[GLBSE] Introducing: Bitcoin Syndicate, a new mining op trading publicly!

[Glasswalker]

There is not much to report here at this point. I have discussed further with MTGox, who *may* be offering a loan of some sorts, but they were very unclear and MagicalTux is hard to get in contact with sometimes (I can get him to answer vaguely, but when I ask for more details, he never responds).

As for reimbursing the shareholders. Here is the hard truth, some people may not like it, but that's how it is:

I'm doing my best to rebuild the syndicate. I want to continue operation, meaning shares owned will be shares in the syndicate still. If/Once we can rebuild into something equalling what it was, then your shares will be worth what they were before this incident. And who knows, likely more. But this has been a major setback. This loss is very large for us, and it means that we won't be likely hitting our initial forecasted growth rate.

Regardless of what happens, I'm trying my best to continue operation. I'm not simply folding up shop and walking away.

THAT is how I plan on "compensating" the shareholders. Not by doing something extra to give money back or taking out loans in my own name, or anything along those lines. I am doing what I can within reason to rebuild.

Am I responsible for reimbursing the company for the money lost? no I'm not. And I won't be. I don't have that much cash on hand (hell I'm tight for cash myself at the moment). And I highly doubt anyone will be giving me a loan (even if I was willing to incur that extra liability on my own to rebuild, which I'm not).

There is a reason that in the real world people adopt the incorporation model. It's called protection from liability for the executives/directors. The CEO of a real corporation is not responsible for personally paying back his shareholders in the event there are major losses. The shareholders can vote to dismiss the CEO and put a new one in his place, and if for example the CEO is found guilty of actual fraud (embezzlement, stealing from the company and so on) then there can be criminal charges in place, and perhaps some small form of restitution required to be paid. But under no circumstances in the real world is the CEO responsible for personally injecting funds into the business...

In this case, a terrible thing has happened. We had a large amount of money stolen from us. The person who is responsible is the one who stole it. And to a small degree Enterpoint/MtGox due to the delays. But as I said before already, I stand by my decisions. I didn't do anything WRONG here. There were choices that I could have done differently had I had different information at my disposal at the time (and it's easy to look back and say oh you should have done this instead of that, with the info we have now in hindsight) but in the end. I stand by my decisions, stand by the fact I did nothing wrong, and so I am not responsible for putting $12K back into the syndicate.

I am doing my job to try and rebuild, come up with a plan to continue operation, and hopefully recover the funds if possible.

So far not much progress on support from MtGox, I still have a week or two to wait for an answer from Enterpoint. And I am exploring some other options.

In the meantime I have not heard from law enforcement yet. I was told it could be a number of weeks before they contact me. I will follow up with them in another week or two to check in on status.

I have received the evidence packet from mtgox, and I am reviewing it. If I find anything of use (that wouldn't be damaging to the case to publish) I will post it up.

Until something changes, we will continue mining with the founders rigs, and working towards a plan of action. At that time I will hold a series of motions to decide on a final course of action based on the available options. Once the course of action is chosen by motion. Trading will be un-frozen at glbse.

Again, I'm sorry if this goes against what some people feel they are entitled to. But this is just how it is.

I will post up more information once I have more to post. As I said before, it will be a bit of a long haul here, Police are slow to move on anything, everything else will take weeks at least, and so expect some silence, before I have the information available to me to come up with some meaningful ideas to put forth to a vote.

Thanks for your patience, understanding, and support (for those of you giving any/all of the above)

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[Coinoisseur]

I hold a few shares of BTCSYN, was looking at the old motions and then wondering at the recent buy/sell activity. Funnily, I wasn't too happy with the liquidate current FPGAs motion when I read it. Turns out that is the source of the stolen funds. May I ask what the reasoning was behind that move? The Cairnsmore1 devices don't even have a full working bitstream yet. Yes I know you can't rewind, but the whole maneuver there is a bit puzzling without some explanation of the reasoning involved.

Glasswalker continuing to work to make BTCSYN whole (by this I mean continuing to operate with the reduced resources) and also posting a copy of the police report in a timely fashion (blacking out anything sensitive) would help reduce the fallout from this.









-Crosspost from https://bitcointalk.org/index.php?topic=92142.msg1036967#msg1036967

[Glasswalker]

I wasn't too happy with the liquidate current FPGAs motion when I read it. Turns out that is the source of the stolen funds. May I ask what the reasoning was behind that move? The Cairnsmore1 devices don't even have a full working bitstream yet. Yes I know you can't rewind, but the whole maneuver there is a bit puzzling without some explanation of the reasoning involved.

Hey, to clarify the decision process there in point form (I believe most of this was clarified in either the discussion about, or the actual motion thread itself, but I may be wrong):
- I was working closely with Enterpoint from before their release
- I was working on a bitstream for their boards which should perform very well
- I was the FIRST person not from Enterpoint to have my hands on a cairnsmore board for development (board serial #0001, first one off the lines). I was well aware of the hardware state, and it's capabilities.
- I was also well aware of their capabilities to release a very high power bitstream
- The hardware was designed to be 100% compatible with an out of the box icarus bitstream, but with twice the FPGA chips it would be twice as powerful as an icarus with no bitstream needed
- Unfortunately what we didn't know when making the decision was a small error was made (swapping the tx/rx pins between first and second fpga for each icarus chain) which made it incompatible.
- I'm also the one who developed the current bitstream for the cairnsmore which is a port of the icarus bitstream (which is FAR more difficult than you would think).
- I'm also currently working on a "fixed" version of the icarus port, in addition to a new completely unique bitstream for the cairnsmore (in parallel to the same effort going on at Enterpoint).
- Regardless, we were having major stability issues with our Icarus boards. Mostly due to the flaky usb chip used by ngzhang (which he admitted he would be replacing in the next gen).
- The cairnsmore boards not only had a nicer "industry standard" FTDI chip, but it was a high end, and capable chip. In addition to their Controller FPGA, and some infrastructure they added, their boards were far superior for stability.
- The cairnsmore boards carry a warranty far superior to Icarus.
- Once the cairnsmore attains it's "potential". It will be at LEAST equal to 2x an icarus, but with the strong suspicion that it will be more like 3x an icarus board in the end
- With this all said, the cairnsmore board is overall far superior to the icarus boards. Even at full retail of $950 USD (compared to over $500 USD per icarus)
- We were only getting about 75% yield out of the icarus due to stability and other issues
- Add in the short term discount to $640 on the cairnsmore boards
- Also consider that for a very short window due to unavailability of icarus, and no news on lancelot, there was a spike in the value of an icarus board due to supply/demand
- Because of all the above factors, we were able to offload our icarus boards for what we paid for them, redirect that money into almost 50% discounted cairnsmore.
- With those things considered, if we had NOT had the money stolen, we would have at LEAST seen a match in hashing power during the development phase while working with a sub-par bitstream
- Once a "Real" bitstream was released, we would see at LEAST double the hashing performance we had before, if not triple the hashing power on the best case.
- I think with that information available, the limited risk at the time (I could not have forseen someone hacking the account and stealing the money). It was a no-brainer move.
- We see 1 month of downtime, to double/triple our returns.

That's the reasoning that went into it. So again, at the time, with the information available, it was an extremely smart move. (unfortunately with the money being stolen any potential benefit has been shot to hell)

Glasswalker continuing to work to make BTCSYN whole (by this I mean continuing to operate with the reduced resources) and also posting a copy of the police report in a timely fashion (blacking out anything sensitive) would help reduce the fallout from this.

As for this, I am currently working to make BTCSYN whole. As you say by continuing to operate with the reduced resources, and seeking other means to improve our position to at the very least something resembling where we started out before the liquidation. Best case, we recover the funds, and can get back on track with just the loss of time, but that's a fairly optimistic view at this time.

As for releasing a copy of the police report. I believe I clarified this in one of my posts on one of the threads here but:
- I went to the police station and filed a police report via their "standard" procedure.
- The proof I got from this is a reciept for the police report, bearing the officers name and badge number which took the report, and a case number for the case we now have open.
- I did NOT get a full paper copy of the report.
- I asked if I could get one, they told me they cannot provide that at this time, First it needs to go to an investigator, and later a full report will be produced. At that time I can request a copy for a fee.
- I have not been contacted by them yet to follow up. The officer who took the report told me that it would be going to either Fraud or CyberCrime (or a joint effort between them). And it may be "several weeks" before I hear anything more.
- Unfortunately since there are only 2 data points on the reciept, both of which are potentially sensitive, Blacking those out would kind of defeat the purpose.
- I don't want to release that reciept to the general public, because I don't know if that would negatively impact the investigation (ie hordes of people inundate the officer with questions, harassment, or any other issues, who knows how it could affect it).
- So until I'm contacted by the investigator, and I am told it is safe to release it (and what I can release) I can't do that.
- What I HAVE done, is release a full scan of this reciept to MagicalTux at MTGox, as well as to Nefario at GLBSE. They are both aware of the situation, and the full details, and they have both offered their support in trying to resolve it.
- If you wish to verify that the report is legit, I suggest you contact one of those 2 individuals (and hopefully they are willing to verify for you).

I hope all this info helps clarify the situation for you, and hopefully re-instates some form of trust in me during this difficult process.

Thanks for your understanding.

[Coinoisseur]

I completely understand that it will take some time to get an actual police report, in no way did I mean release proof immediately. IMO, when you can get a copy post it on the BTCSYN forum and a link to the post here.

Hearing how closely you were working with Enterpoint I can see why you felt confident swapping hardware out. Shame they were not able to accept your payment in bitcoins in a reasonable timeframe.

[Glasswalker]

Just a quick update. Still nothing from the police, and I did get the MTGOX Evidence packet, it didn't really tell me anything new other than verify that in the logs the attack came in the stated number of attempts over a couple days. It will be more useful to provide to the police to simplify their job (and hopefully get more traction from them). Also the previous login attempts did come from random IP addresses all over the place.

Interesting enough, I got an email from mtgox yesterday offering me a free yubikey (due to the "rash of security and hacking issues lately") whatever that means. Seemed to be a general form letter they sent out to several customers, and not directly related to the syndicate. Too bad they didn't offer that a month ago...

Anyway, that aside, I'm working on a couple other angles that may result in returning some of the mining power we lost. I don't want to get people's hopes up, so I won't go into detail, but if it pans out it won't quite be back to full strength, but it will be a good boost in the right direction.

Thanks again for your patience.

[mila]

https://bitcointalk.org/index.php?topic=95738.0;topicseen
another reused password leads to pwned gox account.

[mila]

https://mtgox.com/press_release_20120605.html
gox supported google authenticator as early as june 05
hindsight 20/20

[Coinoisseur]

Any status updates? Dividends from remaining hashing power? Properly redacted police report regarding MTGox theft?

[mila]

Any status updates? Dividends from remaining hashing power? Properly redacted police report regarding MTGox theft?

the statistics and financial pages are both up & running. at the time of writing there were about 155 + 7.5 btc in the books
7.5 for dividends where the growth fund 80 % of income were already accounted
and 155 btc growth + dividends.
not really sure how to account for the funds gone with the gox.

[Glasswalker]

Thanks for updating Mila.

To kick in what info I have at this point (which isn't really anything new from previous updates):

No real updates as of yet, as per the previous posts:
- Still waiting on law enforcement. I'll try following up with them this week to check on status. (they told me it could be "several weeks" when I filed the report)
- As for dividends I have been holding off until we have a couple courses of action decided on, and a vote carried out.
- Currently none of the possible "plans" I had come up with have finished unfolding yet to a point that I can present them.

The plans/ideas I've come up with so far are/were:
- MTGox helping us out, turns out that is a loan in my name, requiring personal guarantee... Can't do that one
- Enterpoint helping us with some hash-sharing lease on hardware of some kind. Yohan at enterpoint has been very busy so no traction yet
- Additional investment as proposed by Mila. I have a few investors that might be interested, still pursuing this one
- Adding to my shareholder loan in the form of a few FPGA mining boards of my own, to boost production for a while as we recover
- Using the remaining funds we have (minus dividends, to be voted of course) to buy more mining gear

So through any combination of the above, we'll get our operation back up and running, but it's taking time to explore all the options. And form a specific set of "options" which can be voted on in a motion.

Right now I've been busting my ass in most of my spare time developing the bitstreams for the Enterpoint Cairnsmore1 boards, trying to get it working fast and stable. Which may result in me getting a bit of compensation in the form of donations in BTC, and possibly some free boards. Which is where the "increase shareholder loan" option above comes from. I'm in no position right now to buy gear to add in, but if I can aquire some via this work, I'll loan some additional hashing power in.

As always, I'll post more when I have something concrete. But hopefully this update helps clear things up so far.

Thanks for your patience.

[gewure]

[mila]

img joker watching burning pile of money

objection. funds lost in the gox event did not burn but exist and are technically spendable
or did I miss any small print?

[pieppiep]

img joker watching burning pile of money

objection. funds lost in the gox event did not burn but exist and are technically spendable
or did I miss any small print?

Unless the transaction is to an address nobody has the private key for, that's basically the same as burning a pile of money.

[Coinoisseur]

Is the police report available to you yet, Glasswalker? It's getting close to the two month point. No idea about your area but it's usually possible to get a self copy of a reported incident fairly quickly. Police know these are important for insurance purposes and such.

[Glasswalker]

Not yet, I'm hoping to have this, and some other info available next week sometime. If all goes well I'll have a large update in the next 1-2 weeks, allowing us to vote on a course of action and unlock the GLBSE fund for trading. (and resume operation).

Unfortunately my day job exploded (as any of you following my FPGA dev exploits in the mining hardware forum will know) and I've had to put all bitcoin related stuff to the side for the past week or so, and the next upcoming week (possibly). I've been working from 8am to 1-2pm each day, with some extremely tight deadlines, so I haven't had the time or energy to wrap this stuff up.

But if all goes well, and a few other outside pieces fall into place, I should have everything I need to propose a plan, and give a general update so that we can get back to "business as usual". It won't be what we had before, nothing (short of catching the thief) will fix that, but we can at least begin rebuilding in a reasonable way, with the hope of getting back to our former glory in a reasonable timeframe.

Thanks for your patience.

[mila]

... and unlock the GLBSE fund for trading. (and resume operation).

transfers work fine. no fees atm for otc trades (over the counter)
syndic has 189 global balance accounted as 7.49 in dividend fund
leaving 181.5 to be split 145.2 growth fund 36.3 dividend fund
dividend fund june-august total 43.79 btc 0.003649 per share
updated balance 'growth fund' 145.2
updated 'global balance' 145.2
updated balance 'dividend fund' 0
reset mining clock (for coins mined after current block) / current block 195816
what about voting for that? a

[HorseRider]

Glasswalker have posted in the ASICMINER thread. He said something about how to know whether an investor hold enough shares to be a board member.

Glasswalker, could you disclose how many shares have you invested? if it is large amount of money, can you explain where did you get the money? I remember that you said didn't have any savings to compensate the BTCSYN investors( of course I know, you think that you should not be blamed  for the loss while you don't use 2fa on mtgox, and you still have not show us the police report by now.)

https://bitcointalk.org/index.php?topic=99497.msg1143278#msg1143278

The post is :

One approach to the "who owns how many shares" challenge, (I may suggest this to Nefario if he doesn't already have something else in the works):

- Allow an asset Owner to generate a "certificate" for a number of shares. Which then become "locked" in their account.
- They can unlock the shares at any time, which would invalidate the certificate.
- The asset Owner can then distribute a public key for the certificate, allowing someone else to verify they own the certified number of shares
- If at any time the certificate becomes invalid, any "subscribers" to the certificate, would be notified. (And it would show as invalid in the web interface).

This way if someone here for example wanted a seat on the board, they could email a request to the Issuer, who in turn requests a verification certificate for 5000 shares. They respond with a public key. Then the Issuer can use the public key to subscribe to  the certificate, and issue board member status accordingly. If the user decided to liquidate their shares they could do so without any "delay" but the Issuer would be notified immediately that the certificate had been invalidated.

This allows validation of share ownership, and it also allows maintaining privacy of the shareholders.

[Glasswalker]

Glasswalker have posted in the ASICMINER thread. He said something about how to know whether an investor hold enough shares to be a board member.

Glasswalker, could you disclose how many shares have you invested? if it is large amount of money, can you explain where did you get the money? I remember that you said didn't have any savings to compensate the BTCSYN investors( of course I know, you think that you should not be blamed  for the loss while you don't use 2fa on mtgox, and you still have not show us the police report by now.)

I could say "It's none of your bloody business" or "Do you mind disclosing exactly how many shares you have in BTCSYN that justify you causing such a stink over this?" But no, I'm not that much of an ass... So...

To answer your question: I own exactly 163 shares in ASICMINER right now. I spent all of about 10BTC in total on those shares, (I was able to do a bit of back and forth trading during the volatility in their share price). I've been monitoring all the ASIC mining threads because I'm fairly heavily invested in FPGA mining (via the syndicate, and via my work with Enterpoint). I thought that ASICMINER was an option that may pan out, so throwing a couple BTC at it might help me with a bit of extra income in the long run. I probably should have cashed those BTC out to pay my bills with, or you know... Buy groceries... But it was already available to me in BTC, and I thought this might help me in the next couple months if it pans out.

I'm sorry if what I spend my personal money on isn't satisfactory to you.

As to where I got the money? I have a dev board (now a couple) from Enterpoint because I'm writing their bitstreams for them (as I've shared on here several times). That dev board has been mining on and off at various times (up until very recently at a significantly reduced rate). And so I earned up a bit of cash. I had earned like 4BTC via that method over the past several months. I also had a 1-2 BTC left in my GLBSE account that it made no sense to withdraw from previous dividends. Then I recently won (split between 3 people) a bitcoin bounty for releasing the bitstream for the Enterpoint FPGA solutions, which I threw in a couple more BTC from. (the rest of which was split between the 55BTC I paid back into the syndicate, and the remainder I am holding onto for personal use because I put HUNDREDS of hours into that project, I think I earned it).

If you're done getting on my case about this, I'm going to get back to being busy as hell at work, and in what little spare time I have working on trying to get the syndicate back off the ground and operating again.

Also, as I mentioned, the police report wasn't available to me until VERY recently, I'm now simply strapped for time to go get a hard copy to upload for everyone's review. I'll be doing that shortly.

This accusational suspicion bullshit is getting really old, normally I don't let crap like this get to me, but this situation, and the reaction of some people to the situation have really worn me thin. I realize so far it's been a select few individuals who have pulled this crap, and so I'm pushing on to rebuild the syndicate into something worthwhile because I believe in it. (and to help the majority of the shareholders who have been supportive through this situation).  But let me say, for those of you who can't just let this drop and move on with life... That you're all lucky I didn't just liquidate the syndicate immediately after this happened, and call it quits, saving myself much time/energy and pain. Because it was well within my power to do so. But no, I wanted to push on, and rebuild. And I'm doing my best. I'm sorry if that's not good enough for you.

Thanks for putting me in a bad mood for the remainder of this already hectic day with this post. I appreciate it.

[HorseRider]

Do you mind disclosing exactly how many shares you have in BTCSYN that justify you causing such a stink over this?"

zero.

I questioned your honesty in my mind after some of your post. Of course, at that time I had no solid evidence. I just feel your personality is really like someones I saw in the financial history. And then sold all the shares quietly. Later, when I nearly forget about BTCSYN, a friend informed me that shit happened.

It's a public company. People who have no investment in pirate40 talk about pirate40. I talk about BTCSYN. If you don't like it, next time you just raise money from your friends and make it a private company. I manage a bitcoin investment fund for friends, and I don't make it public. So that I can scam the money without any question been raised publicly

That you're all lucky I didn't just liquidate the syndicate immediately after this happened, and call it quits, saving myself much time/energy and pain.

Thanks for putting me in a bad mood for the remainder of this already hectic day with this post. I appreciate it.

You're really kindhearted, but I bet that lots of people's mood was worse recently.  why not have a try on this?
http://motivatethyself.com/10-tips-to-help-you-keep-a-smile-on-your-face/

[Glasswalker]

Lol, fair enough. in fairness you didn't ruin my entire day, I was only grumpy for an hour or so.

It's perfectly fair for you to comment as a third party, and hearing you have zero shares helps put that into context. Though I have been a bit on edge based on the amount of crap flying around (when I'm already coping with personal crap on the side and so on, example, my wife and I were hoping to take a trip for our 10th wedding anniversary, but we had to cancel it due to money being too tight, we scaled back to a roadtrip in the USA, which ALSO ended up being too expensive with money being tight. So we stayed home and went out for a cheap dinner...)

It's tough when you're trying to do something positive, it blows up, and then you not only have to deal with the repricussions, but also have everyone accusing you of being a criminal, it's not fun

Anyway, I digress... I'll stop snapping at you now. (and yes you have a valid point, I shouldn't be trading publicly if I don't want to have to deal with the downsides of public opinion).

An on another note.

Incoming announcement post in 3... 2... 1...