-

[sparky999]

You guys and dolls haven't yet figured out what the "legal issues" most likely are, have you?

Check the recent IRS rulings and FIN-Cen requirements, especially those requirements concerning Money Transmitters.

My $.02.

This is just nonsense, the only way what your saying could be true is if Zach was pre-informed by the IRS and/or FinCen and well the chances of that being the case are at best 1 in a million.

The legal issues Zach isn't talking about were first known to Zach months before these rulings and as pointed out before Zach does not qualify as a money transmitter by any current ruling.

[daemonfox]

Please reference the changes noted to BTCGuild in the most recent news posts...

Seems to me ANYTHING that relates to a payment of any sort can and will fall under IRS and FinCen regulations. If LRM is PAYING us dividends... he is transmitting monies. BTCGuild's solution is apparent in the way they have decided to redefine everything as a reward for participation in the pool... some of that mentality applies here but needs further legal scrutiny to define once and for all.

Give Zach some slack... anything he says before the lawyer gives it to him in writing could make everything that much worse.

[elitenoob]

Seems to me ANYTHING that relates to a payment of any sort can and will fall under IRS and FinCen regulations. If LRM is PAYING us dividends... he is transmitting monies.

So it would be better to refuse receiving dividends?

[tempestb]

LRM is NOT a money transmitter.  A money transmitter is a business that acts between payer and payee.  Paypal is a money transmitter.  The only thing LRM is doing is letting us buy hashing power that results in Bitcoin distribution based on our share of it.  The same thing CEX or Cloudhashing or any other cloud mining service does.  The reinvestment for more hash power is also part of their strategies as it is here.  No difference and not illegal.

I think there are real concerns that everything is fake and made up.  Labrat hasn't taken any photos and refuses to even talk about the hardware order that he likely has right now or never bought which would bring up questions about where the money went to.  This has nothing to do with lawyers writing anything up.  It's about being shady and creating suspicion about what is really going on.

Lawyers might not get anything suing him.  Then again, it seems unlikely LRM will go to whatever jurisdiction and fight this out in court.  He'll ultimately get a lien on his property if he doesn't, and his future wages can be garnished and property can be seized.   It depends on how much is won in the judgement and his willingness to battle it out in various courts.

[contactmike1]

Money transmission is not limited to third parties. A transaction between two parties can be money transmission if the company is moving money.  For example, think of a bitcoin atm where you exchange bitcoin for money.  If you stand at the machine, send the bitcoin, and then cash out, no transmission has occurred (assuming the atm company is not depending on a 3rd party.)  But if you send the bitcoin from your house (so you don't have to wait for confirmations), and then drive across town to get your cash, then that IS money transmission.  The atm company just transmitted your money across town.  

Now I know it sounds ridiculous, but that is the law.  MT laws were never designed with bitcoin in mind, so some "stupid" scenarios exist where MT is happening per the letter of the law, even though it doesn't make sense in real life.  It's plausible that labrat got ensnared in a similar "stupid" MT scenario, although there is no basis to assert it is a MT issue.

MT Source: Marco Santori

[contactmike1]

@labrat

I know you are trying to hold everything together.  Why not give us a completion percentage estimate?  I know you can't give out dates yet, but posting a reply like

The lawyer is 20% done with the contract.

or

The lawyer is 80% done with the contract.

would go a long way to helping people feel informed about this issue and progress.  That means we can at least get an idea if this contract will be done in September vs May.  Or April.   

[tempestb]

Money transmission is not limited to third parties. A transaction between two parties can be money transmission if the company is moving money.  For example, think of a bitcoin atm where you exchange bitcoin for money.  If you stand at the machine, send the bitcoin, and then cash out, no transmission has occurred (assuming the atm company is not depending on a 3rd party.)  But if you send the bitcoin from your house (so you don't have to wait for confirmations), and then drive across town to get your cash, then that IS money transmission.  The atm company just transmitted your money across town.  

Now I know it sounds ridiculous, but that is the law.  MT laws were never designed with bitcoin in mind, so some "stupid" scenarios exist where MT is happening per the letter of the law, even though it doesn't make sense in real life.  It's plausible that labrat got ensnared in a similar "stupid" MT scenario, although there is no basis to assert it is a MT issue.

MT Source: Marco Santori

I get what you're saying, but that's nonsense.  Then every single business would be a money transmitting business and be required to file for a license.  That's not how it works.  The Government sees Bitcoin like it sees bricks.  If LRM handed out bricks it wouldn't need a money transmitting license just like it doesn't need one for bitcoin.  The reason folks like Mtgox got nailed was because they were depositing fiat/cash into a bank account and then wiring that to people.  They were transmitting money through the banking system without a license to do so.

This Bitcoin business is like Warcraft Gold to the Government.  It doesn't matter until you cash it for Fiat.  Then they want a piece.  And it's not up to LRM to declare anything about that.  It's on whoever cashes out the Bitcoins to do it. 

I think everyone is trying to look for reasons why Labrat has a good excuse for what is going on.  He might, but guessing what it is isn't helping.  It'd be better if he told people otherwise it appears he's hiding something.  I can't imagine what on Earth a lawyer would be able to write up about this except terms of a new contract that we would have to either accept or go to court over it.  What else could it be?  The lawyer isn't going to be writing up some big excuse document.  "This is why LRM can't do what they said they were going to do after taking your money."   

I believe something probably went wrong.  LRM speculated and lost, or invested in something that failed, or partnered up with someone who blew a bunch of cash for no results.  There probably isn't any new hardware, it was probably scammed out from under him or some embarrassing thing like that, and dude can't come clean about it because there would be pitchforks and torches.  So instead he's pointing to nonexistent legal issues and saying they are the reason why we're not all getting 2gh per share right now.   I don't believe for a second it's a legal reason, because there are multiple similar operations currently up and running and doing the same thing this one is, and they aren't having any problems.  So I don't buy that it's a legal issue.  If it was, we would be able to see the Government's demand letter.

[contactmike1]

I get what you're saying, but that's nonsense.  Then every single business would be a money transmitting business and be required to file for a license.  That's not how it works.  

I was just clarifying your post because it contained some inaccuracies, but it's nothing to get defensive about.  MT can happen between two parties exclusively.  I have Marco under retainer for the handling of MT businesses, and I trust his assessment about MT.  

Aside from that, I am not trying to claim labrat has MT issues.  I just didn't want people to have misinformation about the handling of MT in the USA.  

[||bit]

Seems to me ANYTHING that relates to a payment of any sort can and will fall under IRS and FinCen regulations. If LRM is PAYING us dividends... he is transmitting monies. BTCGuild's solution is apparent in the way they have decided to redefine everything as a reward for participation in the pool... some of that mentality applies here but needs further legal scrutiny to define once and for all.

I don't think it's that simple. Then when you pay the grocer you'd be a money transmitter... and every employer would be a money transmitter... The last FINCEN report I read clarified it, and my interpretation of it means LRM is not a money services company. We discussed this report briefly in this thread some time ago.

[bigasic]

Wouldnt the worse case scenario be that LRM does what Gigavps did? After reading the IRS and Fincens ruling, miners need to pay taxes on the coins value at the time it was mined and if you lose money when you sell it, claim the loss there. So, technically, all he would need to do is get our personal info and send us a 1099 at the end of the year. Thats how I read the laws... Maybe  im wrong... Also, I dont think mining is considered a money transmitter. Also, now that bitcoin is considered property, I think the form is 1099-k...

I just dont see where we need to be limited to 300ghs per share. I dont see anything in the IRs nor Fincens ruling that states limits...

Again, maybe im wrong, lol... But, I understand the issues one could have with lawyers,I had a lawyer that would never get back with me. That was a quick fix, I got a new one.. But, I bet it would be a pain get a new lawyer up to speed and LRM has probably already paid a lot for a retainer..

I have a lot invested with LRM. Im still willing to give Zach the benefit. I have faith that he will work everything out. Those that want to start suing right now would only hurt us.  Where do you think all the money is going to come from to fight it? Granted, there is a time when you say enough is enough, but I dont think we are there yet...

[bittymitty]

http://www.coindesk.com/digitalbtc-signs-bitcoin-mining-hardware-deal-bitfury/

"However, the company did state that the first instalment of the new bitcoin mining hardware is already in operation and started generating revenue in March."

Looks like Bitfury have delivered.

I wonder what LRM is going to do with the BTC from the new hardware.....

[LostDutchman]

http://www.coindesk.com/digitalbtc-signs-bitcoin-mining-hardware-deal-bitfury/

"However, the company did state that the first instalment of the new bitcoin mining hardware is already in operation and started generating revenue in March."

Looks like Bitfury have delivered.

I wonder what LRM is going to do with the BTC from the new hardware.....

Buy a Roller?

My $.02.

[||bit]

http://www.coindesk.com/digitalbtc-signs-bitcoin-mining-hardware-deal-bitfury/

"However, the company did state that the first instalment of the new bitcoin mining hardware is already in operation and started generating revenue in March."

Looks like Bitfury have delivered.

I wonder what LRM is going to do with the BTC from the new hardware.....

There are reasons to suspect that Zach already received the new hardware. Assuming for a moment that is true. My guess on why he wouldn't want to tell anyone is so that he can mine longer than 2 weeks without being hassled for higher dividends. Not necessarily to steal bitcoins from investors, but to take advantage of his lawyer situation to mine longer. To make more new hardware purchases. Why? My guess would be that he has a deal that can't be ignored (in his opinion), and wants to optimize the deal situation while he can. After all, didn't he entertain concerns with the 25:75 ratio and sustainability in the midst of this turmoil - a thought he never entertain publicly before? I think so, and found this recent musing about that possibility an interesting change thoughts to entertain. And that is something one might think if they suddenly knew they should get more funds while they can get more from this deal.

But much of that, I think, Zach should not have problems with sharing with investors. Most would be for such anyway. And he could keep it generic without naming names if needed.

That's about as far as I'd like to compound my speculations at this time.

[mufa23]

@Labrat

In light of the new security flaw, most of us will probably be making new wallets and have new addresses. Will you be able to sift through the all the signed emails and update our addresses. You don't seem to be around often, and I'm thinking about scrapping my wallet.

Let us know...

[grnbrg]

@Labrat

In light of the new security flaw, most of us will probably be making new wallets and have new addresses. Will you be able to sift through the all the signed emails and update our addresses. You don't seem to be around often, and I'm thinking about scrapping my wallet.

Let us know...

If you want to email me a change of address, I'll GPG sign it and forward it to The Man.

Code:

---------
1IHeartLlamasVbfRCyp8ZqGKSpXCtgFNz transfers all control to 1SmurfsAreCoolJoVSgADuzJyHP5fk2Cef
---------

Old address signature:  blahblahblah
New address signature:  hlabhalbhalb

If the signatures fail I will mock you.  


grnbrg.

[LostDutchman]

@Labrat

In light of the new security flaw, most of us will probably be making new wallets and have new addresses. Will you be able to sift through the all the signed emails and update our addresses. You don't seem to be around often, and I'm thinking about scrapping my wallet.

Let us know...

If you want to email me a change of address, I'll GPG sign it and forward it to The Man.

Code:

---------
1IHeartLlamasVbfRCyp8ZqGKSpXCtgFNz transfers all control to 1SmurfsAreCoolJoVSgADuzJyHP5fk2Cef
---------

Old address signature:  blahblahblah
New address signature:  hlabhalbhalb

If the signatures fail I will mock you.  


grnbrg.

How goes it grnbrg?

When you comin' to town?

You got a whole line of free beers'n stuff waiting for you!

Damn boy!

My $.02.

[grnbrg]

How goes it grnbrg?

When you comin' to town?

You got a whole line of free beers'n stuff waiting for you!

Damn boy!

My $.02.

LOL.  My wife has a work thing in Washington DC in late May.  Going to check out the Smithsonian and a bunch of other stuff with her.  That's the extent of my travel plans for the next while. 



grnbrg.

[CumpsD]

Wouldn't surprise me if the new hardware is already mining away solely for LR, instead of for us. It was the same thing last time

[||bit]

Wouldn't surprise me if the new hardware is already mining away solely for LR, instead of for us. It was the same thing last time

I don't think he wants to go to prison, so I doubt it. What are you talking about last time? When did he mine for himself only?

[CumpsD]

Wouldn't surprise me if the new hardware is already mining away solely for LR, instead of for us. It was the same thing last time

I don't think he wants to go to prison, so I doubt it. What are you talking about last time? When did he mine for himself only?

Don't you remember the last batch of hardware, where he was going to mine for 2 weeks and then back for us, except that 2 weeks turned into some sort of rolling 2 weeks between first piece of HW and last piece of HW, which ended up in I think 5?