectation
of financial gain or loss for either party.

STATUS

Will be selling bonds into correctly priced bids up to around 180 BTC worth.

Bond Face Value : 0.01 BTC
Bonds available for sale (including those already sold) : 2000 (Total Face Value of 20 BTC)
Bonds Outstanding : 16477 (Total Face Value of 164.77 BTC)
Current Dividend Rate (per week) : 0.6%


INTRODUCTION

The contract for this bond can be found in the second post of this thread.
Further information about this bond can be found in the asset listing on LTC Global  https://www.litecoinglobal.com/security/LTC-ATF.B1

This security is a bond issued by LTC-ATF - a small trading fund listed on LTC Global.  Further information about LTC-ATF can be found at the following links:

Listing : https://www.litecoinglobal.com/security/LTC-ATF
BTC forum thread : https://bitcointalk.org/index.php?topic=112876.0
LTC forum thread : http://forum.litecoin.net/index.php/topic,657.0.html

This bond has a face value denominated in BTC but is transacted in LTC.  A fixed rate of interest is paid each weekend - calculated based on face value then converted into LTC for actual payment.  The current rate paid will be displayed near the top of this post.  The rate may be increased at any time by the issuer but may not be decreased.  Any change applies to ALL bonds - and a seperate post will be made announcing any increase.

Because the bond has a face-value in BTC but is transacted in LTC it is not possible for the issuer to maintain constant bid or ask walls.  Offers on both sides of the book will be placed whenever the exchange rate is fairly stable and issuer is online - and issuer will also fill any asks at an appropriate price when online (subject to a daily maximum of the higher of 1 BTC worth or 10% of outstanding bonds).  A direct redemption method is also available for quantities of 100 or more bonds.

Steps are being taken and safe-guards established to reduce as far as possible any exposure bond-holders have against exchange-rate changes and/or trading losses making LTC-ATF unable to honour bonds.  The former (exchange-rate changes) is pretty much eliminated as a risk, the latter (trading losses) very heavily mitigated by sensible restrictions on exposure to single points of failure.  As always, there does remain some element of risk.

One risk IS explicitly passed on to bond-holders : the failure (or loss through security compromise or similar) of an exchange platform on which LTC-ATF operates.  Losses incurred in this manner are distributed equitably across LTC-ATF unit holders and LTC-ATF.B1 bond holders with a mechanism in place to restore bond face value from subsequent profits.

The full detail of all aspects of the bond summarised above can be found in the contract in the second post.


TARGET MARKET

The market for this bond broadly falls into three groups of investors.  These are now addressed in INCREASING order of importance :

1.  Unsophisticated investors (mouthbreathers).  These invest in anything which pays dividends.  They probably don't read contracts in full and definitely don't do any analysis to determine whether an investment is likely to be profitable.  If they see this bond's price rise they'll assume it means LTC-ATF doing well, if they see it falling they'll assume LTC-ATF is doing badly (price of this bond is actually set 100% by exchange-rate and entirely unrelated to LTC-ATF's performance).  If you're reading this you probably aren't in this category.

2.  Speculators.  This bond provides a useful way to bet against LTC in the medium term (short-term the admin fees wipe out gain, long-term you probably shouldn't even be using this exchange).  Speculators can also pick off orders that aren't updated to reflect changes in the exchange-rate to make a fast profit.

3.  More sophisticated investors.  It's important at this point to consider WHY people invest in specific securites.  There are intangible reasons (want to support community, think it's interesting etc) but one very tangible one which applies to a lot of investors - to make profit.

But what does "profit" actually mean - and, more relevantly, how is it calculated?  Is an investor interested in increasing the number of LTC they own?  The number of BTC they can purchase?  The purchasing power of their assets if converted to fiat?

A more sophisticated investor may well opt not to put all their eggs in one basket (for example investing/holding solely assets whose profitability is determined in LTC).  This is where these bonds fill a useful niche in the market - they allow investors to effectively convert part of their LTC holdings into BTC AND earn growth on them.  That allows them to hedge against a total collapse
of LTC vs BTC.  And they can do it without ever having to move any funds off of LTC Global or use an exchange.

There's also two classes of investors for whom this bond is absolutely NOT suitable:

1.  Ones who want to go "all-in" on LTC increasing in value faster than BTC in the short to medium term (if they only want to gamble like that long-term than the bond MAY make sense for them in the medium term).

2.  Ones who want to hedge their investment portfolio against the devaluation of BTC/LTC against fiat.  This bond provides no such protection.


CONCLUSION

LTC-ATF.B1 offers a realistic rate of interest backed by an operating business which demonstrably generates profits sufficient to support the bonds.  Whilst fine detail of LTC-ATF's holdings/trades is not published, sufficient information is provided to allow verification that the reported results are at least in the correct ball-park.

By offering bonds that are valued in BTC but transacted in LTC, LTC-ATF.B1 allows investors to balance or hedge their investment portfolios across BTC/LTC - without having to use any exchange other than LTC-GLOBAL or ever hold any currency other than LTC.

Whilst significant effort is being taken to reduce risk, it cannot be totally eliminated.  One specific risk (failure of a trading platform) is not mitigated and is passed through proportionately to bond-holders.  This is because bond holders already accepted the risk of such failure prior to investing and there is no way, in any event, to mitigate it whilst offering a competitive rate.


PRICING

As the face value (in LTC) varies with exchange-rate, this section explains how to calculate the price the fund will buy and sell bonds at.  First a table showing prices for various exchange-rates.



The first column is Exchange-rate (LTC/BTC).  Second column is the price the fund will put bids at (to buy back bonds) at that exchange-rate.  Third column is the face value at that exchange-rate.   Fourth column is the price the fund will put Asks at (to sell bonds) at that exchange-rate.

That table assumes a zero-spread market - which isn't actually the case, so the table is only useful to give a general idea of where prices will lie.  The fund sells bonds based on the rate at which is can sell LTC and buys them back based on the rate at which is can buy LTC.  To work out the exact prices the fund will trade at, you need to to do the following:

The fund's Bid price (to buy back bonds) is calculated by dividing 0.01 (face value in BTC of a bond) by the lowest non-trivial (i.e. ignore tiny orders) Ask on BTC-E.  Then multiply the result by 0.99 for the 1% admin fee (which covers transfer costs, 0.2% transaction fee and allows for a small movement in rate between place of order and execution).

The fund's Ask price (to sell bonds) is calculated by dividing 0.01 by the highestest non-trivial Bid on BTC-E.  Then multiply the result by 1.01 for the 1% admin fee.

The face value of bonds would be calculated by dividing 0.01 by the mid-point between the two rates used for calculating Bid/Ask.

As an exmple right now highest bid for LTC on BTC-E is at .00599 and lowest ask at .00603.

So face value would be 0.01 divided by average of those two (.00601) = 1.6639
Fund's Ask would be at 1.01*(0.01/.00599) = 1.6861
Fund's Bid (or price I'd buy back from Asks at) would be at .99*(.01/.00603) = 1.6418

In practice Asks will often be spred over a range - reflecting volume at different price points.  So if there's 1 BTC worth of bids on BTC-E at .00603 then there'd only be 1 BTC worth of bonds up for sale at 1.6861 with rest at a price corresponding to next highest bid.

It's actually not relevant here - payment on closedown was defined by operator as outstanding dividends plus funds received from selling hardware.  He's valuing the BFL single at full list price.

If there was a scam anywhere it was in not being clear in his OP that he was only selling them rights to 1 BFL single rather than using most/all of raised funds to expand hardware.  Basically he was pocketing the lion's share of raised funds (taken as shares rather than cash - but works out same) then paying out based on hardware funded with the bit left.  He sold something for way more than it was worth (and didn't provide enough information for that to be obvious to investors).

In fact he's paying out slightly MORE than he would actually have to do so, if he paid out in line with the stated policy.

Personally I wouldn't give a scammer tag for this - he sold overpriced junk to people who didn't work out what they were buying before sending their cash.  That's an idiot tax, not a scam.

Cross-posting from other thread.


He's not actually scamming you on the closedown - you got screwed when you bought the shares in the first place.  Here's his post that explains how (and just how badly) you got screwed:


He sold 1000 shares at .25 BTC each (250 BTC total = over $2500) and in return shareholders got ONE BFL single.  That's where you lost your money - his closing down like this is just making your loss immediately obvious.

Mistake you made was assuming that some of the funds raised were going to buy new hardware - they weren't.  If he released a new BFL single to the company that would have been accompanied by raising more funds by sellling new shares.  The funds raised were just going into his pocket and in return you got a portion of a BFL single worth about 1/3 of what you invested.  Obviously that was never going to make you any profit even if he paid for running costs.

If someone sells a "share" then make damn sure they spell out exactly how funds raised will be used and how (and when) they take their own cut.  Otherwise you'll end up (as was the case here) paying a grossly inflated price for something then being surprised when you make a loss.

He's not actually scamming you on the closedown - you got screwed when you bought the shares in the first place.  Here's his post that explains how (and just how badly) you got screwed:


He sold 1000 shares at .25 BTC each (250 BTC total = over $2500) and in return shareholders got ONE BFL single.  That's where you lost your money - his closing down like this is just making your loss immediately obvious.

Mistake you made was assuming that some of the funds raised were going to buy new hardware - they weren't.  If he released a new BFL single to the company that would have been accompanied by raising more funds by sellling new shares.  The funds raised were just going into his pocket and in return you got a portion of a BFL single worth about 1/3 of what you invested.  Obviously that was never going to make you any profit even if he paid for running costs.

If someone sells a "share" then make damn sure they spell out exactly how funds raised will be used and how (and when) they take their own cut.  Otherwise you'll end up (as was the case here) paying a grossly inflated price for something then being surprised when you make a loss.

That would all be fine and well if the investment was made in USD - but it wasn't.  I DO accept that BTC increasing so strongly vs USD may not have been anticipated by Giga - obviously it was never a certainty to happen.  But that doesn't alter a few facts:

1.  Investment was in BTC.  If contract is reversed then repayment would be in the currency originally paid.  Intent of reversing a contract is to revert the situation to how it would have been had the contract never been entered into.  Investors had 1 BTC in their wallet prior to purchasing so should have a BTC afterwards.  Not really relevant what would have happened had he took investments in USD, LTC, Russian Roubles or Zimambwean Dollars - as he didn't.
2.  By your figures this was basically always going to be a loss for investors from day 1.  Less than half investment returned so far and with block reward halving and ASICs imminent investors would die of old age before the remainder got generated in dividends.  Dividends generated are largely unaffected by exchange-rate - there's some small amount of impact rising BTC has on rate of increase of difficulty but for a fixed-rate bond the main impact on dividends for shares (reduced cost of power) isn't relevant.
3.  Note also that BTC increasing in value doesn't only cause hardware to depreciate faster, it also helps in the other direction by reducing the percentage of mining output that Giga needed to spend on power costs.

In short it appears that he sold a lemon that was never going to make a profit for investors - and now wants to make their loss even larger by forcing them to jump through hoops that he could (and should) have identified and disclosed before ever offering the contracts.  He's the one who fucked up by selling a wortless (compared to just holding BTC) investment.  He's the one who didn't bother working out what he needed to do to in order to comply with the regulations/laws in HIS jurisdiction - and has now belatedly decided to do so.

When BTC rose vs USD did he start paying higher dividends as his costs to operate had reduced?  I don't think so.  So when it's now suddenly convenient for him to refer to that change would it be fair for him to do so?

If he wants to play it by the book then that's cool - and whether he raises the funds by selling hardware, selling his house or magicking it out of his ass is not really any concern of investors is it?  If he was concerned about the impact exchange-rate would have then he could hedged against it or just done his homework in first place and made sure he dotted his i's and crossed his t's before accepting every BTC thrown in his direction.

Bottom line, cutting through all the crap, is he knowingly entered into a contract he knew was on dodgy legal ground.  Many investors may well have known they were on dodgy legal ground as well.  But now he's got cold feet over it, it's not investors responsibility to incur significant (for many, compared to investment) costs to cover HIS ass.  Same as it's not HIS responsibility to incur costs sending THEM every bit of paper and jumping through every hoop that they ask for.

Dividends are only divided amongst outstanding shares - they don't go to any held in the issuer's account.  If you hold shares personally then you need to make a second account and transfer them to it.  Don't forget to put any shares for unclaimed shares into a seperate account as well - so their share of dividends is properly calculated and reserved.

If the face value of it is going to steadily drop then it's not a bond and shouldn't market itself as one.  IF mining actually is profitable (and that's arguable - depending on costs/equipment used) then it's entirely possible to run a bond with a fixed face value, redemption allowed at will and that pays a dividend.  Just the dividend would be rather low as most mined coins would have to be reinvested.  Fixed-rate bonds were just (in the main) a way to generate a loss for investors whilst lining the pockets of asset issuers.  Similarly most mining shares are also terrible investments - due to wnting to take a fee on turnover rather than on profit: giving operator near guaranteed profit and no risk whilst investors take the majority of risk for a pretty tiny share of profits (if any).

Asset issuers need to focus on making a profit for investors - not just on paying dividends (whilst underlieing asset value drops at a faster rate) and taking fees for themselves.  Prove that investors will make a profit from whatever you offer and I'm sure you'll get moderator approval.  Try the old "Give me money so I can buy mining gear then I'll take X% of what's mined and you get whatever's left and hopefully it won't be too big a loss for you" and you may not find it so easy to get approval.

Remember that if the contract is totally cancelled then the amount refunded is issue price LESS all dividends paid to date (the dividends have to be cancelled as well) - as ALL transactions have to be reversed.  If mining gear depreciation has outpaced generation of dividends then it was a shitty investment in the first place (as by definition that means investors have made a loss).  It's not like block-reward halving, steadily increasing difficulty or technological advances were somehow unexpected is it?  I somehow can't see Giga claiming that he either totally failed to understand basic issues about mining OR intentionally sold an investment he expected to make a loss for investors.  So how could he claim that somehow at this juncture reversing contracts isn't financially possible - as surely that lets him keep all the profit made from investments that are now refunded at IPO price - total dividends?

Even if that theory is true it doesn't of itself make it a scam.  It would only have been a scam if the contract wasn't honoured - e.g. if the contract stated the Giga bonds had to be kept (rather than just paying out to mirror the performance of actual bonds).  It'd be like running a fixed-rate mining bond without actual hardware - same benefit (a loss) for investors and less hassle/similar profit for the operator.  Nothing intrinsically scammy about it - obviously then stopping paying dividends/deleting the asset data is a different issue: as that implies actual possession of the Giga bonds (as if they'd been shorted and the contract was for "benefits equivalent to" rather than "benefits from" then there'd be no reason to stop paying if GLBSE got closed, giga got adbucted by aliens or whatever).

Well I could be wrong on it - but I had the impression that there was some issue with listing on GLBSE and at least some contracts were issued directly.  Even after it was listed on GLBSE some contracts were entered into directly with other parties rather than through the market (e.g. the one for the MP pass-through).

It's still not particularly relevant anyway - Giga chose the payment processor and so had the responsibility to ensure they met whatever requirements HE had for them to be legal in his jurisdiction.  If he's now saying he needs that information to take on the role of payment processor himself then he needs to be offering an equitable choice for those who don't want to meet the associated costs.  Or if he's saying he's obliged to obtain that information (by law or regulation) to even recognise a contract with the other party then he needs to be cancelling and refunding on contracts where it isn't provided.  If provision of the information is a pre-condition for the contract to be legally binding then in the absence of such information the contract has to be annulled and all payments already made in respect of it reversed.

Or do you seriously believe there's a case to be made that Giga wasn't the senior party in the contract?

EDIT:  Just scanned first pages of thread.  Seems like vast majority of first batch were sold by private arrangement rather then through the market.  Those were done by transfer - where GLBSE were not an intermediary between two unknown parties and were just acting as record-keepers.  Clearly Giga had the ability to request whatever information he needed from those purchasers - and ensure they met any limitations he faced on who he could enter an arrangement with.  Plus any requirement (legal/regulatory) on him to obtain such information would also compel him to ensure that any third-party he chose to act on his behalf met the same requirements anyway - as irrespective of who processed payments his obligations were still to (and in respect of) the beneficiary owners of the contracts.

Not sure this is at all relevant.  My understanding is that Giga initially issued the bonds/contracts OFF of GLBSE - only moving to GLBSE some time later.  He didn't require the information now requested initially - so GLBSE is, in that respect, totally a red herring.

Where you appear to be getting confused is in mixing up what was/is required of Giga to be legal where he is and what was/is required of investors to comply with whatever rules apply to them.  IF the scenario is that the information required by Giga is absolutely essential for him to have (debatable - but that's really for him to decide) AND that the cost of providing such information is disproportionately burdensome on investors (which it clearly is for anyone whose investment is worth less than the cost of obtaining an Apostille) then the standard remedy is to null the contract - reversing all payments made by both parties as though the contract were never entered into.

That is also the standard procedure in the UK (where I am) if someone sends funds to a regulated company then is unable or unwilling to provide personal identity information.  It's also standard in other countries - e.g. in India where Dishwara is from (Their Supreme Court or equivalent ruled that even banks can't freeze funds if someone won't provide ID - the banks either have to allow the account to continue to operate or close the account and refund everything in it).

If one party to a contract has onerous/costly requirements and expects that cost to be met by the other party then it's THEIR responsibility to disclose that at the start.  It's not the other party's obligation to try to guess what they're likely to need in the future when even the country in which the service operates hasn't been disclosed.  Your position (and that of Giga's) appears to be along the lines of:

"Sorry but I've now found out you have to incur a $100 cost to claim the $10 worth of benefit due to you from the contract we agreed.  You either have to pay that $100 or let me dispose of the $10 in some undefined way which won't benefit you."

That's totally against commonsense, decency and established practice.  And also specifically against the law/relevant regulations in at least some countries.  A proper position would be:

"Sorry but I've now found out you have to incur a $100 cost to claim the $10 worth of benefit due to you from the contract we agreed.  Either I'll refund the $100 costs you incur or we'll have to annull the contract as though it never happened and I'll refund the moneys paid to me less those returned to you already in the form of dividends."

Obviously cancelling the contract would mean investors would lose out on all the massive profit they would otherwise make from this investment - but I'm sure that's preferable to getting nothing.

It's HIS responsibility to ensure that he fulfilled whatever legal/statutory/regulatory demands are on him - not the responsibility of his investors.  Had he initially disclosed that he was in the US and was supposed to obtain such information (but wasn't doing so) then the situation would be somewhat different.  His mistake - he should pay for it one way or another basically.

I have an amusing theory.  Only a theory, but one consistent with the known facts.

MP doesn't own any Giga bonds.

Let's look at the known facts:

MP bought a bunch of Giga
MP ran a pass-through based on those bonds
MP was apparently not making any profit from those bonds (claimed by MPOE-PR) other than any extra custom it brought in MPEX' direction.
MP had a very low opinion of securitiess on GLBSE and of GLBSE itself - and actively sought opportunities to short them.

So isn't the obvious scenario that those giga bonds were sold on the market and the pass-through effectively acted as a short on them with the following benefits over a 'normal' short:

No expiry date or means for the short to be recalled/expired.
No premium paid on dividends or up-front.

With the upgrade pending to teramining there was no conceivable way this could fail to profitable - as the pass-through obviously wouldn't upgrade and then the bonds would sink to near zero value (and cost to mantain) and could be bought back on the market at bargain-basement prices and the issue closed out.

Only way this could possibly go wrong is if for some unforeseen reason there was suddenly a requirement to prove ownership.  And that's what just happened.

There's no way to PROVE this is what happened if MP claims he hasn't even registered a claim with GLBSE - that is until the total bonds claimed gets so near to the actual outstanding ones that there's no longer enough unclaimed yet to cover the ones supposedly held by MPEX.

Using the pass-through as a means to short makes a lot of sense.  It's consistent with all the known facts.  But is it the truth?  I don't know - but it's an amusing theory if nothing else.  And of course it's very easy to disprove (if untrue) - just needs MP to submit an email/BTC address to GLBSE and have Giga confirm that the correct number of bonds is associated with that address.

Well there's actually an interesting point raised there.

In some countries (I don't know the situation in the US) certain types of business have to collect personal ID to do business with someone.  The UK (where I live) is one such country.  IF the person refuses or is unable to provide the ID then the company is not allowed to do business with them and has to return any funds they've received (exception being if the company believes the individual may be involved in money-laundering, terrorism etc when they have to file an SAR and hold the funds until either a deadline passes or they're instructed how to proceed).  There's zero option of "we'll just keep the money" or "we already used it" or "we'll give it to charity".

Certainly in the UK if giga NEEDED that information for legal/regulatory reasons but didn't bother collecting the info when he received the funds then he'd have to just return the funds if you were unable/unwilling to provide the information (which would be what you paid for the bonds less any dividends received).  His alternative here to returning it would be to file an SAR (Supicious Activity Report) with whoever his regulatory aithority was (which depends on type of business - e.g. FSA for most financial servie providers, Gaming Commission for casinos etc).

Additionally if in a regulated business then there's whole ton of hoops to jump through to be able to even collect the information - being registered for that specific type of business, having a formal policy on handling the data, liability insurance against loss/theft/misuse of the data, having an individual appointed in charge of the data etc (in fact two different individuals - one for data protection issues, one for KYC/AML requirements).

Now it could be very different in the US - but somehow I doubt it.  If anything, the US is usually even more anal about the hoops companies have to jump through to do things.

Also in the UK it's mandatory to disclose in advance of entering any agreement if:

1.  ID will be required (you also are supposed to provide your policy for complying with data-protection requirements, disclose what the info will be used for, how long it will be kept for etc.).
2.  The agreement is being offered on behalf of a limited-liability entity.

As giga's lawyer said : "and, in fact, the information requested is no more detailed or onerous than what is generally required to open a brokerage or bank account."

Indeed - TO OPEN.  Not requested many months later under threat of withholding your funds if you don't comply.  The argument that everyone knew ID was needed is clearly junk (if ever raised) for a few reasons:

1.  Not everyone lives in the US.  We have no idea what threshholds there are there for requiring ID.
2.  Simple common-sense.  Many people hold small numbers of bonds whose value is less than the cost of obtaining apostille.  Pretty obviously they had no expectation or belief that this level of ID would be required.

If anyone actually wants to complain, best bet is probably NOT the SEC or whatever - first place to start is his local Trading Standards or similar (no idea what they're called in the US): with the complaint being that he took funds and is now requesting that you complete ID procedures costing more than the total value of the transaction and refusing to return your funds if you won't comply.  They'll then forward the complaint to whatever body is best placed to deal with it.

Now that nefario seems to have got a proper grip on sending out lists there seems no reasonable basis to claim that the ID is needed to identify the owners of assets.  Giga trusted nefario to handle who held what bonds when he listed on GLBSE - and to date there's been no evidence suggesting the lists contain false claims.  Which leaves just the "comply with laws" issue - where giga's definitely in the wrong if he believes it's fine to suddenly ask for ID AFTER accepting and using funds.   But please - someone who knows how this works in the US correct me if it's fine there to take money in return for consideration, use it and/or then dispose of it in some manner other than returning it ALL to sender (or file an individual report with LE/regulators) if you subsequently request ID and they refuse to provide it.

If he doesn't sell the gear and return it to investors (or hold it in trust for them until he gets a list from nefario) then it most definitely IS a scam.  Like you I doubt very much he started this with the intent to scam - but if he runs off with the funds then it's still just as much a scam as if he'd intended to do that from day one.

Wouldn't surprise me if (as I believe to be the case with a few other mining operators) he'd spent the mined BTC and then suddenly faced having to find it when the list landed in his mail-box.

If there's enough liquidity in the market to value that way, then yes - it ceases to be an issue, though you still end up booking a realised loss on the sold security if you work our purchase price based on last X rather than re-averaging permanently after each purchase.  My example was primarily showing how using the current built-in system (average cost to buy) to value fails.

Problem with using Bid is that quite often the high bid is just for a single unit - and often significantly above next highest.  Those are generally placed by sellers hoping someone will outbid that they can sell into - a cheap way to make the going rate look higher than it really is.  And the opposite also applies - that after someone sells off in a rush it can take a while before realistic new bids get placed.

With any luck volume will pick up - which coupled with the ability to leverage funds in account across multiple assets should lead to more respectable liquidity and the ability to more reasonably value from market.

Basically no change in last day.  Been quietest day I can remember on LTC-GLOBAL - only 3 securities have any trade at all in last 24 hours (and 2 of those it's just a 1 unit sell to make last traded price high).

It's not implemented.  And it would be hard to do anyway - as how do you value current holdings when most assets have a wide spread and low traded volume.  There can easily be 25% difference between valuing at highest Bid and valuing at 7-day average (much more in some cases).

Once you get to the stage of having to manually enter values for each asset you hold then you may just as well do it in a spreadsheet in the first place.

Note also that the way in which purchase cost is calculated (if you have X of share then it's average price you bought last X of them at) can lead to some behaviour which could confuse those who don't fully understand it.  Here's an example.

For a given asset you buy 4 units in this order:

1 at 9.0
3 at 7.0

So you now hold 4 - which will show as having a total purchase cost of 30 and an average cost of 7.5.
Assuming you have no cash left your portfolio is now valued at 30.

Now you sell one unit at 8.0 - making a profit right?

Well not accoridng to your asset lists:)

You now hold 3 that were bought at 7.0 - total value 21.  And have 8 cash.  So your portfolio now has a value of 29.  Selling at above average purchase cost made you a loss of 1.  WTF?

That sort of thing can catch people out - and is why any profit/loss tracking implementation needs to be very clear on how it functions, when prices are averaged etc.

To get a more consistent valuation what you should do is every time you buy shares, use the self-transfer thing to reset all of them to their average value - then you'd end up holding 3 units worth 7.5 + 8.0 cash for a total valuation of 30.5 after the trade in the example above.

Another dumb thing I see people (some fund managers especially) do is buy stuff via a bid, value it at mid-range or 7 day average and claim they just made a profit by buying it.  Well no - you haven't made a profit until you can find someone to buy it for more than you just paid.  Sometimes you WILL make a profit from it - other times the reason your bid got filled is because the price is about to collapse once whoever just sold to you has sold all theirs (or all bar enough to take the price back down) and removed their fake bid that you overbid (and all the ones below it making it look like demand), leaving a bottom-less chasm below the point you just bought at.

Personally I only value what I hold for my fund two ways:

1.  What I paid for it (if above highest bid and below lowest Ask),
2.  Highest non-trivial quantity bid (i.e. ignoring 1 unit bids put there to try to get over-bidders to sell to).

In illiquid markets valuing any more optimistically has more to do with wishful thinking than with calculating profit.  Profit is what you can actually realise - not what you'd like to hope you'll be able to make at some point in the future.

All of which is to say that it just isn't easy to calculate profit on current holdings - and anything other than a very thorough approach to it is likely to do more harm than good.  This is because people have a tendency to give too muc credibilitydue to official-looking numbers and treat them as some sort of hard fact - when in fact any such 'profit' figure would be a horribly crude estimate which made no sense without a proper understanding of all the assumption which went into its calculation.  You'd learn far more - and have a much better understanding of where your portfolio really stood - if you did it a spreadsheet or whatever yourself and then had to define the actual assumptions/aproximations yourself, ensuring you were aware of them and the massive extent to which they effected the actual final number calculated.

Not entirely happy with this for two reasons:

1.  I don't recall ever seeing any mention that our dividends could be used to pay off other investors or that our bonds were somehow junior to other bonds.  But then I thought htis was a fixed-rate bond - not one where dividends could just be stopped (as you said you were going to) if you didn't want to keep mining any more.  To be clear - you CAN'T make a deal with one set of bond-holders that removes rights from other bond-holders.  That deal has to already be in place when bonds are sold (and the junior nature of them stated in contract) or agreed by ALL parties (not just the ones getting preferential treatment) and contract amended so subsequent purchasers know they only get the leftovers after paying some senior bond-holders..  Otherwise no bond would be worth anything - as issuer could just sell 1 bond to a friend, give them first right to all dividends and noone else gets a penny.

2.  If the bonds are getting listed on Cryptostocks then it's pretty important to get dividends to same state on all of them.  There's no discrimination in the software between bonds that have been paid dividends and ones that haven't - so as soon as people start trading you'll have no way to know who is owed what.  This may be covered if you haven't yet isuued bonds on crypto to the 85% - if you have then you'll need to recall them or you won't be able to pay dividends through the system.

I just hope the coming announcement doesn't end up being a choice between buying a new bond/upgrade or getting nothing for the foreseeable future.

Oh - and just looked at contract in OP it says:

    A total of 200Gh/s offered in 2Mh/s increments
    Weekly payouts are 105% of PPS
    PPS means no variance
    Perpetual - no expiration date
    Buyback provision at 110% of 15 day GLBSE average

I'm not seeing the "and I can stop mining and pay nothing if I feel like it" clause.  Though obviously ongoing dividends would be much smaller due to block-reward halving.