[CLOSED] S.DICE - SatoshiDICE 100% Dividend-Paying Asset on MPEx

[Draino]

The thing that irks me is the surprise of it all.  Shares are down and we finally get a good month, and this announcement is a bit of a kick in the nuts.

Why not do it gradually, take 10% everytime we get a good month?

Shouldn't take long due to the great abilities of the management and superb skills of the IT staff we are paying for, right?

Right?

Well the thing about suprises is that there is no way for me to announce something without it being a surprise upon announcement, no? How can I convey new information to the community without it being the first time they've heard it? I'm trying to give people a heads up, and make the announcement 2-3 weeks before the end of the month.

Again, it could be done gradually... I'm just the "rip the bandaid off quickly" type of person. Really, this has been a massive free loan to SD shareholders. I'd like to end the loan because it's been bothering me since BTC went up 10x, so solving the issue with one month of earnings seems ideal. Again, 87% of those dividends would've been going to me and my partner anyway, so I won't be getting dividends this month either.

Lots of questions.

I'm not an expert, but isn't failing to disclose a giant liability like that tantamount to fraud?  I'm probably confused, was it made clear during the IPO?  I can't seem to find anything in the PDFs.

What was to stop us from considering the reserve pool an asset of the company all along (was it formed with pre-public profits from SDICE?  Is considering it a loan a new idea?)  Is your spite for shareholders going to continue to grow, and one day you'll decide to collect interest on this loan?

[evoorhees]

The thing that irks me is the surprise of it all.  Shares are down and we finally get a good month, and this announcement is a bit of a kick in the nuts.

Why not do it gradually, take 10% everytime we get a good month?

Shouldn't take long due to the great abilities of the management and superb skills of the IT staff we are paying for, right?

Right?

Well the thing about suprises is that there is no way for me to announce something without it being a surprise upon announcement, no? How can I convey new information to the community without it being the first time they've heard it? I'm trying to give people a heads up, and make the announcement 2-3 weeks before the end of the month.

Again, it could be done gradually... I'm just the "rip the bandaid off quickly" type of person. Really, this has been a massive free loan to SD shareholders. I'd like to end the loan because it's been bothering me since BTC went up 10x, so solving the issue with one month of earnings seems ideal. Again, 87% of those dividends would've been going to me and my partner anyway, so I won't be getting dividends this month either.

Lots of questions.

I'm not an expert, but isn't failing to disclose a giant liability like that tantamount to fraud?  I'm probably confused, was it made clear during the IPO?  I can't seem to find anything in the PDFs.

What was to stop us from considering the reserve pool an asset of the company all along (was it formed with pre-public profits from SDICE?  Is considering it a loan a new idea?)  Is your spite for shareholders going to continue to grow, and one day you'll decide to collect interest on this loan?

Fraud is a more than reasonable conclusion. But sadly your only option is the good will and love of the OP or the courts. MPOR-PR clearly has no power but bitching so what can you do? Cry? Ask for scammer tag from Theymos the fail? You got fucked.

OMG why is this so complicated for you guys?!

This 6100 BTC is not a "giant liability" of SD. It is sitting in a wallet, getting used by SD as a betting pool. If I withdraw it, then SD is not "in debt by 6100 btc"... there is not some huge 6100 btc hole. It's like if I had been letting SD use my personal hosting account for free, and then one day said, "he guys, we need to get a hosting account for SD because I don't want it using mine anymore." And then people yell, "zomg that is so terrible how could you let SD use your account!!"

Amazing that letting SD use this money for 9 months, for free, turns into accusations of fraud.

[Deprived]

Doing in gradually, with 10 or 25% of profits going to the reserve fund seems much more reasonable to me, rather than doing it all at once. Is this where the problem is, that the contract says 100% of profits go to dividends? Couldn't you just list it as an expense to pay off the loan which gets taken out before profits are calculated?

Sure, it could be done gradually such that a % of earnings each month go to building up the pool. I'd rather just get it over with, do one single month without dividends and then problem solved.

"I'd rather ..." yeah, that is what would be good for you, but as the manager of SatoshiDice you have the responsibility to do what would be good for the shareholders. Seems there is a conflict of interest here.

Of course. But the math is as follows - 3-4k BTC needs to be retained in order to create an asset betting pool for SD. If not, then I have a personal loan to SD indefinitely.

The only conflict of interest here is that I was being extremely generous about letting SD use that money for free, and now I need to go back to being normal, and establish a betting pool for SD with its own funds.

Strictly speaking, in the narrowest interest of an s.dice shareholder, Erik (me) should continue to loan the 6100 btc to the site forever, for free. But sorry, I'm not going to do that. Anyone have a good suggestion if my plan is so terrible?

The shares were sold as representing a share of profits.

If the pool was meant to be provided by shareholders then a portion of the funds raised from IPO should have gone for that purpose rather all of it going to you.

You received ALL of the capital raised from sale of shares, in part, because YOU were providing the working capital needed.  Accepting that risk - and providing that commitment - was all part and parcel of the original sale.

The key part of the contract of relevance is NOT the bit saying 100% of profits will be distributed, but rather the part defining profit.  Specifically:

"Net Profits here mean profits after explicit SatoshiDice development and Marketing costs (such costs, if any, will be described monthly in the Profit and Loss Statements). SatoshiDice does not pay salaries to any party, so no salary will be taken out of Net Profits. "

Only development and marketting fees can be treated as costs - NOT interest on loans or provision of capital.  And, for that matter, not any salaries or other costs related to running the business unless they're explictly either development and marketing.  In short there should be ZERO deductions in respect of anything which could be considered an operational cost.

How to do that? well of the 100% of IPO revenue you received (counting yyour partner as you for simplicity) and the 87% of profits you receive maybe you should have assigned some portion to cover YOUR end of the deal.  Which includes covering the costs of actual operation - one of which is the cost/rsik of providing sufficient capital.

Alternatively you could have done the contract differently - so that some portion of IPO funds was used as a float.  You could, in effect, change to that now - by GIVING to the company that portion of IPO funds that should have been retained if you'd IPOed with investors supposed to provide working capital.

What isn't acceptable is trying to charge investors twice - once so you can have it and then a second time so the funds go where they should have gone in the first place.

Another alternative would be to sell some of your own shares to raise cash to replace that currently tied up in the float.  That would be contractually allowed and is likely the best solution - even if it does produce a lot of whining about depressed share prices.

[Deprived]

Really, this has been a massive free loan to SD shareholders.

It's like if I had been letting SD use my personal hosting account for free, and then one day said, "he guys, we need to get a hosting account for SD because I don't want it using mine anymore." And then people yell, "zomg that is so terrible how could you let SD use your account!!"

A strange world where providing something in return for keeping 100% of IPO proceeds and 87% of profit is "free".

[maximian]

Amazing that letting SD use this money for 9 months, for free, turns into accusations of fraud.

It's a surprise. When did you declare this shareholder's loan? I wasn't aware of it. It's not stated in the IPO, and there's no published shareholder's agreement. You really owed it to us to make this arrangement clear at the time of the IPO, not now.

It's too bad that the IPO's purpose wasn't to provide capital for the betting pool, which is what would have made sense.

[RationalSpeculator]

Thinking more about it, I had the impression that SD already had retained earnings to finance this pool. But I might have misunderstood. Sunnankar talks about retained earnings of SD having gone up, strengthening the company, what did he mean with that?

[Peter Lambert]

OMG why is this so complicated for you guys?!

This 6100 BTC is not a "giant liability" of SD. It is sitting in a wallet, getting used by SD as a betting pool. If I withdraw it, then SD is not "in debt by 6100 btc"... there is not some huge 6100 btc hole. It's like if I had been letting SD use my personal hosting account for free, and then one day said, "he guys, we need to get a hosting account for SD because I don't want it using mine anymore." And then people yell, "zomg that is so terrible how could you let SD use your account!!"

Amazing that letting SD use this money for 9 months, for free, turns into accusations of fraud.

This would all be much easier if you had published a balance sheet for the company months ago.

The question we have is whether SatoshiDice has had this 6100 liability the whole time that you never told us about? The way this was operating, it looks like that 6100 BTC is an asset of the company. The "huge 6100 btc hole" is the difference between what we thought we owned as shareholders of this company and what you are claiming we own.

[DutchBrat]

We have seen months before when SD was doing well and then ended up with a nominal gain

What are you going to do when you can't replace all 6100 BTC this month (btw it would be really lucky if SD made 6100 BTC profit this month).... Are you going to keep providing a loan to SD for working capital and still gradually replace the reserves or will whatever SD ends up this month be the working capital from now on?

[StarenseN]

Erik,

if you still have a loan of 6K BTC to Sdice, I really really don't get the purpose of the IPO where SDice raised approx 35K btc.

The dividends are not your asset, it belongs to all stakeholders now.

[Deprived]

Thinking more about it, I had the impression that SD already had retained earnings to finance this pool. But I might have misunderstood. Sunnankar talks about retained earnings of SD having gone up, strengthening the company, what did he mean with that?

What makes you believe his comments had any validity?  If someone randomly assumes earnings are being retained that's no reason to believe it's actually the case.

Given that the contract explicitly states 100% of profit is paid as dividend it isn't actually possible for the COMPANY to retain earnings.  What IS possible is for evorhees to increase the working capital he provides (as part of his obligation in return for receiving all IPO proceeds).  That has the same impact (in terms of maximum bet sizes and risk of ruin) as if the company owned the float and retained earnings - but is not actually the same thing.

[EskimoBob]

Are you guys finally starting to understand why Popescus fabulous bookkeeping and reporting "standard" (LOL again) is yet another major fuck-up in BTC funny land of MP finances?  LOL!

Popescu has exactly ZERO! real life experience in running a business. He also has no idea what financial reporting is and how it looks like. I bet he can not even read read a real report. No wonder, he invented some new "standard" that ended up screwing everyone who believed his crap.

Hmm... why am I not surprised?

This is why the real world has some relatively straightforward reporting and accounting practices. This has completely escaped self proclaimed Financier Extraordinaire a.k.a dipshit Popescu.

Sure, Evorheese fucked up too, by not disclosing when IPO was sold. I can only guess that he got really stupid advice from a really stupid gypsy diletante, who got his non-existing education from a Hollywood "finance thriller".

In any normally compiled financial statements, including a proper balance sheet, this "loan" can not stay hidden.

Oops! But it did, because clueless egomaniac has set the "standard". LOL!

Please note how MPOE-PR muppet is starting to distance her slippery master and herself from this circus...

[Pale Phoenix]

OMG why is this so complicated for you guys?!

This 6100 BTC is not a "giant liability" of SD. It is sitting in a wallet, getting used by SD as a betting pool. If I withdraw it, then SD is not "in debt by 6100 btc"... there is not some huge 6100 btc hole. It's like if I had been letting SD use my personal hosting account for free, and then one day said, "he guys, we need to get a hosting account for SD because I don't want it using mine anymore." And then people yell, "zomg that is so terrible how could you let SD use your account!!"

Amazing that letting SD use this money for 9 months, for free, turns into accusations of fraud.

This would all be much easier if you had published a balance sheet for the company months ago.

The question we have is whether SatoshiDice has had this 6100 liability the whole time that you never told us about? The way this was operating, it looks like that 6100 BTC is an asset of the company. The "huge 6100 btc hole" is the difference between what we thought we owned as shareholders of this company and what you are claiming we own.

^This is it exactly. To my knowledge, you haven't provided a balance sheet or any disclosure that this loan existed. Can you point us to such a disclosure?

I know you aren't an accountant, but this is common sense, because obviously, the loan is a material debt on the company's books, and it is owed to an insider. If you were on the other side of this, wouldn't you have expected it to be disclosed prior to the announcement of it's repayment?

[evoorhees]

Alright. This isn't worth the drama.

- June dividends will go out as normal.
- Ill withdraw my 6100 btc loan at the end of the month
- My own June dividend will be retained and that will be used as the betting pool

In effect, this won't change things much from the current situation. I'll bear the whole cost of the betting pool, it'll just be smaller now.

Nowhere was it ever mentioned by me that SD owned a big pile of bitcoins. I guess people just assumed this. My mistake for letting the site use my coins since the beginning.

Enjoy your dividends this month.

[Pale Phoenix]

I understand some shareholders are disappointed as they will not have a dividend this month. And if you wanted to sell out soon than this is bad news. But if you are in it for a longer term I think a 10% drag on earnings for 6 months will likely have a bigger negative impact on the value of the shares than just doing it in one month.

Speaking for myself, I'm not nearly as concerned about the loss of another month's worth of dividends as I am with the incredibly unprofessional, and nonchalant, lack of disclosure to shareholders. Many of us have embraced Bitcoin because of the promise of freedom from onerous regulations, etc. but no one should be allowed freedom from fair dealing.

I don't know evoorhees personally, but from his posts, it's clear that he is not an unintelligent person, so I cannot believe the unfairness of this situation eludes him.

I don't think anyone would be questioning the repayment had this loan been documented and disclosed in the regular financial statements, which after all, are produced so that shareholders are aware of the entirety of the company's financial condition.

[Pale Phoenix]

Nowhere was it ever mentioned by me that SD owned a big pile of bitcoins. I guess people just assumed this. My mistake for letting the site use my coins since the beginning.

Enjoy your dividends this month.

Come on Erik. Nowhere did you mention a liability either. Frankly, I'm stunned by your attitude here.

The proper way to handle this is for the company to sign a note for the funds in the pool, and commit to a reasonable repayment schedule. This note should be carried as a liability on the books, and payed back regularly in a transparent manner that keeps outside shareholders informed.

What is so hard about that? Why are you making this seem like you are put out when it was your lack of disclosure that got us here?

Rather than getting our backs up, perhaps we can spend some time discussing the repayment plan and put this to bed in a professional manner?

[MPOE-PR]

Erik,

if you still have a loan of 6K BTC to Sdice, I really really don't get the purpose of the IPO where SDice raised approx 35K btc.

The dividends are not your asset, it belongs to all stakeholders now.

Actually, it was  2mn * 0.0032 BTC each + 5 mn * 0.0034 BTC each + 3 mn * 0.0037 BTC each = 34.5 k BTC at ipo + ~3 mn * .005 or so each = roughly speaking 50k BTC. For comparison's sake, all of Asicminer was built out of a 20k BTC original investment, more or less at the same time.

[jonitas]

Rather than getting our backs up, perhaps we can spend some time discussing the repayment plan and put this to bed in a professional manner?

Agree, lets repay the loan over the next 10 months or so.

[ThickAsThieves]

Rather than getting our backs up, perhaps we can spend some time discussing the repayment plan and put this to bed in a professional manner?

Agree, lets repay the loan over the next 10 months or so.

I think the point here is that there is no loan at all. Erik has been compensated fairly via IPO and the shares he holds, and never noted any desire to loan funds to SDICE in the past.

I wonder if there are any other surprise liabilities SDICE has...

[freedomno1]

Rather than getting our backs up, perhaps we can spend some time discussing the repayment plan and put this to bed in a professional manner?

Agree, lets repay the loan over the next 10 months or so.

I think the point here is that there is no loan at all. Erik has been compensated fairly via IPO and the shares he holds, and never noted any desire to loan funds to SDICE in the past.

I wonder if there are any other surprise liabilities SDICE has...

All I will say on that topic is we'll see given time

[MPOE-PR]

I think the point here is that there is no loan at all. Erik has been compensated fairly via IPO and the shares he holds, and never noted any desire to loan funds to SDICE in the past.

I wonder if there are any other surprise liabilities SDICE has...

Moreover, management can't really pass responsibility for its own actions to the shareholders, because the shareholders have no control whatsoever. If three months down the road Erik comes and says "hey, we had a break-in, the funds are gone" then how exactly can Random Q Investor verify this claim, make sure it's not something like Vircurex pulled recently? And if Erik never comes and says thus, what's the point of the entire maneuver? In all circumstances they with the ability to prevent losses are they who must be responsible for the losses.