-

[Epoch]

Anyone remember Philip Moustakis, the senior SEC attorney who charged Trendon Shavers (pirateat40) with defrauding investors? https://bitcointalk.org/index.php?topic=120759.0

Paraphrasing part of the OP in the above link: As per US securities law: if LRM ever made any misrepresentation or material omission to investors, on which they relied to make an investment decision in LRM's bitcoin securities offering, then securities laws were violated and SEC may be able to pursue civil prosecution. That's exactly what happened in the Shavers case.

LRM is peanuts compared to the scale of pirate's "Bitcoin Savings and Trust", but if people feel LRM is a case of investment fraud then Philip Moustakis would be a good starting point. He is easy to talk to and can be contacted by email (moustakisp@sec.gov) or phone (212-336-0542); his contact information is in the link above. At the very least, Philip can give an opinion on whether this situation warrants the SEC's attention.

I have no opinion on whether LRM defrauded investors or not; I am not an investor so I haven't been following all of LRM's promises from Day 1. But as a general statement I will say this: Whatever the scale, people must learn to realize that scams and frauds won't be tolerated by the bitcoin community; we've had way too many of them already. We continue to have them because people think they can get away with it; that scamming and defrauding is easy; that there won't be any repercussions. Pirateat40 was one of those people, and he won't be the last unless we, the community, continue to send strong messages that this type of behavior will not be tolerated.

[Endlessa]

This is my opinion not legal advise.
Ok. I've been quietly watching this.  I have to call bullshit.  I don't know who your lawyer is, but this is complete crap/bullshit.

The solution here is to form a proper corporation with proper shares that pay profit dividends.  This is fully legal and within the financial capabilities of this group.  This is compliant with FinCEN and US law as to how to handle the profits of a company structured like LRM.  Please read the FinCEN administrative rulings closer.  It would also give the additional benefit of putting profits into capital gains.


Seriously, there is no reason we can't continue with the intend purpose of this consortium.

FinCEN understands that Bitcoin mining imposes no obligations on a Bitcoin user to
send mined Bitcoin to any other person or place for the benefit of another. Instead, the user is
free to use the mined virtual currency or its equivalent for the user’s own purposes, such as to
purchase real or virtual goods and services for the user’s own use. To the extent that a user mines
Bitcoin and uses the Bitcoin solely for the user’s own purposes and not for the benefit of another,
the user is not an MSB under FinCEN’s regulations, because these activities involve neither
“acceptance” nor “transmission” of the convertible virtual currency and are not the transmission
of funds within the meaning of the Rule. This is the case whether the user mining and using the
Bitcoin is an individual or a corporation, and whether the user is purchasing goods or services for
the user’s own use, paying debts previously incurred in the ordinary course of business, or (in the
case of a corporate user) making distributions to shareholders. Activities that, in and of
themselves, do not constitute accepting and transmitting currency, funds or the value of funds,
are activities that do not fit within the definition of “money transmission services” and therefore
are not subject to FinCEN’s registration, reporting, and recordkeeping regulations for MSBs.
 

Source:
http://www.fincen.gov/news_room/rp/rulings/pdf/FIN-2014-R001.pdf  Page 3 paragraph 1


I see no reason for this current discussion to continue in the manner state by LRM.


In my understanding, the same structure we have can continue legally as a corporation with the following share structure:

Class A shares (commonly refered as founder shares or voting shares) can be held by LRM/Partners who currently control the company.
Class B & C shares (non-voting shares) can be distributed to other share holders.


this effectively creates the same thing we currently have and conforms to FinCEN/US law, as I understand it.  Of course you would want to pass this through a lawyer, but that's what we need to be pursuing, even if we hold some divs to pay for the process.   Anything else, and your just completely stealing from the promise you gave us coming into this and have effectively defrauded us of future growth/income promised.

Forming a proper corp, is not very expensive.  

[Endlessa]

Also, Maryland corporation allows zero corp tax, as long as we don't host or sell bitcoin in their state.  It's easy peasy stuff.  Since bitcoin is being distributed as divs.

[Endlessa]

What does this Fincen ruling mean for LRM ??  http://cointext.com/fincen-issues-bitcoin-friendly-ruling-for-miners/

Yes, this is a very interesting clarification from FINCEN. Apparently if we were shareholders we would be fine because we are collectively mining for ourselves. As bondholders we do not "own" anything other than the right to receive a dividend. In its current configuration it is possible LRM needs to restructure the bonds into shares or become a MSB.

Thirdly, we have asked you about this before to no avail.  You have had plenty of time to act responsibly on this matter.

[Komodorpudel]

This---->

Anyone remember Philip Moustakis, the senior SEC attorney who charged Trendon Shavers (pirateat40) with defrauding investors? https://bitcointalk.org/index.php?topic=120759.0

Paraphrasing part of the OP in the above link: As per US securities law: if LRM ever made any misrepresentation or material omission to investors, on which they relied to make an investment decision in LRM's bitcoin securities offering, then securities laws were violated and SEC may be able to pursue civil prosecution. That's exactly what happened in the Shavers case.

LRM is peanuts compared to the scale of pirate's "Bitcoin Savings and Trust", but if people feel LRM is a case of investment fraud then Philip Moustakis would be a good starting point. He is easy to talk to and can be contacted by email (moustakisp@sec.gov) or phone (212-336-0542); his contact information is in the link above. At the very least, Philip can give an opinion on whether this situation warrants the SEC's attention.

I have no opinion on whether LRM defrauded investors or not; I am not an investor so I haven't been following all of LRM's promises from Day 1. But as a general statement I will say this: Whatever the scale, people must learn to realize that scams and frauds won't be tolerated by the bitcoin community; we've had way too many of them already. We continue to have them because people think they can get away with it; that scamming and defrauding is easy; that there won't be any repercussions. Pirateat40 was one of those people, and he won't be the last unless we, the community, continue to send strong messages that this type of behavior will not be tolerated.

and this ---->

This is my opinion not legal advise.
Ok. I've been quietly watching this.  I have to call bullshit.  I don't know who your lawyer is, but this is complete crap/bullshit.

The solution here is to form a proper corporation with proper shares that pay profit dividends.  This is fully legal and within the financial capabilities of this group.  This is compliant with FinCEN and US law as to how to handle the profits of a company structured like LRM.  Please read the FinCEN administrative rulings closer.  It would also give the additional benefit of putting profits into capital gains.


Seriously, there is no reason we can't continue with the intend purpose of this consortium.

FinCEN understands that Bitcoin mining imposes no obligations on a Bitcoin user to
send mined Bitcoin to any other person or place for the benefit of another. Instead, the user is
free to use the mined virtual currency or its equivalent for the user’s own purposes, such as to
purchase real or virtual goods and services for the user’s own use. To the extent that a user mines
Bitcoin and uses the Bitcoin solely for the user’s own purposes and not for the benefit of another,
the user is not an MSB under FinCEN’s regulations, because these activities involve neither
“acceptance” nor “transmission” of the convertible virtual currency and are not the transmission
of funds within the meaning of the Rule. This is the case whether the user mining and using the
Bitcoin is an individual or a corporation, and whether the user is purchasing goods or services for
the user’s own use, paying debts previously incurred in the ordinary course of business, or (in the
case of a corporate user) making distributions to shareholders. Activities that, in and of
themselves, do not constitute accepting and transmitting currency, funds or the value of funds,
are activities that do not fit within the definition of “money transmission services” and therefore
are not subject to FinCEN’s registration, reporting, and recordkeeping regulations for MSBs.
 

Source:
http://www.fincen.gov/news_room/rp/rulings/pdf/FIN-2014-R001.pdf  Page 3 paragraph 1


I see no reason for this current discussion to continue in the manner state by LRM.


In my understanding, the same structure we have can continue legally as a corporation with the following share structure:

Class A shares (commonly refered as founder shares or voting shares) can be held by LRM/Partners who currently control the company.
Class B & C shares (non-voting shares) can be distributed to other share holders.


this effectively creates the same thing we currently have and conforms to FinCEN/US law, as I understand it.  Of course you would want to pass this through a lawyer, but that's what we need to be pursuing, even if we hold some divs to pay for the process.   Anything else, and your just completely stealing from the promise you gave us coming into this and have effectively defrauded us of future growth/income promised.

Forming a proper corp, is not very expensive.  

-----> is reason enough for LRM to CONTINUE its business.

At the moment LRM shares/bonds trade for less than 1% of the original price at the IPO, which shows there has been a HUGE misrepresentation and also a omission to inform the bond/shareholders (whatever...) about the so called "legal problems"

So:

A: Continue business and everybody will be happy again.
or
B: Buyback every bond/share at a price the majority agrees to and the story is over.
or
C: The SEC gets contacted(and i really hope that this will never be necessary)

[electerium]

So what will happen when you eventually add more hardware? Will each bond still be deisngated for dividends at 300mh/s a share??

[spuushie]

If Lab_rat things he is going to get away with all this... then he is as dumb as me who put money on him...

[cloverme]

Seems like all the bonds now are pretty much worthless or at least junk bond status. Companies like this have to stop folding or they'll continue to pull down cryptocurrency with it.

Mark Twain - “A gold mine is a hole in the ground with a liar on top.”

[electerium]

You purchased bonds, not shares.

[spuushie]

You purchased bonds, not shares.

oh really??? Feck off

[elitenoob]

You purchased bonds, not shares.

Bonds of scam it seems.

[electerium]

You purchased bonds, not shares.

oh really??? Feck off

I'm just saying that could explain why the "dividends" cannot be variable monthly on a non predetermined basis

[||bit]

My guess is that Labrat is trying to avoid defining anything as actual bonds or shares. Doing so may require certain requirements be fulfilled. From the beginning, the term "bond" was only used for lack of better term. Even in some of my oldest posts I would put bonds in quotes. And there's probably a reason LR didn't call these shares. Anyway, if you noticed, LR isn't saying bonds anymore, he's calling them 'contracts'. There could easily be a good reason behind this... I simply don't think this is all that serious anymore, or at least if it is serious, I do think that a solution is probably somewhere to be found.

For example, why not rewrite the "contract" or simply redefine LRM as a hosting company of our hardware with Labrat acting as manager. Or find an asset protection specialist and see if moving everything into a trust could free up more options.

So, because I think a solution is achievable and I'm going to assume Labrat actually wants LRM to be successful, I now think the status of new hardware (and future hardware) is more important than this restructuring of the btc distribution schema.

[Lab_Rat]

Found an almost exact analogy...

http://en.wikipedia.org/wiki/Community_Shared_Agriculture

The way those work here is you buy a "share" in the commodities produced by the farm and each week you get your share of production. The people who buy shares don't own the farm, just it's output.

Find legal basis for those, structure LRM accordingly.

This is interesting.

[kaneda2004]

Found an almost exact analogy...

http://en.wikipedia.org/wiki/Community_Shared_Agriculture

The way those work here is you buy a "share" in the commodities produced by the farm and each week you get your share of production. The people who buy shares don't own the farm, just it's output.

Find legal basis for those, structure LRM accordingly.

This is interesting.

What have you been doing with your spare time? If our investment is important to you, and LRM as a company is important to you, then I implore you to use the brains in this community to problem solve this and then make actual practical decisions and actions based on the bondholders input and guidance. This is our money after all. Make a post soliciting help, contact the bitcoin foundation, contact anyone with any experience in this who runs a legitimate buisness - talk to CEX.io, talk to ANYONE... rather than just stay silent as the ship sinks.

1) Solicit help. 2) Make informed descisions. 3) Take positive action. 4) Quell the masses with pitchforks and torches.

[Lab_Rat]

My guess is that Labrat is trying to avoid defining anything as actual bonds or shares. Doing so may require certain requirements be fulfilled. From the beginning, the term "bond" was only used for lack of better term. Even in some of my oldest posts I would put bonds in quotes. And there's probably a reason LR didn't call these shares. Anyway, if you noticed, LR isn't saying bonds anymore, he's calling them 'contracts'. There could easily be a good reason behind this... I simply don't think this is all that serious anymore, or at least if it is serious, I do think that a solution is probably somewhere to be found.

For example, why not rewrite the "contract" or simply redefine LRM as a hosting company of our hardware with Labrat acting as manager. Or find an asset protection specialist and see if moving everything into a trust could free up more options.

So, because I think a solution is achievable and I'm going to assume Labrat actually wants LRM to be successful, I now think the status of new hardware (and future hardware) is more important than this restructuring of the btc distribution schema.

They have been called mining contracts by me from the beginning or "Perpetual Mining Bonds" which are what the community called them which is why I called them "bonds" since the beginning and stated in the original contract these are not traditional bonds and are non-callable.

I was out today, but tomorrow is a full day I will be speaking with my lawyer, as well as the other legal advisers who had input on this matter.  None of which see anything LRM to be working with to be an SEC or FinCEN issue if the transition is made, which is why I made this choice.  How to handle the specifics of the payout moving forward is being worked on.

[Lab_Rat]

Found an almost exact analogy...

http://en.wikipedia.org/wiki/Community_Shared_Agriculture

The way those work here is you buy a "share" in the commodities produced by the farm and each week you get your share of production. The people who buy shares don't own the farm, just it's output.

Find legal basis for those, structure LRM accordingly.

This is interesting.

What have you been doing with your spare time? If our investment is important to you, and LRM as a company is important to you, then I implore you to use the brains in this community to problem solve this and then make actual practical decisions and actions based on the bondholders input and guidance. This is our money after all. Make a post soliciting help, contact the bitcoin foundation, contact anyone with any experience in this who runs a legitimate buisness - talk to CEX.io, talk to ANYONE... rather than just stay silent as the ship sinks.

1) Solicit help. 2) Make informed descisions. 3) Take positive action. 4) Quell the masses with pitchforks and torches.

CEX.io is on a different boat than LRM, although they are definitely breaching MSB issues within the US whether they operate in or out of the country.

EDIT: also going to be flying out to meet with a well respected business lawyer rather soon who has also handled Bitcoin.

[kaneda2004]

Found an almost exact analogy...

http://en.wikipedia.org/wiki/Community_Shared_Agriculture

The way those work here is you buy a "share" in the commodities produced by the farm and each week you get your share of production. The people who buy shares don't own the farm, just it's output.

Find legal basis for those, structure LRM accordingly.

This is interesting.

What have you been doing with your spare time? If our investment is important to you, and LRM as a company is important to you, then I implore you to use the brains in this community to problem solve this and then make actual practical decisions and actions based on the bondholders input and guidance. This is our money after all. Make a post soliciting help, contact the bitcoin foundation, contact anyone with any experience in this who runs a legitimate buisness - talk to CEX.io, talk to ANYONE... rather than just stay silent as the ship sinks.

1) Solicit help. 2) Make informed descisions. 3) Take positive action. 4) Quell the masses with pitchforks and torches.

CEX.io is on a different boat than LRM, although they are definitely breaching MSB issues within the US whether they operate in or out of the country.

Granted, that is true. However, what I am suggesting is soliciting the help of community members, individuals who operate enterprises of a similar nature to LRM, or anyone who may have information that is helpful. I'm suggesting being open to help from them rather than writing them off as not being similar enough - someone may have something to contribute, if only you were to solicit the help. If LRM hasn't been operating illegally this whole time, then there is no harm in talking in the open about what challenges we face and how we can productively overcome them. If LRM has been operating illegally this whole time then I can understand your hesitance to ask for help and talk about specifics.

Bottom line: Ask the community for help regardless of how well versed you think they are.

[Lab_Rat]

Granted, that is true. However, what I am suggesting is soliciting the help of community members, individuals who operate enterprises of a similar nature to LRM, or anyone who may have information that is helpful. I'm suggesting being open to help from them rather than writing them off as not being similar enough - someone may have something to contribute, if only you were to solicit the help. If LRM hasn't been operating illegally this whole time, then there is no harm in talking in the open about what challenges we face and how we can productively overcome them. If LRM has been operating illegally this whole time then I can understand your hesitance to ask for help and talk about specifics.

Bottom line: Ask the community for help regardless of how well versed you think they are.

The closest would be James Gibson's giga/teramining ventures as they are in the US and have handled issues in the past, but they are fixed hashrate payout schemes, not variable.

[||bit]

Found an almost exact analogy...

http://en.wikipedia.org/wiki/Community_Shared_Agriculture

The way those work here is you buy a "share" in the commodities produced by the farm and each week you get your share of production. The people who buy shares don't own the farm, just it's output.

Find legal basis for those, structure LRM accordingly.

This is interesting.

Yes. That is interesting (thanks Flashman). The only concern that pops out to me is what to do if/when hardware is sold to liquidate assets. Or how about the idea I proposed before with LRM acting more as a hosting service? Both have similar attributes, however, acting as a host where LRM manages the farm at least allows for liquidated assets to be returned to actual investors.

Don't forget to answer the most obvious question, the elephant in the room: What's up with the 150TH+ of hardware that was on order?
Also, is there any change in your relationship with the hardware sources you were working on? And finally, are you committed to LRM succeeding?