So GLBSE's obligation is to handle the sole account of who owns what, and they can simply stop handling that accounting any time they want?

Did GLBSE have an obligation to issue the claim codes at all? If not, then you're essentially arguing that GLBSE can abandon its customers (asset holders) any time it wants. If so, then they surely can't satisfy that obligation with a claim scheme that's fundamentally broken.

Since that consumes the code, why is that not accurately described as "redeeming"?

The asset holders are anonymous and have to self-identify to get their assets? Nobody has yet proposed any scheme for using the claim codes that works.

I agree that the shares were never in the possession of GLBSE.

Right, but that's only because the NYSE or the NASDAQ don't have any continuing obligation to maintain an accounting of who owns what shares. GLBSE isn't comparable in this regard. Each transaction of a share on GLBSE obligated GLBSE to maintain that ownership record, an obligation to the buyer that I don't think GLBSE can simply abandon. Anonymous exchanges can't work that way.

Your shares still exist, you simply have no way to prove they're yours to the issuer. That's cold comfort. The claim codes don't work for reasons I've already explained.

Please, explain the redemption scheme that can be used with these codes. I can't figure out any possible scheme. How long does he wait to make sure he doesn't get two claims with the same code? What does he do if he does get two claims? What does he do if someone accuses him of scamming when they present a code that isn't on his list?

And please explain where GLBSE's agreement with either its buyers or its asset owners permitted it to unilaterally decide how the accounting will be perpetuated when a stock is delisted.

Also, the suddenness of the delisting appears to be a major "screw you" to GLBSE's customers. I don't know of any reason such a drastic measure was needed. Trading could have been suspended, all pending orders deleted, a good faith effort made to work out a plan (buyback, redemption, whatever) with Goat, and perhaps trading resumed for a limited period of time (with a warning click through or some such) for people who didn't want to go through a redemption process and risk their anonymity. GLBSE may have good reason not to work with Goat, but they should have put their other customers' interest ahead of that.

That's half the solution. That's still insufficient because there can still be conflicting claims by two people each of which have the same private key. Each can swear that GLBSE gave that code to them and they gave it to nobody. You also need a two-phase claim scheme that requires everyone to submit a claim before any claims are honored. (With GLBSE taking the responsibility to resolve any disputes, presumably by issuing another claim code through the GLBSE account.)

Both parties agreed that GLBSE would control who owned the shares. GLBSE gave them to Goat. They're not bearer bonds, they're not "your shares" just because you have a claim code issued by GLBSE. GLBSE has no authority to issue its customers claim codes that Goat must redeem. Goat never agreed to effectively a bearer bond and he certainly never agreed (nor would have under any circumstances) to a scheme where GLBSE issues its customers claim codes that Goat must honor.

I would assume GLBSE's obligation to secure its customers assets and transfer control of them only as agreed rather than giving them to the issuer without authorization from either party.

Say Nefario says, "I'll buy gold for $10,000 per ounce". So Goat buys a bunch of gold expecting to sell it for $10,000 per ounce. Then Nefario says, "Sorry, I can't pay that much", I'll have to give you much less. You think *Goat* is scamming?

Goat relied on a representation that Nefario made where Nefario specifically intended that representation to increase the value of the previously worthless asset. If this is scammy behavior, it's only because he should have somehow known not to rely on Nefario's word. Nefario certainly had apparent authority to make that offer, though it now seems he didn't have the actual authority.

Goat was delisted because of events having to do with the GLBSE scam asset and his reaction to Nefario's breach of an offer he relied on. (The full issue is complicated. Please don't read that as placing the blame on either of them.) I don't believe the PPTs, or any of Goat's listings, were part of the issue.

I agree with this, though I slightly disagree with some of your reasoning.

I don't really agree with this. But I think it's academic as nobody (so far as I know) has claimed that they suffered actual losses (as opposed to lost profits) as a result of Nefario's representation beyond what he offered in compensation.

Goat reasonably believed that Nefario was acting on behalf of the seller's agent. GLBSE was the entity handling the sale and Nefario appeared to be acting on GLBSE's authority. He was in fact an agent of the seller.

Sure, but his responsibility is now only to himself. GLBSE's customers agreed to allow GLBSE to decide who holds the asset -- the other party to the contract is whoever GLBSE says it is. GLBSE has stated that they returned those assets to Goat and in exchange gave their customers claim codes. Goat has not accepted any obligation to honor these claim codes. Goat is now the holder of those assets, since GLBSE gave them back to him, and GLBSE's customers have only claim codes issued by GLBSE.

Goat only listed securities and never issued bearer bonds. GLBSE had no authority to issue bearer bonds redeemable by Goat. So it cannot be that the holder of those assets is whoever possesses the claim codes.

Every analogy will be different from the thing analogized, that's the point of the analogy. Can you explain why you think those differences make the analogy inapposite?

The basic idea is that you identify specific risks and then allow people to post offers to insure for or against that risk. The hard part is specifying precisely what the risks are, what the terms of the insurance offers are, and how you determine whether the insurance has to pay out or not.

For example, let's say there was a mining bond offered on GLBSE and someone wants insurance that the issuer won't default. The risk can fairly easily be identified. There would likely be a 100% payout if the bond was delisted from GLSBE or trading was stopped and a partial payout if the value of the bond dropped below some specified level, say half its average price around the time of purchase (in case there was a gradual or partial default). These are things that can readily be objectively identified. Time frames can be standardized, 30 days, 90 days, 6 months, 1 year, and people can place bids/asks for particular quantities at particular price points.

A thriving market in this type of insurance would be extremely valuable because it would provide a crowdsourced estimate of the reliability of various issuers and securities.

Goat paid GLBSE for stock.

Same here.

Perhaps, but that wouldn't change the fact that if the car dealer didn't intend to keep the promise, they would be scamming. (Though I think Nefario intended to keep the promise and so long as he makes up for any actual losses suffered as a result, he's not scamming in so far as breaching the promise.)

"If you buy a car from us and are unsatisfied for any reason, we'll give you back your money." You buy the car, relying on the promise. They refuse to give you back your money for the car. Consideration, or no?

Nefario said "if you hold the fake stock, we'll take it back in exchange for real stock". Goat bought the stock relying on the promise.

Nefario was specifically intending to increase the value of the fake stock. His concern was that people had paid more than it was worth and chose to handle it by increasing the value. Of course, he should have frozen trading prior to doing this. This mistake justifies voiding the promise, and that's why Goat is not entitled to lost profits.

That's not the right platform for a variety of reasons. And an insurance company won't work because the market is too immature. But an "insurance marketplace" on a platform specifically designed for that purpose could work.

IMO, the value of this forum for open discussion is greater than the value of this forum for trading and sacrificing the former for the latter doesn't make sense. Counter his speech with more speech. It sounds like most of the complaints are about claims that aren't actually unambiguously false. You have to live with that.

So this means that if someone gives Goat a claim code that has already been used, he must honor it anyway, otherwise he will be branded a scammer. There's no way he can prove he actually issued the stock already based on the same claim code. And there's no way he can hold all the claims and issue at the same time because he has no way to contact claim code holders to arrange such a schedule.

How long should he wait? He has no way to contact claim code holders to work out a schedule. Do you see how ridiculous this is?

And the mechanism for resolving those is ...? What?

In other words, GLBSE has abandoned their customers and unilaterally imposed a fundamentally broken and insecure claim code scheme on them. Yet they assume no liability whatsoever for the damages that will result from its obvious flaws and expect Goat to do so at his own risk. GLBSE had no right to convert a listed security into a bearer bond with no permission from either the issuer of that security or the holders of that security. In effect, GLBSE issued bearer bonds it now expects Goat to redeem in the absence of any agreement to that issue such bonds, any agreed upon scheme for redeeming them, or even any imaginable redemption scheme!

Congratulations, GLBSE. You are now on my list of companies that will make up new rules any time they feel like regardless of the consequences to their customers. On the bright side, you have lots of company.

I don't see how he can agree to do this until some method to solve competing claims is set up. Agreeing to do this poses huge liability for him as he would essentially be relying on GLBSE to have accurately issued the claim codes.

Again, the problem scenario is this:

1) Goat gets a claim code from an anonymous person, he issues the stock anonymously.

2) Someone else presents the same claim code.

3) Goat says the claim code is used.

4) The guy swears up and down he has not used the claim code, has mountains of documentary evidence saying he held the asset, threatens to make noise on the forums about Goat scamming.

What does Goat do in this scenario? He has no way to know if the guy is scamming or if GLBSE made an error. Outsiders have no way to know if Goat is scamming, the guy is scamming, or GLBSE made a mistake or deliberately issued the same claim code twice.

This would only work if either every single holder of his securities is honest or the community trusts him and GLBSE enough to believe that anyone who claims Goat refused to honor a claim code must be lying. I don't think either of these things are true. Do you?

(He actually could do a two-phase redemption. But considering he has no way to contact all his asset holders to arrange such a thing, the fact that it's technically possible doesn't help much.)

What does Goat do if he someone presents him one of those codes and then he receives a later claim using the same code that is accompanied by massive evidence documenting that that particular person held the security? Who is assuming this liability?

How can Goat verify that? He is essentially being compelled to accept a representation from a party he has little reason to trust.

In other words, GLBSE has abandoned their customers.

How does Goat verify this? Or does he have to take your word for it?

In other words, GLBSE has abandoned their customers. Goat is in a no win situation. If he refuses to honor the claim codes, he will be branded a scammer. If he agrees to honor the claim codes, he may encounter impossible situations with competing claims. Meanwhile, the customers who relied on GLBSE are in the cold as there appears to be little sign of cooperation -- frankly, from either side.

You mean GLBSE's customers, right? Goat doesn't even have any idea who they are.

Perhaps, but no consideration is required because all the elements for promissory estoppel are present. Nefario communicated a promise intending people to rely on it in clearly foreseeable ways. They relied on his promise to their detriment. This renders the promise the equivalent of a contract.

In any event, whether someone's considered a scammer by the community doesn't hinge on the finer points of contract law. It's more about common sense.

However, I think this particular issue may now be completely academic, as it seems Nefario did offer to cover any direct harm Goat suffered from the breach. He's not entitled to lost profits.

If that's so, then Goat has no case. He relied on Nefario's promise based on his apparent authority. The promise can't be enforced. He's entitled to compensation for any damages he suffered due to relying on that promise. If there are no damages, then that should be the end of it as far as the GLBSE shares issue goes.

My feelings may be a bit less strong than yours, but basically I agree.

And your losses from that are ... ?

That's a different issue. I think he was referring specifically to the issue with the bogus GLBSE stock. You are entitled to recover your losses from relying on that promise, but you are not entitled to lost profits.