Do you Consider a Contract Change without a Share Holder Vote Invalid? [GLBSE]

[RandomQ]

I just curious about what other people think on this issue?

If a Contract change is made without a Share Holder Vote and changes are made to the contract by the Asset Owner?
I consider this fraud by the Asset Owner and the changes to be invalid.


If a Contract change is made without a Share Holder Vote and changes are made to the contract by the Exchange Owner?
I consider this a breach of Contract by causing interference with the other party's performance.

I wanted to throw this here, because I didn't want to clog up other threads.

Please keep Flaming to Low Levels, I want to discuss the issue and not what is causing this to come up?

[puffn]

Yes. Even if the issuer does not need a motion to pass to change the contract I consider this to be very very shady. Ianal, but I am pretty sure any ambiguity in a contract benefits the party who did not draft it in US courts.

[JoelKatz]

If a Contract change is made without a Share Holder Vote and changes are made to the contract by the Asset Owner?
I consider this fraud by the Asset Owner and the changes to be invalid.

I don't think you can answer this in the abstract. It's fraud if there's deception or intent to defraud. If, for example, the change remedies something that was objectively a defect in the contract, then it's not fraud. For example, if the contract promises that a particular person will guarantee repayment and that person dies, there's no fraud in changing the guarantor to someone comparably reliably. What's the alternative?

[RandomQ]

If a Contract change is made without a Share Holder Vote and changes are made to the contract by the Asset Owner?
I consider this fraud by the Asset Owner and the changes to be invalid.

I don't think you can answer this in the abstract. It's fraud if there's deception or intent to defraud. If, for example, the change remedies something that was objectively a defect in the contract, then it's not fraud. For example, if the contract promises that a particular person will guarantee repayment and that person dies, there's no fraud in changing the guarantor to someone comparably reliably. What's the alternative?

Sorry I was saying making changes to a contract, that required a vote to change without a vote being done. Even if you are fixing an error in the contract don't you think a vote still should be done to just for transparency purpose.

[markm]

The thread title specifies GLBSE, so what applies elsewhere is maybe not particularly relevant.

Since MPEx being exacting was mentioned though I will also point out that in Open Transactions an asset is identified by the hash of its contract, thus any change in the contract results in a totally distinct asset. Since all asset accounts incorporate the asset's ID (that hash) all accounts of the previous asset are also distinct and separate from any asset accounts created for the "new" asset described by the "new" contract.

That is, thus, even more "exacting", I think.

Presumably any negotiation could in such a system take place in the question of whether anyone chooses to exchange any of the old asset for any of the new asset; I suppose one could even make several variants of a contract, thus making several variant new assets, and people could choose which if any to exchange their units of the old asset for...

-MarkM-

[RandomQ]

The thread title specifies GLBSE, so what applies elsewhere is maybe not particularly relevant.

Since MPEx being exacting was mentioned though I will also point out that in Open Transactions an asset is identified by the hash of its contract, thus any change in the contract results in a totally distinct asset. Since all asset accounts incorporate the asset's ID (that hash) all accounts of the previous asset are also distinct and separate from any asset accounts created for the "new" asset described by the "new" contract.

That is, thus, even more "exacting", I think.

Presumably any negotiation could in such a system take place in the question of whether anyone chooses to exchange any of the old asset for any of the new asset; I suppose one could even make several variants of a contract, thus making several variant new assets, and people could choose which if any to exchange their units of the old asset for...

-MarkM-

Very interesting, I will have to do more Research on MPEx I was thinking about a similar way of handling assets but P2P. I know alot of people see the 20BTC fee and are like no way!

[Borzoi]

If a Contract change is made without a Share Holder Vote and changes are made to the contract by the Asset Owner?
I consider this fraud by the Asset Owner and the changes to be invalid.

Sorry I was saying making changes to a contract, that required a vote to change without a vote being done. Even if you are fixing an error in the contract don't you think a vote still should be done to just for transparency purpose.

If contract calls for vote in situation, rule is clear.

If contract modification is material and vote is specified, rule is not only clear but voting is important.

Question on GLBSE (not MPEx or other exchange) is what is recourse for violation of contract?  Nefario seize shares owned by contractor?  Helps no one but hurts those.  Any remedy with contractor?

Edited to correct quote.  No vote taken.

[RandomQ]

If a Contract change is made without a Share Holder Vote and changes are made to the contract by the Asset Owner?
I consider this fraud by the Asset Owner and the changes to be invalid.

Sorry I was saying making changes to a contract, that required a vote to change without a vote being done. Even if you are fixing an error in the contract don't you think a vote still should be done to just for transparency purpose.

If contract calls for vote in situation, rule is clear.

If contract modification is material and vote is specified, rule is not only clear but voting is important.

Question on GLBSE (not MPEx or other exchange) is what is recourse for violation of contract?  Nefario seize shares owned by contractor?  Helps no one but hurts those.  Any remedy with contractor?

Edited to correct quote.  No vote taken.

I think it would have to deal with intent of the violation? Was it Fraud or a mistake, bad decision ?

Nefario seizes shares and asset owner seizes assets? Kinda mutual assured destruction.

[JoelKatz]

Sorry I was saying making changes to a contract, that required a vote to change without a vote being done. Even if you are fixing an error in the contract don't you think a vote still should be done to just for transparency purpose.

I do think a vote should still be done, but that doesn't mean that not having a vote is necessarily fraud. Fraud has a specific meaning and requires some kind of deception to benefit one person at the expense of another.

[Borzoi]

Sorry I was saying making changes to a contract, that required a vote to change without a vote being done. Even if you are fixing an error in the contract don't you think a vote still should be done to just for transparency purpose.

I do think a vote should still be done, but that doesn't mean that not having a vote is necessarily fraud. Fraud has a specific meaning and requires some kind of deception to benefit one person at the expense of another.

As you say, negligence, fraud, and other reasons for changing contract without vote all depend on intent.  Also relevant is how first party responds when challenged on contract changes.

[bitcoinbear]

I think any change to the contract, no matter how small, should be approved by a shareholder vote. It does not matter intent or whatever, if the change is minor there should be no trouble getting it approved, setting up a motion takes barely any more work, and it gives the shareholders notice that the change is happening.

[Bitcoin Oz]

Given that the rules of GLBSE themselves change with no notice and with arbitrary intent, it is difficult to say that any contract based on that platform has any validity.

I would like to see something similar to "the real world" for investments. MPEX is much, much closer than GLBSE, but Mircea is a freak about some things. It's not accessible to tiny investors due to the membership fees. However, MPEX is more exacting about the contents and terms of the contracts with new offerings. It's not what I would call a "real" exchange, in the sense that BTCworld is still in its infancy, but it's clearly more developed than GLBSE.

That said, MPEX also has less drama than GLBSE, and most of the MPEX drama is MPOE-PR stirring up shit. However, pot, kettle, glass house.

GLBSE lets any retard list, and so many retards do so. MPEX at least requires retards to put in a little effort, so only motivated retards with some funds get through the hoops.

N.B., I don't have a financial stake in MPEX or GLBSE, but I do think Mircea is a real asshole.

The owner of MPEX is also anonymous and hides behind a scumbag pr account. We all know the owner of GLBSE at least if something goes wrong.  I think going forward glbse is going to introduce stricter standards on what can and cant list.

[Deprived]

The problem with contracts gos well beyond just whether or not a share-holder vote is needed to change one.

Consider a scenario where one company (or group of companies) holds a majority of shares in another.

How about if they vote to give themselves more shares in the company or some of the assets?  Does the fact that they hold a majority of share allow them to pass ANY motion - even where it's blatantly against the interest of other share-holders?

Or what about if the company founder owns a majority of shares: could they then vote to increase their share of profits from (say) 10% to 90%?

Being able to control/command a majority of votes in a company should NOT be a charter allowing someone (be it the founder, one investor or a small cartel of investors) to take action specifically intended to enrich some parties unjustly at the expense of other share-holders.

[Nefario]

3. They trust people who are one step removed from script kiddie status.  Nefario?  And you had problems with PirateAt40?

I'm very much a real person, with my IRL identity well known, especially after having spoken in front of 200 people at Bitcoin2012 yesterday and organising the event. If you can get to London I'm happy to meet with you to talk (or anyone for that matter, I seriously enjoyed speaking with bitcoiners last weekend).

If a Contract change is made without a Share Holder Vote and changes are made to the contract by the Exchange Owner?
I consider this a breach of Contract by causing interference with the other party's performance.

Thus far(since GLBSE has begun, over 1 & 1/2 years ago) no one has had their contract changed by GLBSE

Given that the rules of GLBSE themselves change with no notice and with arbitrary intent, it is difficult to say that any contract based on that platform has any validity.

You can find our TOS at the bottom of every GLBSE page, it's not changed for many months, and when we do make changes, whether in fees or the TOS we announce it on the forums usually a week or more in advance.

Any changes that happen on GLBSE, programmatic or procedural are not arbitrary.

I would like to see an example of where we have changed the rules of GLBSE,  without notice or arbitrarily.

[RodeoX]

Unless specified in the original contract a change should void the original contract.  If you refuse to sign the new contract I don't see how you are compelled to abide by it.

[Deprived]

Unless specified in the original contract a change should void the original contract.  If you refuse to sign the new contract I don't see how you are compelled to abide by it.

Indeed - but that's not what seems to happen around here.

Any change of contract for shares should be accompanied by an offer to buyback the shares of those who disagree at (at worst) nav/share (if market is higher then those who want market can obviously sell on the market).

That doesn't apply to bonds - the contract on those absolutely ca't be amended with first buying back all outstanding ones.

[nedbert9]

The owner of MPEX is also anonymous and hides behind a scumbag pr account. We all know the owner of GLBSE at least if something goes wrong.  I think going forward glbse is going to introduce stricter standards on what can and cant list.

Awesome.  This is where I get to list out almost every problem I have with the bitcoin "community".

1. People throw around words they don't understand.  Ponzi, scam, anonymous, etc.

2. They rely on non-existent claims or insults as if that carries any weight.  "hides behind scumbag pr account"

3. They trust people who are one step removed from script kiddie status.  Nefario?  And you had problems with PirateAt40?

4. They make speculative claims without evidence of any support.  You think GLBSE is going to do x based on what?  More fantasy?

This all adds up to intellectual laziness and a disrespect for truth or fact.

There is truth in this.

There is no guarantee of any kind of the behavior of an individual whether known or unknown.  It's just removes a variable amount of risk when dealing with someone publicly known.  Mainly in the legal arena.  However, Terms of Service can be written to reduce legal consequences for negligence.

Ultimately, judge someone based on their history.  If MPOE-PR (popescu whatever) is an asshat MPEx is not a marketplace that should survive.


Nefario has his flaws.  No single individual, with all of the bias that is introduced with unilateral thinking, should be running a big (in Bitcoin terms) capital market.


A Bitcoin capital market needs to arrive that has the same level of professionalism and organization of, for example, Mt.Gox.  Of course, MtGox has it's problems, but let me ask you this.  Would you feel comfortable with Nefario or MP being the sole proprietor running MtGox?  I wouldn't.  Mainly due to the risk of sole proprietors easily becoming arbitrary, tyrannical and negligent.


As for contracts.  Isn't this a no-brainer?  Changing contracts should require consent of all parties unless expressly written out of the initial contract.
Take a look at the back of your credit card agreement.  All of that fine print is expressly writing away cardholder's rights to litigate.

[Nefario]

Ultimately, judge someone based on their history.  If MPOE-PR (popescu whatever) is an asshat MPEx is not a marketplace that should survive.

This is completely wrong, you absolutely need to know who a person is if they are selling something of considerable value, holding funds or running an exchange. The result of an anonymous person running an exchange will be depositors and "investors" losing their money when the exchange eventually disappears.

We saw this with mybitcoin.com and pirate, they build up a history of good trades, once they have everyones trust and enough BTC for it to be worth while they run off, it's called a confidence trick.

Nefario has his flaws.  No single individual, with all of the bias that is introduced with unilateral thinking, should be running a big (in Bitcoin terms) capital market.

I completely agree that I'm not perfect, but there is nothing wrong with one person running a large (the largest) capital market, the problems only arise where there is a lack of clarity or absence or rules. On GLBSE this is the direct result from contracts that are very very short and lack any clause to handle issues that arise.

This is something that I'm working to address, I've opened up another thread to get input on having a default contract to turn to when there are no clauses for events that come up. I also want to add the provision for the addition of a neutral third party to be selected to arbitrate and interpret these rules.

The only reason I'm doing this myself is because it's the first time we're dealing with it, once the process is set up I won't need to be involved, and can get back to actually running the market instead of dealing with this sort of thing.

A Bitcoin capital market needs to arrive that has the same level of professionalism and organization of, for example, Mt.Gox.

A capital market has a lot more issues to deal with than MtGox, whose scope is relatively small.

Would you feel comfortable with Nefario or MP being the sole proprietor running MtGox?  I wouldn't.  Mainly due to the risk of sole proprietors easily becoming arbitrary, tyrannical and negligent.

MagicalTux is the sole person running MtGox, yes some other people work there but he runs it all. And we (at least I) can't do whatever the hell we like, being bound by our TOS and the laws of the jurisdiction I reside under. Of course this isn't the case if someone is anonymous or has no TOS.

As for contracts.  Isn't this a no-brainer?  Changing contracts should require consent of all parties unless expressly written out of the initial contract.

If it's an asset with voting rights then usually contract changes require a vote, although if a change is proposed that is to the advantage of the asset holder then no vote is needed as the original contract is  being met, and with the new terms exceeded (i.e. it's to the asset holders advantage).

[reeses]

Ultimately, judge someone based on their history.  If MPOE-PR (popescu whatever) is an asshat MPEx is not a marketplace that should survive.

This is completely wrong, you absolutely need to know who a person is if they are selling something of considerable value, holding funds or running an exchange. The result of an anonymous person running an exchange will be depositors and "investors" losing their money when the exchange eventually disappears.

We saw this with mybitcoin.com and pirate, they build up a history of good trades, once they have everyones trust and enough BTC for it to be worth while they run off, it's called a confidence trick.

MPEx has the guy's name in the title.  He goes by his name on IRC and elsewhere.  You use a 1337 haxx0r nick that implies you're EEEEEVIL™.  Why do you not lead with your real name and accept accountability?

Mircea is an arrogant, conceited, asshole (we know our own) that we can all track down.  He's a hardass about his exchange in ways that you are not.  He is not anonymous, but his mouthpiece (MPOE-PR) remains mostly so.

That said, neither of you is a real exchange operator.  You have too much ability to fuck people out of their money.  You did it with gigavps on his private bond offering.  He acquiesced because his reputation is worth more than the 30-50 btc of your shakedown.

Nefario has his flaws.  No single individual, with all of the bias that is introduced with unilateral thinking, should be running a big (in Bitcoin terms) capital market.

I completely agree that I'm not perfect, but there is nothing wrong with one person running a large (the largest) capital market, the problems only arise where there is a lack of clarity or absence or rules. On GLBSE this is the direct result from contracts that are very very short and lack any clause to handle issues that arise.

Right.  You handle the long tail of smaller trades, offerings, etc.  This is a great place for amateurs with no experience and no knowledge of capital markets.  You admit all of this.  This is why there is risk in having a single person with the ability to "seize" assets or otherwise control informal contracts.

This is something that I'm working to address, I've opened up another thread to get input on having a default contract to turn to when there are no clauses for events that come up. I also want to add the provision for the addition of a neutral third party to be selected to arbitrate and interpret these rules.

The only reason I'm doing this myself is because it's the first time we're dealing with it, once the process is set up I won't need to be involved, and can get back to actually running the market instead of dealing with this sort of thing.

This is where the person who can adequately assess their own level of competence would involve a more experienced partner.  A "real world" exchange operator or participant or at the very least an attorney or other legal expert.  Contracts written by laypeople are usually laughable.

If it's an asset with voting rights then usually contract changes require a vote, although if a change is proposed that is to the advantage of the asset holder then no vote is needed as the original contract is  being met, and with the new terms exceeded (i.e. it's to the asset holders advantage).

So...who decides that the change benefits the asset holder?  If I list that I will increase my dividends from 1%/week to 100%/week, can I push that through without a vote?  Even if, as of course everyone knows, such returns are "unsustainable"?

These loopholes and arbitrary, informal, procedures are why smart money avoids the exchanges.  It's like a random listing on the forum or -otc, but with a single bottleneck–a person represented by a silly nickname with no real background of trust or accountability.

There is no assurance that the capital exchanges won't be the next bitcoinica or whatever.  You fight attacks to your reputation defensively.  MP fights to keep his reputation clean (other than, well, you know who).  Both groups have "fans".  Either of you could just as easily be setting up a long con.

Remember, Trust No One.

[reeses]

Please keep Flaming to Low Levels, I want to discuss the issue and not what is causing this to come up?

Sorry about that.  By the way, MathematicaWonkQ["RandomQ"]?