Biz27B-6 on Bitfunder - 100% scam

[SamPryce]

There's a lot of conjecture here, but let's start with the most important one.

The claim is that the statement

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.

is false. No real evidence is shown other than that someone using the system was able to anonymously purchase some shares, presumably of a business that they know next to nothing about. How many people do you know that would buy shares in a company that they know nothing about?

Let me be clear. I am signing up investors in person, and using BitFunder to manage things and allow the investors to buy/sell between each other. I am doing this in part because I don't have the time to build my own version just for managing my shareholders. Nor do I think taking the time to manage the shares myself, manually or otherwise, is the best use of my time.

I talked it over quite a bit with Ukyo before listing. He pointed out that it would be very hard to get investors on my own, so I expected it would take some time to raise the capital we would like. Given the difficulty, I think we are doing pretty well.

As far as identifying the business that's only important for people who don't already know it, and they shouldn't be investing in it anyway. We choose to be anonymous for some very important reasons, reasons that the creator of bitcoin would understand. Who are we? None of your business and don't buy any of our shares please.

Now as to the accounting, maybe you can help. How would you account for non-bitcoin revenue? Certainly taking each non-bitcoin payment, converting it to bitcoin via MtGox or others, then sending that to the revenue address would be overly expensive in both fees and time. And if we were scamming, why bother to do such small amounts? Wouldn't cycling a bunch of larger amounts through many more times be more compelling for potential investors?

This really bothers me though.

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.

You might not be capable of conceiving a reason, but that doesn't mean there can't be one. I have already given one, that we want to use the BitFunder site as a way to outsource share handling for our known investors. The reasons we need to remain anonymous are our own, but if you are using bitcoins and can't think of a reason why then you are clearly using the wrong alternative currency. Also, you must have some weird parents to have named you Deprived :-)

Our investors have seen our plans to take this business from not being anywhere near worth 50Kbtc to being worth far more than that. Our plan doesn't require as much as we're raising, but the higher amount would be useful in furthering our plans. It is also expected to take some time, as our description notes.

So let me say it again. Biz27B-6 is not intended to be traded by people who don't know what it is. We are signing up investors on our own, and they are trading their own shares as they will. Since we cannot see who is making bids and asks, we can only assume that they are legitimate investors. If he wants to, and he has apparently alluded to it earlier, Ukyo can confirm that most of the investors in Biz27B-6 are new accounts on BitFunder that were created specifically to receive the shares. And yes, most of the new investors had their shares transferred to them as they paid for the shares in cash or other ways outside of the BitFunder system.

We cannot and will not endanger our shareholders and our business merely because someone who has no business with us wants us to expose ourselves to unwanted scrutiny just to satisfy their own curiosity.

And as much as we can appreciate BitFunder desiring to be the bitcoin equivalent of NASDAQ, it can be so much more than that decrepit cesspit of regulatory capture and failed crony capitalism. We have a great opportunity here to allow small businesses to have access to the same tools as were previously only available to large corporations. Yes, the challenge of identifying and handling scammers needs to be dealt with, but the way to do that is to shine light on things and not to pass off the responsibility to some authority figure.

Thank you for allowing me to respond.

Sam Pryce (obviously not my real name)

[Deprived]

So let me say it again. Biz27B-6 is not intended to be traded by people who don't know what it is. We are signing up investors on our own, and they are trading their own shares as they will.

So why did you sell 500 shares at 20% of your listed price to an anonymous buyer?  Or was that a pre-arranged sale to someone who knew what your business was (Ukyo can likely easily verify that if you claim it to be the case - so would be a brave bluff to lie)?

Why, for that matter, did you sell 1 share to ME at 1% of your listed price?

Why, for that matter, do you list shares for sale (of your own) at all?  You DO realise there's a transfer function?

Why, shortly after listing, did you immediately put up 100,000 shares for sale (you took it down within a day) whilst only have a few (from memory 17 - but was defnitely under 100) shares in the hands of investors?  Did you really have private investors lined up to buy 100K shares?  Weren't you at all concerned someone not knowing the business may accidentally buy them - not realising it was a private thing?

Why, do your (supposedly transparent) accounts have transfers from your Expenses account to an unidentified account, which then promptly sends the funds on to your Revenue account?

Why, if all your investors are obtained and contacted privately, did you post some fluff news post (about unidentified celebrities doing unidentified things with the unidentified product produced by your unidentifed company) to Bitfunder - in which you actually CLAIMED that most of your actual (alleged) investors hadn't even signed up yet?  Surely you sent an unexpurgated version to your actual (alleged) investors - making it only of use to attract investors who DIDN'T know what you're doing.  Which is what you claim is NOT your intent.

There's actually one more glaring thing that makes it all a mockery - but it'll be a few weeks before I can point it out without you being able to rectify it and claim it was just a mistake/late action on your part.  You don't mind me not disclosing it yet I hope - given your own love of non-disclosure.

[Deprived]

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.

You might not be capable of conceiving a reason, but that doesn't mean there can't be one. I have already given one, that we want to use the BitFunder site as a way to outsource share handling for our known investors.

You misunderstood my point.

There's PLENTY of reasons why YOU (or other businesses) would want to list on the exchange without disclosure.
My point was that there's no reason why the exchange should let you.  

Hence me saying "why the exchange shoud list you" rather than "why you should ask to be listed".

Two entirely different things.  Though I'll admit there IS one reason why an exchange would let you list - to increase short-term revenue/activity (at the expense of credibility).  So rather than saying "no conceivable" reason I should have said "no valid reason" or "no sensible reason".

EDIT: There would, of course, be absolutely nothing wrong with Ukyo allowing private companies  to use the exchange - with their shares only visible to those holding them.  Then the rest of us wouldn't have our screen-space and band-width wasted on meaningless stuff of no interest or value to us.  And you'd be spared the problems associated with people buying your shares in error, not realising they weren't for public consumption.  If you do it in private you can shuffle funds between your 'transparent' accounts all you want to simulate an actual business - and if your investors are happy with it then great.

[SamPryce]

So why did you sell 500 shares at 20% of your listed price to an anonymous buyer?  Or was that a pre-arranged sale to someone who knew what your business was (Ukyo can likely easily verify that if you claim it to be the case - so would be a brave bluff to lie)?

Why, for that matter, did you sell 1 share to ME at 1% of your listed price?

Why, for that matter, do you list shares for sale (of your own) at all?  You DO realise there's a transfer function?

Why, shortly after listing, did you immediately put up 100,000 shares for sale (you took it down within a day) whilst only have a few (from memory 17 - but was defnitely under 100) shares in the hands of investors?  Did you really have private investors lined up to buy 100K shares?  Weren't you at all concerned someone not knowing the business may accidentally buy them - not realising it was a private thing?

Why, do your (supposedly transparent) accounts have transfers from your Expenses account to an unidentified account, which then promptly sends the funds on to your Revenue account?

Why, if all your investors are obtained and contacted privately, did you post some fluff news post (about unidentified celebrities doing unidentified things with the unidentified product produced by your unidentifed company) to Bitfunder - in which you actually CLAIMED that most of your actual (alleged) investors hadn't even signed up yet?  Surely you sent an unexpurgated version to your actual (alleged) investors - making it only of use to attract investors who DIDN'T know what you're doing.  Which is what you claim is NOT your intent.

There's actually one more glaring thing that makes it all a mockery - but it'll be a few weeks before I can point it out without you being able to rectify it and claim it was just a mistake/late action on your part.  You don't mind me not disclosing it yet I hope - given your own love of non-disclosure.

I did have an advisor tell me to not list so many shares for sale, but he doesn't really understand the nature of a truly free market yet. That's why I changed the number of shares for sale, to keep an investor happy. He is still thinking traditional stock market.

As far as selling shares at a price that you might think is less than I should, opinions change. Who is to say what a fair value is? Since I have no way of knowing whether a bid is from a legitimate shareholder or not, I can only assume they are placing lower bids hoping to get a discount. Who else would bid on an asset that has no identifying information?

As far as transfer vs bid, maybe its just easier to let the system handle what the system was built for than to recreate the system's functionality by manual processing.

I already explained why the recycling of bitcoins through the various addresses happened, but to recap: we still have more revenue from non-bitcoin sources and to have the bitcoin addresses accurately reflect the revenues and expenses we need to recycle some of them. As I said earlier, if there was an intent to commit fraud, then why wouldn't the amounts recycled be much larger?

And why would I use the news system to communicate with my investors when I could send some of them emails, some of them facebook messages, some of them tweets, and walk over to others' houses and tell them in person? Jeez, let me think about that. LOL

I'm not going to say I'm perfect. Maybe I have missed something. But that doesn't mean that the asset is a scam. All this all means is that it isn't for everyone. In fact we are explicit that it is only for those who already know what it is.

But the tl:dr of this all is, if you don't know what it is then don't invest in it. That's pretty obvious and simple.

[SamPryce]

You might not be capable of conceiving a reason, but that doesn't mean there can't be one. I have already given one, that we want to use the BitFunder site as a way to outsource share handling for our known investors.

You misunderstood my point.

There's PLENTY of reasons why YOU (or other businesses) would want to list on the exchange without disclosure.
My point was that there's no reason why the exchange should let you.  

Hence me saying "why the exchange shoud list you" rather than "why you should ask to be listed".

Two entirely different things.  Though I'll admit there IS one reason why an exchange would let you list - to increase short-term revenue/activity (at the expense of credibility).  So rather than saying "no conceivable" reason I should have said "no valid reason" or "no sensible reason".

EDIT: There would, of course, be absolutely nothing wrong with Ukyo allowing private companies  to use the exchange - with their shares only visible to those holding them.  Then the rest of us wouldn't have our screen-space and band-width wasted on meaningless stuff of no interest or value to us.  And you'd be spared the problems associated with people buying your shares in error, not realising they weren't for public consumption.  If you do it in private you can shuffle funds between your 'transparent' accounts all you want to simulate an actual business - and if your investors are happy with it then great.

No, I didn't misunderstand your point. You want to make the exchange be an arbiter of what is acceptable or not, instead of allowing each individual make that decision for themselves. That is inherently authoritarian and leads inevitably to corruption.

The idea of limiting display of certain assets to current shareholders is a good one though. I would be glad for Ukyo to add that and use my asset as a first test case. In fact that's so good an idea I'll toss him a half bitcoin to do it if he agrees. (I know that's hardly enough, but I'm not rich.)

[SamPryce]

The idea of limiting display of certain assets to current shareholders is a good one though. I would be glad for Ukyo to add that and use my asset as a first test case. In fact that's so good an idea I'll toss him a half bitcoin to do it if he agrees. (I know that's hardly enough, but I'm not rich.)

Yay, looks like this can happen. Thanks for the suggestion Deprived.

[Deprived]

And why would I use the news system to communicate with my investors when I could send some of them emails, some of them facebook messages, some of them tweets, and walk over to others' houses and tell them in person? Jeez, let me think about that. LOL

So you think the best way to inform your investors (who know what the business is) is to post a news item that has NO details in (becuase it's posted in public)?  And to do so at a time when (according to YOU in the news post) a lot of them aren't even signed up to Bitfunder?

Giving no information to half of them is the best you could think of?  Surely if they know about the business anyway you could actually send them .. I dunno -- maybe some actual information?  Or is it your intent just to give vague generalities about unidentified people doing unidentified things even to those who (allegedly) already know what the business is?

To answer a question you raised - why would someone who knows nothing about the business buy shares?  Well, speaking personally, I happily buy shares in businesses I believe are scams regularly (for my fund).  I do so because scammers, especially early on in the life of their 'business', are exceedingly predictable and easy to exploit.  Specifically, they'll happily sell shares at any price - but won't let the price crash : so you can back them into buying the shares back at more than you paid for them.  That's why I had an order up at 1% of your listed price - and I hope it's why the guy at 20% of price had his up (I pulled mine after he outbid me - as I don't like to go over 5-10% on blatant scams.  I'll go to 30-40% on more subtle ones where the likelihood of selling on to an idiot is much higher).

Other people, I guess, treat it like a lottery ticket - that's the ones who never research what they invest in anyway: so not knowing the identity of the business doesn't especially affect their (nonexistent or unused) judgment.

[Deprived]

The idea of limiting display of certain assets to current shareholders is a good one though. I would be glad for Ukyo to add that and use my asset as a first test case. In fact that's so good an idea I'll toss him a half bitcoin to do it if he agrees. (I know that's hardly enough, but I'm not rich.)

Yay, looks like this can happen. Thanks for the suggestion Deprived.

Well that would solve everyone's problems - yours and mine.  And Ukyo could still get revenue from the trading so it works for the exchange.  If he does it then he should add some way for people with zero shares to be white-listed to see it - e.g. some box where they type in a ticker name (given to them by the owner) and from then on it gets displayed.

[SamPryce]

So you think the best way to inform your investors (who know what the business is) is to post a news item that has NO details in (becuase it's posted in public)?  And to do so at a time when (according to YOU in the news post) a lot of them aren't even signed up to Bitfunder?

Giving no information to half of them is the best you could think of?  Surely if they know about the business anyway you could actually send them .. I dunno -- maybe some actual information?  Or is it your intent just to give vague generalities about unidentified people doing unidentified things even to those who (allegedly) already know what the business is?

Actually, it wouldn't be as vague as you think if you knew more about the business. And those not yet signed up can see it when they do. But go ahead and don't believe me.

To answer a question you raised - why would someone who knows nothing about the business buy shares?  Well, speaking personally, I happily buy shares in businesses I believe are scams regularly (for my fund).  I do so because scammers, especially early on in the life of their 'business', are exceedingly predictable and easy to exploit.  Specifically, they'll happily sell shares at any price - but won't let the price crash : so you can back them into buying the shares back at more than you paid for them.  That's why I had an order up at 1% of your listed price - and I hope it's why the guy at 20% of price had his up (I pulled mine after he outbid me - as I don't like to go over 5-10% on blatant scams.  I'll go to 30-40% on more subtle ones where the likelihood of selling on to an idiot is much higher).

Other people, I guess, treat it like a lottery ticket - that's the ones who never research what they invest in anyway: so not knowing the identity of the business doesn't especially affect their (nonexistent or unused) judgment.

Sure, a fool and his money are soon parted. People are free to use bad judgement, and hopefully they will learn from it. Some people do need to learn the hard way, and sometimes even idiots get lucky. Whatever. The private display functionality will hopefully be online soon enough and you can pretend you live in a world of perfect information once again :-)

[Deprived]

No, I didn't misunderstand your point. You want to make the exchange be an arbiter of what is acceptable or not, instead of allowing each individual make that decision for themselves. That is inherently authoritarian and leads inevitably to corruption.

Nope, I don't want to make the exchange the arbiter of what is acceptable or not.  I want the exchange to ensure companies listing provide sufficient information for investors to make that decision.

[SamPryce]

No, I didn't misunderstand your point. You want to make the exchange be an arbiter of what is acceptable or not, instead of allowing each individual make that decision for themselves. That is inherently authoritarian and leads inevitably to corruption.

Nope, I don't want to make the exchange the arbiter of what is acceptable or not.  I want the exchange to ensure companies listing provide sufficient information for investors to make that decision.

But requiring the exchange to define "sufficient information" is in itself a problem. Making the exchange get proof of information accuracy would be expensive and time consuming, a burden that isn't necessary. It would also expose them to the threat of lawsuits (or at least as much as can be done in bitcoinland). But if the exchange isn't required to have actual proof of the accuracy of the information, then why even require it? It would certainly be in the interest of most assets that are intended to be publicly traded to list all the verifiable information they can. But why not let people decide for themselves how much information is enough to decide? For most people, the lack of information itself should be sufficient to decide not to invest.

[Ukyo]

Hey,

I like his idea.

What if I make the asset a private listing.
Not listed on the market, and only shareholders can even view the asset page / interact with it?

[Deprived]

No, I didn't misunderstand your point. You want to make the exchange be an arbiter of what is acceptable or not, instead of allowing each individual make that decision for themselves. That is inherently authoritarian and leads inevitably to corruption.

Nope, I don't want to make the exchange the arbiter of what is acceptable or not.  I want the exchange to ensure companies listing provide sufficient information for investors to make that decision.

But requiring the exchange to define "sufficient information" is in itself a problem. Making the exchange get proof of information accuracy would be expensive and time consuming, a burden that isn't necessary. It would also expose them to the threat of lawsuits (or at least as much as can be done in bitcoinland). But if the exchange isn't required to have actual proof of the accuracy of the information, then why even require it? It would certainly be in the interest of most assets that are intended to be publicly traded to list all the verifiable information they can. But why not let people decide for themselves how much information is enough to decide? For most people, the lack of information itself should be sufficient to decide not to invest.

Well an exchange COULD go down that route - but Bitfunder wasn't.  Ukyo has already he said he's rejected a lot more listing applications than were accepted.  So clearly some level of information IS required - the problem, in your case, is that he may have that information but investors don't.  So listing yours whilst rejecting a load of others netiher meets what you'd like OR what I'd like.

You'd apparently like an exchange where anyone who paid the fee could list, correct?  

I actually DON'T oppose that.  What I oppose is one where a significant number of assets are rejected due to meeting unspecified qualifications then a couple that fail to meet any reasonable set of requirements to allow informed decisions by investors are listed.

Either have no critieria for listing (other than paying the fee) OR have a consistently applied set.  Once some restrictions ARE applied that it's important to apply them consistently - as investors KNOW there's a barrier to being listed and so being listed at all gives some degree of credibility.  When the information on which that credibility was formed is not disclosed (Ukyo refers to himself knowing information that the public doesn't have) then some investors are going to invest purely on the basis that they believe Ukyo in way endorses the offering (as he rejected a load - so clearly only accepts one he believes are OK).

Let's just look briefly at what would happen if things went the way you say you'd like - where the operator of the exchange made no judgment on submissions for listing.  There'd be a TON more listings on Bitfunder (pretty sure Ukyo said he's rejected more than he accepted) and most of them would be utter crap.  And when people see uttercrap getting listed, every scammer/HYIP/ponzi merchant would be running their own.  So you'd have page after page of listings with no useful information provided.  At that stage the ONLY things that would trade would be ones giving full disclosure - as with 50 listings like yours (no identification and no proof of anything) none would get any significant investment.  It would NOT help legitimate businesses that didn't want to diclose information - it would help scammers (as ANY sales is fine for them).  And legitimate businesses with proper disclosure would be buried amongst page after page of junk - though would still get a decent amount of trade no doubt.

IF Ukyo had intended that to be how Bitfunder was, then I absolutely would NOT have made this thread.  As there'd have been dozens or scores of assets with as bad or worse information provided.  And at that stage it would be obvious to even the most stupid investor that there was a lot of crap around they shouldn't touch with a barge-pole.  This thread was necessary (in my view) because there's only TWO such listings that have managed to get listed (the other one is so obviously a scam that it didn't even deserve a thread).

The reason I still believe yours is a scam is NOT because I'm sure you don't have a business (I'm by no means sure of that -and have said so earlier in this thread).  It's because by being for sale amongst a bunch of securities it's falsely being portrayed as an investment opportunity - when, to those who know nothing about it, it's at best a gamble not an investment.  Plus there ARE rather scam-like aspects of it (such as the accounting - where you may have some reason for doing it, but it no way then meets your claims of transparency anyway: shuffling funds between your own wallets is NOT transparent even if it were representative of actual economic activity elsewhere.).

[Deprived]

Hey,

I like his idea.

What if I make the asset a private listing.
Not listed on the market, and only shareholders can even view the asset page / interact with it?

That would be a good thing.  New investors could get their first share(s) by transfer (payment would be off-exchange anyway) then thereafter trade with one another.  It would reduce clutter for the rest of us - and prevent anyone trying to get listed with the intention to sell to the public by claiming it was just for private management of shares.

Only shareholders should also see news-releases from it.  If the issuer wants to market to the public then they can give disclosure sufficient to make informed investment decisions like most of the other companies do.

[iCEBREAKER]

But the tl:dr of this all is, if you don't know what it is then don't invest in it list it on a putatively reputable exchange.  That's pretty obvious and simple.

^^I fixed it for you.^^

A good exchange ensures their listings meet certain minimum requirements (I.E. not a scam), then individual investors decide whether or not to invest.

It isn't that hard, it happens IRL all the time.  Your false dilemma is false.

[Ukyo]

Hey,

I like his idea.

What if I make the asset a private listing.
Not listed on the market, and only shareholders can even view the asset page / interact with it?

That would be a good thing.  New investors could get their first share(s) by transfer (payment would be off-exchange anyway) then thereafter trade with one another.  It would reduce clutter for the rest of us - and prevent anyone trying to get listed with the intention to sell to the public by claiming it was just for private management of shares.

Only shareholders should also see news-releases from it.  If the issuer wants to market to the public then they can give disclosure sufficient to make informed investment decisions like most of the other companies do.

I think this is more than good.
Then for other people who want to do private personal things, not even public, they can use bitfunders services as well.

I will try to get this setup and done tonight after one or two other releases.

[zx9r]

Hey,

I like his idea.

What if I make the asset a private listing.
Not listed on the market, and only shareholders can even view the asset page / interact with it?

I was thinking this solution as long as I was reading the thread. So +1 to it.

[Ukyo]

Hey,

I like his idea.

What if I make the asset a private listing.
Not listed on the market, and only shareholders can even view the asset page / interact with it?

I was thinking this solution as long as I was reading the thread. So +1 to it.

They ass has been removed from the market list.

Anyone who holds shares can easily access the asset page from their 'My Assets' page.

I will will be adding a flag in the near future so that its news posts are not public.

I am still a bit in debate over making the asset only viewable by shareholders.

[SamPryce]

Anyone who holds shares can easily access the asset page from their 'My Assets' page.

I will will be adding a flag in the near future so that its news posts are not public.

I am still a bit in debate over making the asset only viewable by shareholders.

It would also be good to see it in the market list as well iff you are a shareholder. IMHO, for shareholders the site should act the same for private assets as it does for public assets, perhaps with some indicator when displayed in a mixed listing to indicate its private nature. Perhaps a superscript 'p' with a hover text saying "This is a private asset" or something like that. For non-owners it would still be not visible.

I do seem to remember that James/Nefario was working on splitting out listings into classes of assets, which might be worth thinking about. There are some big downsides to that though, like someone being responsible for determining the classifications. Overall, I think private listings is a better way to go, and it does fit in with my original intention of just using BitFunder as a way to outsource shareholder management.

And can we get this thread renamed? Since it is now a private listing, calling it "100% scam" is improper.

[supermono]

What are the plans for this asset with the changes at Bitfunder? Will it remain on Bitfunder, migrate to direct shares or another exchange (like 796.com, Cryptostocks), or shut down? Do shareholders need to do anything? Thanks!