[Poll] Should YABMC issuers be tagged as scammers?

[conspirosphere.tk]

Below a recent report from the GLBSE asset issuer (he already received his investors' list from Nefario) to "explain" why he cannot pay dividends accrued from the GLBSE closure up to now as per the contract below, nor refund his investors.
My opinion is that both him and his associates are worth of a scammer tag.

Here is the consolidated version:

1.  When YABMC expanded from 5 to 55 Gh/s (we planned 150 Gh/s --> https://bitcointalk.org/index.php?topic=82249.0 ) this was enabled by the addition of hashking and Patrick Harnett.  The 50 Gh/s of additional capacity (revenues from sales and future debt responsibility) was split slightly to the favor of HK and PH as I already had 5 Gh/s of commitments.

2.  hashking has confirmed his inability to pay the accumulated coupons and further his ability to pay any future coupons.  This represents ~33% of the outstanding shares (Note:  There are 33,832 outstanding shares -- each partner acquired shares on GLBSE to meet their own needs and 732 were never sold).

3.  Patrick Harnett has a debt burden much smaller (Responsible shares less purchased shares) and is trying to devise a plan to cover his obligation.

So unfortunately, best case, the past (i.e., accumulated) and future value of YABMC shares (namely the coupon) is ~66% of what they were post GLBSE shutdown.  The shortfall of ~33% being hashking's inability to cover his past and future "debts" to YABMC bondholders.  The 66% could decrease without the participation of Patrick Harnett - but not by an additional 33% as his debt burden of shares (Gh/s) is much smaller.

It should be clear that neither PH or HK will receive any coupons and they have effectively returned the shares to YABMC (so the burden is 33,832 not 54,278).

While we announced wanting to not re-list YABMC (the reasons/concerns are probably understood), I am now thinking differently.  Not that it is a way to raise more capital - but it would allow bondholders a market to sell shares (if they so desired).  If it remained private the ability to sell shares is gone and I am trying to make this BAD situation just a little bit better.  My preference is Bitfunder but I am open to your suggestions.

I deeply regret delivering this somber message so soon before the holidays.

Please know, as you have seen posted, my portion of the YABMC debt will continue to be sent to the https://blockchain.info/fb/1yabmc address until a final plan is made (private vs. re-list).


PS - I will e-mail this as well for those who do NOT frequent the forum.

PPS - Bitfunder is offering a 10 BTC bonus if we list there.  That would obviously be returned to the bondholders in light of the situation.

Original YABMC contract:

***Bulk Share Purchases Available***

If you missed out (or want diversification) on the other VERY successful offerings by Meni Rosenfeld (PureMining), amazingrando (Bitbond) and gigavps (Gigamining), I offer the following 100% PPS bonds (transaction fee revenue excluded).

Offering:
5 Gh/s total -- 20 Gh/s is goal by July - increasing in 5 Gh/s increments
 * Currently provided by GPUs
 * Transitioning to 6 BFL Singles when arrived (4-6 weeks   ) to improve efficiency
5000 Shares @ 1 Mh/s
Price: The BEST return possible today on GLBSE for 1Mh/s @ .3 BTC

Return:
Daily        0.00049386 BTC (493.86 μBTC)
Daily ROI   0.3406%
Weekly   2.3841%
Monthly   10.3597%

** As of 8/3/2012 (Ask @ 0.145) with 50 BTC reward and Difficulty at 2,036,671.08869332 **

Call Provision:
The bond will be callable at 105% of the 15 day maximum price.

Coupons:
A minor twist is to pay coupons at each change in difficulty (~14 days -- determined by market forces).  When paying weekly (as most have done thus far) it creates additional bookkeeping for mid period difficulty changes.  The timestamp on blockchain.info will be used to calculate the payout to the nearest minute.

Effective after the coupon paid on 24 May 2012, coupons will now be paid 2x per week (Tuesday and Friday at 1200 UTC).  This will be communicated to all bondholders via a new functionality in GLBSE very soon.

Trust:
I have another 4.6 Gh/s of personal mining capacity and am sincerely reviewing growth opportunities (mini-rig and LargeCoin).  For now my focus is to bring this to market and then move forward in 5Gh/s increments (but this might change to 25 Gh/s increments).  I have been involved in Bitcoin mining since February 2011 and have included my OTC references in my signature.  I have been verified by GLBSE.  I am happy to discuss my mining operations via PM, e-mail or Skype at your convenience.

Again, thanks for reading and your interest in YABMC.  

Terms

The holder of this bond will receive as coupons a number of bitcoins equivalent to 100% PPS output of ONE MILLION HASHES PER SECOND for as long as they hold the bond. This hashpower will be used in private computer systems owned by THE ISSUER and used in the process of "mining" bitcoins. All coupons will be paid timely (within 24 hours) after each change in difficulty (which occurs every 2016 blocks – approximately every 14 days). Coupons are not pro-rated; you must hold the share at time of coupon to be paid. All dates / times will be represented in UTC. In the event the cost of mining exceeds the value of coins mined, THE ISSUER may suspend mining operation for as long as it sees fit to mitigate potential loss, or indefinitely. THE ISSUER can buy back the bond at any time at a price equivalent to 105% of the highest price the bond was last traded on GLBSE over the previous 15 days (360 hours). Though THE ISSUER will use all reasonable efforts to ensure value for the holders of these bonds, they are provided on a best effort basis and as with any investment there is risk involved. Please do not invest what you cannot afford to lose. Liability of a bondholder is limited to the capital already invested when this share was purchased. *** This share does not represent ownership of any company ***

Now we know that YABMC can't pay as per its contract because some of the asset issuers gave the coins to Pirate:

@conspirosphere.tk

Honesty is what was posted above.

 1.  A buyback at ~ .07 BTC/share will not happen
 2.  Listing on a new exchange increases the potential of this (exchange closing) happening all over again - that is not acceptable!
 3.  YABMC grew from 5 to just shy of 55 Ghs with the addition of hashking and Patrick Harnett.  With recent events (Trendon Shavers default) that growth has complicated matters.

Background:

Can you clarify a bit about points 1 and 3?  Why is YABMC unable to buy the shares back at the price you outlined in the contract?  If it is because of the Pirate default as you mentioned in point 3, I'm not sure why YABMC investors should take a bath on money you (or hashking or Patrick) "invested" in an obvious ponzi.  

As best I can tell, YABMC sold nearly all the shares at the IPO price of 0.30 BTC per share and paid about 0.10 BTC per share in dividend total since YABMC started.  Buying the shares back at 0.07 BTC per share still nets YABMC a tidy 0.13 BTC per share profit.  A profit of 0.13 BTC per share, multiplied by the 54278 shares YABMC sold, yields a profit of over 7,000 BTC even after buying out all of us at the price you stated in the contract.  The fact that you "invested" your profit and lost it does not allow you to violate your contract obligations to those of us who bought your shares.

[PsychoticBoy]

My vote: Patrick Harnett YES
              Hashking YES
              JWU42 NO he is trying to solve this Mess created in the first place by GLBSE, the recent shit is due to PH and HK.

Greetz

[conspirosphere.tk]

You may have a point. Poll changed as per your observation.

[PsychoticBoy]

Could you also reset the vote count then?


Greetz

[dree12]

Have we lost touch with what "scammer" means? A public company's owners have limited liability; they are not at fault if the company goes under or fails to meet its obligations. Unless someone made the YABMC issuers cosign the debt, there is no reason they have to pay it back to the shareholders—everyone will have to settle with a dividend of 0.

[conspirosphere.tk]

Have we lost touch with what "scammer" means? A public company's owners have limited liability; they are not at fault if the company goes under or fails to meet its obligations. Unless someone made the YABMC issuers cosign the debt, there is no reason they have to pay it back to the shareholders—everyone will have to settle with a dividend of 0.

Look, it is not that they went under due to some business-related event: They admitted that they gave the coins to Pirate (!).
For you is right to raise capital for mining and investing it in an an obvious Ponzi?

[usagi]

Have we lost touch with what "scammer" means? A public company's owners have limited liability; they are not at fault if the company goes under or fails to meet its obligations. Unless someone made the YABMC issuers cosign the debt, there is no reason they have to pay it back to the shareholders—everyone will have to settle with a dividend of 0.

Look, it is not that they went under due to some business-related event: They admitted that they gave the coins to Pirate (!).
For you is right to raise capital for mining and investing it in an an obvious Ponzi?

It's my understanding that JWU increased his output from 5 to 55 GH/s by investing money with Patrick and Hashking and taking some fraction of the output from pirate as "theoretical mining reward". It's basically the same thing Goat did. They said "the output of" meaning the assumed output. The punishment for this should be the same as if JWU had been involved in a consortium of miners with the purpose of a price manipulation scheme to jerk the market around in a boom-bust cycle after the ASIC-announcement mining crash.

It's my take that JWU thought he was safe because of Hashking and Patrick's guarantees. They lied, JWU got fried. Thank god I never did anything like that or I would have to agree to a scammer tag for myself. The real issue here is an outright lie told to investors: We will invest in mining hardware on your behalf, then, behind the investor's back it is invested in a high yield fund.

Anyone with investment experience can tell you why fraud was committed here. It's because it makes it impossible to analyze the risk of the investment. People thought they were investing in a low-yield, low-risk mining hardware asset, while JWU secretly moved the money into a higher risk product. Then, by pocketing the difference, the actual fraud was committed; he had offloaded the risk to his investors, while pocketing the money. This fufills all the classic definitions of fraud; an intentional deception made for the purposes of financial gain.

The problem is that we don't know what JWU's thinking was. Did he intend it to work out this way? I doubt it.

SO I believe a remedy is available to JWU. It's simple -- something akin to... give up his current stake in YABMC. I.e. ~500 BTC. Relist on bitfunder or btct.co or wherever and make a 500 btc payment out to shareholders. That's a slap on the wrist but a gesture like that would show that he never meant for any of this to happen and that he is willing to make amends. In short.. pay a fine. Settle. Something like that. Unless I am wrong and JWU is somehow innocent of offloading risk while pocketing the difference?

[JWU42]

I didn't plan on commenting in this thread but there are some things that should be understood by all before voting...

When the partnership was formed on May 16, 2012 we each agreed to be responsible for a portion of the incremental 145 Gh/s.  As mentioned in the YABMC thread, this was prorated in a 45/50/50 manner so that we each would end up with a debt of 50 Gh/s.  We stopped the expansion at 55 Gh/s which left a debt of 20.293 Gh/s for me and 16.992 Gh/s for HK and PH.  As the bonds were sold the income was dispersed eleven (11) times from May 20th through June 5th, 2012 in the same 31.0345% / 34.4828% / 34.4828% breakdown.  Both HK and PH would then send BTC back to the YABMC account (mostly as a GLBSE transfer) to "cover" their portion of the Tuesday and Friday coupon.  I kept administrative lead for payment of coupons as GLBSE lacked the feature of a shared login to an asset - something requested of nefario and was supposedly a possibility in GLBSE 3.0.

I have every intent of paying my portion of the accumulated debt and have been very transparent about adding to it weekly since mid December -- https://blockchain.info/fb/1yabmc

[stochastic]

Have we lost touch with what "scammer" means? A public company's owners have limited liability; they are not at fault if the company goes under or fails to meet its obligations. Unless someone made the YABMC issuers cosign the debt, there is no reason they have to pay it back to the shareholders—everyone will have to settle with a dividend of 0.

Show me the legal documents that gives them limited liability, otherwise anyone in the partnership has unlimited liability.  This ridiculous concept about limited liability in make believe companies needs to stop.  If one partner cannot complete their duties it is the responsibilities of the remaining partners to fulfill the contract they signed with other people.  Lets say a person purchased a house with their spouse using a mortgage that they both signed for and then later got divorce.  If the person that got the deed to the house stops paying the mortgage then both parties that signed the contract will be declared in default.  The bank is not going to ask for only half the mortgage from one of the spouses.  They are going to expect 100% payment.