In view of the imminent closure of BTC-TC and LTC-Global, LTC-ATF will be closing its doors.  In theory we could move to another exchange - but there's nowhere which supports securities denominated in LTC so a major restructure would be needed with a massive change to the contract.

The following will happen today, assuming the exchanges are up and the necessary functionality works:

1.  All bonds will be recalled at face value.  The contracts are explicit that redemption is at face value in the event that LTC-ATF closes.
2.  I will buy out all LTC-ATF shares at the NAV/U as of yesterday.  The adjusted NAV/U (i.e. post management fee) was 0.69148904 LTC per share.

This is an expedited version of the closure procedure defined in the contract.  If I were to strictly follow the contract then bonds would be paid out now (once I was sure all funds were going to be accessible) then LTC-ATF investors would get back cash slowly as shares were sold.  Some of the investments we hold are NOT going to sell for full value - e.g. the 500 LTCI we picked up a day or 2 ago to flip (which will lose a load of value because of holdings LTC-GLobal shares which obviously aren't going to be worth a lot).  There would also be signficant delays realising some assets - e.g. the BMF shares where I can't sell them back for nearly 2 months.

As maximum losses are under 100 BTC I've decided I'll just eat whatever losses there are myself and save my self the hassle of sending small bits out as we sell stuff - and then having to send out to lots of people directly after October.  I'd hope all investors would appreciate that this isn't something I was obliged to do, will definitely cost me some BTC (probably only 20-25 BTC unless usagi defaults on the BMF deal) and is better for investors than if I stuck rigidly to the contract.

Those of you who invested at the start will have made very slightly under 900% profit denominated in LTC, 5550% denominated in BTC and something with even more digits if you measure it in USD.  Thanks for your support - and hope you're happy with the return you received for putting your trust in me.  For those who invested more recently, buying at well above NAV/U, I can only apologise for your losses.

DMS will be dealt with seperately in its own thread.

For the BBET and MPOE pass-throughs, for now I'll fill any asks where I can sell at that price into orders on MPEx.  Down the line I'd be aiming to do a forced buyback before LTC-Global gos offline at whatever price I can sell the underlying at.  I'll address those in more detail once I've got the easy ones (bonds and LTC-ATF itself) out of the way.

[If you wouldn't PM me for advice/investment then ignore this as it isn't directed to you. This post is aimed at all the people who think "I want to be the next ASICMINER" or "I want to be the next S.DICE" but lack money and ability so think PMing people with both can somehow make them useful. People with a real plan already know what they're doing. Those running blatant ponzis/scams know better than to ask anyway. It's those in between that I'm addressing here.]

If you wouldn't PM me for advice/investment then ignore this as it isn't directed to you.  This post is aimed at all the people who think "I want to be the next ASICMINER" or "I want to be the next S.DICE" but lack money and ability so think PMing people with both can somehow make them useful.  People with a real plan already know what they're doing.  Those running blatant ponzis/scams know better than to ask anyway.  It's those in between that I'm addressing here.

I get a bunch of PMs that fall into one of the following categories:

1.  What do you think of X?
2.  I want to IPO X will you help write the prospectus and/or market it?

Here's the absolute basics you need to meet for me to answer "yes" or even "I want more details" to either:

1.  If you're asking for X BTC then I want proof (NOT your word) that you already have X/4 BTC either as your own capital or as investment from private investors.  If you want to raise 10k BTC that means you need 2.5k BTC yourself or from friends/family/acquaintances.  This requirement is simply because if you don't already have (or have access to) capital then there's a reason for it - and normally that reason is that you should NOT have such access.

2.  I want something pretty solid proving that anyone who invests will end up with more than they started with.  That's in whatever currency you're listing in.  If it's a USD investment then a profit in USD is fine.  If it's a BTC denominated investment then that profit has to be in BTC.  If you're mining BTC and selling shares priced in BTC then you fail this criteria - right now there's no hardware for sale that can safely be assumed to mine more BTC than it costs (if you're mining alt-coins then you CAN meet the criteria if your power costs are low enough).

3. If your 'investment' relies on customer volume then you need some evidence (e.g. surveys) to establish you'll get that trade volume.  I have zero interest in yet another gambling site which will do well if it gets 50% market share but has no evidence to suggest it'll even get 1%.

Now that 99% of you have been excluded the other 1% can feel free to PM me.  If you're in the 99% and PM me don't be offended if you don't receive a reply - I stopped replying to begging PMs a while back (and if you don't have any money or any plan you ARE begging as you're asking for my time which is worth something to reply to your 'IPO' which is worth nothing).

I have no interest whatsoever in your plan to borrow 5 BTC to list a security so you can raise 10K BTC to make ASICs.  I have just as little interest in your plan to sell shares to buy 10K BTC worth of ASICs, give half the mined income to investors and keep the other half yourself.  I have even less interest (were it possible) in the fact that you held some shares for a few weeks, made some profit so now want to run an investment fund worth 100 times your total worldly wealth.

I expect that most other people who actually HAVE BTC and knowledge/ability feel the same way.  It's not our job to give you a chance.  It's your job to prove you deserve one.  Don't waste our time when you're just an unproven beggar.

[INTRODUCTION]

INTRODUCTION

LTC-ATF.B2 is the second bond issued by the fund I manage (LTC-ATF).  The first bond (you'd never guess it was LTC-ATF.B1) has been on offer since last year on LTC-Global and pays a higher rate of interest than this one.  Once this is launched it is intended that no further LTC-ATF.B1 will be sold (none have been placed for a while already).

This one is being issued for two reasons:

1.  To reduce the cost of capital.  Whilst LTC-ATF could comfortably continue paying the rate we do on LTC-ATF.B1 there is no reason for us to do so if we can raise capital at a lower rate.

2.  To make maintenance easier.  With this bond being transacted in BTC rather than LTC we are able to leave bids and asks up unattended without having to worry about exchange-rate movements making the prices wrong.

Capital raised from these bonds is used to enable LTC-ATF to trade BTC-denominated securities whilst maintaining minimal BTC exposure (by balancing the majority of BTC-denominated assets against BTC-denominated liabilities).


OVERVIEW OF TERMS

Each bond has a face value of 0.01 BTC.
Bonds will be sold at face value (or into such higher bids as exist).
A daily dividend will be paid of 0.05% of face value - so .35% per week, about 18.2% per year (assuming no compounding).
Bonds are backed by all assets of LTC-ATF (though LTC-ATF.B1 has a senior claim on them).
The bond has no fixed expiry date but a bid-wall will be maintained at 99% of face value to provide liquidity even if there are no bids from others.
The bond IS callable - at 105% of face value.  That option is only intended to be used if circumstances change such that the bonds can no longer be maintained - it will NOT, for example, be used to try to sell cheaper bonds in the future (hence LTC-ATF.B1 not being recalled now).
If LTC-ATF closes down then bonds will be paid out at 100% of face value - an exception to the general terms for calling the bond.


BACKING

LTC-ATF is contractually obliged to ensure the following :

That it holds more BTC-denominated assets than it has BTC-denominated liabilities.
That it holds total assets (excluding securities held on behalf of pass-throughs) with a value of at least 166.666% of all liabilities.  That is to say that liabilities may not exceed 150% of net assets.

In practice I aim to keep liabilities below100% of net assets (right now they're at 41.81%).

LTC-ATF predominantly trades/speculates rather than invests and so maintains very high liquidity compared to investment funds.  Typically 85-90% of all assets are cash (BTC or LTC) - at this instant 91.46% of assets are in cash.  Although we are heavy in cash that does mean the capital is inactive - most is backing Bids of securities or currency orders (to maintain our target currency ratios even when exchange-rate moves whilst I'm afk) with the remainder providing cover against short-term liquidity needs.

As of this instant LC-ATF's situation is (all numbers approximate):

Gross Assets : 849 BTC
Liabilities : 251.5 BTC (LTC-ATF.B1 - 250 capital plus 1.5 dividend due for payment shortly)
Net Assets : 598 BTC

Cash position (mixed BTC/LTC - just under half of it BTC) : 776 BTC

Our position is VERY sound financially.


RISK

This is addressed in more detail in the contract.  But briefly:

LTC-ATF bears all exchange-rate risk - this is mitigated to near zero (for bonds) by holding BTC-denominated assets exceeding BTC-denominated liabilities.

LTC-ATF bears all trading-related risk - this is mitigated as far as possible by spreading trading widely, avoiding multiple exposure to the same CP and not holding positions for long.  It would take massive - and rapid - losses for any trading loss to impact bonds.

Trading Platform Risk - this cannot be mitigated : we cannot avoid CP risk in respect of trading platforms (exchanges) that we use.  This risk IS shared with bond-holders (who accept such risk when they first deposit to exchanges) but if losses arise from this then they are then recouped from future LTC-ATF profits (but only after LTC-ATF.B1 has been fully repaired).


QUANTITY TO BE ISSUED

Initially 5000 bonds will be sold (50 BTC worth at face value) with there likely to be another similar quantity released later in the week.  There MAY be more released shortly after that - depending on certain other developments.  In general these will be issued whenever LTC-ATF needs (and can afford without risk of having to sell more units) more capital and/or when we manage to buy back LTC-ATF.B1 (reducing cost of existing debt).


RELEVANT LINKS

Listing for this bond : https://btct.co/security/LTC-ATF.B2

The below links provide further information on LTC-ATF.

The listing for the fund at https://www.litecoinglobal.com/security/LTC-ATF
The LitecoinTalk thread for the fund at http://forum.litecoin.net/index.php/topic,657.0.html
The Bitcoin forums thread for the fund at https://bitcointalk.org/index.php?topic=112876.0

If viewing LTC-ATF on the market please be aware that there was a 100:1 split on it executed today - it has NOT suffered some massive losses.

[IMPORTANT : The account to send DMS.PURCHASE to (to receive DMS.MINING and DMS.SELLING) is DeprivedMining]

IMPORTANT : The account to send DMS.PURCHASE to (to receive DMS.MINING and DMS.SELLING) is DeprivedMining

CLIFF'S NOTES

DMS.MINING - Behaves like a 5 Mega-Hash/Second PMB (The things people call perpetual mining bonds).
DMS.SELLING - Is a bet that people will pay too much for DMS.MINING.
DMS/PURCHASE - Is a way to get one each of MINING and SELLING at a price that will probably deliver a modest profit if the pair are both held.

The real profit comes from correctly pricing MINING and SELLING and trading with people who get it wrong.

It is strongly recommended to read more of this thread before buying ANY of them.  Investing/trading MINING or SELLING has the potential to make significant losses OR profits.

OVERVIEW

Deprived Mining Speculation is a fund comprised of three seperate securities listed on BTC-TC.  These three securities share a pool of assets to which they each have a different set of rights.  Two of the securities will receive dividends from the pool of assets, the third only exists as a means of enforcing certain consistency on the behaviour of the other two.

DMS.MINING - This acts like a 5 Mega-Hash/Second PMB (Perpetual Mining Bond).  It is NOT a bond (and nor are any PMBs).  Daily dividends will be paid out.

DMS.SELLING - This acts as the backing for a DMS.MINING.  These provide the capital that allows investors in DMS.MINING to receive back significantly more in dividends than they paid for their shares.  If DMS.MINING never receive back what they paid then DMS.SELLING keep the extra.  If difficulty rises sharply then these will also receive dividends - as the capital needed to back DMS.MINING becomes lower.

DMS.PURCHASE - This represents 1 unit of DMS.MINING + 1 unit of DMS.SELLING.  These are the only shares that will be sold by the issuing account on the market.  DMS.MINING and DMS.SELLING are obtained by transferring unit(s) of DMS.PURCHASE back to the issuer - who will then transfer an equal and matching number of DMS.MINING and DMS.SELLING to you.  This is a messy way to sell paired securities - but the only practical AND trackable way to ensure that there are always an equal amount of DMS.MINING and DMS.SELLING.

The selling price of DMS.PURCHASE is defined by formula - and (unless mining difficulty rises massively) will drop over time as dividends are paid out.  The selling/trading prices of DMS.MINING and DMS.SELLING are entirely left to those trading in DMS.PURCHASE to set - there will be no sales of them by the issuing account.  The issuer/manager (Deprived) WILL sell these himself - but on exactly the same footing as everyone else : paying the same amount for a DMS.PURCHASE and competing with all other traders in the market-place.

The majority of capital raised will (where possible) be invested very conservatively - in bonds/debt from well-established businesses and in secured (on reputable securities provided as collateral) loans to individuals.  This allows the cash paid out to DMS.MINING and DMS.SELLING to be more than the selling price of DMS.PURCHASE - reducing the margin traders need to make on the relative pricing of those two for investment here to be profitable.  

In most scenarios the benefit (and risk) of that investment gos to DMS.SELLING holders - DMS.MINING investors received payments calculated based on difficulty whilst DMS.SELLING receive whatever is left over (which includes all income from investment).  This means that although the rate of return of our investment will be low (due to being only in very safe investments and not all capital being invested) DMS.SELLING can still receive a decent return IF bought at the right price - as they will be effectively receiving the earned income on ALL capital not just the portion raised from DMS.SELLING.  That balances the risk they bear - that they have no guaranteed minimum payment at all.  DMS.SELLING investors will be able to determine which securities/issuers are considered 'safe' for investment or for use as collateral when taking a loan from the fund - but investment will be restricted strictly to investments which repay 100% of capital so as to protect the interests of DMS.MINING.

A management fee of 3% is charged on all sales of DMS.PURCHASE.  Originally I was going to take management fee on dividends - but that becomes less transparent and far more complicated, involving taking fees at a number of different dividend points (and having to take a management fee on buy-backs and redemptions as well).  I believe this compares very favourably to all alternatives where the management fee is disclosed.  Sales of 500 BTC worth of DMS.PURCHASE would be needed just for me to break even on the listing fees.

DMS.MINING

This security behaves very much like a PMB (the misnamed Perpetual Mining Bonds).

Every day (at or around 16:00 GMT/UTC) it pays out an amount equal to what 5 Mega-Hash of mining power operating at 100% would be estimated to mine.  The difficulty used in this calculation is the one at the previous midnight GMT/UTC - so assuming an even distribution of times at which difficulty changes it will pay out very slightly more on average than a PMB with identical theoretical hashing power.

DMS.MINING shares are backed by the following capital:

• The funds raised by selling the DMS.MINING
• The funds raised by selling a DMS.SELLING
• The profit (or loss) made by very conservatively investing/lending out the majority of this capital.

In practice the first two items in this list are combined into the funds raised by selling a DMS.PURCHASE.

This differs from a conventional PMB - in that there IS a maximum which any DMS.MINING can ever receive.  The pricing of DMS.PURCHASE has been set such that, in my view, that maximum is unlikley to ever be received in practice.  Should it ever appear likely that maximum WILL be reached then the fund is designed such that when that realisation is made all remaining funds would be distributed immediately (or as soon as investments could be liquidated) to DMS.MINING.  So although you could end up getting less you WOULD receive a good chunk of it earlier - shortening the time-span over which you need to measure your ROI.

It is my view that in all likely scenarios these can be compared pretty directly to PMBs - with some small differences in how you value them when comparing.  I'll deal with how to make comparisons in more detail later.

DMS.SELLING

DMS.SELLING is at root a chance to bet that people will pay more for PMBs in general (and DMS.MINING in particular) than they're worth.

If you believe that DMS.MINING are worth less than people are paying for them then DMS.SELLING is what you want to be investing in (provided the profit you'd expect to make, when expressed as an APR, meets your personal investment criteria).

The value of DMS.MINING + DMS.SELLING is exactly equal to the value of DMS.PURCHASE.

If it is your belief that DMS.MINING investors will receive back less than they paid for their shares then (if you are correct) if you were to either:

• Buy a DMS.SELLING for the NAV/U of a DMS.PURCHASE minus the price of a DMS.MINING OR
• BUY a DMS.PURCHASE, convert it and sell the DMS.MINING

You would be looking at receiving, over the lifetime of the fund BOTH of the following as profit:

• The difference between the price paid for the DMS.MINING and the total amount they actually receive back.
• All income generate from investment of your capital (tied up in the DMS.SELLING) AND a matching DMS.MINING holder's investment.

Some of that would be returned gradually in dividends - and the remainder either when the fund closed or you sold your DMS.SELLING.

You do, however, need to make around 3.5% profit (to cover the management fee and trading fees) before you will actually be in profit.

DMS.PURCHASE

These exist only to facilitate issuing of DMS.MINING and DMS.SELLING in pairs.  Some investors may, however, consider them as investments in their own right.  I'll try to explain why this isn't a good idea long-term (or very short-term) but why it MAY be a reasonable thing to do for intermediate periods.

The price at which DMS.PURCHASE are sold is strictly defined in the contract - and not subject to arbitrary modification by the issuer.  At any given time DMS.PURCHASE will have a clear NAV/U (all assets will be disclosed and only investments with a fixed face-value will be invested in).  The issuing account will:

• Sell DMS.PURCHASE at NAV/U + 5%
• Buy back DMS.PURCHASE at NAV/U - 2%

The spread between those two prices is mainly because of a 3% management fee being taken.

The NAV/U of DMS.PURCHASE will change because of the following factors:

• It will (hopefully) rise as the result of income from investments.
• It will rise very slightly whenever more units are or units are redeemed (though is balanced to a degree by loss of investment efficiency potentially resulting from both of these).  It is necessary to protect existing investors by adding a small margin on sales/redemptions - and in defining those margins I have intentionally erred on the side of protecting existing investors.
• It will fall whenever dividends are paid.

When the NAV/U falls because of dividends, all DMS.PURCHASE will have received EXACTLY the amount in dividends that the NAV/U fell by - so there is no loss to DMS.PURCHASE holders resulting from this.  That means that, unless our investments lose, the value of (DMS.PURCHASE NAV/U + fund returned) will slowly rise above the NAV/U at the time you bought them.

On the face of it you have to make up the 7% spread before actually being in profit - however if this fund is actively being used then that is NOT the case.  When you want to sell your DMS.PURCHASE you just have to list them at the minimum increment below the price at which the fund is trying to sell new units.  If you can sell at that price then you only need see 0.4% growth in (NAV/U + payments received) over the NAV/U when you invested to be in profit.

In short, DMS.PURCHASE CAN be a (slightly) profitable AND liquid investment themself IF the following are true:

• There is sufficient demand for them that no Asks last long below the official sales wall.
  DMS' investments make some profit.

The split between the prices of DMS.MINING and DMS.SELLING - and which get paid what dividends has absolutely zero impact on this.

This is totally unsuitable for very short-term (you still have to overcome 0.4% in trading fees).  And for longer term there will ALWAYS be better investments (specifically, the ones DMS itself invests in).  But lack of availability and/or liquidity MAY make DMS.PURCHASE a reasonable vehicle for leaving BTC with for a period greater than a few weeks but less than many months.

You can, of course, also convert your DMS.PURCHASE into a DMS.MINING and a DMS.SELLING - and received precisely the same benefits if you held a DMS.PURCHASE.  That comes with the draw-back that you can no longer cash out quite so quickly - but with the benefit that you can sell either or both.

COMPARISON OF DMS.MINING WITH PMBS IN GENERAL

I'm not going to produce a list of PMBs and compare them with DMS.MINING - rather I'll explain how investors should do it themselves.  Why?

• Any such comparison would be out of date as soon as it was made - an out of date comparison is worse than not having one in many respects.  I do not want to commit to maintaining such a list - so will not post one now.
• Any actual comparison relies heavily on subjective issues - in particular the reliabilty/trustworthiness of the issuer.  I do not believe a thread for my own security is the correct place for me to comment on my opinions of other issuers.  I break that rule in the next section - by commenting on ThickAsThieves, but only because our securities are more directly comparable and I have a very high opnion of him so won't be saying anything controversial.

Here are some of the factors you should take into account when comparing DMS.MINING to PMBs.  The first two are the most important - the rest are in no particular order.

The trustworthniness and reliability of the issuer.  This determines whether you should even consider investing at all.  If someone is a known scammer - or has failed to deliver on promises/guarantees before - then you should not proceed further with looking into what they offer.  There's no point comparing the price of apples and oranges - similarly the cost of MH/S from a scammer cannot be compared to the cost of the same from a reputable individual.  Note that trustworthiness and reliability are two different things.  Someone can have every intention of delivering what they promise but fail to do so through entirely predictable reasons or just through incompetence.  Such a person MAY be trustworthy but is definitely unreliable.  In many respects incompetents are worse than scammers - as scammers vanish after taking one set of cash whilst incompetents hang around blaming everyone but themselves and frequently get given extra bites of the cherry.

The Hashing Power of the securities.  Obvious - but easy to over-look if in a hurry.  DMS.MINING offers 5 MH/S - so if comparing with a PMB that offers 1 MH/S you need to start from a base point of comparing 5 of that PMB with one DMS.MINING.

The redemption terms.  these are in decreasing order of value:

• Redemption at face-value/initial purchase price.  No PMB offers this - but if one does AND pays out based on hashing power then it should be valued at a LARGE multiple of its nominal hashing power.
• Redemption at a multiple of most recent dividend.  If two securities you wish to compare offer this then clearly the one with the higher multiple is worth more.
• Redemption based on market value.  This is the worst option - as it allows the issuer to affect the buy-back price either by neglect or by flooding the market.  If this is the only option then you also hit major problems with repurchase if the security ever delists, changes exchange or has no activity for a long period (where 1 sale at a low price could allow repurchase at very unfavourable terms).  There is also something inherently bad about a contractual clause which explicitly gives the issuer a financial motivation to drive the price of their security down.

Where an issuer gives themself more than one option for repurchase you should always assume they will perform any buy-back at the alternative least favourable to investors.  You may end up being pleasantly surprised - better that than making an investment decision based on an assumption of charity from an issuer.

What is actually paid out.  If the PMB pays out what is actually mined then it is likely to be worth less than DMS.MINING as it almost certainly won't have 100% up time and 100% efficiency.  If the PMB pays out BTC transaction fees then that gives it a small edge in the other direction.

What security there is.  With DMS.MINING there is a non-zero risk of loss of capital in our investments - reducing the capital available to be paid out.  With PMBs there MAY exist a isk of loss in the event of fire, theft or hardware failure.  What insurance the PMB has - and what assets they can and would use to honour their commitments in the event of loss of mining capacity - are important risks to consider.

Third-Party Risk.  With DMS.MINING there exists the risk of loss through BTC-TC scamming or being hacked and being unable to replace funds.  If a PMB relies on a third party (such as a hardware manufacturer) then there exists a risk of non-delivery or non-adherence to their warranty by such a third-party.  You need to assess the likelihood of such risks.

Caps on Maximum Payout.  The amount that will be paid out by DMS in respect of any DMS.MINING share is capped at the investment in that share plus its partner DMS.SELLING plus any profit made from investment.  If you believe there is any likelihood of that cap being exceeded then you should value PMBs higher than DMS.MINING (if all other factors are equal).

Sustainability. DMS.MINING can continue to pay dividends all the while capital remains.  Many PMBs rely on hardware which only has 6 or 12 month warrranties - yet promise to pay out forever.  You need to assess their credibility and capability in terms of delivering on that promise.

There are other factors beside these - and likely I've missed out one or two important ones - but hopefully this gives some food for thought and shows how comparing securities is about far more than just looking at price and hashing power/share.


COMPARISON OF DMS.MINING WITH TAT.VIRTUALMINE

This is an obvious comparison for potential investors to make.  I'll try to give a balanced view on it here.  If ThickAsThieves wants to respond I'm happy to move his comments to below mine in this section - so investors can see his view on the same footing as mine.

I'll start by looking at a range of factors to be considered - and how the two securities compare.

ISSUER : The trustworthiness and reliability of the issuer are a major part of valuing any security.  I have no doubts over TAT's trustworthiness and reliability and pretty certain he has the same view of me.  I don't believe potential investors should place a premium on either security because of this factor.  Obviously if you've personally dealt with one of us in the past then you may personally have a preference.

DIVIDENDS : These are ALMOST identical.  TAT should be valued VERY slightly higher than MINING because its dividends are based on the difficulty 24 hours previous to dividend time whilst DMS are based on only 18 hours previous.  This is a tiny - but real - difference.

BUY-BACK :  TAT has a buy-back at 200 days at current dividend, MINING at 365 days. We can define a range within which the premium must lie as follows:

The highest markup MINING should have would be if both securities performed a buy-back immediately after you bought their shares.  In that situation you would receive 365/200 more from MINING - suggesting an 82.5% premium on the price of MINING would be warranted.
The lowest markup MINING should have would be if both securities traded without buyback until dividends had fallen to near zero.  At that point the buy-back on both would be identical in practical terms (next to nothing) and no premium at all is warranted.

I would say that a realistic premium in terms of this factor lies nowhere near either extreme but that there is definitely a significant premium for MINING over TAT to be applied because of it.

MAXIMUM RETURN : TAT has no maximum on the amount which investors can receive.  Investors in MINING are limited to only being able to receive back the price of one DMS.PURCHASE plus the profits made from investment of capital.  This either has no impact at all on value or an absolutely enormous one.  At current prices of TAT it works out roughly as follows:

• If you believe the total payout on a TAT share over its lifetime will be less than around 2.5 times what you paid then this factor has absolutely no impact.
• If you believe the total payout on a TAT share over its lifetime will exceed around 2.5 times what you paid then you should value TAT shares ABOVE MINING ones and can totally ignore the benefits of MINING's better buy-back clause over TAT's.

I believe the first of these two options is the correct one.  And it's safe to assume TAT believes the same - or he wouldn't be selling the shares at this price at all.  But we could both be wrong.

There is, however, a related issue where TAT does have an edge.  TAT shares have payments guaranteed by ThickAsThieves - even if ASIC-MINER were to crash.  There is no such guarantee in respect of MINING shares - if our investments or loans fail then that capital will not be replaced.  Whilst every step reasonable will be taken to minimise this risk it IS a real risk - and TAT shares should be assigned a premium when valuing on this basis.  This is only a risk if losses exceed the revenue from investment - so I'd rate it as very low.  You'd need to form your own judgement on this one.

My conclusion is that MINING shares SHOULD have a value significantly higher than TAT's - because of the better (for investors) buy-back clause.  All other factors are, in my view, either much smaller in comparison to that or unlikely to be relevant.  But form your own opinion.  And bear in mind that the price of DSM.MINING will be set by the market NOT me (unless noone else buys DMS.PURCHASE).

[before he's even received approval to be listed]

This is a self-moderated topic.  Posts by usagi may be deleted - depending on whether I find them amusing or not.  Posts by usagi apologists (where i'm fairly confident it isn't a usagi sock-puppet - and if there still are any) WILL be allowed to remain.

I didn't particularly want to do this - but feel forced to after usagi:

1.  Deleted a post from me in his thread with the same title as this one (I was fine with just ignoring that as I've wasted enough time on that failure already)
2.  Then responded to that deleted post in the thread for one of my own securities - I've no problem with him occasionally trolling and exposing his ignorance there provided it's actually about my own securities.  I will not, however, accept him dragging discussion of his failed endeavours into threads for my own securities.

Recently I've tried to be constructive towards him and offer legitimate advice on the reasons why he's been struggling to get approval for his securities.  He doesn't see it that way - but my recent comments have been me being nice to him and trying to help him sort his mess out to some extent.  If he doesn't want to take advice or even properly read what is written then fine - I'll stop being nice.  Being nice wasn't fun anyway

So here, first of all, is the deleted post.  Then in a subsequent posts I'll explain why you should vote NO on all of usagi's current securities and not approve ANY securities he attempts to list.  In brief the reasons are:

1.  He lies habitually.
2.  He routinely makes promises that he fails to deliver on.
3.  He changes his mind as a matter of course - either forgetting and/or lieing about what he's previously said.
4.  He totally ignores the rights of investors - and I don't just mean in his past (admitted by him) conflict of interest over BMF/CPA.
5.  Even when he doesn't outright lie he makes intentionally misleading statements.

I'll explain each of the above points - with examples.  It will not all get posted tonight (in fact little will) - but I'd strongly urge holding off on voting YES (if that was your intent) and changing any current YES votes to Abstain until you've read what I have to say.  You can then verify the accuracy of what I say - and also watch usagi avoid addressing the detail of them whilst denying the allegations themselves (likely with some attempts to attack me - which I'll just be ignoring).  Whilst I'll probably delete some of his responses I'll leave any where he actually attempts to explain any of the specific allegations made - i.e. don't expect to see any of his posts here.

Here's the (pretty innocuous) deleted post of mine:

List of assets taken from BTC-TC account:

   576      B.YABMC
   1,431      BTC-BOND
   50      ESECURITYSABTC
   200      PAJKA.BOND
   137      ESECURITY-SA
   1,100      ESECURITY-SA2
   3,192      LTC-ATF.B1

This is a partial list of distribution paying assets that I would use to restart the relevant listings. Absent are holdings such as ART and BITVPS which currently don't pay distributions. I am not going to provide the full list, for the same reason Deprived refuses to list his individual holdings. However, I would also donate 100 BTC to BMF should it be approved.

Are you saying that those assets belong to BMF?  Or are those assets that belong to various of your assets (including TU.SILVER)?

You refer to me not providing detail of my precise holdings (for my fund).  That is correct.  I do, however, weekly provide a precise valuation of all assets held by it - and exact detail is provided for (typically) around 90% of those holdings (that being cash or disclosed holdings in shares to which I run pass-throughs).  And that's why providing detail of my investments isn't as important as in an investment fund - the valuation of my fund isn't heavily influenced by my valuation of securities it holds.  In an investment fund where little cash is held the valuation of securities held IS the valuation of the fund.

Investors (including potential ones) need either a credible valuation of assets OR a detailed list of assets (so they can work their own out).

A partial list of shares held in an account used for half a dozen securities  is of no use in assessing the value of any single asset.

BMF holds cash as well (a refund was received from BMF but has not been distributed - so there's at least that).

My point is simply that I can't work out the NAV/U of BMF - and I doubt very much anyone else can.  So you're asking for approval for an asset that has SOME assets but which refuses to provide information necessary to calculate any value for it.  If approved that means anyone trading it would be doing so totally blind - with no idea at all what it was actually worth on ANY basis.  That's not good - I can see the attraction of it for your shareholders but I don't support the listing of ANY security which refuses to provide a valuation of assets OR a list of assets.

Here, also for reference, is the current contract for BMF.  Note that BMF is already in existence so should already be following its contract to whatever extent it can.  I'll explain how usagi is already showing clear intent not to bother following his contract before he's even received approval to be listed.  You'll find that to be a common strand throughout much of what I explain about usagi's behaviour - essentially he says whatever he thinks will serve him best without regard for whether it's true and with no real intention of following through when such statements refer to future intent.

Purpose: BMF allows investors to safely diversify among mining companies.
1. BMF will not invest in any company unless the operator is a known
and trusted community member.
2. BMF will not invest in any company unless it has paid regular
dividends for at least sixty days.
3. BMF will only invest in companies approved by shareholder motion.
4. BMF will not invest more than 2% of it's holdings in a company
unless it has obtained the identity of the person operating the
company, or the operator of the company has provided identity escrow,
or is accountable in some other way for the operations of said
company. We do not list in unaccountable, anonymous entities.

Transparency: The fund seeks maximum transparency by fully disclosing
all assets held in the fund at any time.
1. A spreadsheet will be created listing all assets held.
2. An independent financial advisor will be hired to provide oversight
and ensure that things are running smoothly.
3. A support e-mail address will be operated by the manager, to
provide disclosure and give investors the tools they need to make
their own decisions should anything be required.


Dividends: The fund will pass through dividends received by the fund
using a combined growth and income policy.
1. Upon receiving a dividend, the fund will use approximately half the
money to buy more assets (growth via capital gains) and make payments
to shareholders (income via distributions).
2. Dividends will be paid within a reasonable time frame after
receipt; within 72 hours barring any extenuating circumstances.

Net Asset Value
The Net Asset Value (NAV) is the value of all assets in the fund plus
the cash on hand.
The Net Asset Value per share is the value divided by number of units
outstanding. This is also known as NAV/U.

Management Fees
Management will be compensated with 5% of all dividends paid. No other
payment or fees will ever be taken by management.

Underlying Asset Motions
Underlying assets held by the fund may periodically raise motions to
vote. This fund will vote on motions on underlying assets favoring the
best interest of the fund. Shareholder may request a motion for proxy
voting the fund's shares of an underlying asset.

Risk to shareholders
Although research has been put into each underlying asset, Mining
assets in the past have been unpredictable. The fund's value relies on
the the value of the underlying assets. If the underlying asset value
decreases, the entire fund's value will also decrease. Additional
risks to Mining assets include the price of Bitcoin, the price of
mining equipment, the difficulty mining Bitcoins the Bitcoin reward
per block, mining equipment upgrades, as well as many other risks.
This fund does not hedge against any of these risks. Each shareholder
must understand these risks before investing.

Fund Closure
Management reserves the right to close this fund for any reason giving
30 days notice. All assets in the fund including unpaid dividends will
be liquidated on the respective markets and paid to shareholders.

It seems there's still demand for fixed-rate mining bonds.  There's also plenty of people who believe those are generally sold at prices where they make no sense for investors (I fall in this latter group).

Is there interest in a set of investments that allow investing/betting on BOTH sides of this argument?  This would allow those on both sides of the discussion to put their money where their mouth is - and would also allow the market to define what it considered a fair price for fixed-rate mining bonds.

I'd do this by issuing either TWO or THREE securities - all from the same issuing account and with a shared wallet.  I'm not going into the detailed math or specific numbers here - just the principles.

Security 1 : Acts pretty much like a fixed-rate mining bond.  Weekly pays out based on current difficulty.  Has a buy-back clause giving right to repurchase at 100 times current weekly payment.
Security 2 : Is betting against security 1.  Retains the wallet contents after repurchase of security 1.  May also receive dividends prior to that IF the wallet contents exceed 100 weeks' payment by a large margin.  Has a monthly vote on whether to exercise the buy-back clause (so investors get to choose).

In the two security model I'd sell both securities.  So investors in security 2 would be trusting my judgment on what a profitable (for them) price-point was for security 1 - but would get to choose when to close out security 1 and either take a loss or collect profit.

In the three security model there'd be a third security.  More sophisticated investors would buy that on the market then transfer the share(s) back to me and receive in return shares of BOTH securities 1 and 2 (in a fixed ratio).  They could then sell whichever they chose on the market.  Those who wanted to bet/invest only on one side would be buying from these investors - so the prices of both sides would entirely be set by the market (I'd buy some myself at start to give some initial liquidity).

Note that I CAN'T list all three securities AND directly provide shares for sale in 1/2 - as that would destroy the value for investors in security 3 (which comes from them being able to bet on their own judgment being better than the market's).

In the two-security model my fee would be a percentage of PROFIT made by investors in security 2 - i.e. unless they received back more than they invested I'd get nothing.  So I'd be gambling myself that I could sell security 1 at a price unfavourable to investors in it - which is what most mining bonds/shares do anyway.  As the terms of security 1 would be absolutely fixed there'd be nothing I could change for investors to create a conflict of interest.

In the three-security model I'd take a small fee on ALL dividends (as I'd also be subject to the pricing judgment of investors in 3 and would also have a bunch more work to do transferring shares).

There's a whole bunch of checks and balances that would need to be in place (in terms of when shares could be issued and dividends paid to investors in 2 etc) but that's minor detail that I already know the answers to.  Is there any interest in the concept to make it worthwhile for me to flesh out the contracts and front up the listing fees?

Advantages for investors in 1 over 'traditional' fixed-rate mining bonds:

No CP risk to third parties such as manufacturers.
Immediate dividend payment - no waiting for hardware to arrive.
Investing doesn't itself increase network hash-power - investing here rather than in a normal FMB means lower difficulty and more profit.
No possibility of default because of events such as fire, theft of hardware, massive hardware failures etc.
Cash backing the bonds always present and verifiable.
If redemption happens it would be immediate and in cash - no waiting for buyers of hardware.
Likely to be cheaper than bonds backed by actual hardware.

Disadvantages for investors in 1 over 'traditional' fixed-rate mining bonds:

CP exposure to the exchange on which the funds sit idle.
Not actually contributing to securing the Bitcoin network.
Maximum receivable limited to wallet contents - meaning if bitcoin disastrously fails for some reason you'd get a lot less (albeit near worthless) BTC back.

[BACKGROUND]

This is a self-moderated topic.  The rules being applied are:

Any posts by usagi or friends will be deleted if they are fully or partially off-topic or attempt to weasel around the questions (clearly given at the end of this post) without actually answering them.  This will be done without delay or discussion - what's good for the goose is, after all, good for the gander.  If this happens repeatedly then, in accordance with the forum rules, usagi will be asked not to post further in this thread.  I'd prefer if he just answered the questions but am not expecting that to occur.

This topic exists because when I asked perfectly clear and simple questions in the main thread for TU.SILVER they were not answered and the second post of mine deleted.  If we can't discuss the security in its own thread then we'll make our own.

BACKGROUND

Today usagi made the following post:

Wow, this just blew me away.

As some of you know from the "Financial Reporting" thread, we have cusdog (a Registered CA) looking at our books now for TU.SILVER (thank you cusdog), in addition to DeaDTerra providing operational oversight and advice.

Well guess what. Cusdog just found an error in our books where I had inserted or deleted some rows and the balance was not updating properly. And, apparently, we have around 30 BTC in cash more than I thought.

Yeah I know, I'm in shock. When I corrected the mistake our internal value calculator shot up about 100%.

This is good news because we are going to need to spend some money soon on a silver purchase and this will definately soften the blow of a large amount of silver entering the fund. It's probably about time to pay our financial advisor (and cusdog!) something for the amazing job they're doing auditing our books as well.

So this is all-around great news. Maybe we can even step things up a notch and hire someone to manage an advertising campaign for us. Let me know if you have an ideas guys. I'm especially interested in suggestions for silver purchases. Do you want Freedom Girl rounds? Murray Rothbard rounds? Crazy Horse rounds? NTR silver bars? You name it, and I'll order it. Then you can choose what you like when you redeem your units for the physical.

Good luck and thanks to everyone invested in TU.SILVER for making this a smashing success!

The emboldening is mine.

Whilst it's amusing that someone can misplace half of their 'internal value' and not notice it (and the error get past some kind of rubber-stamping audit) that's not the main focus here.  The auditor not blinking at half the value vanishing is excusable - he probably just has past experience of companies run by usagi (so half value vanishing is entirely standard).


SO WHAT'S THE VALUE OF THE SHARES?

Usagi has been lately paying out dividends to reduce the non-silver element of the shares.  The most recent valuation of the shares was only given a few days ago - with a heavy reduction in price caused in part by that policy.

My reading of usagi's post above was that 30 BTC belonging to investors had been found - what else could the 'internal value' refer to after all?  And there were references to "we" further suggesting that the funds were something other than usagi's personal money.

So I posted asking the following (quoted with usagi's reply) which was NOT deleted:

So what's the new value/share or recommended trading price?
Wouldn't you be better off dividending it out to keep your price reasonable for anyone who wants to buy silver - or is there some way they can get their part of that 30 BTC if they turn shares in to receive silver?

I was going to answer this but I'm rushing out the door to go to work. Maybe DeaDTerra or cusdog can answer for me while I'm gone, or I'll have to get back to you after work. It should be the same or a little higher than the management guidance published in our recent weekly report but you'll have to hold for an official answer.

There were two parts to my question:

1.  A request for a new valuation - pretty simple you'd think as one was given only a few days ago.
2.  A question/suggestion that maybe the 30 BTC should be dividended out - if the funds belong to investors then retaining them undos the good work usagi had been doing in getting the price/share back somewhere towards being representative of actual silver prices.

Much to my amazement (and I WAS genuinely amazed) it appears that somehow doubling internal value of shares has a negligible impact on their price.  Maybe I somehow misunderstood things - and the found 30 BTC weren't investors' but belonged to usagi?


SO WHOSE ARE THOSE 30 BTC?

In the interim the price of TU.SILVER shares had risen sharply - my belief is that was because some people, like myself, read usagi's post as meaning the value of shares had doubled.  If internal valuation has doubled then it's not unreasonable to assume external valuation has increased similarly.

So I posted suggesting this should be clarified.  My post was then deleted and I was PMed a non-response to it.  As the PM was in response to a PUBLIC post I'd made (which has now been deleted) I quote my post AND usagi's PMed response here.

I misunderstood  (I think) what you'd said as meaning you'd found 30 BTC extra that belonged to your investors - and that the value of shares had nearly doubled.

If the 30 BTC you found belongs to you personally then maybe you should clarify that - so people don't mistakenly assume the shares massively increased in value because of this lucky find.

As I said, I simply can't confirm or deny anything of the sort for you. If you need a confirmation of what is going on, you will have to ask our financial advisor. Good luck!

Yes you read it right.  Usagi can't confirm or deny whether 30 BTC that were the subject of an accounting error in his fund belong to him or to investors.  I'm supposed to PM his financial advisor to find out.  That's DeadTerra who:

1.  Didn't even NOTICE the error during an 'audit'.
2.  Has yet to respond to a PM from me about his OWN business sent 3-5 days ago (it was just a question about transferring shares between his pass-throughs to S.DICE on 2 different platforms - nothing urgent or important).

No wonder usagi wished me "Good luck!".

Now in general after some major fuck up (and misplacing half your fund's value IS pretty major - if the found BTC doubled value then half was misplaced) it's good practice to be absolutely clear about what happened.  If usagi doesn't feel competent/qualfied to comment on his fund's value/share then he should get his financial advisor to post it in the thread - not leave everyone in the dark unless they PM.  If none of usagi and his two financial advisors can determine what the shares are worth then maybe he should suspend trading on it until they decide who the 30 BTC belongs to and what value the fund/shares have.

The suspicion has to be that there's some co-mingling of funds/assets going on - with usagi's personal cash and the fund's mixed together.  That suspicion can, of course, be easily dispelled.

THE QUESTIONS

So here's the simple questions that need to be answered:

1.  Does that 30 BTC belong to investors or to usagi personally?  If to neither of those then who owns them?
2.  What's the new book value/NAV/whatever usagi calls the 'official' price/value of a share of TU.SILVER?
3.  If 'internal value' is significantly different to the answer to 2. then just what does it represent and why is it of interest to investors?  i.e. why was that doubling reported but not the extent to which a useful 'real' value had changed?
4.  Is cash belonging to usagi personally kept in the same wallets as cash belonging to the fund?
5.  Are shares of TU.SILVER owned by usgai personally kept in a seperate Bitfunder account to shares belonging to the fund (i.e. treasury shares)?

I appreciate it may take some days or weeks to determine the answers and that both financial advisors would need to be involved in addressing such complicated matters.

Some of you will be aware that I've commented at various times on usagi's assorted failed businesses and the scummy/scammy practices conducted by said issuer.  The more alert of you will have noticed that usagi has locked various threads and is back to sticking his head in the sand and pretending that's all is well.  What few of you will have realised is that usagi moved the conversation about his businesses into threads for the small fund and associated bond that I run.  As they're traded in LTC and on LTC-Global, those threads are in the alternate cryptocurrencies section of the forum.

Most of his posts there are of little interest - asserting that as I make a decent profit I must be lieing and begging me to show him my books so he can work out how to make a profit himself.  Obviously he doesn't word it like that

This post is only going to address one very specific issue - where usagi is plainly lying and is clearly attempting to back out of a commitment made to his investors.

Recently usagi asked in one of my threads (as his own relevant ones are locked of course) what I wanted him to do for me to stop posting about his securities.  Here's his response to one of my points:

NYAN.A: You promised to repay this in full personally.

Another lie. It was insured by CPA. There's a big difference. What I actually said has been posted on the forums since pretty much November.

Well that's wierd because:

https://bitcointalk.org/index.php?topic=133168.msg1482060#msg1482060

Letter to Shareholders of all my companies:

In response to some recent enquirers I'd like to remind people that I DO NOT HAVE PERSONAL LIABILITY. The contracts were all very clear. NYAN.A was insured by CPA and CPA existed to expose investors to both the rewards -- and the risks -- of insurance. You knew that before you invested, so it's a little late to start complaining. Do not bother to try and shift the scam accusations from "usagi is responsible for the mining crash" to "usagi has personal liability". I will simply ignore you.

You have to understand. If I invest in a company like BitVPS, and the boss (rg) dumps his WoT/OTC key on pastebin, sells his company and moves to timbuktu -- that I am not responsible for covering investor's loss. Some people seem to think that taking 5% of investment dividend qualifies me to shoulder 100% of the risk. That's just not going to happen on many levels, least of all the contract stating I am not responsible.

This is very important to understand because I will be, breathtakingly, assuming personal liability for NYAN.A.

Yes, you heard it here first. I will be paying what is remaining on NYAN.A out of my personal salary over a period of months because so many companies blew up that all of the value in NYAN.B and most of the value in NYAN.A has disappeared. BITVPS is gone. That was our gem. We're not on the list of BITCOINRS (fancy that). And so on. I've also sold $4,000 worth of my personal gold and silver in order to make bids on BMF securities (see auction) and to buy out the JAH and RSM positions so that my shareholders can receive full value. I've done this in auction or on the market so shareholders know they are getting a better deal than if I didn't do this. I've also relinquished my personal stake in these companies back to shareholders to increase their value.

It's sad that I won't be able to save any money during this time but I believe that contractual obligations be damned -- it's the right thing to do.

In a better world the people who owe me money (as listed in the claims thread) would do the same thing. But they aren't. They're running and hiding and pretending they don't owe me any money.

That makes me sick. And what's worse is a handful of very confused individuals who believe it's all my fault.

Well there's nothing I can really say to anyone over this, because actions speak louder than words.

At any rate, Chinese New Year is coming up soon so let's enjoy ourselves Smiley"

As clear as anything he explains how he doesn't have to accept personal laibilty (true) then equally states that despite that he's going to accept that liability and pay them out of his wages.

Obviously that never happened - it's usagi so promises are just things you say because they sound good not actual commitments.  But now he's even denying ever saying it - despite (as of now) the post still being viewable.  Hopefully a few of you see it before it vanishes - into whatever black-hole the promise (and payments) have vanished.

In fairness, in the past usagi has generally kept actual explicit promises (just fucked up everything he touched, lied through his teeth, made false claims regularly and failed to understand even basic issues germane to the businesses he purported to run).  Seems like now he's going the extra mile and progressing to not just failing to keep promises/commitments - but actually lying about having made the commitment.

Be VERY careful if you have to deal with this piece of shit.

Now to see if he's dumb enough to quote the first sentence of his post without bothering to refresh his memory on the rest of what he said.

Not sure why Ukyo lets crap like this and Exchange.ESIF list on Bitfunder when it's immediately obvious just from the prospectus that they're scams.  There's now plenty of reasonable or half-reasonable assets on the platform - and scams like these don't actually attract much volume (and what they do attract the exhcnage only gets to see about 1.333 times before it vanishes).

Anyway, here's why this one is a scam.  Some of the stuff here you'll have to check out yourself - other bits you'll have to take my word for (or ask Ukyo to check).

1.  His description says "This is not a public company or corporation, but is a private business. We are using this service to manage shares and dividends. We cannot prevent shareholders from selling or trading their shares to outsiders using this service, but it is the best system available so we are using it."  Yep - according to this he wasn't listing to sell shares himself, but to help manage the accounting.  And he can't help it if some shareholders trade on it.

But that's not what happened.  Right after listing he slung up a block of 100k for sale.  We know it was him - as all the shares except 17 (yep - only 17) were in a single account.  And since then he's been trying to sell non-stop including posting a totally laughable news release.  So we aren't off to a good start are we - when he lies about the primary intention of listing.

2.  He hasn't even identified the business.  I'd have thought Ukyo would have the self-respect just to laugh at him and tell him to fuck off when he asked to list without identifying the business, but apparently not.  Think everyone knows the track record of past companies that didn't even identify their business.

3.  Another common give-away for scammers is that they don't actually mind what price they sell shares at : after all they haven't got to protect investors' interests or raise a specific sum, they just want whatever they can get.  So I thought I'd see just how low he'd sell shares at.

I slung up a buy order for some at 0.0001 - that's 1% of the price he was listing for sale at.

Not long after :

2013-03-01 21:30:29    BUY: (Biz27B-6): 1 @ ฿0.00010000/ea

Hmm, what to do next?  Well obviously put it up for sale just below his own sell orders (delay is mainly because I didn't notice I'd bought it).

2013-03-02 19:06:44    SELL: (Biz27B-6): 1 @ ฿0.00990000/ea

Ah well, only 1 share - would be different if he did it on a bunch.

Like:

2013-03-09 14:10:34       ฿0.00995000    1    ฿0.00995000
2013-03-09 14:09:31       ฿0.00200000    500    ฿1.00000000

Yup - selling 500 at 20% of price he lists at, then immediately buying 1 off his main Ask so last bid is still high.  Just hope whoever got that 500 knows to relist under him and keep lowering price down.  Do I KNOW that sale is him?  Nope - but it's easy enough to check from cached ownership lists on Bitfunder.  Just can't be bothered to do it myself - as I don't need convincing he's a scammer.

4.  None of the above is conclusive proof of scamming individually.  Put together maybe it is.  But here's the real kicker.  He talks about having transparent accounting - where investors can see revenue and expenses go in and out of the business' accounts.  Now I was sceptical of this - how can it be transparent when we have no idea who is paying or being paid by him?  How can we be sure he's not just funelling BTC through a mixer to fake up his accounts?  Turns out I was wrong - it IS transparent and laughably so.

I had a look at the accounts addresses and was amazed and amused by what I saw and by his total stupidity.

The revenue account (starts with 1BizRev) receives funds in from various addresses and sends funds on to the Expenses account (starts with 1BizExp).  The expenses account then disburses these funds to various addresses.

Where it becomes transparent is because if you look at these other addresses you find some where ALL the account does of significance is receive from his Expenses account then an hour (or less) later send it back round the loop to the Revenue account.  Yep - he was too dumb even to use a mixer and made his accounts totally transparent - he's cycling the same cash around to make it look like there's business happening.

Here's some examples :

http://blockexplorer.com/address/17MVKyVjFsMAnsFKidGmJCWGmUfstLUXRa

receives 1.3 BTC from his expenses account (which received that from his revenue account) then 10 minutes later (yep only TEN minute later) he sends exactly same amount back to the Revenue account.

http://blockexplorer.com/address/1NsnBcrk6jJQGcwWCCAmBHcdG9VJofSGRA

This time he waits an hour before sending the funds on around the loop.

I spat coffee all over my keyboard when I first saw just how obvious it was - had expected it to take at least 10 minutes to work out just how he was cycling the funds around.  I haven't looked at half the addresses.  Would assume some will be receiving withdrawals from Bitfunder and pushing them round the loop - the size of his transactions has slowly grown once he sold some shares so had some cash to move around.  And would also assume some of expenditure transactions will be deposits to his alt accounts on Bitfunder so they can buy shares and make it look like there's demand plus assist his pretence of having private investors.

Anyone still think it's legit (other than Ukyo)?

[INTRODUCTION]

INTRODUCTION

LTC-ATF is a small fund listed on LTC Global which, to date, has focussed on trading LTC and BTC-Denominated securities on the available exchanges.  LTC-ATF is now expanding its operations to include running LTC-denominated pass-throughs to BTC-denominated securities.  This thread will be used to describe and discuss these pass-throughs (as they will all have pretty much identical contracts any question or issue relating to one is likely to apply to all).

The second post in this thread will hold a typical contract for reference.

Further information about LTC-ATF can be found at:

The listing for the fund at https://www.litecoinglobal.com/security/LTC-ATF
The LitecoinTalk thread for the fund at http://forum.litecoin.net/index.php/topic,657.0.html
The Bitcoin forums thread for the fund at https://bitcointalk.org/index.php?topic=112876.0

The threads in the last two links contain pretty much identical information (I post all significant updates to both) so there's no need to read both.


RATIONALE

The idea behind running these pass-throughs is straight-forward : to make additional profit for LTC-ATF by making available to LTC investors investment opportunites that are otherwise unavailable or uneconomical for them.  As well as the direct profit from operating the pass-throughs it is my hope that these pass-throughs may attract some new investors to LTC-GLobal - stimulating the market there which is also to the benefit of the fund (as the fund trades there - so increased investors/activity means more opportunity for the fund).

Clearly for pass-throughs to be profitable to operate they must be attractive to potential investors.  The following are the key points that I will be looking for when choosing securities to operate pass-throughs to:

1.  A clearly defined business.
2.  A clear means by which profit can be delivered - no pipe-dreams lacking any description of how return for investors will be achieved.
3.  Indisputable evidence that the business described is actually occurring.
4.  Some specific reason why it is not practical (or economical) for small investors to directly invest in that business.  The pass-throughs will NOT be targetted at larger investors - those should invest direct.
5.  The business is of a type and/or scale not already available for investment in on LTC-Global.  Don't expect to see mining companies or precious metal funds.

Point 4 pretty much rules out pass-throughs to securities on BTC.CO, CryptoStocks and Bitfunder (there's no barrier to entry).


OPERATIONAL DETAILS

Shares will only be sold in pass-throughs when LTC-ATF already holds shares of the underlieing asset.

Rather than selling in large blocks at a fixed price, our pass-throughs will attempt to more closely mirror the price of the underlieing asset - avoiding the situation where shares sit unsold due to having become grossly over-priced.  This also removes the hidden fee charged on some pass-throughs - where the price sold at represents a much greater markup than the fee claimed to be charged.

We charge a 2.5% fee on sales/repurchases and a 1% fee on dividends.  These fees cover all transaction/currency conversion/currency movement/subscription fees whilst leaving a small profit for the fund.  This works out to be competitive compared to alternative pass-throughs - especially for those intending to hold shares and receive dividends.  It also works out much cheaper than investing directly for small to medium investors.

Unlike some other operators, LTC-ATF offers the ability to sell back - just put them up at 2.5% below lowest bid on MPEx and we'll fill the order.  All LTC-ATF securities (including the parent fund) offer this type of liquidity.


PASS-THROUGHS OPERATED

Satoshi Dice.  Would assume everyone knows what this is.  Most BTC exchanges have pass-throughs to it - well here's an LTC denominated one.  Full details in the listing at https://www.litecoinglobal.com/security/S.DICE-PT

BitBet.  A website for betting on Yes/No propositions.  All betting is done by transparent Bitcoin transactions (no user accounts needed).  Bets are seeded with  small amount of capital by the house.  Full details in the listing at https://www.litecoinglobal.com/security/S.BBET-PT

MPOE.  The share representing ownership of the MPEX stock-exchange and the MPOE Options exchange.  Full details in the listing at https://www.litecoinglobal.com/security/S.MPOE-PT

[STATUS]

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.

[Local Rules : Anyone can post in this thread, even people who are confused over their gender, can't do basic math, view failure as doing well and in general lack any idea of how to run a business]

GIVING AWAY MONEY

Think this shows just how dumb usagi is.

If you are a large investor I will give you 10% off shares of NYAN.A or BMF. I am desperate to make this work and I think that you can see that with the way I am backing this with my own personal money. I have absolutely no intention of giving up and I will fight for my companies till  the very end.

Now let's think about this.

Nyan.a's contract specifically commits that CPA/nyan will maintain a bidwall at .99 for nyan.a.

nyan.a shares sell at 1 BTC.

10% off 1 is .9

So usagi is offering to sell nyan.a shares at 0.9, having offered a guarantee to buy them back at 0.99.  That smells like giving away money for free to me.  Buy at 0.9, list at .99, wait for contractual obligations to be fulfilled, rinse and repeat.

Or is the 10% off some imaginary RMV?

And who foots the bill for that 10%?  The investors?  CPA?

-------

Coming next post : Guarantee?  What guarantee?

Note: I have decided to cease posting in usagi's own threads.  I don't believe local rules banning me are wise, should be enforced or are in the interests of usgai's investors.  However if usagi won't respond to them then they DO end up effectively being trolling.  I would encourage any investors in usagi who believe any points I raise merit answer to ask the questions themselves - then, maybe, you'll get an answer.  I expect usagi to answer THIS post but not the next.

[WHAT IS LTC-ATF AND WHY DOES IT EVEN EXIST?]

WHAT IS LTC-ATF AND WHY DOES IT EVEN EXIST?

LTC-ATF is a small fund established to trade in securities denominated in crypto-currencies.  The fund's focus is very much on trading rather than investment - it doesn't sit on investments waiting for them to (hopefully) make a profit, rather it strives to buy and sell making profit in a much shorter time-scale.  As part of its strategy LTC-ATF now operates pass-throughs to securities which have a significant barrier to entry that would otherwise prevent smaller investors buying them.

The obvious question to ask is "Why bother setting up a fund with such a small amount of capital - couldn't you just use your own funds to trade?".  There are a range of reasons why the fund exists - hopefully the give some insight into
the rationale behind the fund and why it operates the way it does.  In no particular order :

Funding : Of course I have sufficient funds to use my own capital for an operation this size.  But if market conditions (range of securities and volume traded) change such that a much larger operation is desirable then without a track-record it would be hard to raise the funds to take advantage of that.

Fairness : I'm by no means shy about expressing criticism of other virtual securities.  It's therefore only fair that I run one myself and give opportunity for those I criticise to reply in like manner.  It's my hope (and expectation) that my performance, fairness to investors, reporting standards and transparency will make plain that - whatever else my faults may be - I'm no hypocrite when I complain about others' lack of those same qualities.

Fun : It's far more enjoyable running the fund in public than it was when I just invested my own funds in private.

Motivation : Having a responsibility to my investors causes me to put more effort into my endeavours than I otherwise likely would.  If I become lazy, lax or careless then it will become a matter of public record - a great incentive to do none of those.

Start Small : It's painful watching people attempt to create new companies in areas they have no proven expertise in and trying to raise thousand or tens of thousands of BTC right from the start.  I'm doing it (what I believe to be) the right way - start small, prove you can do well whilst small then (and ONLY then) expand.

WHAT SECURITIES DOES LTC-ATF OFFER?

At present LTC-ATF offers four securities on LTC Global:

LTC-ATF - This is the parent fund.  Investors in this purchase units of the fund representing a portion of the assets owned by the fund.  This fund does not pay dividends - all profits (or losses) are reflected in a regularly updated and published fund valuation.  Liquidity is provided via a constantly maintained bid-wall just below NAV/U.  Units of LTC-ATF are valued and transacted in LTC.

LTC-ATF.B1 - This is a bond issued by LTC-ATF.  The bond's purpose is two-fold - to retain as much of profit as possible for LTC-ATF investors and to allow trading in BTC-denominated securities with greatly reduced exposure to fund value changes casued by exchange-rate movement.  This bond has a face value (and pays dividends) denominated in BTC but transacted in LTC.  Dividends are paid weekly at a fixed rate which can be raised by the fund manager at will (but never lowered again whilst there are bonds outstanding).  Liquidity is provided via buying back through the market at just below face value and by facilitating sell-back of larger quantities of bonds through direct transfer.

At present 25000 LTC-ATF.B1 bonds have been sold.  These have a face value of 0.01 BTC each and pay a dividend of 0.6% of face value each week.

S.BBET-PT - This is a pass-through to the BitBet security listed on MPEx.

S.DICE-PT - This is a pass-through to the Satoshi Dice security listed on MPEx.


PLATFORMS TRADED ON AND DISTRIBUTION OF FUNDS

I list below the exchanges/platforms our funds are used on - along with an estimate of the percentage of funds deployed at each location.  Some of these ranges are pretty wide - actual funds on each platform varies as profit/loss occurs and needs change.  I don't intend to update the percentages too often - they're only there to give a general idea of how funds are distributed.  I WILL, however, update the list promptly if we add an extra platform to which we have exposure.

LTC Global : 25%-45%.  Majority of funds will usually be here - as we can't use LTC denominated capital anywhere else (there's no meaningful LTC activity on Crypto).  This percentage will drop as activity on BTC.CO/BitFunder picks up and we issue new bonds to take advantage of it.

BTC-E : 10%-20%.  We hold reserves here (for faster movement between LTC/BTC, to exchange to maintain ratios and to ensure we can maintain bidwalls in the event lots of our Bids get filled).

BTC.CO : 10-30%

BitFunder : 15-35%

Cryptostocks : Currently no funds here.

CoinBR/MPEx : 5-25%  CoinBR is a brokerage through which we trade on MPEx (the 30 BTC MPEx registration fee to trade cirectly on there is beyond the fund's budget at present).

WeExchange : 0%  Have to pass through this site to deposit/withdraw from BitFunder.  No funds are left here for any period of time.

BitFinex : 0%-10% Used to arbitrage LTC/BTC, as an alternative to BTC-E for exchanging.


SUMMARY OF RESULTS TO DATE

The table below shows the overall performance of the fund to date.



There's a column for each of LTC and BTC showing how the fund has performed measured in that currency.  From top to bottom the rows are:

Fund Start :  Shows the date on which the funded and the initial NAV/U.
Last Report :  Shows the date at which the latest report was produced and the NAV/U at that date (that's the NAV/U after deduction of any management fee) plus the total of all dividends paid to date.
NAV/U Change : The change (growth) of the NAV/U from the fund's start until when the latest report was produced.
Growth (%) : The percentage the NAV/U of one unit has grown since the fund's start.
Days Elapsed :  How long the fund had been running for when the last report was produced.
Daily Multiplier :  What the starting NAV/U would have to multipled by every day (compounded) to reach the current NAV/U.
Daily Growth : The daily multipler shown as a percentage.
Weekly Growth : How much on average the fund has grown in a 7-day period.
Annual (APR) : What the annual growth would be if the current growth were maintained over a period of 365.25 days.

Whilst these figures DO represent the actual performance of the fund to date they should NOT be taken as any sort of sensible prediction of future behaviour.  A lot of the growth to date has been achieved with a much smaller amount of capital AND a much lower-valued LTC : both factors which allowed growth of a scale it is unlikely can be sustained.

No promises or predictions are made, intended or implied as to future profitability.


DETAILED HISTORICAL RESULTS

The spreadsheet below shows the performance of the fund since its inception.  Do note that the ending NAV/U reported for each week is BEFORE management fees - the starting NAV/U for the following week represents the actual NAV/U units were worth to their holders.




Here's an explanation of the various columns (from left to right) :

Date : With the exception of the first row (which records the start of the fund) this is the date at which a report was produced.  This is typically done each weekend - however it can be done more of less frequently.  Shorter periods between reports will only occur if either the fund is in significant profit AND is selling new units (where the ask price gets artificially inflated by unclaimed management fee otherwise) or if a very significant event occurs (such as the closing of GLBSE).  For the remainder of this post I refer to each of these periods as "a week"  - this should be read as an abbreviation for "accounting period (typically a week)".

Exchange-Rate : The LTC/BTC exchange-rate at the time at which the report was generated.

Start of Week NAV/U : This is the NAV/U of the fund at the start of the week.  If the previous week was profitable then this will be lower than the ending value listed for the previous week (due to the reported value at the end of a week being before deduction of management fee).

End of Week Actual NAV/U : The NAV/U of the fund at the end of the week.  This is the value before deduction of management fees, but after servicing any outstanding bonds or other commitments.

End of Week Actual Profit : This is the trading profit made by the fund expressed as a percentage.  Again, this is before deduction of management fees, but after servicing any outstanding bonds or other commitments.

%LTC : The percentage of the fund's net assets which are denominated in LTC.

%BTC : The percentage of the fund's net assets which are denominated in BTC.  Net assets refers to gross assets less liabilities.  Bonds are a liability at their face value.  So if the fund had BTC denominated assets (cash+securities) worth 30 BTC but had 20 BTC worth (at face value) of outstanding bonds then the fund's net BTC-denominated assets would only be 10 BTC and this percentage calculated accordingly.

Recalced minus E/R NAV/U : This is a (fairly crude) estimate of what the NAV/U would be were any exchange-rate movement ignored.  It is the average of (the average fund-split between currencies at the old exchange-rate) and (the average fund-split between currencies at the new exchange-rate).  i.e. the calculation assumes that the exchange-rate change happened steadily throughout the week and any change in the split between currencies also happened steadily through the week.  Sometimes one (or both) of those assumptions will be wrong.  This is just an approximation designed to give a crude view of what part of profit/loss was actually from trading rather than from exchange-rate movement.

Recalced minus E/R Profit : This is the profit that the fund would have made (expressed as a percentage) were the NAV/U at end of week the one recalculated in the previous column.

These last two columns are important - as the maximum rate that LTC-ATF is able to offer on bonds is one third of the average weekly profit adjusted to remove exchange-rate fluctuations.  This value needs to be defined ignoring exchange-rate impact as funds raised by issuing BTC-denominated bonds are immune to exchange-rate changes.  Below the main table are listed the average gross profit per week (i.e. before management fee) and the maximum rate LTC-ATF is allowed to offer on bonds.  Both of those are AFTER adjustment for exchange-rate fluctuations.

At the time of writing this, that figure sits at 3.2%.  There is no way a rate THAT high will ever be offered as I believe our results so far are above expectation and we shouldn't need to offer that high to sell bonds anyway (and why pay more than we have to?).