Biz27B-6 on Bitfunder - 100% scam

[Deprived]

Not sure why Ukyo lets crap like this and Exchange.ESIF list on Bitfunder when it's immediately obvious just from the prospectus that they're scams.  There's now plenty of reasonable or half-reasonable assets on the platform - and scams like these don't actually attract much volume (and what they do attract the exhcnage only gets to see about 1.333 times before it vanishes).

Anyway, here's why this one is a scam.  Some of the stuff here you'll have to check out yourself - other bits you'll have to take my word for (or ask Ukyo to check).

1.  His description says "This is not a public company or corporation, but is a private business. We are using this service to manage shares and dividends. We cannot prevent shareholders from selling or trading their shares to outsiders using this service, but it is the best system available so we are using it."  Yep - according to this he wasn't listing to sell shares himself, but to help manage the accounting.  And he can't help it if some shareholders trade on it.

But that's not what happened.  Right after listing he slung up a block of 100k for sale.  We know it was him - as all the shares except 17 (yep - only 17) were in a single account.  And since then he's been trying to sell non-stop including posting a totally laughable news release.  So we aren't off to a good start are we - when he lies about the primary intention of listing.

2.  He hasn't even identified the business.  I'd have thought Ukyo would have the self-respect just to laugh at him and tell him to fuck off when he asked to list without identifying the business, but apparently not.  Think everyone knows the track record of past companies that didn't even identify their business.

3.  Another common give-away for scammers is that they don't actually mind what price they sell shares at : after all they haven't got to protect investors' interests or raise a specific sum, they just want whatever they can get.  So I thought I'd see just how low he'd sell shares at.

I slung up a buy order for some at 0.0001 - that's 1% of the price he was listing for sale at.

Not long after :

2013-03-01 21:30:29    BUY: (Biz27B-6): 1 @ ฿0.00010000/ea

Hmm, what to do next?  Well obviously put it up for sale just below his own sell orders (delay is mainly because I didn't notice I'd bought it).

2013-03-02 19:06:44    SELL: (Biz27B-6): 1 @ ฿0.00990000/ea

Ah well, only 1 share - would be different if he did it on a bunch.

Like:

2013-03-09 14:10:34       ฿0.00995000    1    ฿0.00995000
2013-03-09 14:09:31       ฿0.00200000    500    ฿1.00000000

Yup - selling 500 at 20% of price he lists at, then immediately buying 1 off his main Ask so last bid is still high.  Just hope whoever got that 500 knows to relist under him and keep lowering price down.  Do I KNOW that sale is him?  Nope - but it's easy enough to check from cached ownership lists on Bitfunder.  Just can't be bothered to do it myself - as I don't need convincing he's a scammer.

4.  None of the above is conclusive proof of scamming individually.  Put together maybe it is.  But here's the real kicker.  He talks about having transparent accounting - where investors can see revenue and expenses go in and out of the business' accounts.  Now I was sceptical of this - how can it be transparent when we have no idea who is paying or being paid by him?  How can we be sure he's not just funelling BTC through a mixer to fake up his accounts?  Turns out I was wrong - it IS transparent and laughably so.

I had a look at the accounts addresses and was amazed and amused by what I saw and by his total stupidity.

The revenue account (starts with 1BizRev) receives funds in from various addresses and sends funds on to the Expenses account (starts with 1BizExp).  The expenses account then disburses these funds to various addresses.

Where it becomes transparent is because if you look at these other addresses you find some where ALL the account does of significance is receive from his Expenses account then an hour (or less) later send it back round the loop to the Revenue account.  Yep - he was too dumb even to use a mixer and made his accounts totally transparent - he's cycling the same cash around to make it look like there's business happening.

Here's some examples :

http://blockexplorer.com/address/17MVKyVjFsMAnsFKidGmJCWGmUfstLUXRa

receives 1.3 BTC from his expenses account (which received that from his revenue account) then 10 minutes later (yep only TEN minute later) he sends exactly same amount back to the Revenue account.

http://blockexplorer.com/address/1NsnBcrk6jJQGcwWCCAmBHcdG9VJofSGRA

This time he waits an hour before sending the funds on around the loop.

I spat coffee all over my keyboard when I first saw just how obvious it was - had expected it to take at least 10 minutes to work out just how he was cycling the funds around.  I haven't looked at half the addresses.  Would assume some will be receiving withdrawals from Bitfunder and pushing them round the loop - the size of his transactions has slowly grown once he sold some shares so had some cash to move around.  And would also assume some of expenditure transactions will be deposits to his alt accounts on Bitfunder so they can buy shares and make it look like there's demand plus assist his pretence of having private investors.

Anyone still think it's legit (other than Ukyo)?

[Ukyo]

Not sure why Ukyo lets crap like this and Exchange.ESIF list on Bitfunder when it's immediately obvious just from the prospectus that they're scams.  There's now plenty of reasonable or half-reasonable assets on the platform - and scams like these don't actually attract much volume (and what they do attract the exhcnage only gets to see about 1.333 times before it vanishes).

Anyway, here's why this one is a scam.  Some of the stuff here you'll have to check out yourself - other bits you'll have to take my word for (or ask Ukyo to check).

1.  His description says "This is not a public company or corporation, but is a private business. We are using this service to manage shares and dividends. We cannot prevent shareholders from selling or trading their shares to outsiders using this service, but it is the best system available so we are using it."  Yep - according to this he wasn't listing to sell shares himself, but to help manage the accounting.  And he can't help it if some shareholders trade on it.

But that's not what happened.  Right after listing he slung up a block of 100k for sale.  We know it was him - as all the shares except 17 (yep - only 17) were in a single account.  And since then he's been trying to sell non-stop including posting a totally laughable news release.  So we aren't off to a good start are we - when he lies about the primary intention of listing.

2.  He hasn't even identified the business.  I'd have thought Ukyo would have the self-respect just to laugh at him and tell him to fuck off when he asked to list without identifying the business, but apparently not.  Think everyone knows the track record of past companies that didn't even identify their business.

3.  Another common give-away for scammers is that they don't actually mind what price they sell shares at : after all they haven't got to protect investors' interests or raise a specific sum, they just want whatever they can get.  So I thought I'd see just how low he'd sell shares at.

I slung up a buy order for some at 0.0001 - that's 1% of the price he was listing for sale at.

Not long after :

2013-03-01 21:30:29    BUY: (Biz27B-6): 1 @ ฿0.00010000/ea

Hmm, what to do next?  Well obviously put it up for sale just below his own sell orders (delay is mainly because I didn't notice I'd bought it).

2013-03-02 19:06:44    SELL: (Biz27B-6): 1 @ ฿0.00990000/ea

Ah well, only 1 share - would be different if he did it on a bunch.

Like:

2013-03-09 14:10:34       ฿0.00995000    1    ฿0.00995000
2013-03-09 14:09:31       ฿0.00200000    500    ฿1.00000000

Yup - selling 500 at 20% of price he lists at, then immediately buying 1 off his main Ask so last bid is still high.  Just hope whoever got that 500 knows to relist under him and keep lowering price down.  Do I KNOW that sale is him?  Nope - but it's easy enough to check from cached ownership lists on Bitfunder.  Just can't be bothered to do it myself - as I don't need convincing he's a scammer.

4.  None of the above is conclusive proof of scamming individually.  Put together maybe it is.  But here's the real kicker.  He talks about having transparent accounting - where investors can see revenue and expenses go in and out of the business' accounts.  Now I was sceptical of this - how can it be transparent when we have no idea who is paying or being paid by him?  How can we be sure he's not just funelling BTC through a mixer to fake up his accounts?  Turns out I was wrong - it IS transparent and laughably so.

I had a look at the accounts addresses and was amazed and amused by what I saw and by his total stupidity.

The revenue account (starts with 1BizRev) receives funds in from various addresses and sends funds on to the Expenses account (starts with 1BizExp).  The expenses account then disburses these funds to various addresses.

Where it becomes transparent is because if you look at these other addresses you find some where ALL the account does of significance is receive from his Expenses account then an hour (or less) later send it back round the loop to the Revenue account.  Yep - he was too dumb even to use a mixer and made his accounts totally transparent - he's cycling the same cash around to make it look like there's business happening.

Here's some examples :

http://blockexplorer.com/address/17MVKyVjFsMAnsFKidGmJCWGmUfstLUXRa

receives 1.3 BTC from his expenses account (which received that from his revenue account) then 10 minutes later (yep only TEN minute later) he sends exactly same amount back to the Revenue account.

http://blockexplorer.com/address/1NsnBcrk6jJQGcwWCCAmBHcdG9VJofSGRA

This time he waits an hour before sending the funds on around the loop.

I spat coffee all over my keyboard when I first saw just how obvious it was - had expected it to take at least 10 minutes to work out just how he was cycling the funds around.  I haven't looked at half the addresses.  Would assume some will be receiving withdrawals from Bitfunder and pushing them round the loop - the size of his transactions has slowly grown once he sold some shares so had some cash to move around.  And would also assume some of expenditure transactions will be deposits to his alt accounts on Bitfunder so they can buy shares and make it look like there's demand plus assist his pretence of having private investors.

Anyone still think it's legit (other than Ukyo)?

First off:
I can confirm from public history records that you are correct on those two trade. Both were traded back and fourth between the same two accounts.

Secondly:
I have already locked down his ability from issuing additional shares until he responds to a ticket.

I cannot release the private details that were presented originally as he wanted to keep it confidential.

There are a few things I am checking, but there are also some other things on the account that I cannot currently discuss because it is private information but needless to say, those things do make things seem not so bad.

Deprived, PM.

P.s. For what its worth, I checked, and have turned down more than 30 asset requests since BF started.

[Ukyo]

On a side note, if you look at the BF asset list: https://bitfunder.com/assetlist

You will see an address that hold 991,248 shares. I think it's safe to assume that is the issuer.

This leaves 8,752 shares that outstanding.

If you go through the trade history, its clear that that most shares were sold on BF, but obviously transferred directly to private entities.
A total of 620 shares (of of now) were bought. And from the public records of the asset lists, I can tell you that the majority were bought from other users, who hold and trade in other assets.

The asset itself has only ever had 26 trades total.

Moving the btc around that way is quite questionable though.

[Deprived]

On a side note, if you look at the BF asset list: https://bitfunder.com/assetlist

You will see an address that hold 991,248 shares. I think it's safe to assume that is the issuer.

This leaves 8,752 shares that outstanding.

If you go through the trade history, its clear that that most shares were sold on BF, but obviously transferred directly to private entities.
A total of 620 shares (of of now) were bought. And from the public records of the asset lists, I can tell you that the majority were bought from other users, who hold and trade in other assets.

The asset itself has only ever had 26 trades total.

Moving the btc around that way is quite questionable though.

Oh - I wouldn't be surprised of he DOES have a website and some sort of fledgling business.  But it's still a scam as he's trying to obtain money based on false statements.

The main reason it shouldn't be listed (even without his rather dodgy accounts) is because there's no disclosure of the business.  That makes it a gamble rather than investment - and turns your site into a gambling site rather than an exchange.  His 'business' is Satoshi Dice without the odds being published or verifably fair - you send off some BTC and may get back none, a small amount or a large amount with nothing you can do to assess the likelihood of the various outcomes let alone influence them.

If someone won't disclose their business then there's no conceivable reason why an exchange should list them.

Of the shares transferred to other accounts, how many of those other accounts were his own (obviously you can't tell me the answer - but it's something you should look at)?  One of favourite tricks of scammers/ponzis etc is selling/transferring shares to other accounts of their own - to make it look like there's more activity than there is and to allow them to inflate apparent dividends whilst not actually paying out much.

When you say you've locked down his ability to issue more shares do you mean he can't sell shares or that he can only sell the 1 million he already has?  There's a big difference between "he can't sell anything" and "he can only sell 10k BTC ($400k) worth of shares".  If the former then I guess the 500 sale earlier would be one of his alt accounts dumping into the only open Bid as he realised he'd been caught.

I'm failing to see how you ever thought he had a company worth 50K BTC - the value it supposedly has with 5 million shares and sales being at 0.01 BTC each.

[Ukyo]

Oh - I wouldn't be surprised of he DOES have a website and some sort of fledgling business.  But it's still a scam as he's trying to obtain money based on false statements.

The main reason it shouldn't be listed (even without his rather dodgy accounts) is because there's no disclosure of the business.  That makes it a gamble rather than investment - and turns your site into a gambling site rather than an exchange.  His 'business' is Satoshi Dice without the odds being published or verifably fair - you send off some BTC and may get back none, a small amount or a large amount with nothing you can do to assess the likelihood of the various outcomes let alone influence them.

If someone won't disclose their business then there's no conceivable reason why an exchange should list them.

Of the shares transferred to other accounts, how many of those other accounts were his own (obviously you can't tell me the answer - but it's something you should look at)?  One of favourite tricks of scammers/ponzis etc is selling/transferring shares to other accounts of their own - to make it look like there's more activity than there is and to allow them to inflate apparent dividends whilst not actually paying out much.

When you say you've locked down his ability to issue more shares do you mean he can't sell shares or that he can only sell the 1 million he already has?  There's a big difference between "he can't sell anything" and "he can only sell 10k BTC ($400k) worth of shares".  If the former then I guess the 500 sale earlier would be one of his alt accounts dumping into the only open Bid as he realised he'd been caught.

I'm failing to see how you ever thought he had a company worth 50K BTC - the value it supposedly has with 5 million shares and sales being at 0.01 BTC each.

I did look at the accounts that shares were transferred to. They are all reasonably legit looking.

Again, I can confirm from public record that the 500 shares was moved from the large holding account.
That does look questionable.

As for the business, I had a hard time debating on this one. This was actually one of the first assets that got approved that was not a GLBSE asset.
It just took a lot more time than expected to go live. My issue with this, is that I have been presented with all the details that really need to be public.
I made him aware that not listing those details would cause problems, and that I honestly did not expect people would invest into something so blindly.
Judging by the purchase history, it was mostly correct.

Since then, I have setup a lot of rules and standards that must be met now to be listed on BF. Only one other asset got by early on before hand, and has
already been locked down recently until they comply.

These things have evolved quite a bit from where they started. Someone wants to get funding for this or that, without much to go on. Some have surprisingly
turned into great investments, others have turned into, well, you get the idea.

I decided a bit ago to try to step things up a notch or two. With some big events in BitFunder's near future coming up, listing will become more interesting.

As for valuation, I have seen some pretty good ones recently with big numbers sought after while providing very little.
As of right now, I will not force my opinion on people as to a min or max price the can launch their asset at.

Besides, this brings up an interesting question. If fraud was ever decided on an asset, how should it be handled? I am always open to suggestions.
I would like to think that going forward it should be less likely, but you never know when someone will just.. disappear. Such is the nature of online/anon dealings.
That is, unless you want to get super strict, and somehow enforce real contracts on all issuers, and do full id verification on all users to make sure none are puppets.

In the 'free' world, there is always a high risk when people don't use their brain and think before handing out their money.

[Ukyo]

Also, on that 500 share sell.

It was one big trade, that went to someone who was asking .002 (roughly 25% of the current rate)
There is always the possibility that the issuer was just trying to push shares out into the market.
It may have also been the only buy order.

[Deprived]

Also, on that 500 share sell.

It was one big trade, that went to someone who was asking .002 (roughly 25% of the current rate)
There is always the possibility that the issuer was just trying to push shares out into the market.
It may have also been the only buy order.

It was the only buy order up.  I'd cancelled my .0001 one below it.

If a business needs to raise $X or values itself at $X then there's no way it can ever have a good reason for selling shares well below the price that would raise $X.  Aside from the impact on the business it dilutes other shares previously sold.  Plus it's classic scammer behaviour

One of key things all IPOs need to state is the pricing polciy of shares (be it in batches, in BTC/share or BTC equivalent of USD/share).  There's no reason why he couldn't have stated that in his contract even if he kept everything else quiet.

I'm NOT in favour of excessive requirements in terms of ID etc.  But there's a bunch of very basic stuff that absolutely needs to be in every contract.  And #1 on that list is disclosure of the business - without that it's impossible to assess anything as, even ignoring financial issues, the risks can't be determined without knowing what area the business operates in.

Similarly, I'm NOT in favour of the exchange being required to (or liable for) assessing the viability and legitimacy of businesses.  But the exchange SHOULD be responsible for ensuring that anything listed provides sufficient information for potential investors to make such determinations themselves.  That again means the business needs to be disclosed.  It also means that (as was NOT the case with the other scam one) if a business claims a record of past profits then they should be providing SOME kind of evidence of it that potential investors can investigate to make their own determination of whether those profits look real or not.

The single biggest deterrent to scammers (and way to avoid problems down the road for legitimate businesses) is to force them to publish their contract and answer questions here BEFORE they get to start trading.  It's pretty much at that stage on BTC.CO/LTC-GLobal now.  There WAS one that got approval on LTC-Global without a thread first,  At the time I posted about it calling whoever approved it idiots.  It paid one dividend then vanished.  Since then, no business without a discussion thread has made any significant progress on listing.  If someone refuses to handle criticism/questions over their business BEFORE selling shares then there's about ZERO chance that they'll satisfactorily handle issues that arise down the line due to unclear/incomplete/bad/not adhered to contracts.

[Ukyo]

Also, on that 500 share sell.

It was one big trade, that went to someone who was asking .002 (roughly 25% of the current rate)
There is always the possibility that the issuer was just trying to push shares out into the market.
It may have also been the only buy order.

It was the only buy order up.  I'd cancelled my .0001 one below it.

If a business needs to raise $X or values itself at $X then there's no way it can ever have a good reason for selling shares well below the price that would raise $X.  Aside from the impact on the business it dilutes other shares previously sold.  Plus it's classic scammer behaviour

One of key things all IPOs need to state is the pricing polciy of shares (be it in batches, in BTC/share or BTC equivalent of USD/share).  There's no reason why he couldn't have stated that in his contract even if he kept everything else quiet.

I'm NOT in favour of excessive requirements in terms of ID etc.  But there's a bunch of very basic stuff that absolutely needs to be in every contract.  And #1 on that list is disclosure of the business - without that it's impossible to assess anything as, even ignoring financial issues, the risks can't be determined without knowing what area the business operates in.

Similarly, I'm NOT in favour of the exchange being required to (or liable for) assessing the viability and legitimacy of businesses.  But the exchange SHOULD be responsible for ensuring that anything listed provides sufficient information for potential investors to make such determinations themselves.  That again means the business needs to be disclosed.  It also means that (as was NOT the case with the other scam one) if a business claims a record of past profits then they should be providing SOME kind of evidence of it that potential investors can investigate to make their own determination of whether those profits look real or not.

The single biggest deterrent to scammers (and way to avoid problems down the road for legitimate businesses) is to force them to publish their contract and answer questions here BEFORE they get to start trading.  It's pretty much at that stage on BTC.CO/LTC-GLobal now.  There WAS one that got approval on LTC-Global without a thread first,  At the time I posted about it calling whoever approved it idiots.  It paid one dividend then vanished.  Since then, no business without a discussion thread has made any significant progress on listing.  If someone refuses to handle criticism/questions over their business BEFORE selling shares then there's about ZERO chance that they'll satisfactorily handle issues that arise down the line due to unclear/incomplete/bad/not adhered to contracts.

I definitely couldn't agree more. I have been putting together more and more listing agreement requirements and throwing them at anyone interested in listing.
I think everyone noticed that there were similarities between ziggap and bitpride. The requirements will only get better from here.

As for "prooving" things, anything is easy to fake. Not saying it shouldn't be asked for. "Just saying"

[Deprived]

As for "prooving" things, anything is easy to fake. Not saying it shouldn't be asked for. "Just saying"

Right - I see your responsibility as being to ensure those listing provide some "proof" that they operate the business and of any claims they make in respect of its past performance.

It's down to investors to check the "proof" out and determine just how strong it is as evidence.  But if you don't do your part (making the issuer provide the proof) it's impossible for investors to do theirs (assessing it).

[Ukyo]

As for "prooving" things, anything is easy to fake. Not saying it shouldn't be asked for. "Just saying"

Right - I see your responsibility as being to ensure those listing provide some "proof" that they operate the business and of any claims they make in respect of its past performance.

It's down to investors to check the "proof" out and determine just how strong it is as evidence.  But if you don't do your part (making the issuer provide the proof) it's impossible for investors to do theirs (assessing it).

Agreed.

After this asset launched that was actually one of the new policy requirements. Assets will need to publicly show what it is, and where the funds are coming from.
The operator did contact me back, and also saw the posts here. I have advised him to post and make himself known.

[iCEBREAKER]

great job deprived.  You are hereby promoted to head of the Bitcoin Police.

ukyo, please take the garbage assets off BF ASAP (or change the name to ScamFunder).  The exchange loses credibility every hour such trash stays listed.

[Ukyo]

great job deprived.  You are hereby promoted to head of the Bitcoin Police.

ukyo, please take the garbage assets off BF ASAP (or change the name to ScamFunder).  The exchange loses credibility every hour such trash stays listed.

If it was to happen.

Besides, this brings up an interesting question. If fraud was ever decided on an asset, how should it be handled? I am always open to suggestions.

Thoughts/suggestions on what a fair approach would be?

[iCEBREAKER]

no need to reinvent the wheel, use criteria from IRL exchanges.

market cap.  Too small for too long?  Delisted!

volume.  Nobody wants equity after the IPO pump&dump?  Delisted.

transparency.  How you make money is a sekrit?  Delisted.

we want BF to be the NYSE, not the TSX venture graveyard of dead enterprises.   

[Ukyo]

no need to reinvent the wheel, use criteria from IRL exchanges.

market cap.  Too small for too long?  Delisted!

volume.  Nobody wants equity after the IPO pump&dump?  Delisted.

transparency.  How you make money is a sekrit?  Delisted.

we want BF to be the NYSE, not the TSX venture graveyard of dead enterprises.   

Exactly.

The question is, what should the process be for delisting.
Just disabled trading, tell users that the issuer has the list of users and share counts. Good luck. and that's it?
Give an X day notice, so ppl can sell off and crash the market for the asset first?

It needs to be fair to the users still.

[iCEBREAKER]

WWND?

(wut would NASDAQ do?)

/can't be arsed to GIFY   

[Monster Tent]

If you admit you are "vetting" assets and one turns out to be a scam it may cause  problems for the platform in future because if people cant go after the scammer they will look to the person who is responsible for allowing it to happen, and who admitted it on a public forum  

[Monster Tent]

Although lets not kid ourselves the chance of any legal action happening with bitcoin securities pretty much approaches 0.

[burnside]

If you admit you are "vetting" assets and one turns out to be a scam it may cause legal problems for the platform in future because if people cant go after the scammer they will look to the person who is responsible for allowing it to happen, and who admitted it on a public forum  

I did look at the accounts that shares were transferred to. They are all reasonably legit looking.

Again, I can confirm from public record that the 500 shares was moved from the large holding account.
That does look questionable.

As for the business, I had a hard time debating on this one. This was actually one of the first assets that got approved that was not a GLBSE asset.
It just took a lot more time than expected to go live. My issue with this, is that I have been presented with all the details that really need to be public.
I made him aware that not listing those details would cause problems, and that I honestly did not expect people would invest into something so blindly.
Judging by the purchase history, it was mostly correct.

...

In the 'free' world, there is always a high risk when people don't use their brain and think before handing out their money.

Problem here is that by listing it knowing all the secret details (and stating as much) you gave it credibility.  Essentially, you vouched for it.

Damage does seem to be minimal, call it a learning experience?

[Monster Tent]

If you admit you are "vetting" assets and one turns out to be a scam it may cause legal problems for the platform in future because if people cant go after the scammer they will look to the person who is responsible for allowing it to happen, and who admitted it on a public forum  

I did look at the accounts that shares were transferred to. They are all reasonably legit looking.

Again, I can confirm from public record that the 500 shares was moved from the large holding account.
That does look questionable.

As for the business, I had a hard time debating on this one. This was actually one of the first assets that got approved that was not a GLBSE asset.
It just took a lot more time than expected to go live. My issue with this, is that I have been presented with all the details that really need to be public.
I made him aware that not listing those details would cause problems, and that I honestly did not expect people would invest into something so blindly.
Judging by the purchase history, it was mostly correct.

...

In the 'free' world, there is always a high risk when people don't use their brain and think before handing out their money.

Problem here is that by listing it knowing all the secret details (and stating as much) you gave it credibility.  Essentially, you vouched for it.

Damage does seem to be minimal, call it a learning experience?

Its kinda like Gigamining giving pirate a +10 on bitcoin-otc....and also meeting him for dinner in vegas.

[Ukyo]

Let's be clear on one thing.

I am only stating that business description was provided, not proven, or authenticated.

I have had some messages with the operator and I am seeing what can be agreed to.
If an agreement is not reach rather quickly, then I will have no choice but to start the delist process.