-

[dooferorg]

So we are stuck with worthless bonds and Mr Zach will receive 150 TH/s BF + Buttefly Monarch...fully "crowfunded" by holders...

We need official paper about this issue.
And fire your piece of s**t that serve you as a lawyer...

Law evolve but not as quickly as this timeframe.period.

You really deserve a scammer tag and your name in red in Bitcoin community for being silent about that situation.

+1 .. Came here to say just that. It's so obviously the final piece of the scam. I think buying back people's shares at some agreed upon rate is the only proper thing to do.

[bittymitty]

This simply does not work.

We need more details. A full explanation from your lawyer and an answer/proposal re the incoming hardware we paid for.

It's coming:

The issues at hand are both on a state and federal level regarding multiple topics.  The specifics of these statutes will be presented in a timely manner.

grnbrg.

So because of "statutes" bond holders get a haircut? Why are you allowing trading for LRM while you do not know the outcome of pending laws?

[spuushie]

I remember "black Friday" in the online poker world. when American poker players where not allowed to play anymore. 2 things happened the online sites moved to Europe. And the winning poker players just moved to places like Canada, Australia and so on...

The point is that this things happen and then you move. Why does one have live in a country where there are to many laws that don't make sense?

What you are now saying is that you have to do the opposite what you believed fixed hash rate rather than progressive. Why is this the best solution?

Why would you want to run LRM in a way that you don't believe in yourself. Surly this cannot even be considered a solution! There are a lot better ones posted!   

[dooferorg]

From the 1st post: "It is intended installments in the operation will continue to occur which will provide more value to the company as well as more value to each individual bond as the company matures.  These expansions, if they occur, will likely grow the company and our mining capacity in size which will provide further expanded payouts in the form of dividends (or increased dividends to investors).  It is currently intended a portion of the money the company receives in revenue from bond sales and mining will be used to expand the operation which will further increase dividends per bond.  It is currently intended the company will be adding to the bondholders hashrate on a regular basis as the company expands so one should expect to receive greater dividends than those explained above"."


Hmm.

[pixl8tr]

Why the 80% drop in Divs this week?  Another payout issue?  What happened to all the new hardware we paid for?

[Epoch]

Again I would like to apologize for this seeming like I'm randomly dropping this out of thin air.  I have had morality yanking on one arm and legality yanking on the other for the last 2-3 months.  This is not a new development, it is just becoming a finalized one though.

Does Grnbrg know?

Yes, now he knows. I think they will not be anymore best friends
And if he knew...well the word "rat" comes into my mind.

He knew ~ a week ago and didn't sell his bonds behind the scenes.  He understands because he knows me well enough to know I wouldn't do this unless I had to.

He didn't sell his bonds because he would have been acting on insider information. Insider trading is illegal. You should know that.

Zach, when you make statements like this it just reinforces the sense that, even after all this time, you are still not treating your LRM responsibilities seriously. This isn't a joke. You are not playing with Monopoly money, sitting across the table with paper cutout dummies. Real people have invested real money with you. They are not some anonymous internet avatars; they are real people with real lives and real families with real bills to pay. They gave you their money because you convinced them to trust you. Now you are telling them they can kiss their investment goodbye.

It is obvious that your investors will never recover their initial BTC investment. Real people have lost real money and value. What are you going to do about that, if anything? You know that the only person who will make out positively from this mess is you. At the expense of everyone else. But you can change that. Nothing (other than personal greed, perhaps) is stopping you. But I guess that knowledge doesn't keep you up at night.

[fractal02]

Again I would like to apologize for this seeming like I'm randomly dropping this out of thin air.  I have had morality yanking on one arm and legality yanking on the other for the last 2-3 months.  This is not a new development, it is just becoming a finalized one though.

Does Grnbrg know?

Yes, now he knows. I think they will not be anymore best friends
And if he knew...well the word "rat" comes into my mind.

He knew ~ a week ago and didn't sell his bonds behind the scenes.  He understands because he knows me well enough to know I wouldn't do this unless I had to.

He didn't sell his bonds because he would have been acting on insider information. Insider trading is illegal. You should know that.

Zach, when you make statements like this it just reinforces the sense that, even after all this time, you are still not treating your LRM responsibilities seriously. This isn't a joke. You are not playing with Monopoly money, sitting across the table with paper cutout dummies. Real people have invested real money with you. They are not some anonymous internet avatars; they are real people with real lives and real families with real bills to pay. They gave you their money because you convinced them to trust you. Now you are telling them they can kiss their investment goodbye.

It is obvious that your investors will never recover their initial BTC investment. Real people have lost real money and value. What are you going to do about that, if anything? You know that the only person who will make out positively from this mess is you. At the expense of everyone else. But you can change that. Nothing (other than personal greed, perhaps) is stopping you. But I guess that knowledge doesn't keep you up at night.

+1

[MaxwellsDemon]

I'm terribly sorry to say this, because up until right now I really did believe in LabRat, and I hate to sound like a troll, but this is outright theft.
Even if it really is some kind of legally mandated theft, it's still theft. 

As others have noted, this means the immediate loss of the majority of our equity value. 300 Mh/s are worth about BTC0.006 at current cex.io prices, which is 4% of the IPO price. Up until now, I think we've received something like 10% of the IPO price in dividends (please correct me if I'm wrong). This means a total loss of ~86%. Obviously, the current value of the bonds does not stem from the current hash rate, but rather from the expectation of higher return in the future due to reinvestment, an expectation which has now been crushed.


If LabRat is keen on using some ill-defined legal obligations to take our money, here are a couple of legal points to consider:

1. LRM is bound by contract. We did not sign up for 100 Mh/s, or 300 Mh/s, or any other hash rate. What we signed up for is 75% of all proceeds generated by the hardware purchased with our money, as well as any proceeds generated by any future hardware purchased with the reinvestment money generated by our hardware (with a lower bound of 100 Mh/s).
Just now, when LRM is about to receive hundreds of Th/s, we are suddenly limited to 300 Mh/s, and any other proceeds and future reinvestment is owned by LabRat?
Please ask your lawyer about breach of contract.

2. Let's assume that, for some reason, LRM is indeed legally bound to distribute fixed dividends. How is 300 Mh/s a fixed sum?
In the world of bitcoin mining, with difficulty in a consistent exponential incline which is not expected to end in the immediate future, the only way to ensure a fixed dividend is to stick to a certain percentage of total network hashrate. For example, 300 Mh/s is currently equal to about 0.000001% of the network hashrate. If LRM would ensure that percentage for each bond regardless of the change in difficulty, we would get fixed dividends each week, and LabRat would have extra incentive to buy more hardware because any growth in LRM hardware above the overall growth rate of the network would go straight to LabRat's pocket.
By fixing the bonds to 300 Mh/s, bondholders are not given a fixed dividend, but rather an exponentially decreasing one. It escapes me how a fixed hashrate is consistent with the law, while a fixed percentage isn't.

[a2offrb]

SO LETS DO SOME CALCULATIONS!!!!

Current hashrate is about 23-24 TH? Some of hashrate isnt even pointed to GHASH.IO.
Also we had about 25 TH hardware of BFL Monarch. That BFL Monarch order will turn in best way 25TH/0.6(Monarch hashrate)*1TH(Imperial Hashrate)+25TH(bonus hashrate on end of queue)= 66,66TH
So overall it makes about 91TH.

Bitfury equipment should start shipping out by the end of February which will be a minimum of 100TH

So its 191 TH MINIMUM hashrate that is paid from OUR POCKETS. Its the totally MINIMUM!!!

191 TH/58792 Bonds=3.24GH/bond. And u offering??? 300MH per bond?? And say "that is 20 mh increase"?
I have bought bonds for 0.15 BTC, 0.25 BTC and some of lower priced bonds. It makes that price per bond was about 0.15 BTC/Bond.
I own 355 bonds. It makes about 53.25 BTC. So u gonna say that u have sold to me 106 GHash for 23850€(current btc price)?

If u going to give everyone 300 MH per current bond, its make only 17.6GH.  What about 6 GH that is mining somewhere? What about BFL Monarch order? Is is over 200k$ invest, its our money, what u going to do with them? Keep??
BF order that is made already as i understand. Atleast 100TH. It should cost to u atleast 400k$. U going to keep them too?

*
Added:
Also as i remember u have invested LRM OUR money to coinseed?

[KonstantinosM]

I was under the impression that changing the rules of an agreement solely to gain from the change was fraudulent. If this is the case you need to get a scammer tag under your name.

[BKM]

Again I would like to apologize for this seeming like I'm randomly dropping this out of thin air.  I have had morality yanking on one arm and legality yanking on the other for the last 2-3 months.  This is not a new development, it is just becoming a finalized one though.

Does Grnbrg know?

Yes, now he knows. I think they will not be anymore best friends
And if he knew...well the word "rat" comes into my mind.

He knew ~ a week ago and didn't sell his bonds behind the scenes.  He understands because he knows me well enough to know I wouldn't do this unless I had to.

He didn't sell his bonds because he would have been acting on insider information. Insider trading is illegal. You should know that.

Zach, when you make statements like this it just reinforces the sense that, even after all this time, you are still not treating your LRM responsibilities seriously. This isn't a joke. You are not playing with Monopoly money, sitting across the table with paper cutout dummies. Real people have invested real money with you. They are not some anonymous internet avatars; they are real people with real lives and real families with real bills to pay. They gave you their money because you convinced them to trust you. Now you are telling them they can kiss their investment goodbye.

It is obvious that your investors will never recover their initial BTC investment. Real people have lost real money and value. What are you going to do about that, if anything? You know that the only person who will make out positively from this mess is you. At the expense of everyone else. But you can change that. Nothing (other than personal greed, perhaps) is stopping you. But I guess that knowledge doesn't keep you up at night.

I imagine its kept him up. Regardless of how much sleep Zach does or does not get or how much he really cares, there is always more than one way to solve a problem. One point I need to clarify is that you represented from the outset that LRM's legal counsel advised that its structuring at launch were within statutes. If things have changed, fine. If they have not and you were wrong, you are in a heap of shit and that is truly unfortunate for all of us.

I will add my voice to Epoch's to state that the only reasonable course in this process is to wind up the company rather than spending additional resources trying to fight your bondholders or somehow restructure the deal. All existing and inbound equipment needs to be sold and the proceeds distributed to the bondholders accordingly. Simple is as simple does. Do not try to hold on and fight - move on and lesson learned. Make it clean. Just let go.

[goddardnet]

LRM's real saving grace may be that they claim to be selling hardware derivatives. Your security is (in the eys of the SEC) worthless; LRM promises you no rights to assets nor facevalue. It will only generate derivative income off of bitcoin mining and is only worth what someone else is willing to pay you for it.

My main reason of structuring like this.

Why does this still not hold ?

[a2offrb]

Again I would like to apologize for this seeming like I'm randomly dropping this out of thin air.  I have had morality yanking on one arm and legality yanking on the other for the last 2-3 months.  This is not a new development, it is just becoming a finalized one though.

Does Grnbrg know?

Yes, now he knows. I think they will not be anymore best friends
And if he knew...well the word "rat" comes into my mind.

He knew ~ a week ago and didn't sell his bonds behind the scenes.  He understands because he knows me well enough to know I wouldn't do this unless I had to.

He didn't sell his bonds because he would have been acting on insider information. Insider trading is illegal. You should know that.

Zach, when you make statements like this it just reinforces the sense that, even after all this time, you are still not treating your LRM responsibilities seriously. This isn't a joke. You are not playing with Monopoly money, sitting across the table with paper cutout dummies. Real people have invested real money with you. They are not some anonymous internet avatars; they are real people with real lives and real families with real bills to pay. They gave you their money because you convinced them to trust you. Now you are telling them they can kiss their investment goodbye.

It is obvious that your investors will never recover their initial BTC investment. Real people have lost real money and value. What are you going to do about that, if anything? You know that the only person who will make out positively from this mess is you. At the expense of everyone else. But you can change that. Nothing (other than personal greed, perhaps) is stopping you. But I guess that knowledge doesn't keep you up at night.

I imagine its kept him up. Regardless of how much sleep Zach does or does not get or how much he really cares, there is always more than one way to solve a problem. One point I need to clarify is that you represented from the outset that LRM's legal counsel advised that its structuring at launch were within statutes. If things have changed, fine. If they have not and you were wrong, you are in a heap of shit and that is truly unfortunate for all of us.

I will add my voice to Epoch's to state that the only reasonable course in this process is to wind up the company rather than spending additional resources trying to fight your bondholders or somehow restructure the deal. All existing and inbound equipment needs to be sold and the proceeds distributed to the bondholders accordingly. Simple is as simple does. Do not try to hold on and fight - move on and lesson learned. Make it clean. Just let go.

I would like to vote for sending HW to bondholders, who want it and then sell everything else. My bonds worth over 1TH by current HW orders have been made. There is no reason to sell just arrived HW. And as i believe, some of BF order should be in LR hand currently, and i mean new order for over 100TH he has told about.

[BKM]

LRM's real saving grace may be that they claim to be selling hardware derivatives. Your security is (in the eys of the SEC) worthless; LRM promises you no rights to assets nor facevalue. It will only generate derivative income off of bitcoin mining and is only worth what someone else is willing to pay you for it.

My main reason of structuring like this.

Why does this still not hold ?

It may relate to Money Service Bureau issues as a mining consortium may fall under the MSB regulatory climate. If this is the case then all the assets of the company could be siezed and forfeit in which case we would be totally screwed. Better to shut down immediately and liquidate the company for asset value.

With regard to accounting - it is very important for everyone to understand that the value of BTC when you purchased the bond to now has changed. Your input value would have been accounted for in USD and exit values will be the same. BTC is simply a mode of exchange and regarded as something like a foreign currency. Money in money out. BTC is not money. All accounting records must be kept in USD. We are not in a Bitcoin economy, yet.

[||bit]

CHANGE IN PAYOUT RATE STRUCTURE

Cryptocurrencies, which includes Bitcoin, are relatively new to the world economic communities and its governments. Worldwide there continues to be almost daily announcements from governments regarding crypto currencies. Lab Rat Data Processing, a Limited Liability Company in the state of New Jersey, continues to monitor those announcements and the ever-changing laws and economic environments and how those laws impact cryptocurrencies, including Bitcoin, and in particular Lab Rat Data Processing. Most important to Lab Rat Data Processing are the ever-changing laws and/or announcements from the United States and its governmental agencies and the state of New Jersey and its governmental agencies.

Based upon recent developments in US and local laws, Lab Rat Data Processing, and their legal representatives, have determined a potential current or future problem with its current rate structure, which was originally intended as a variable rate payout. Therefore, Lab Rat Data Processing is amending its variable rate payout with a set rate payout of 100 MH/s per contract. This rate payout shall be for all current contract-holders and all future contract-holders.  Contemporaneous with the change from a varying rate payout to a set rate payout Lab_Rat will triple the amount of contracts held by all contract holders as of the date of March 8, 2014.  Therefore, for all current contract holders on their current contracts, the effective rate will be permanently set at 300 MH/s per contract.  All future contracts purchased will be at the new rate of 100MH/s.

Lab Rat Data Processing will continue to monitor developments for cryptocurrencies and Bitcoin in particular, seeking to maintain its current status as a leader in the Bitcoin community and to maintain compliance with US and New Jersey laws.

More information to come.

Here is why what you wrote is false. And why you need a new lawyer.

Any supposed issue about "variable payouts" based on company performance is refuted by the fact that most companies ALREADY pay dividend based on their varying performance/growth. And each unit of ownership that receives dividends is based on a percentage of that unit per all units issued. That is exactly what each bond represents. Is paying dividends based on performance against federal or state laws? Clearly not.

Nobody that paid a percentage into this expected a "bond" to stop at 100MH. That was NEVER the expectation, and if you claim it was then you need to read the original posts about LRM. We aren't that stupid. And if your lawyer wrote it up differently, then you need to ask him how you can avoid being sued for documenting on your website and these forums how hashrates would not stop at 100MH.

The spirit of the matter(i.e the understood agreement) is this: The TRUE value of a bond was a fixed percentage of mining yields (not hashrate!), based on all issued bonds at any one time, and a fixed percentage is NOT VARIABLE. What ends up being mined may vary, but that is true if you fixed a bond at 100MH/bond instead of fixing it at ~1/50,000th of the 75% allotted for investors.

Cutting people off from their due percentage is a setup for a lawsuit, and I'm pretty sure a majority here are willing to go all the way with a lawsuit. Especially, after all the anger built up from all the scamming going on.

Your lawyer (who advised you from the beginning!) should have known exactly how this was going to work. And nobody signed a statement saying it was only going to be 100MH. If he's changing his story now,  then all I can say is that this smells like a crap story that needs investigation. And you might need to seek better legal counsel, because this guy is going to get you sued big time.

I hate to say it, but it seems like this is the first phases of allowing LRM to fail. And ifso it would seem to have something to do with Coinseed and some new hardware opportunities.
percentage.

[BKM]

I would like to vote for sending HW to bondholders, who want it and then sell everything else. My bonds worth over 1TH by current HW orders have been made. There is no reason to sell just arrived HW. And as i believe, some of BF order should be in LR hand currently, and i mean new order for over 100TH he has told about.

This would also be an option if possible. But, not everyone will want to accept the hardware vs BTC. For example, if I bring hardware into Canada from the USA I will need to pay taxes on the value.

This may be preferable for Zach because it is a relatively simple matter to divide up the gear and ship it as compared to selling it all. In any case, the only reasonable outcome from this situation is some form of liquidation of ALL HARDWARE whether in hand or inbound and distribution of the proceeds to the stakeholders. Make it clean and make it quick and move on...... for the better of all.

[elitenoob]

It may relate to Money Service Bureau issues as a mining consortium may fall under the MSB regulatory climate. If this is the case then all the assets of the company could be siezed and forfeit in which case we would be totally screwed. Better to shut down immediately and liquidate the company for asset value.

Not really, i would be really happy if all assets would be seized instead of getting the bondholders's payed equipment into his own hands!

[||bit]

It may relate to Money Service Bureau issues as a mining consortium may fall under the MSB regulatory climate. If this is the case then all the assets of the company could be siezed and forfeit in which case we would be totally screwed. Better to shut down immediately and liquidate the company for asset value.

Not really, i would be really happy if all assets would be seized instead of getting the bondholders's payed equipment into his own hands!

If I'm not mistaken, the FINCEN report that we spoke of last indicated this is not an issue.

[goddardnet]

CHANGE IN PAYOUT RATE STRUCTURE

Cryptocurrencies, which includes Bitcoin, are relatively new to the world economic communities and its governments. Worldwide there continues to be almost daily announcements from governments regarding crypto currencies. Lab Rat Data Processing, a Limited Liability Company in the state of New Jersey, continues to monitor those announcements and the ever-changing laws and economic environments and how those laws impact cryptocurrencies, including Bitcoin, and in particular Lab Rat Data Processing. Most important to Lab Rat Data Processing are the ever-changing laws and/or announcements from the United States and its governmental agencies and the state of New Jersey and its governmental agencies.

Based upon recent developments in US and local laws, Lab Rat Data Processing, and their legal representatives, have determined a potential current or future problem with its current rate structure, which was originally intended as a variable rate payout. Therefore, Lab Rat Data Processing is amending its variable rate payout with a set rate payout of 100 MH/s per contract. This rate payout shall be for all current contract-holders and all future contract-holders.  Contemporaneous with the change from a varying rate payout to a set rate payout Lab_Rat will triple the amount of contracts held by all contract holders as of the date of March 8, 2014.  Therefore, for all current contract holders on their current contracts, the effective rate will be permanently set at 300 MH/s per contract.  All future contracts purchased will be at the new rate of 100MH/s.

Lab Rat Data Processing will continue to monitor developments for cryptocurrencies and Bitcoin in particular, seeking to maintain its current status as a leader in the Bitcoin community and to maintain compliance with US and New Jersey laws.

More information to come.

Here is why what you wrote is false. And why you need a new lawyer.

Any supposed issue about "variable payouts" based on company performance is refuted by the fact that most companies ALREADY pay dividend based on their varying performance/growth. And each unit of ownership that receives dividends is based on a percentage of that unit per all units issued. That is exactly what each bond represents. Is paying dividends based on performance against federal or state laws? Clearly not.

Nobody that paid a percentage into this expected a "bond" to stop at 100MH. That was NEVER the expectation, and if you claim it was then you need to read the original posts about LRM. We aren't that stupid. And if your lawyer wrote it up differently, then you need to ask him how you can avoid being sued for documenting on your website and these forums how hashrates would not stop at 100MH.

The spirit of the matter(i.e the understood agreement) is this: The TRUE value of a bond was a fixed percentage of mining yields (not hashrate!), based on all issued bonds at any one time, and a fixed percentage is NOT VARIABLE. What ends up being mined may vary, but that is true if you fixed a bond at 100MH/bond instead of fixing it at ~1/50,000th of the 75% allotted for investors.

Cutting people off from their due percentage is a setup for a lawsuit, and I'm pretty sure a majority here are willing to go all the way with a lawsuit. Especially, after all the anger built up from all the scamming going on.

Your lawyer (who advised you from the beginning!) should have known exactly how this was going to work. And nobody signed a statement saying it was only going to be 100MH. If he's changing his story now,  then all I can say is that this smells like a crap story that needs investigation. And you might need to seek better legal counsel, because this guy is going to get you sued big time.

I hate to say it, but it seems like this is the first phases of allowing LRM to fail. And ifso it would seem to have something to do with Coinseed and some new hardware opportunities.
percentage.

The silence from Merlin, as a major bond holder, is deafening.

Looks like he will get a CTO with 'no baggage'

[||bit]

Why are you guys talking about liquidating hardware? Why can't this work out? It seems to me that Zach and his lawyer made a decision not based on any certainty of what to do.
As such, what he is proposing is not necessarily the way it will proceed. If it is, then he'll have to issue new bonds for each bond every time the total hashrate goes up 100MH per bond. Which seem ridiculous way of doing something that should be understood as a percentage of mining, and not a fixed hashrate. Labrat said from the start that bond hashrate equivalents would only increase - translation: 100MH was never a cap per bond - it was a minimal based on percentage of growth in mining.