Our contract (Negotiated in private. Some bits were edited on the grounds they're both irrelevant and possibly embarrassing, but the whole log isn't very long and can be published if necessary):
**** BEGIN LOGGING AT Fri Aug 10 08:06:25 2012
Aug 10 08:06:31 <mircea_popescu> listen i actually wanted to talk to you.
Aug 10 08:06:38 <patrickharnett> hi
Aug 10 08:06:54 <mircea_popescu> hey. your deposits still bs&t free ?
Aug 10 08:07:21 <patrickharnett> I run a slightly complicated business, but most of the deposit accounts I run are BS&T free
Aug 10 08:07:39 <patrickharnett> that's what the market wanted
Aug 10 08:07:58 <mircea_popescu> you deem yourself able to repay your depositors in the event bs&t goes bankrupt, and nothing is recovered ?
Aug 10 08:08:00 <patrickharnett> back in a couple of minutes - grabbing a glass of wine - friday evening here
Aug 10 08:09:57 <patrickharnett> back
Aug 10 08:10:17 <patrickharnett> in the event BS&T goes bust, I have more than enough assets to cover that
Aug 10 08:10:41 <patrickharnett> mainly because the 15,500 coins I hold on deposit are not invest in BS&T
Aug 10 08:10:56 <mircea_popescu> well that works. i'd like to put 500 bitcoins with you
Aug 10 08:11:02 <mircea_popescu> do you mind id'ing with gribble ?
Aug 10 08:11:28 <patrickharnett> I was only planning on being here a minute so didn't id
[...]
Aug 10 08:40:02 <mircea_popescu> anyway. deposits are recallable on how long notice ?
Aug 10 08:41:10 <patrickharnett> deposits, straight forward, on call
Aug 10 08:41:22 <mircea_popescu> 179MtpYiG2sfVmPopsrHF6i2KimEmjCimY
Aug 10 08:41:25 <mircea_popescu> is mine. what's yours ?
Aug 10 08:42:18 <patrickharnett> your unique deposit address is: 1PYEzELdHT1EhLHV7ePsHCai6pF2UH1475
Aug 10 08:43:08 <mircea_popescu> on its way. you compound on request correct ?
Aug 10 08:43:19 <patrickharnett> your new balance is 500.5250
Aug 10 08:43:26 <mircea_popescu> why .5 ?!
Aug 10 08:43:29 <patrickharnett> compound is default
Aug 10 08:43:48 <patrickharnett> because you deposit started at 12:01 a.m. and it's 5:43 p.m.
Aug 10 08:44:11 <patrickharnett> it's one of those little things
**** ENDING LOGGING AT Fri Aug 10 11:50:21 2012
**** BEGIN LOGGING AT Wed Aug 15 00:53:50 2012
Aug 15 01:11:18 <patrickharnett> hi
Aug 15 01:11:56 <mircea_popescu> gheya!
Aug 15 01:12:11 <mircea_popescu> im about to do a tranched cdo based on mpoe debt, my bond with you and another asset
Aug 15 01:12:14 <mircea_popescu> you see a problem with this ?
Aug 15 01:12:47 <patrickharnett> which bond? you mean the deposit?
Aug 15 01:12:51 <mircea_popescu> yeah.
Aug 15 01:13:31 <patrickharnett> well if it is a collateralised debt obligation, what's to stop you asking for your deposit back and removing the collateral?
Aug 15 01:14:02 <mircea_popescu> umm what, and perjure myself ?
Aug 15 01:15:10 <patrickharnett> not sure if purjure is the right word
Aug 15 01:15:21 <mircea_popescu> well ya, but whatever it is.
Aug 15 01:15:58 <patrickharnett> so, if I understand, basically you're asking people to trust that you will not remove the deposit. But there is nothing on the account to prevent that
Aug 15 01:16:16 <mircea_popescu> except im quoting the exact line from your reporting in the contract
Aug 15 01:16:35 <mircea_popescu> do you want to see a copy of it ?
Aug 15 01:17:08 <patrickharnett> might be useful - you can email it if that's easy
Aug 15 01:17:18 <mircea_popescu> whats your addy again ?
Aug 15 01:17:36 <patrickharnett> in principle I don't have a problem - and couldn't stop you
[...]
Aug 15 01:18:03 <patrickharnett> I held ShadowAlexey's reserve deposit for a few months for him
[...]
Aug 15 01:32:55 <patrickharnett> anyway - yes I am completely fine with the doc as provided and happy to help underpin a new offering.
Aug 15 01:33:31 <mircea_popescu> cool.
Aug 15 01:34:22 <patrickharnett> hmmm, looks like the traded PPTs are having fun this morning
Aug 15 01:59:30 <mircea_popescu>
http://polimedia.us/bitcoin/mpex.phpAug 15 01:59:33 <mircea_popescu> yup, they're live.
Aug 15 02:27:19 <mircea_popescu> o hai.
Aug 15 02:27:37 <patrickharnett> yes, there is a lurking starfish
Aug 15 02:28:10 <assbot> [GLBSE] [DMC] 40 @ 0.05 = 2 BTC
Aug 15 02:28:20 <assbot> [GLBSE] [TYGRR.BOND-P] 3 @ 0.9999 = 2.9997 BTC
Aug 15 02:28:56 <mircea_popescu> patrickharnett so i guess this has the side advantage to you that you know when you'll be asked to repay : 30th of october or thereabouts.
Aug 15 02:29:02 <assbot> [GLBSE] [DMC] 1 @ 0.05 BTC
Aug 15 02:29:34 <patrickharnett> I didn't notice the 30'th date - wouldn't be a problem anyway
Aug 15 02:29:47 <assbot> [MPEX] [S.MPOE] 32810 @ 0.000383 = 12.5662 BTC
Aug 15 02:29:48 <mircea_popescu> well since the bonds die and repay on the 1st of nov
Aug 15 02:29:49 <assbot> [MPEX] [S.MPOE] 18714 @ 0.00038423 = 7.1905 BTC
Aug 15 02:29:50 <assbot> [MPEX] [S.MPOE] 797 @ 0.00039267 = 0.313 BTC
Aug 15 02:29:51 <assbot> [MPEX] [S.MPOE] 5615 @ 0.00039477 = 2.2166 BTC
Aug 15 02:29:52 <mircea_popescu> it'd be a few days prior.
Aug 15 02:30:09 <patrickharnett> it's only 500+interest, it's not lots
Not lots, the man says.
What happened here was this: PatrickHarnett advertised a depositing scheme, recallable on demand, paying 5% a month. He then unilaterally changed the interest rate to 1% (or below that, in steps, something like that). This in itself is a breach of contract, as he wasn't also simultaneously repaying holders on demand, but we'd have let it slide.
Then, he converted deposits into unrecallable paying ~1% a week. So basically what PatrickHarnett has done was transform an interest bearing recallable deposit into a sort of miner bond, where he pays "some" interest and the principal can never be recovered. This is not acceptable.
Scammer tag, please. Patrick Harnett is Peter Lambert v2.0.
