Branny is an operative of the Hong Kong holding company.  He isn't the one you bought shares from or whatever.  It's a different thing.  The company in Hong Kong is allowed to offer shares in their country this way. 

Note, that the SEC understands this as the company that is dealing directly with the payouts.  If Branny sends income to the Hong Kong holding company and they distribute to the share holders, then he is just their operative and this works fine.  If, however, Branny is the one distributing payouts than regardless of the Hong Kong company ownership he would fall into the legal quagmire that Ken found himself in with his company being registered in Belize.

They follow the money.  Where the money is being distributed is where the investment lives. 

  From what I read about IntelliHash, it just sounded like a plan to reduce the power usage of the chips as the difficulty increased vs the cost of operating the miner.  It might also reduce heat, reduce cooling needs, and make it more efficient to run.  This is possible.  Say it came out running at 1gh a chip but used 1500 watts.  The difficulty rises to a point where that is no longer profitable versus another ratio, so it cuts down to 500mh, but the wattage decreases more to like 600watts.  So you can run it longer at less power but also at less hash.  Or run it slower in a hotter environment to reduce cooling costs.

I know you can argue around this, such as only selling the chips at their optimal speeds and whatever, but people overclock miners all the time and eat the extra power costs for doing it.

Anyway, that's just how I understood it.  It sounds like someone else (not Ken) came up with the idea and then that guy quit and went on to join the team at Subway because they paid more.

This has gone a long way to distract everyone from the missing money in the accounts that were recently withdrawn as well as the condition of the website.  So some of this has worked well into Ken's favor.

Ken does not know what the deal is yet.  The MSD are waiting for their (Ken and his lawyer) idea of what it should be.  The MSD is likely to change it and submit their own plan and this will go back and forth for awhile.  Until the MSD accepts the deal and outlays that for everyone, a lot of what is happening with reimbursement is guessing.

Ken does not know what the fines will be.  He's guessing (or his lawyer is telling him) that the maximum fine is $100,000.  That is a guess based on a single infraction.  The MSD can fine him multiple times and even put him in jail if they want to.  Though they probably won't unless Ken fails to pay or tries to deceive them.  They can also charge him a lot less than $100,000.  It really depends on how they see it.

Keep in mind, this is a State investigation.  It does not clear Ken from a potential federal investigation which would be a lot worse.

The MSD said that Ken would not be allowed to sell shares.  Those of you with shares could end up with nothing.  If Ken deploys funds to your shares, such as a dividend payout, he will be in violation of his agreement with the MSD.  And he could face severe fines or jail time.

Your best bet is to get out.  

Honestly, Ken should liquidate the company.  There is no money left for anything.  Just sell off while the hardware can fetch a profit and distribute to shareholders.  

Liquidate.  

The Government doesn't recognize gold as a currency, you would have to refund people in cash.  For instance, in court cases that involve broken engagements, a court cannot force one party to return an engagement ring.  Instead the court fines that person in cash.  The courts deal with cash.  Property sometimes, but that is usually auctioned off for cash.  At no point does the court say, "You gave him a 1978 Jeep.  You need to return him a 1978 Jeep."   Never happens.  The refund will have to be in cash.

The law would not tell Ken to refund people in Bitcoin.  They don't recognize Bitcoin as a currency.  So the refunds would be in cash.  If you paid $140, he'll have to refund you $140.  Based on what you paid in cash is what you will get reimbursed.    

 

Last paragraph basically says that current investors can get reimbursed or stay in.  GOOD LUCK getting Ken to reimburse you when he can't even refund people for their orders.

Otherwise, he can't sell any new shares.  Business as usual, minus the fines, whatever that is.  Could be tremendous, could be minor.  I find it hard to believe Ken has no idea what deal his lawyer struck.  Nonsense...

You might be right.  But I think you're looking for the absolute negative scam view point.  Think about it, Ken didn't have to tell anyone about this mining farm.  He could have told people we're still working on our own custom 28nm chip and never mentioned a word of this mining farm.  It wouldn't have gotten out otherwise, nobody else has even mentioned it.  So it would make little sense for him to divide the mine up and just mine for himself while revealing this other mining gear, especially because he hasn't said he's going to give any of the coins earned to anyone.  He may just mine those coins for further operating expenses.

So there is no need for him to hide anything.  He can mine with all the equipment and spend all the money on whatever he wants.  That's just the facts. 

He may not be adding more equipment until the AC is fixed.  Again, that could be happening as well as making boards.  Or you might be right, he could have cashed all the coins out and is heading to Mexico.  I dunno...  I tend to think that Ken is completely incompetent but not a thief. 

I think that one address is one of the largest Bitcoin storage addresses.  It's likely some kind of Coinbase cold wallet or other similar service.  

Ken said he's working at DC(?) to improve the hash situation.  Let's assume that's true.  He can't get anything else in there due to the AC situation.  So it would be common sense (Which doesn't always apply here) that Ken is having an HVAC guy replace the air conditioners with better ones.  That can be expensive.  Not thousands or hundreds even, of Bitcoins, but expensive enough to warrant Ken to be there for it.

Ok, now Ken also said that he has tooled up a line ready to do a 5,000 board run when needed.  That's expensive, so perhaps he pulled the money to pay for the boards to be made.  That could very well be true.  It would go with Ken mentioning that the chips they were talking about in the court case might be his.  Or in other words, they might be a customer's that Ken is producing boards for.

It's also possible there is just another customer of Hashfast out there in possession of chips that needs boards and Ken worked out a deal.  He cashed out the coins out of that wallet to fund the boards being made.

Of course, the question is, "Where's the money from the order?" and Ken did say that he had something brewing to raise 2.5 million.  Is it this?  Might be.  Pay on delivery?  Maybe...  But probably not.  Probably the money is in FIAT in a bank account somewhere that we can't see.

Just tossing that out there.  I cashed out awhile ago and have no money on the line with this.  But it stands to reason based on everything that Ken has said recently that this might be the case of what is happening.  It also might be to pay for his chalet in Switzerland.  One of the two.

Dread Pirate Roberts

He revealed who he really was by doing some dumb things like asking for help with website design and other things by using his real name and linking back to his LinkedIn Profile, etc. 

I think people are confusing the costs of the chips to produce and their value in the inventory vs what they actually get sold for.  They will be sold for profit, so the value will be much higher than what is listed here.  He's not creating and selling chips to break even.  It just looks that way on a financial report right now, likely because the profits from sold chips weren't many compared to what was produced and sit in inventory.  As those start selling in greater numbers, the profits will come in.  It's just that right now, the money isn't there because of the initial production cost.

Fear
Uncertainty
Doubt

FUD

It means you are spreading fear and doubt by posting things without having any evidence to back up what you're saying.

Often people mistake it for meaning "False" such as spreading false information.  That is incorrect.  It means you're spreading fear...  Usually to damage the reputation of something.

Why would anyone buy them with their terrible Watt to GH ratio?  They can produce all those chips they want, nobody is going to buy them.  And if the difficulty rises, the first miners to get switched off will be these.  Between Spondoolie, Blackarrow and BFL all releasing much better performing watt to GH chips, I don't see why anyone would buy these unless they are dirt cheap.

Exemption F:  (F) Accepts and transmits funds only integral to the sale of goods or the provision of services, other than money transmission services, by the person who is accepting and transmitting the funds.

He transmits funds that are integral to the provision of the service, and is not providing a money transmission service (Exchanging Bitcoin for USD for instance). 

He's exempt. 

The thing you are missing from all the legalese is that FinCen is interested in you laundering the money.  They want to know if you are operating a business which takes in cash, flips it into Warcraft Gold, then you sell the Warcraft Gold for new cash, and you give the cash to other people.  Havelock or Crypto-Trade are Money Transmission Businesses.  Bitpay, for instance, is not.  They are exempt because a single individual is taking their money and flipping it back and forth.  They don't care about that.

The guidance explains that Mining and investment mining operations like this are exempt.  The service is exempt.

Thank You David!

You obviously don't know what a Money Service Business is.  FinCEN already said that miners and Bitcoin investments are not subject to being a Money Transmitter or Money Service Business. 
http://www.coindesk.com/fincen-bitcoin-miners-investors-money-transmitters/

Folks who send money via Bitcoin is not a Money Transmitter by default.  You have to operate a business which sends money as a service.  A Bitcoin exchange that turns USD into Bitcoin and back is an example of a Money Transmitter.  An operation that deals with just mining and moving Bitcoin to investors is not.

Be sensible, there are two people who went to their location and reported on it.  There are multiple people involved in answering questions.  They have a physical address.  If you have a passport and some money you can fly out there too I'm sure and have a look around. 

It's not a scam.  They've said exactly what the problem is.  I know people are upset and tired from waiting, I'm waiting too.  But just go look at the BFL boards and see what Josh is saying.  They need to create a new board for the Imperial Monarch because it uses too much power.  That puts them back another couple weeks, then they have to still put components on those boards.  It's the same issue BA is having but different. 

I'm sure they don't want to be compared to BFL, and hopefully they get their sh*t together and start sending miners out soon.  But it's not a scam.  Be patient.  Update probably this time tomorrow.  Let's see what they say. 

Graham,

  You need to interface with a form of registration so that "Mywallet1" always links to the same wallet address.  Just like domain names on the web work now.  If it was all crazy IP addresses mixed with port numbers and website number identifiers then the web would not be very user friendly.  Allowing wallets to be user friendly would be a huge gain, because it's simply not easy to give someone your number, just like it wouldn't be easy to give someone your URL if it wasn't a domain name and instead a hash.  The idea that having to double check the hash number is silly, how many people are REALLY typing in a hash code by hand?  I do it very rarely, it's all copy and paste.  But if you're going to make Cryptocurrency mainstream for everyone to use, they aren't going to get on with these ridiculous unmemorable wallet addresses.  We have to name them inside our wallets, and even that is a burden because since the blockchain doesn't contain the names, you have to name them again on a different wallet (Depends on the wallet.)

We have some folks using wallet names with creative leading characters because they want this ability (For Bitcoin anyway).  A coin would be stronger if it could interface with this kind of feature.  Perhaps some hybrid of how Namecoin works.  No idea... 

Anyway, I'm just tossing out ideas, not expecting them to all stick.  But I think you have to make the coins appealing to the mainstream to make real money and solve problems that people have today with the existing coins that are out there.  Only then can you really have a shot at getting big value for the coin.

GPU miners and people in general are going to go to the coin that is the most profitable.  Not the coin with the best technology.  The only reason a consumer would want to exchange currency into any coin is if it offered a feature they need.

Darkcoin has the ability to send transactions anonymously which some consumers need or want to stop people from tracking their movements with their currency.  True, that Darkcoin hasn't fully implemented this yet however with many consumers betting that when it does go online the market value will skyrocket so they are investing dollars now on the cheap. 

Hirocoin needs a similar feature.  If not anonymous, than some other consumer based benefit that makes the coin more attractive.  For instance, figure out the confirmation delay problem that plagues Bitcoin and other coins.  Some coins speed up the confirmations but do so in an insecure way.  If anything is going to hurt Bitcoin's future adoption as a replacement for cash it's going to be the confirmations taking 10 minutes for each one.  Nobody in their right mind is going to sell something and wait around at the cash register for half an hour for the clerk to say, "Ok, it looks good."   Fix this problem and you have a good idea.  Maybe something like the Masternodes that Darkcoin uses that confirm the transactions faster with authority to do so.

Come up with a way to make the transaction addresses more simple.  Like leave it as the HASH, but offer some kind of network translation so that afjwq0f8hjqw08cnw[09qj  is equal to something easier to type like "Mywaller15" that people can register (Maybe burn coins) and creates a permanent link to the address.  That would be SO MUCH EASIER to give someone.  If they said, "What's your Hirocoin wallet address?" you can just say "Mywallet15" instead of saying "Ok, it's is Alpha, Frank, Jessie, Woodward, Quinoa, Zero, Frank, Eighter, Hugo..."  Zzzz...  That's the worst.

Think about the end user, the consumer and their adoption of the coin.  Make it easier to use!  Then people will use it.  Imagine your Grandma trying to use a Cryptocurrency.  Try to make it so your Grandma could figure it out.  And then you'll get all the Grandma's money invested in the coin, etc.

Right now you're just trying to appeal to miners, and miners are going to just go to whatever coin has the most profit.

It's quite easy to have a fake Ebay account.  Scammers proliferate on Ebay, especially back when they were selling preorders for Bitcoins that Ebay had to shut down the activity due to all the complaints.  Paypal would be more difficult but there is no proof they have a Paypal account. 

Also, I'm not sure Mr. Piggles if you actually have the information you are saying you do or not.  Since you're not going to show it to anyone until AFTER they split town, it would be unfortunate to find out that what you have is wrong.