My apologies.  I presumed that you must have some personal interest given the amount of effort you've put into trying to mediate this clusterfuck.  Although given that you have put in that effort and continue to do so, it would have been courteous of the parties involved to keep you informed of where things are at from a legal standpoint. 

I seriously doubt they'd meet the bar for being "racketeer influenced"  or a "corrupt organisation" as defined by RICO, although pirate might if he was providing large amounts of BTC to "shady" characters as he so often implied.  Then again, "organised crime" laws can be quite bizarre.  In my state, car "rebirthing" offences are regarded as "organised" crime even if they involve only one person and one car.  I personally know someone who was charged with car "rebirthing" offences for taking the compliance plates off a classic car they were restoring.  The charges were dismissed in court, but it cost them tens of thousands of dollars in legal fees.

I'd certainly hope that your lawyer is keeping you up to date on this.  Isn't there a case management conference set down for early next year?

It's probably exactly what will happen if people persuade Kim Dotcom to accept Bitcoin.  Be careful what you wish for people.

Tell  me what you believe your legal options are.  For a start, the amounts owed to most people would likely fall into the realm of small claims and small claims is an area which often requires the person making the claim to be present at the hearing.  It always requires you to prove your claim and often requires you to demonstrate that the person you're seeking judgement against has been given an opportunity to pay and didn't - ie, that payment is "overdue".  

If you're going to bypass small claims and try for individual lawsuits, then you're running into a real problem both with expense and with the court examining whether or not the activity in which people were engaging with GLBSE was legal.  As you can't file a lawsuit anonymously, you are tying yourself to an illegal activity in a legal forum in order to pursue an amount which is probably less than the fines you'd be facing for participating in that activity.  You'd be a fool to try to represent yourself in any such action, obviously, and international lawsuits are not cheap - you'd be looking at paying lawyers in at least two locations, and your cause of action is what?  That you lost money as a result of Nefario closing down an illegal enterprise?  Good luck with that argument.

Edit.  Just checked UK Civil Rules.  Here's what you're required to do prior to starting court action - including small claims action - against someone in England, Wales and Northern Island.  Annex A is especially important.

http://www.justice.gov.uk/courts/procedure-rules/civil/rules/pd_pre-action_conduct

No, if anyone is going to find offences which carry potential prison sentences (actual criminal prosecutions for AML type offences are pretty rare), it's the regulatory authorities.  Users can certainly go that route if they want to, but they need to do so mindful of the fact that they were participating in illegal activity themselves and weigh up whether it's worth the risk of finding their own financial dealings under scrutiny.

From the viewpoint of civil law, "clean hands" might be a sticking point.  If the user contracts with GLBSE and the asset issuers are illegal in and of themselves, then civil action to try to enforce them may well be futile.

Much as it pains me to agree with goat, I have reservations about the reasons why Nefario was given the scammer tag too.  It seems like he was given the tag primarily for personal reasons, just as theymos has said that he will not give the scammer tag to the Intersango guys because they're "good people".  If the scammer tag is to have any meaning whatsoever - and frankly, I think it's useless for anything except warning people against doing business with minor scammers like thebitbabe - then it can't be given or with-held based on whether the mods/admins like someone as a person.

"Asshole" might be a better tag for such people, and I nominate Patrick Strateman as the first candidate.

And because it's a "toy company", as Nefario described it, there was also apparently no prohibition on a partner voting on a matter where they have a conflict of interest.

Nobody said it worked like that.  I'm trying to get an idea of what percentage of shares are held by people who weren't at the meeting and didn't vote.  It is absolutely stock standard in legitimate companies that you can't even hold a vote unless the required number of people and/or percentage of shareholdings are present.  That's what a quorum is - the number of people/percentage of shareholdings required for the business of the meeting to be legally valid and it's generally higher for exceptional matters such as closing down a company, removing a CEO, sacking a board of directors, than it is for general business.  There's often a requirement that the quorum be present for the whole of the meeting, too.  In a legitimate company, Nefario wouldn't have even been able to vote on a motion to remove him as CEO because it would have been a clear conflict of interest and he would have been required to abstain from voting (although he would have been allowed to speak against the motion, as any member can in respect of any motion).

Hell, I actually do this with my conventional accounts as well.  I only transfer just enough to cover what I know will be going out when it's due to come out.  It only takes seconds to transfer more money into my "hot" account if I need it, so there's no reason to keep money in there "just in case".

What was the total percentage of shares held by all of those who participated in the meeting - not individually, but collectively?

Given that it was basically an exceptional general meeting agenda, I probably would have closed the meeting early on and called a formal exceptional general meeting and basically demanded that the absentees be present and vote or assign their proxies to others.  The attendance/percentage of shareholdings for a quorum to pass special resolutions is generally higher than that required to pass ordinary business, but in some ways it seems like this particular meeting was a bit of an ambush.

Nefario said he was most concerned about AML stuff, not about the legalities of selling unregulated securities to Americans.  If there's an investigation going on, it seems far more likely that it's a domestic one (which could have been precipitated by information shared by US investigators looking into pirate's ponzi).


At this point in time, so many Bitcoin services are complete clusterfucks that you'd never be sure whether it was a competitor or an angry user who reported you.  Every time a Bitcoin service fucks up spectacularly these days, I pretty much assume that a few of their users will report them to the authorities - and services themselves should probably work on that assumption too.

Cosby heroin stamps.

I would make that same assumption.  When lawyers "gag" their clients, they tend to tell those clients to refer people who want to know what's going on to them - then the lawyer gets to stonewall people, eliminating the risk of the client saying something stupid which will dig them into a deeper hole.

It's not that I don't believe a lawyer would tell Nefario to shut GLBSE down - there are a lot of Bitcoin services operating that are skating on very thin ice when it comes to compliance with financial laws and regulations, and judging by some of the comments in those minutes some of them have probably been reported to regulators by their competition - I don't, however, believe that he has received legal advice in anything other than a personal capacity and I'd be worried that he'll throw everyone else under a bus if that's what it takes to save his own ass.

Just over 40 coins returned so far. 

And no lawyer in a Commonwealth country is going to maintain that the absence of a written contract means that a partnership didn't exist.  There is clear evidence that the "shareholders" were not angel investors who had no role in the operations of GLBSE - some of them even performed the roles of office-bearers and it's apparent that they held regular meetings to discuss GLBSE issues.  

If a lawyer told Nefario to with-hold information from the co-owners (because that's what they are) of GLBSE, it's not because no written partnership agreement exists (the absence of written partnership agreements is common enough that legal systems have default ways of dissolving partnerships, and this particular one did have by-laws - signed or not), it's because Nefario consulted that lawyer as an individual rather than on behalf of GLBSE.

It's more than clear that the partners did regard it as a toy company and didn't seek legal advice before deciding to throw it together - nobody who's obtained competent legal advice is going to set up an enterprise in a manner which exposes them to unlimited personal liability - but that doesn't mean that no laws apply to it.


There are circumstances where you have a positive obligation to disclose material information and it's utter bullshit to pretend that an investigation into the operations of GLBSE - a business for which all of the partners are legally responsible - is not material information.  If Nefario was seeking legal advice on behalf of GLBSE rather than as an individual, you bet he had an obligation to disclose that material information to his co-owners - the business, and not Nefario personally, would be the client in that instance.  Likewise, a CEO of a real company seeking legal advice on behalf of the company could not with-hold that advice from the board of directors.

He has produced zero evidence of having consulted a lawyer and zero evidence of being advised to close down the business - which I've already pointed out that the lawyer could have given without disclosing the existence of any active investigation.  There is no way that if I'm seeking legal advice on behalf of a business - something I've done on many occasions - I am not going to get my lawyer to confirm that advice in writing 1) so there is no confusion about the advice when I relay it to others and 2) so that if it turns out to be unsound advice, I have evidence that we were badly advised.

The partners have indicated that BG doesn't have sufficient reserves to cover the whole amount which was double paid, and I think that we can safely assume that Nefario isn't going to cover anything out of his own pocket.

That might explain his attitude towards drug dealers, but it doesn't account for his hysteria over Cosby avatars.

All of that's fine if you're organising the recording of something yourself.  When you're invited to appear on someone else's turf, you don't usually get to call the shots regarding camera angles, lighting or anything else unless you're a mega-star.