1.  I would never buy a PUT option from the operator of a company because:
   a) There's asymmetrical information in their favour,
   b) If they scam the company they obviously won't honour the put call.

2.  Doubt very much puppet's plan is to short EVERY company - just the worst ones.

3.  Following on from 2., your company is one of the minority on GLBSE that has an A grade in my personal list.  Don't be TOO flattered by that - as I pretty much only day-trade and A grade just means that I believe the price is stable enough within a range that I feel comfortable leaving up bids overnight.  A B grade means I'll trade in it but not leave bids up whilst afk, below that means I won't trade it at all.  There's more securities with ratings below B in my list than As + Bs combined.

In short, yours isn't one of the securities I'd look to short - there's far better targets.

Puppet may, of course, have a different view.

Something I didn't make clear in my original post:

If you check out the two listed BTC addresses You'll find:

BMF paid 4 weeks cover up front (by the end of which it's NAV had plummeted again).  There's then more 5 BTC payments which don't have the .00000012 on the end that they should have (no biggies as usagi obviously knows who they were from).  And no payments from BMF since 9th September - so it seems BMF has also defaulted on the contract now.  Of course the payments COULD be being made in other ways - non transparent ones.  As neither BMF or CPA accounts for actual transactions (just a fairy-tale valuation) there's no way to know.

And there's no payments made out to the claims address at all (so it's not just a case of "I sent it but forgot to mention it in the thread").  Of course usagi COULD claim that insurance claims were made and paid - just never mentioned (and not done in the defined transparent method) but with no rise in BMF's valuation I can't see anyone actually believing that lie.

usagi has consistently refused to answer questions about what the insurance policy covered and why there was no claim on it - in the BMF thread, in the CPA thread and now here.  Not even the usual spin attempts given on valuation questions.  The reason why is obvious - there's no explanation it can give which would be at all credible.  I half expect to see the contract vanish from its website to be honest - though wondering just what usagi could replace it with that would be at all credible.

My post did NOT accuse you accuse you of being a scammer (though I HAVE posted one that does in teh scammers forum).  You appear to misunderstand what "scamming" is.

"Do not post scammer accusations here (ex. that usagi is misrepresenting the value of his companies" tries to link two things that are not necessarily related.

1.  The accusation that you are scamming.
2.  That you misvalue your companies.

2. can occur without 1. being the case.  I did NOT accuse you of scamming by misvaluing your company.  I pointed out how you'd made a MISTAKE in a valuation.  A mistake is NOT a scam - it's just something unfrotunate that happens when someone tries to do something they aren't very competent at.  Being incompetent does not make you a scammer.

If you don't want any criticism at all then SAY so in your local rules - rather than trying to make ALL criticism into "you're accusing me of scamming".  I've no idea whether an unlocked topic CAN have local rules of "Don't disagree with me or point out where I'm wrong" - but if you actually SAY that in your local rules I'll check the site rules out before responding.

Until then: Nothing I have (or will) post in this thread is an accusation of scamming.  I don't care what examples you give of scamming as I already KNOW what scamming means and incompetence isn't a subset of it (which isn't, of course, to say that an incompetent individual is precluded from being a scammer as well).

Mods feel free to correct me if I'm wrong and I'll delete my posts from this thread.

I'm interested - but I think that the problem will be trying to find investors willing to loan their shares so as to short.

The problem is three-fold:

1.  You have to convince them that the deal is safe enough for them to take part in it.
2.  They believe you're wrong in shorting (or they'd sell the shares not loan them) and so they'll strongly believe it to be a scam.
3.  When you offer to borrow their shares to short (AND pay them for the privilege) the (luckily few) smart ones may look again at the share, realise why it's an obvious short and sell it rather than lend it.

Unlike most 'businesses' on here I can actually see profit potential in this one.

1.  INSURANCE AGAINST WHAT?

A brief time-line for BMF - an investment company (mis)managed by usagi.  This is relevant to set the scene.  All quotes here (other than when identified otherwise) come from the BMT thread at https://bitcointalk.org/index.php?topic=81993.0

May 16th - the fund starts.  The OP includes amongst its various points:


Obviously usagi then went and did precisely what it had said it wouldn't do - that was just incompetence (and overestimating its own ability) not scamming in my opinion.  The share IPOed at 1 BTC per share.

A bit over a month later the value of shares in BMF had dropped by around one third.


But good news - within less than a month the NAV of BMF shares had allegedly been nearly repaired (I have no knowledge of whether it genuinely had grown back or was the result of creative accounting).


usagi then signed an insurance contract with CPA - to insure against NAV loss.  usagi also runs CPA - which is pretty much a black box (or even a black-hole).  usagi was thus representing both BMF and CPA when agreeing the contract.  Here is the first mention of it in BMF's thread:


It's clear from the post that usagi was confident nav was about to reach 1.0 again - and was taking out insurance to ensure it couldn't fall below 1.0 again.  Note also that there was no earlier mention of this contract, no share-holder vote on it and no explanation in any detail of what the contract contained.

 I quote below the text of the contract:

"A. NAV Insurance Contract
1. BMF ("the customer") will be indemnified (by CPA) against loss defined
   as a NAV (Net Asset Value) of less than 1 per unit.
2. CPA will not be liable for loss greater than 500 bitcoins.
3. Multiple indemnification payments are allowed so far as the total amount
   does not exceed 500 bitcoins.
4. Neither party may cancel this contract although any party may choose to
   accelerate their obligation at any time.
5. All payments by either party must be tagged with .000012 to show that
   they belong to CPA Contract #12. Ex. a payment of 95 btc would be sent
   as 95.000012.

B. Payment of Premium
1. BMF will send 5 bitcoins per calendar week for 110 weeks to CPA at
   [1EGXZ8kPwEeomiepZwwZayZYdH5nQTkc1f] ("CPA Marked Deposit Address").
2. Any and all payments of 5 bitcoins sent to this address will satisfy
   BMF's obligation in this regard.
3. Payments made late (after the insured period begins) will be assigned
   a late fee of 10%.
4. Multiple payments may be sent at the same time provided the marker is
   not changed (i.e. 10.000012 for two weeks, 15.000012 for three weeks).

C. Indemnification
1. From time to time (and/or at the bequest of BMF), CPA will monitor
   BMF's NAV (Net Asset Value).
2. At that time, should BMF's NAV be less than one, CPA will transfer
   100 bitcoins to BMF at address [1N9xQivX5yEYXafjJfeQYtSiq1iT6h9sek]
   ("BMF Marked Deposit Address").

D. DISPUTE RESOLUTION
1. Any controversy or claim arising out of or relating to this contract, or
   the breach of this contract, shall be settled by binding internet
   arbitration at judge.me in accordance with the judge.me arbitration
   agreement. The arbitrator's decision shall be final and legally binding
   and judgment may be entered thereon.
2. The customer must indemnify (make whole) CPA's incurred legal fees if
   they lose their claim, limited to the amount required to be paid by CPA
   to judge.me.
3. All judge.me fees related to this contract must be paid in bitcoins."

Here's a summary of the key points:

1.  BMF is paying 5 BTC per week for 110 weeks - total premiums of 550 BTC.
2. BMF is insured against "loss defined as a NAV (Net Asset Value) of less than 1 per unit."
3.  The total which BMF can claim back is 500 BTC - but only in 100 BTC blocks (there's no mention of any qualifying period between successive claims).

It all seems very straightfroward.

But then towards the end of the month, Pirate defaults and share prices crash everywhere.  BMF loses a whole chunk of value and CPA, the insurers, have a major liquidity crisis - to the extent that usagi worried in a different thread that CPA may go to a NAV of zero.  CPA's liquidity issues were, of course, not the concern of BMF investors.  BMF would just have to wait in line with the other creditors to get paid out, right?  Well no - as usagi never claimed on the policy for BMF (and hasn't to this day).

On September 9th I made the following post in the thread:


My post was then quoted by someone else and usagi replied to them (but not to my question) as follows:


Now look at what usagi claims in response (to bitcoin.me, my question was ignored):

"This was announced, publicized, motioned, voted on and passed two months ago."

Oh really?  Where?  This is a blatant lie.  There is no publicity and no motion prior to the post announcing it as a done deal.

It is debatable whether the original contract was ever in the interests of BMF shareholders.  At a minimum, given that usagi was also wearing the hat of the other party (CPA) shareholders should have been given a proper explanation of what the contract meant for them and why it was good value to pay 550 BTC for 500 BTC of insurance cover.

It's not (in my view) debatable that failing to claim under the insurance (because CPA were short of cash) is defrauding and scamming the investors of BMF.  They paid for something - and usagi should have ensured they got that something (and is the only person in a position to honour that insurance).  Instead they're just paying 5 BTC a week to CPA for absolutely no gain.

It's absolutely clear from the contract and the context in which it was introduced to investors what this insurance was against.  Yet usagi has refused to ever claim on it.

My second point will have to be made later (hopefully today) as I have other things I need to tend to.

A lot of the accusations against usage relate to the valuation of its various companies (I'll use "its" for usagi as he/she has portayed himself/herself as being male and female at different times - and "its" is shorter than using his/her or he/she every time).  The problem with those accusation is that, whilst they may well have merit (I believe some do) they're largely subjective, are prone to honest mistakes and so difficult to support a scammer accusation with.

Instead I'll address two specific issues - both of which indicate that usagi intentionally acts against the interest of its share-holders in one company to assist a different company.

usagi runs a bunch of companies - most of which own shares in various other companies also run by usagi.  There's nothing intrinsically wrong with this - however it DOES lead to the following three things occurring:

1.  Because the companies' holdings of one another form a loop (company A holds company B which holds company C which company A's shares) any change to the valuation of one repeatedly feeds back through the loop - allowing very easy manipulation of company values.
2.  The cross-holdings in shares give usagi very heavy weight in any share-holder votes: way above the amount that would be due if the shares usagi voted on behalf of were all purchased with its own funds.
3.  usagi has different responsibilities to each set of investors.  usagi SHOULD be careful to avoid situations where there is a potential clash of interest.

I'm going to deal with two seperate incidents where there is a clear indication of usagi acting against the interest of one group of shareholders in favor of shareholders in a different company also managed by usagi.  In neither case is there any need to value shares.  In both instances, if I'm mistaken, usagi should have no problem easily demonstrating it.

I'll do each instance in a seperate post - bear in mind I'm typing it up as I go along, so don't expect another 2 posts immediately.

Right now LTC/BTC exchange ate is at about 0.00382 - but there's no volume either side for quite a way, so that's likely to vary a lot during the day.

Adjusted NAV/U is 10.1226 at that exchange rate.

Will be putting up Bids at 9.65 and Asks at 10.4 - the spread is wider than usual as the exchange rate is far from steady.  Rates will, of course, change throughout the day as the exchange rate moves and trading occurs.

It would only beolong in the Scam Accusations forum if I was accusing you of scamming.  That's not what I'm claiming.  But maybe we're talking at cross purposes.

If someone running a company is doing so badly do YOU believe that makes them a scammer?
If someone misrepresents (even through total ignorance rather than malice) a loss that heir company has made as a profit then do YOU believe that makes them a scammer?

I don't believe either of the above necessrily make someone a scammer (it's ONE explanation but the only one).  Sheer incompetence is a far more likely explanation.

Now if YOU believe that the two scenarios above are ones which would warrant a scammer tag then please say so.  I'd still disagree with you - but if YOU say that the only way YOU could end in either of those scenarios is if you were scamming then I'd have to agree that any such accusations should (and would) go in the Scam Accusations forum.

Until you make such a statement my position remains as it always has been - that you just aren't very good at what you do, other than at explaining it so badly (quite likely just from ignorance not malice) that potential investors are likely to be misled as to the value of investing in you.  And discussing whether or not investments are good value/well managed is EXACTLY what discussion in this forum is intended to be about.

If you just want to make announcements without criticism then post them on your website - not in a discussion forum.

Someone's been seriously buying up LTC - whether an attempt to manipulate the rate, laundering or what I don't know.  But there's essentially no volume at pressent from 0.0036 right up to well over 0.004.  If I had to estimate a current exchange it'd be about 0.004 - but it could end the night significantly either side of that.

There's no doubt that this will majorly reduce the value of LTC-ATF units (expressed in LTC) - as majority of funds/investments are in BTC or BTC denominated securities.

Assuming a rate of 0.004 then current NAV/U is 9.699 LTC.

To see how the exchange rate move (of over 10%) impacted NAV/U the NAV/U if rate was same as at start of day (0.00356) would have been 10.57888013.

Obviously not the start I wanted for the fund - but it was always an explicit risk of an LTC-denominated fund whose investments were mainly in BTC-denominated securities.  Whether the exhcange-rate rise sticks remains to be seen - but with the rate in flux as at present I can't leave a Bid-wall up overnight at any reasonable value.

An Ask is being left at 10.5 - that becomes good value if the rate returns to below 0.00365.

Yeah - it may seem counterintuitive, but having an ask-wall up all the time will sell less shares than only having it up occasionally.  I believe there's a few reasons for this:

1.  The huge wall looks insurmountable - it gives the impression that the company has run into a brick-wall.  If the potential invstor hasn't read the whole thread (and most don't - as evidenced by the total junk people invest in) then they may get the impression nothing will happen until all have sold.
2.  There's no urgency for potential investors to but with a huge wall - they know it'll still be there tomorrow/next week.
3.  The wall totally prevents investment for short-term speculation, immediately ruling out an entire class of investors.

You asked for any suggestions I had - so here gos.

First off, just resetting the price (as you propose) would have exactly the wrong result.  The price CAN'T go over 0.15 because of the ceiling - so what your proposal does is guarantee that the price of shares wll progressively fall.  That's not something your investors are going to like too much  - remember that a lowered price per share for further issues has a double-whammy effect on existing investors:

1.  It locks them into a loss on their share value.,
2.  For each new piece of equipment you buy more shares have to be sold (as the price/share is lower) - meaning their portion of dividends gets diluted more than hashing power increases.

What you need to do is give prices a chance to rise - and the key to that is patience.  So here's my suggestion (only a quick sketch of it - as it's 4.00am and I need to head to bed shortly):

Remove further new shares from the market other than sufficient to buy your next rig.  Once those have sold, no new ones will be made available immediately.

Let the price adjust itself.  If/when that price settles above 0.15 for some significant amount of time then announce that the next block of shares will be made available in a week (or whatever time-scale).  That block should be sufficient to buy your next rig (i.e. the cost of it less any portion of mining income reserved for expansion).  At the predefined time/date you sell that block into the market at 0.15.  Any pre-orders above .15 would of course get filled first.  That surplus above 0.15 could be put towards expansion or dividended out to all share-holders post-sale.

How does this help?

1.  The price can rise above 0.15.  That removes one of the current problems - tha tanyone buying shares KNOWS WITH CERTAINTY that if they ever need to liquidate (in the foreseeable future) they're guaranteed to take a loss doing it (not strictly true for those who bulk-purchased).
2.  A lot of investors like the possibility of buying shares in an IPO then selling them afterwards for a profit.  At present that's impossible.  This gives a window in which profts can be taken.
3.  If even a single share sells on issue at above 0.15 then existing investors have gained from it.  Rewarding your early investors is always a good idea.

In essence you need to reduce/regulate supply so the market can set a price.  If that price happens to be below 0.15 then the simple truth is that you wouldn't have sold much more even if you'd left the Ask-wall up.  Already I see some slightly lower asks going up - and that is BOUND to continue if things don't change: as there's nowhere someone who wants to sell can price an ask except below 0.15.  What about new investors who would have bought shares if you left the wall up?  They'd be buying off current investors at below 0.15 right now - with the wall gone (albeit temproarily) there's at least a cahnce those trades will occur above 0.15.  WHich doesn't directly help you sell MORE shares - but at a minimum is more encouraging for current investors.

Let the market show you whether/when there's demand for more shares at 0.15 (or above) - if you see the demand there then fill it.  If there's not the demand then the Ask-wall does nothing anyway.

That's an issue which (at root) is one of the big problems BTC faces in gaining wider acceptance - specifically:

1) Most physical assets owned by businesses (e.g. mining rigs) are valued in fiat - and will continue to be valued so whilst the materials and labour needed to make is valued in fiat.
2) Because of 1), the value of those assets (expressed in BTC) is going to vary as the BTC/fiat rate alters.

What this means is that to make profit in a market where BTC is gaining vs fiat (with investment and gains denominated in BTC) your business has to make a profit which exceeds the rate at which BTC climbs.  That's very hard to do.

But for a long-term mining operation that shoudn't be as disastrous as it seems.  In most businesses not only are the assets denominated in fiat - but the product is too: so not only are your assets losing value, so is the value (in BTC) of what you produce.  That's not the case in a mining operation - as what it produces is priced in BTC.

IMO mining operations should be planning from the start to write-off their equipment over a fixed period of time.  That period may vary from item to item - but the expected lifetime of various computer equipment isn't exactly a secret.  Ideally that period should be the warranty/guarantee period for the kit.  If, using sensible projections for difficulty increase/rewards halving, there's no way to make back the original investment before the gear gos out of warranty then there's an immediate red-flag for investors: there's a not insignifcant risk that they'll never make back their initial investment.  Add to that the need to generate some profit, cover the operator's fees and make additional funds to expand and/or be in position to replace equipment as it fails/is superceded.

And that last sentence is the key to why mining isn't necessarily doomed.  If BTC rises vs fiat then sure - your original equipment is losing value at a faster rate (in BTC).  But if X% of mined income is used for expansion then that X% buys MORE replacement equipment as a direct result of the exchange rate varying.

There's another point where many operators screw their investors (probably unintentionally).  That's by including (non-free) power as being covered by their portion of the take (usually with a clause that if it won't cover the costs they can take more or shut down the operation).  When BTC gains value vs fiat then the value of equipment falls - but so does the cost of operating the equipment (as power becomes cheaper expressed in BTC).  Operators with that sort of arrangement get to pocket those savings - whilst passing on all the losses (in the value of equipment) to their investors.

I'm gradually working on a model to allow me to properly assess the long-term viability of mining companies in various scenarios.  One thing I can say without needing a model is that it's scary how readily investors are buying operations where the hardware will only come with a 6 month warranty.  What precisely is the plan if the kit fails after 7 months?

On securities - BMF didn't start buying hardware until after the losses had occurred (well, no doubt there's still more losses happening - but the first big batch were before the change in plan to being a miner).

I've nothing against BAKEWELL - as you say it's transparent and the guy seems genuine.

However, YOU didn't pay .15 per share (at least not for most of your shares).  Private purchases get 110 shares for 15 BTC.

That works out at .... Wait for it ... 0.13636 per share.

So your case is that you buy the shares for 0.13636 and they then magically become worth 0.15?  I think not.  IF the IPO had sold out fast then you'd have a point - but it didn't and, as usual, you don't.

You COULD take an even more pessimistic view and include the additional shares he gets himself for free (i.e. work out the average price 'paid' per share including the ones he 'paid' nothing for).  That would be wrong of course - but so is taking the HIGHEST price (0.15) anyone paid for a share (when the majority sold for 9% less) and claiming that is somehow their 'value'.

The truth is that, when a company fails to sell out an IPO it's very hard to put a value on it.  The best you can say for SURE is that it's less than the IPO price (as all demand at that price has been fulfilled already - which is why it hasn't sold out).  I think Ian (and plenty of others) do themselves and their shareholders a disservice by starting off trying to issue too many shares.  Had he only initially issued enough shares for his first rig he'd have sold out already - and the market could begin trying to value his company.   Because he didn't do that, he's placed a ceiling on the price at 0.15 - meaning all remaining demand necessarily has to be below that.

Which would all be well and good IF your investors bought their shares with USD.

They didn't - so mostl of your post is totally irrelevant.  What about non-US investors?  Did they make a different profit/loss due to their currency not being pegged to the USD?

The profit/loss on a security is measured in the currency it's denominated in.  BTC in your case.  Not in whatever other currency you can find (after the fact) that happens to be able to make it look profitable.

Occasionally you might like to get eevn basic facts right.

Here's what Diablo himself said:

https://bitcointalk.org/index.php?topic=77469.msg1224420#msg1224420

"nefario emailed me and said my account is now unlocked and also the one guy that he found that would do the audit backed out."

No audit was ever actually carried out.

Turns out that whoever bought the handful of units up at 10.25 did well for themself.

LTC/BTC rate is now 0.00356

Adjusted NAV/U is now 10.3129

Adjusted NAV/U is the standard NAV/U modified to what it would actually be if my 10% management fee were deducted.  Bids/Asks are based around this - so anyone buying in doesn't pay for "profit" that wouldn't actually end up being theirs.  And also so anyone cashing out doesn't get to take profit that they wouldn't keep if they stayed in.  Management fee is NOT actually taken from the fund until the next report of course.  NAV/U before adjustment was 10.34772.

Bids will be put up at 10.15 and Asks at 10.36 (Adj NAV/U+0.5%) shortly after this post is made.  Those will be adjusted throughout the day as profit/loss and exchange-rate changes occur.

NAV/U at end of (my) trading today is 10.1112 LTC.

LTC/BTC Exchange rate is 0.00357

A small quantity of Asks will be left up overnight at 10.25 LTC and a small bid-wall at 9.7 LTC.  I do NOT recoomend buying into (or out of) the fund at those prices - but the option's there if you're desperate.  The reason why these values are significantly either side of NAV/U is so as to protect existing investors in case of a minor swing in the LTC/BTC exchange rate.  Whilst I'm online I regularly adjust the asks/bids - I cant do that whilst I'm asleep.

Exception to the above would be if the LTC/BTC exchange rate DOES move significantly - in which case buying or selling could make sense (which makes sense depends on which way the exchange-rate has moved).

30.75% of the fund is in LTC (or LTC-denominated securities), the other 69.25% in BTC (or BTC-denominated securities).  With those percentages and the NAV/U a bit of basic math will allow you to work out the current NAV/U at any exchange rate that transpires.

Throughout the day (when I'm online) I update asks/bids every hour or so - typically the Ask will be about 0.5-1% over NAV/U and the Bid 1-5% below NAV/U.  These spreads represent the costs involved in processing each type of action - and ensure existing investors dont lose any value when someone new invests or an existing investor divests themselves of their holding.

The small premium on asks reflects that there's a 0.2% fee to the fund for the sale plus a small cost in transferring the bulk of the funds across to BTC.  There's also a hidden cost to existing investors - that earnings on their working funds are being shared with the new investors whose capital is not yet in play.

The larger premium on bids reflects the fact that if a signficiant number of units are sold back then holdings may have to be liquidated to get the reserve 5% LTC back in place.

The degree of the spread is also determined by the current situation of the fund: if I have an immediate use for capital then the ask will tend to be lower and the bid significantly lower.  Conversely, if I have surplus liquid capital then the ask will be raised and bids made more attractive.  The spread will also tend to widen when the LTC/BTC exchange-rate looks volatile and tighten when there's significant walls on both sides of the current value.

On a final note (for today) if anyone at any point knows in advance that they will need to sell back their units at a particular time then feel free to let me know - and I can ensure I have funds available (even if it's over the 5% I'm committed to).  It makes my life easier - and in return I'd be able to buy back at 99% of NAV/U rather than anywhere in the 95-99% range you'd get trying to sell back to me through the exchange.