My Criteria for Approving Securites on LTC-GLOBAL and BTC Trading Corp

[burnside]

So I had a radical idea hit me, I haven't quite got this nailed down, so help me run with this...

Maybe pre approving securities isn't the way to go. Maybe setup the marketplace to reward good and punish then delist the bad instead.

My idea is something like this:

list everything, use the BTC5 to "pre qualify"
Give every listing a vote like they have now (green/red) but open voting to everyone
Setup the fee's to trade on a sliding scale, start at 1% and as assets gain green they get cheeper to trade in (0.2%), as they sink in red they get more expensive(10%)
Order the marketplace with the most green at the top and most red at the bottom, make it obvious to everyone the vote count.
Setup a rule that assets must meet X volume per week to stay listed, increasing volume required for red, and decreasing for green.
Good assets will be listed at the top of the marketplace and become cheaper to trade in while requiring less volume to stay listed
Bad assets sink to bottom of the marketplace, cost more to trade in, and require more volume to stay listed

...

I like the current pre-qualify with votes required because a lot of the voters have been very generous with their time and have helped the asset issuers clean up their offerings and improve things before they make it to the market.  (keep in mind that once shares are sold on the open market, the contract cannot be changed anymore.)

Maybe instead of a fixed 5 YES, 3 NO it could be based on the total number of moderators available at that time?  Say there are 20 mods and we set it up so YES requires 30% of the mods and NO blocks at over 20%.  Then;

6 YES would approve it.
4 NO would block it.

I'll think on that a bit.

A lot of the rest of what you're trying to accomplish is already there in the current system.  Voting doesn't stop after approval.  Mods can vote (and change their votes) at any time.  Thus the ratings you see on the right hand column in the Market.  All we're missing is a sort by votes option I suppose.  And right now it sorts by volume, which realistically is people voting with their wallets.

I agree that a black market/delisting process needs to be established.  I'm planning on adding a separate black market page where the following assets will go;

- those that have no trades in the last month
- those that have a total moderation score of less than zero.
- those that have been proven to have violated their contract but are working toward resolution.

Some great ideas.  Love it, thank you.

[odolvlobo]

What is your (or any other board members) real life background?
How do you determine the value of a security? What type of analysis do you use?

I have a background in economics and investing. I have a basic knowledge of finance. I don't consider myself to be an expert in any of these fields.

Do you realize that this market is for virtual shares and not for actual shares?

Yes, and my criteria and my vote are also virtual.

I guess the question here is the same - what is your (or anyone else on that board) qualifications?
How many business plans have you guys written in RL? Can you give advice how to write one that is accepted by this board?

My advice for writing a business plan is to provide at least the information I listed, and provide investors with enough information to make rational and informed decisions about the security and its shares.
 

I am clad to see that finally you guys are starting to ban "turds" Good job!

"you guys" is not accurate. This is my criteria. I don't represent the other moderators. Also, I don't disapprove mining bonds or perpetual bonds in general -- just the ones that don't intend to return the face value.

How do you know what is scam and what is not? Maybe you do not like (or do not understand) the submitted business plan? Maybe you have no experience on that field hence you have no qualification do rule over it in any meaningful way?  
Maybe you do not like the person form the forum because they have a different understanding of some "case X"?
What is that "falls below some threshold" in EUR or USD?

If I don't understand the business plan, then it is probably poorly written or conceived, or perhaps it doesn't belong on this exchange, or it is probably a scam. I don't have a specific threshold.

Concerns:
1) Some of the information asked is really personal and can be misused easily. Especially as a package with corporate information.  

I don't think I'm asking for any information that shouldn't be public knowledge.

[MPOE-PR]

That would cost around 10k LTC or $780.

You sell them after tho, so depending how liquid the market is your costs wouldn't likely be above the 8 BTC GLBSE used to charge.

Not sure what you mean by the site being shockingly slow

I mean it took > 20 seconds to load. Pingdom shows it at 4 seconds currently, so maybe it was just a bad connection or something. Still pretty slow.

... and you can feel like a low life scammer for rest of you life. I guess you are always looking for a chance to scam and sounds like you are even proud of that shit.

What are you, the forum idiot?

[stochastic]

"you guys" is not accurate. This is my criteria. I don't represent the other moderators. Also, I don't disapprove mining bonds or perpetual bonds in general -- just the ones that don't intend to return the face value.

Perpetual bonds do not have a face value because they do not have a maturity date.  You are confusing face value for the amount a bondholder paid for the bond.

Perpetual bitcoin mining bonds and fiat perpetual bonds are a little different because traditional fiat bonds guarantee a coupon payment of a certain amount for perpetuity.  This means that bonds sold during the Napoleonic Wars are still being paid, but that inflation has decayed the coupon payments over time.  For a perpetual bitcoin mining bonds it is the inflation of difficulty that is decaying the coupon payment as the perpetual bitcoin mining bond's coupon is dependent on the difficulty.  The problem with perpetual bitcoin mining bonds on GLBSE was not that they decreased in value from the initial bond price (not face value), it is that they were overpriced to begin with.

[burnside]

You sell them after tho, so depending how liquid the market is your costs wouldn't likely be above the 8 BTC GLBSE used to charge.

And then all your votes disappear.

I mean it took > 20 seconds to load. Pingdom shows it at 4 seconds currently, so maybe it was just a bad connection or something. Still pretty slow.

I'm definitely not happy with the panama setup.  There was a complete outage earlier this evening for a few minutes.

I've been discussing setting up a box with Neotrix of Koddos/Esecurity in the Netherlands.  Anyone else have suggestions for a good colo provider for a Belize company?  I want to colo 3U of gear with lots of bandwidth for under 100 USD/mo.  

[stochastic]

Maybe instead of a fixed 5 YES, 3 NO it could be based on the total number of moderators available at that time?  Say there are 20 mods and we set it up so YES requires 30% of the mods and NO blocks at over 20%.  Then;

I think people should take an exam in finance before they can become voting moderators.

[EskimoBob]

You sell them after tho, so depending how liquid the market is your costs wouldn't likely be above the 8 BTC GLBSE used to charge.

And then all your votes disappear.

I mean it took > 20 seconds to load. Pingdom shows it at 4 seconds currently, so maybe it was just a bad connection or something. Still pretty slow.

I'm definitely not happy with the panama setup.  There was a complete outage earlier this evening for a few minutes.

I've been discussing setting up a box with Neotrix of Koddos/Esecurity in the Netherlands.  Anyone else have suggestions for a good colo provider for a Belize company?  I want to colo 3U of gear with lots of bandwidth for under 100 USD/mo.  

Sent you a PM

[MPOE-PR]

And then all your votes disappear.

But the security was approved already. Does it somehow become disapproved, for instance after people bought in?

[burnside]

And then all your votes disappear.

But the security was approved already. Does it somehow become disapproved, for instance after people bought in?

Ahhh, I gotcha.  Yes, if people buy in before the manipulator sells the shares they used to manipulate the system, then those people would be stuck holding a turd.  It's already happened a couple of times on LTC-GLOBAL.  This is why we're trying to improve on the system.  While the system has greatly reduced the damage, it has not completely prevented it.  (It seems like people will buy almost anything without reading a prospectus.)

I'm open to good ideas for improvement.

One possibility that occurred to me would be to default everyone's vote to "NO".  Then a sneaky manipulator could not go in and get a quick approval.  They'd have to convince nearly everyone else to change their votes.

[bitcoinbear]

One possibility that occurred to me would be to default everyone's vote to "NO".  Then a sneaky manipulator could not go in and get a quick approval.  They'd have to convince nearly everyone else to change their votes.

I like this idea, although it might be frustrating if too many of the potential voters take too long to respond. Do they get some sort of notification that there is a new asset awaiting approval?

[burnside]

One possibility that occurred to me would be to default everyone's vote to "NO".  Then a sneaky manipulator could not go in and get a quick approval.  They'd have to convince nearly everyone else to change their votes.

I like this idea, although it might be frustrating if too many of the potential voters take too long to respond. Do they get some sort of notification that there is a new asset awaiting approval?

They're supposed to.  EskimoBob found a bug last night that I had introduced when I plugged in that notification a couple of weeks ago.  The Create page was breaking on the submission and no one had even mentioned it!  heh.  Just lucky it was breaking after the DB insert of the actual asset info. 

It's fixed now, and all mods should now get a notification whenever a new asset is created.

If we do change it to default to NO, we'll probably have to also reduce the "NO" threshold a bit, and then when approved automatically wipe the votes that had defaulted to NO and were not actually updated during the approval process.  Laying out the details this sounds like it could get kind of ugly.

Another alternative... simply require 50% of the mods to vote before an asset can be approved.  (in addition to the ratio requiring a positive outcome.)

[EskimoBob]

...
If we do change it to default to NO, we'll probably have to also reduce the "NO" threshold a bit, and then when approved automatically wipe the votes that had defaulted to NO and were not actually updated during the approval process.  Laying out the details this sounds like it could get kind of ugly.

Another alternative... simply require 50% of the mods to vote before an asset can be approved.  (in addition to the ratio requiring a positive outcome.)

For any voting, it's better to have no vote preselected at all. Let people make up their own mind. Changing default "No"  to "no vote" can also be a slippery slope and cause confusion down the road.

How do you keep moderators interested in voting? What is the incentive? I bet, first few times must be interesting , but then what?
If moderators is also a issuer, every new listing can be a competition to his own issue. Can this become a problem?
What if there was some type of a "reward" for those who vote in first X days or even hours?
If the new listing request just sits there, it will not get any better. Only active moderators can improve the application (if there is something missing etc)

[Deprived]

If moderators is also a issuer, every new listing can be a competition to his own issue. Can this become a problem?

Same issue of personal benefit can also apply to people who aren't issuers.  There'll undoubtedly be votes cast for personal reasons (grudges or friendship) as well as ones for financial benefit.

If an issuer runs an asset that isn't an investment/trading fund then treating investment as a zerosum game (where funds invested elsewhere aren't buying their shares) then for financial benefit they should vote NO on all issues except ones which are either:

1. Direct competitors to their own but very clearly inferior.
2. Investment funds likely to buy their asset.

Similarly there's a strong case that if a smart Investor/Investment fund wants to vote purely for their own financial benefit then they should vote YES on some horrible investments as well as voting NO on marginal ones which objectively probably deserve a Yes vote.

Don't know if anyone's doing anything like that - but it wouldn't surprise me.

[burnside]

...
If we do change it to default to NO, we'll probably have to also reduce the "NO" threshold a bit, and then when approved automatically wipe the votes that had defaulted to NO and were not actually updated during the approval process.  Laying out the details this sounds like it could get kind of ugly.

Another alternative... simply require 50% of the mods to vote before an asset can be approved.  (in addition to the ratio requiring a positive outcome.)

For any voting, it's better to have no vote preselected at all. Let people make up their own mind. Changing default "No"  to "no vote" can also be a slippery slope and cause confusion down the road.

How do you keep moderators interested in voting? What is the incentive? I bet, first few times must be interesting , but then what?
If moderators is also a issuer, every new listing can be a competition to his own issue. Can this become a problem?
What if there was some type of a "reward" for those who vote in first X days or even hours?
If the new listing request just sits there, it will not get any better. Only active moderators can improve the application (if there is something missing etc)

My hope initially was that the motivation would be to vote in a manner that kept the exchange viable because shareholders have a financial interest in keeping the quality up. 

Unfortunately not everyone thinks long term like that.  Could mitigate that somewhat by setting up a waiting period between when you get your shares and when you are allowed to vote.

I'm leaning toward requiring at least 50% to vote before approving/disapproving an asset.

[Deprived]

I'm leaning toward requiring at least 50% to vote before approving/disapproving an asset.

If you go that route then you need to make it something like 50% of those who have logged in during last 48 hours or something.  Otherwise could end up with no assets getting approved if a load of people are on holiday etc.

[BTC-TradingCo]

I'm leaning toward requiring at least 50% to vote before approving/disapproving an asset.

If you go that route then you need to make it something like 50% of those who have logged in during last 48 hours or something.  Otherwise could end up with no assets getting approved if a load of people are on holiday etc.

That's true, but taking a while might be a good thing.  If it's easier to get assets approved during the holidays when are the scammers going to apply?

We could send a reminder out to voters when assets have been waiting for approval for say, 48 hrs?  (For the lazy, "ABSTAIN" would stop the reminders.

[odolvlobo]

I think that many of the posters in this thread assume that the moderators do a thorough investigation of the securities and the issuers of the securities. Nothing could be further from the truth. Most moderators don't bother to vote. I and a few others are the exception, but even then, I don't think any of us spend that much time evaluating a security being listed. Nobody should assume that any security on any exchange has been thoroughly vetted.

Having said that, I believe that the moderator mechanism that Burnside has set up is very valuable. Overall, the securities on his exchanges are a better quality than those on other exchanges.

[usagi]

Hey Burnside,

I would highly suggest against just 'taking' peoples accounts/shares if you are going to go the ToS route. I think it would lead to accusations of theft over
a difference in opinion. If you are selling shares of the company, and giving the share holders the right to vote on having customers or not, regardless of
the reasons why a shareholder makes their vote and if you like it or not, it is their vote.

For the penalties of violating the ToS, there are few things I can do but confiscate assets.  The penalties in screwing with the financial system in real life are not much different.  Fines, etc, get levied.  Maybe we can make it a fixed amount fine instead of the entire account?  But I absolutely require that people take their moderation privileges seriously.  Since a user has agreed to the ToS to register and use the site, I do not believe it would be stealing.  Rather, it's like all the other fees on the site.  You do X, it costs Y.

I'd like to caution against ever confiscating people's assets because they break the ToS. That would be extremely bad. It could even happen accidentally. For example BTC-TRADING-PT. The issuer is assumed to control two accounts, both of which have 10 or more shares of LTC-GLOBAL. Or anyone who votes as an owner of BTC-TRADING-PT. Like me. I own some BTC-TRADING-PT. Have I broken the TOS by voting both with my own shares and as an owner of BTC-TRADING-PT? What if I own or a third fund (like LTC-ATF) and invest in LTC-GLOBAL? It seems crazy to state you will confiscate the assets of a fund because it turns out that people end up getting more than one "vote". Given that one share in BTC-TRADING-PT costs 0.15 BTC, and that you could probably swing the vote easily with a few hundred shares, well it seems you can almost buy a second vote for the same price that it costs to buy 10 shares of LTC-GLOBAL.

Secondly, I know for a fact there were some account managers who represented certain investors who prefer to remain anonymous to the GLBSE. I've seen this a couple of times. I am going to speculate that (at least) those two people are doing the same thing on LTC-GLOBAL right now, and operate not only their own account but a customer account as well. What would happen if you found out about those people and they didn't want to reveal the identity of their customers?

What if I hired someone to represent my interests? That's an external legal obligation and I can't see how you could morally prevent someone from doing that. What if I ran a full passthrough on a second exchange and operated multiple accounts in order to give investors votes? It seems that with the current ToS you are over-extending your jurisdiction into some pretty strange areas.

Also what about bribes? I'll be honest. If someone gave me 200 BTC I would find it personally difficult not to vote for their security. Unlikely, but, I can assure you that if there aren't any LTC-GLOBAL moderators selling their votes now, there WILL be once we get another 30 or 40 moderators into the system. And why not? If an asset issuer is serious about listing, why not charge a fee for an "evaluation and advice session"? Moderators could advertise that they are willing to critique someone's contract for a small fee. After all, it takes a long time to go over a detailed contract with eight or nine sections to it. There's nothing wrong with that, is there? Or is there.

For punishment, why not just ban people from voting? If it's proven conclusively that someone is trying to game the system, just penalize them from voting for say a month or two. That seems reasonable and fair. But I must voice my opinion strongly that someone's money or assets never be confiscated, that does not sit well with me at all. I don't think that should never be an option. Please try to find another way around that.

I know the current system is not perfect but I am just airing a few ideas I've had for your consideration. In the end I think you will find a good way though all of this burnside, my faith is with you now.

[usagi]

Interesting ideas all around.

Chiming in, I basically vote yes on everything unless I detect some sort of funnybusiness going on.
- Is the form filled out completely and accurately?
- Are there any promises in the contract which the asset issuer has failed to keep?
- Is there enough information being published about the issue so that I can establish a value? (the most important factor)
- Is there any form of accountability (no anonymous issues please)

That's pretty much it. Of course each asset is evaluated individually but those are the basic things I look for. Also,
- I don't like startups. I like established businesses looking to list.
- I don't approve personal loans or anything directly tying US dollars or the stock market to bitcoins.
- I start to get highly suspicious of people who list more than two or three assets, because I know from first hand experience how difficult it can be to manage more than one issue (believe it).

I also want to say.. as outspoken as I am..  I don't think this voting system is going to go over very well after more moderators come on board. First, moderators are community members. That works out great right now but the fact is, community members are not necessarily financial experts. There is a notion that moderators are there to approve securities based on their personal opinion of business viability, their trust of the asset issuer, or any other subjective factor. That is not a good idea. Do the LTC-GLOBAL moderators take on any sort of liability for approving a scammy asset? They should, if it's their job to filter out scams.

I believe moderators should enforce the principle that investors must be given sufficient information to decide for themselves whether or not they want to invest in a company. As it stands, the system is starting to work opposite from how it was intended. We have extensive, extremely well-done contracts which have received several down-votes. For example the LTC-ATF contract. LTC-ATF is one of the best contracts I've ever seen and yet it has eight NO votes. What's even worse is that there are no comments and there seems to be no way for Deprived to try and fix his security. But actually there is nothing wrong with his security at all. It seems as if people are just voting him down because they don't like him personally. That is really, really bad.

Then on the other hand you see multiple assets where six or more sections have been left blank and there is no contact info other than an e-mail. And those securities have received ten upvotes and no NOs. This doesn't make sense. It shows the basic intent behind the system might have placed it's trust in the wrong area. But I do agree it's the best system among all the exchanges so far. I would not want to remove it, only improve it. But how.

Well, I'd like to see something a lot closer to what Ian proposed. Ian actually had an amazing idea. Just list everything and have a rating system from the moderators.  That would be a lot closer to how it works in the real world. Honestly, personal trust should never be an issue. Look what happened with KRAKEN. The most trusted issuer in the entire community intentionally listed an asset designed to steal investors money. So trust and personal feelings are never a good indicator of whether or not something should list.

[burnside]

I'd like to caution against ever confiscating people's assets because they break the ToS. That would be extremely bad. It could even happen accidentally. For example BTC-TRADING-PT. The issuer is assumed to control two accounts, both of which have 10 or more shares of LTC-GLOBAL. Or anyone who votes as an owner of BTC-TRADING-PT. Like me. I own some BTC-TRADING-PT. Have I broken the TOS by voting both with my own shares and as an owner of BTC-TRADING-PT? What if I own or a third fund (like LTC-ATF) and invest in LTC-GLOBAL? It seems crazy to state you will confiscate the assets of a fund because it turns out that people end up getting more than one "vote". Given that one share in BTC-TRADING-PT costs 0.15 BTC, and that you could probably swing the vote easily with a few hundred shares, well it seems you can almost buy a second vote for the same price that it costs to buy 10 shares of LTC-GLOBAL.

You make some very good points.

I'm not going to be doing any confiscating if I can avoid it.  I don't WANT to confiscate.  But I also don't want the platform destroyed by abuse.

Secondly, I know for a fact there were some account managers who represented certain investors who prefer to remain anonymous to the GLBSE. I've seen this a couple of times. I am going to speculate that (at least) those two people are doing the same thing on LTC-GLOBAL right now, and operate not only their own account but a customer account as well. What would happen if you found out about those people and they didn't want to reveal the identity of their customers?

What if I hired someone to represent my interests? That's an external legal obligation and I can't see how you could morally prevent someone from doing that. What if I ran a full passthrough on a second exchange and operated multiple accounts in order to give investors votes? It seems that with the current ToS you are over-extending your jurisdiction into some pretty strange areas.

If the relationship can be proven, I would think you're in the clear.  If it can't, (person want's to remain anonymous) then I think that breaks the ToS.  Otherwise everyone would just claim they're representing 10 anon clients.  Definitely some gray area here.

Also what about bribes? I'll be honest. If someone gave me 200 BTC I would find it personally difficult not to vote for their security. Unlikely, but, I can assure you that if there aren't any LTC-GLOBAL moderators selling their votes now, there WILL be once we get another 30 or 40 moderators into the system. And why not? If an asset issuer is serious about listing, why not charge a fee for an "evaluation and advice session"? Moderators could advertise that they are willing to critique someone's contract for a small fee. After all, it takes a long time to go over a detailed contract with eight or nine sections to it. There's nothing wrong with that, is there? Or is there.

If you get caught voting based on a bribe and there's solid proof, you're out.  We're not going to stand for that. 

If you're a mod and you're offering a service to assist the issuer in drafting contracts and/or operating the asset, I'm pretty sure that would be ok.  Though if you have much integrity at this point you'd probably abstain from voting on the asset you helped draft.

For punishment, why not just ban people from voting? If it's proven conclusively that someone is trying to game the system, just penalize them from voting for say a month or two. That seems reasonable and fair. But I must voice my opinion strongly that someone's money or assets never be confiscated, that does not sit well with me at all. I don't think that should never be an option. Please try to find another way around that.

The punishment has to fit the crime, for sure.  If what you did cost other people a lot of their crypto currency, then it's only fair that you lose yours.  On the other hand, if there was little damage done, then we might find a more lenient discipline.

I'm not going to mince words here.  If you have an inkling that what you're doing might be questionable, don't do it.  If you're caught there will be a penalty and you're not going to like it.  I feel very strongly about this.

Cheers.