If a government authority is the cause of this, then Nefario has not disclosed that to the shareholders or other people with whom he's spoken.  From what people have posted regarding their conversations with him, it seems far more likely that he got spooked when he finally consulted an actual lawyer about "legitimising" GLBSE on Wednesday and learned that all of his "but Bitcoin" claims of GLBSE's activities not being illegal were actually wrong.

Interestingly, despite his claims that GLBSE was doing nothing wrong, the very fact that he spoke in terms of "legitimising" it is an admission that he knew it was not operating legitimately and any competent lawyer would wipe the floor with him over that.

It's extremely unlikely that any government regulator would go after Nefario alone in relation to GLBSE's activities - it's not a sole proprietorship entity.

Fuck me drunk.  What the hell is with all of these Bitcoin enterprises which are handling hundreds of thousand of dollars worth of other people funds not even having a lawyer or an accountant?  Tell the shareholders and Nefario that you want an instrument drawn up by an actual lawyer which indemnifies you against any liability for losses suffered by users/issuers as a result of you handing over the funds.  If they're going to pay for Nefario's legal costs, then they can pay for a lawyer to draft an indemnity, too.  You have as much right to protect yourself legally as Nefario does.

Like Fox Mulder, they want to believe.  If reality is different from what they want to believe, then all of their dreams of easily gained wealth go down the toilet.

That would actually have been the smart way to do it but if this had been planned there shouldn't have been any sudden closure - it should have been advertised well in advance and processes already in place for returning BTC and users dealing directly with issuers.

It's also possible that Nefario needs serious financial backers to open a legitimate exchange and knows that the current shareholders would never have approved those people buying into GBLSE (theymos mentioned that Nefario planned to issue more shares - which would have diluted the value of existing stock - but the bylaws required new investors to be approved by the existing shareholders).  He can now launch a new exchange with the backers of his choosing (although I think he's naive enough to get eaten alive by VCs).


By "accountant", do you mean someone with an actual accounting qualification and accounting practice who has been engaged by BG in a professional capacity?  If so, then hand the funds over - if they're mishandled by a licensed professional then people have recourse through professional indemnity insurance.

There is no evidence whatsoever that anyone "went after" Nefario.  From the conversations with Nefario which have been posted so far, it appears that his decision to shut down was precipitated by a meeting with his lawyer where he finally realised that all the nonsense he'd been sprouting about his service having some kind of magical legal immunity because ...Bitcoins... was total bullshit.  He's not some kind of martyr who's being persecuted, he's just someone who was arrogant enough to launch his service without first gathering factual information about the risks involved.  Now that he finally has that information, he's decided those risks aren't acceptable to him.

This is just as true of those who hold equity in GLBSE - you all took the risks you took knowingly.

Nefario referred to threads in which "disaster plans" were posted.  Do you know which threads he was talking about?  Do you know why the possibility of sudden shut-down for legal reasons wasn't one of the things for which GLBSE had contingency plans given that it was a known risk?

Despite being online 9 hours ago, usagi hasn't posted for 36 hours.  That must be a record for him/her. 

In fact the site doesn't say that people will need to provide their username, email and BTC address in order to receive their BTC back - it says that's what's required to continue their relationship with their asset issuer.  Someone really needs to update the site so that there is no ambiguity about what's required of users.  Nefario knew this was going to happen at least a few days ago so he should have had everything ready to go immediately after the shareholders' meeting.

It was stated in one of the other threads that most of the asset issuers have already been contacted.  Presumably, each of them will now have to think about "what next" and it's reasonable to assume that they'll make public statements once they've decided where they're going from here.  Every single one of them should have had a contingency plan for this possibility, so hopefully those public statements won't be long in coming.

If nothing else, this debacle is going to reveal the true level of competence of the people who issued the assets.

Nefario really needs to put up an announcement about where people should submit their information to, exactly what information is required, and when they should start submitting their information.  He should also outline the timeline for him getting that information to asset issuers - is he going to forward it as it comes in, submit it to them in weekly batches, or what?

As Nefario appears to have abandoned Bitcointalk, the shareholders who voted for this action should be keeping the forum fully informed about next steps.

Not to mention that most places require AML/CTF/KYC information to be kept for between 5 and 7 years, so even if the entity which collected it goes out of business during that time (highly likely in the case of most Bitcoin ventures) they must still retain that information - how securely they'll store it if they've gone out of business is an interesting question.

Nope, just a lot of experience with how incredibly stupid human beings become in pursuit of money (419 scams, anyone).  While there are a fair number of ideological purists here and people trying to build legitimate, fully legal Bitcoin enterprises, just as surely as the nature of Bitcoin makes it a magnet for scammers it's also going to attract its fair share of bottom-feeders.

It's a mistake to assume that everyone who participates in Bitcoin actually cares about Bitcoin in and of itself.  For many, it's either just another way to make money scamming people or just another tool to facilitate already criminal activity.  SR prohibits the advertising of certain products/services precisely because they're realistic enough to know that people would use SR (and by extension BTC) to purchase them if they were advertised there.

This actually applies to a lot of Bitcoin ventures offering financial products/services, not just GBLSE.

I think that many people on here are actively seeking illegal investments rather than believing that the schemes offered here are in any way legitimate.  Perhaps they believe that there's less risk of being caught if their illegal activity takes place online or perhaps they don't have the real world connections to participate in high return illegal activity, but people were perfectly happy to keep throwing BTC at pirate when it was believed he was using them to launder money for unsavoury clients.  I have no doubt that if someone offered shares in a child porn distribution ring or a cocaine cartel on here there'd be users scrambling to get in on the action.

And in many countries you'll be paying a goods and services tax (or some other kind sales/transaction) tax each time you buy or sell gold as well as tax on any increase in its value between purchase and sale.  And even if the gold itself isn't subject to any taxes, if you make something out of it and sell that product a value added or sales tax of some kind is often applied.

The manner in which something is being used often determines its taxation liability.  I don't pay tax on money per se, but I do pay tax on money I receive as income (although not on money I receive as gifts or windfalls).  I pay tax on certain types of financial transactions.  If I trade currency, then I'll have a taxation liability in respect of that trading.  "Money" per se isn't taxable where I live, but many of its uses are - although those taxes are often invisible because they're included in the cost of goods and services.


Nope, but by lodging a tax return and paying tax on illegal activity there's one less thing with which you can be charged if you eventually get caught.  Taxation laws have brought a lot of illegal businesses undone.  I know there've been cases here where drug dealers have tried to claim the theft of their product as a tax deduction - I'll see if I can hunt them up.


I think this is common everywhere, as is being paid cash off the books as an employee.  If you get caught, you're likely to be prosecuted though.  A massive amount of people who get caught for tax evasion get caught as the result of tip-offs from people they've pissed off (about 60%, according to my daughter who used to work for the Taxation Office).  If you're going to participate in tax evasion at any level, try not to piss anyone off.

That's kind of what I suspected - that when he consulted an actual lawyer he found out that "because...Bitcoin" and being outside of the US did not insulate him from possible prosecution for AML/CTF and taxation/securities violations, despite what he'd so confidently claimed on here previously.

In future, when people offering financial services on this forum make such claims users should demand to see written legal opinions supporting those claims.  If the offerer can't provide them, it's reasonable to assume that they haven't sought any legal advice whatsoever and are just dribbling bullshit.

Then you should be able to tell us whether or not he's shut down GBLSE in response to an immediate threat of prosecution by a regulatory authority or whether it's simply a pre-emptive move because consulting a lawyer about "legitimising" GBLSE made him aware of the enormity of the risks he was taking by facilitating anonymous trading of unregistered securities.

There is simply no excuse for him not providing this information to shareholders, even if you believe that issuers and users aren't entitled to that information.  If he's not providing that information because he's been advised not to by his lawyer, then he needs to state that.  If he says nothing, people are going to assume that GBSLE is under active investigation and that Nefario is co-operating with the authorities by helping them to obtain evidence which may be used to prosecute the issuers of unregistered securities (and possibly their users).  If GBLSE is under active investigation,  issuers can be expected to throw Nefario under a bus and claim that they relied on his assurances that their assets were legal because the exchange was operated outside of the US and ...Bitcoin.

At this point, it does matter whether the closure of GBLSE was pre-emptive or not.  People are going to assume the worst if it's not clarified and it's reasonable for them to do so. 

FATF has 34 member nations which have agreed to adopt its 40+9 AML/CTF recommendations.  There are also regional bodies which address AML/CTF issues, memorandums of understanding between nations, and provisions which get snuck into trade agreements without anyone noticing (the US is notorious for doing this as a means of getting other nations to adopt its IP laws without actually passing unpopular legislation to do so).

Financial services are even more tightly regulated in some other places than they are in the US, so people really,really need to be aware of their local laws instead of just assuming "I'm fine because I'm not in the US".

It's honestly pretty useless to simply quote legislation.  What really matters is the case law - ie, how that legislation has been interpreted by courts in the past.  It's further complicated by the fact that many cases involving violation of financial services regulations don't even get to court.  Service providers agree to civil forfeiture in return for not being prosecuted - this is not surprising as not only is the cost of defending against prosecutions significant, the maximum penalties which a court could impose are staggering (literally in the millions per offence).

Can you, or one of the shareholders, clarify something for the rest of us?

"Risks jail time for funding terrorism, money laundering, etc" could mean that in the process of looking to legitimise GBLSE (and the fact that Nefario has openly posted that intention here implies that he knew GBLSE was not operating legitimately), his lawyer has become aware of how GBLSE was operating and said "holy fuck, close that shit down right now because you're violating AML/CTF laws all over the place and if the authorities find out what you've been doing you could go to jail - and make sure you get user information so that if this blows up at a later date you've covered your ass a bit".

Another option is that the authorities have become aware of GBLSE's activities and directed him to shut down GBLSE or face prosecution.

It's not clear from what's been posted by those who've had contact with Nefario whether the authorities have anything to do with this decision or whether it's a pre-emptive move which came about because when he finally consulted a lawyer about GBLSE, the reality of what he was doing and the risks he was taking finally sunk in for Nefario.  Can you shed any light at all on this?

It has nothing to do with ensuring that funds are returned to whoever deposited them.  It has everything to do with knowing who receives those funds.  In taking those funds without at least minimal KYC information from users, GBLSE was allowing and encouraging people to bypass AML/CTF requirements.  Returning those funds to users without gathering at least a minimum amount of information to show where those funds have been disbursed to would only compound any offences GBLSE has already committed.


The obligation is on the providers of financial services/products.  Yes, you can be charged if you're using GBLSE to launder money, evade tax or finance terrorism but in general the user/purchaser of a financial service/product doesn't have AML/CTF/KYC requirements.  Of course if the operators have publicly made statements making clear that they're in some way operating illegally and you choose to deal with them with that knowledge, you may be leaving yourself open to charges.