[BDK] - Liquidating, Permanent Closure -

[slider1978]

Also part of the law is that they can't opt you in automatically if you didn't respond to their request, they have to opt you out, so don't let them try to tell you that cause you didn't respond that you are automatically in.

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[Kluge]

I went to the Fed's rules, and now I'm not so sure I have the upper-hand.

"The new rules do not cover checks or automatic bill payments that you may have set up for paying bills such as your mortgage, rent, or utilities. Your bank may still automatically enroll you in their standard overdraft practices for these types of transactions. If you do not want your bank's standard overdraft practices in these instances, talk to your bank; you may or may not have the option to cancel."

Does an "Instant" Paypal transaction fit in there? I'm assuming it's an ACH transaction and thus likely subject to overdraft bullshit.

[slider1978]

I went to the Fed's rules, and now I'm not so sure I have the upper-hand.

"The new rules do not cover checks or automatic bill payments that you may have set up for paying bills such as your mortgage, rent, or utilities. Your bank may still automatically enroll you in their standard overdraft practices for these types of transactions. If you do not want your bank's standard overdraft practices in these instances, talk to your bank; you may or may not have the option to cancel."

Does an "Instant" Paypal transaction fit in there? I'm assuming it's an ACH transaction and thus likely subject to overdraft bullshit.

I would say no because it is a user generated transaction and not an automatic one. It's the same as you going to Walmart and using your debit card, that transaction should be declined if you have in-sufficient funds unless you signed up for their overdraft protection. You initiated the transaction, it wasn't an automated transaction such as a mortgage payment or auto credit card payment where you only supplied the bank info the first time to set it up.

[Kluge]

I went to the Fed's rules, and now I'm not so sure I have the upper-hand.

"The new rules do not cover checks or automatic bill payments that you may have set up for paying bills such as your mortgage, rent, or utilities. Your bank may still automatically enroll you in their standard overdraft practices for these types of transactions. If you do not want your bank's standard overdraft practices in these instances, talk to your bank; you may or may not have the option to cancel."

Does an "Instant" Paypal transaction fit in there? I'm assuming it's an ACH transaction and thus likely subject to overdraft bullshit.

I would say no because it is a user generated transaction and not an automatic one. It's the same as you going to Walmart and using your debit card, that transaction should be declined if you have in-sufficient funds unless you signed up for their overdraft protection. You initiated the transaction, it wasn't an automated transaction such as a mortgage payment or auto credit card payment where you only supplied the bank info the first time to set it up.

Yeah, I agree - effectively the same. I spoke with the VP an hour or so ago, and I feel fine about it, now. I settled and paid the balance plus almost all the fees (amount owed was $102.85, we settled on $87.25 [refused to waive the initial $3x NSF fee [yes, they charge an overdraft fee one-time, then a recurring fee each day after]), but I only had $20s, so I asked if I could settle for $100 and just close the account right now -- I guess he didn't think to offer me change). Pretty sure it's incompetence, not malevolence, and I got in a lot of digs. He claimed (with a straight face) the overdraft coverage was a service long-standing members are automatically enrolled in (I never did opt-in to it), then insisted the bank sent me a notice about the overdraft fee every day since the transaction (which is either not true, or my postal carrier hates me for some reason). It went on... he asked me if I had a debit card, I told him I ordered one with the checks but it never came in the mail, and he said the paperwork was never processed for the card (I did receive the checks).

Oh, well. Account's closed, and I feel fine. Thanks for the help, everyone.

[Kluge]

Just a quick notice -- I'm expecting a large deposit within the next couple days. Until GLBSE 2.0 is released and I'm comfortable investing there again, I feel comfortable taking only ฿600 more. I feel uncomfortable with the liabilities beyond that and do not believe I'd be able to push the deposits out as loans in a manner timely enough to recoup costs (BTC loan market is becoming saturated, and soon I will have to settle on lower rates. I am much less willing to expose myself to debt for significantly lower returns). Availability now exceeds 1kBTC. The maximum CD amount per person was increased to ฿300 a few days ago. I am open to issuing CDs larger than that, but I need to know I have the ability to turn that BTC around within a couple days to others. With ฿200+ CDs, I am willing to offer my address, utility bill, email address, phone numbers, and a Skype account (which is most preferable for contact).

Cheers!

O/T - I'm also pleased to announce I pre-ordered a couple FPGAs from ngzhang. You can find the new group purchase thread (with VERY reasonable rates) @ https://bitcointalk.org/index.php?topic=73773.0 . Best of luck!

ETA: Also would like to announce I now keep a reserve of $500 USD in MtGox in case of emergencies were I for some reason am unable to pay out a CD as intended. While it won't be kept track of in the I/O & disclosure sheets, I hope it will still bring some comfort to depositors as it brings to me. As well, I'm making another BTC buy. This is intended to ensure ownership equity is never at an unsafe level (well, and because I'd like to make more loans ). Cheers!

ETA2: Assets will be shifting largely from loans to equities in the next couple months. I'm not fond of the hassle & default rate which comes with consumer loans. The intention for the June disclosure report is ฿1000 in an Insured Pirate Program, ฿1000 in an Uninsured Pirate Program, ฿500 in TyGrr, ฿512.5 in TyGrr Bank (very possible it will be partially liquidated prior to June), ฿150 with imsaguy (+ first in line for excess BTC, up to ฿500), ฿500 with other projects of Goat's. Any assets beyond that are uncommitted.

The CD rate in April is expected to remain at current rates. I will consider increasing the CD rate in May.

[Kluge]

https://bitcointalk.org/index.php?topic=74216.0 S² Capital Management (the reason I decided not to go through with directly selling BDK bonds via GLBSE for the time being) is now selling IPO shares. BDK is not affiliated with S² except that S² is supposed to be purchasing BDK CDs.

ETA: text disclosure #s in OP updated, too.

[Kluge]

Finally bothered for a few seconds to register on Heatware. http://www.heatware.com/eval.php?id=80153

If we've done business, I'd appreciate a mark, and I'll return the favor.

[Kluge]

Currency Risk Insurance

Oh, right. I thought of something else before I went to sleep this morning which I've now remembered. It's a bit complicated (probably due to my poor explanation), and I suspect the vast majority of people won't care about this.

All Bitcoin CDs are now automatically partially insured against BTC drastically devaluing as a service to CD-holders. With CDs, you are now granted an option you may exercise no later than two days before your CD is set to expire. PM me, and I will pay out your BTC CD in MtGoxUSD, PPUSD, DwollaUSD, or I will send you a check in the amount granted by your insurance plan -- whatever you prefer (but nothing outside of those payment options). Having your CD paid off early by me in BTC voids your option to receive a USD payout. Receiving a USD payout voids your BTC CD. You may receive partial payment in both currencies if you like. For holders of CDs on a plan above Tier 5, I will not pay off the CD in BTC prior to the date of maturity, to ensure you have a chance to request payout in USD if you prefer. Tier 5 CD-holders will still have their CD paid off early as I see fit. USD payout DOES include accrued interest (unless you request to be paid prior to date of maturity, in which case you are entitled to no interest on principal). You must specify you want currency risk insurance prior to purchasing the CD. You may not purchase currency risk insurance after you've purchased a CD. See examples at bottom of this post to see exactly how this is supposed to work.

**Expect DwollaUSD requests to require at least 10 business days to be processed. Checks will be sent Priority USPS with signature requirement & delivery confirmation #. MtGoxUSD may take ~10 business days if in an amount >$500. Otherwise, should be within a day or two. PPUSD is instant, but it's Paypal, so....**


The plans are as follows (these plans are valid on new CDs while the last trade value per ฿1 on MtGox is between $4.60 and $5):

Tier 5 ($1/฿1) - All CD-holders are granted this option by default. This applies retroactively, so all CD-holders currently have this option. You may request your CD be paid in USD. The value of your BTC CD will be worth $1 per Bitcoin. If you have a ฿100 CD and request full USD payout, you would receive $100, and your BTC CD would be void. There is no penalty to MPR attached to having this plan.

Tier 4 ($2.75/฿1) - For each BTC your CD is worth at date of maturity, you are entitled to $2.50 USD payout on the condition that it voids your CD. If you have a ฿100 CD and request full USD payout, you would receive $250, and your BTC CD would be void. Requesting Tier 4 currency risk insurance on your CD reduces CD's MPR by .5% (absolute, not relative).

Tier 3 ($3.50/฿1) - For each BTC your CD is worth at date of maturity, you are entitled to $3.25 USD payout on the condition that it voids your CD. If you have a ฿100 CD and request full USD payout, you would receive $325, and your BTC CD would be void. Requesting Tier 3 currency risk insurance on your CD reduces CD's MPR by 2% (absolute, not relative).

Tier 2 ($4.25/฿1) - For each BTC your CD is worth at date of maturity, you are entitled to $4.00 USD payout on the condition that it voids your CD. If you have a ฿100 CD and request full USD payout, you would receive $400, and your BTC CD would be void. Requesting Tier 2 currency risk insurance on your CD reduces CD's MPR by 3% (absolute, not relative).

Tier 1 ($4.60/฿1) - For each BTC your CD is worth at date of maturity, you are entitled to $4.35 USD payout on the condition that it voids your CD. If you have a ฿100 CD and request full USD payout, you would receive $435, and your BTC CD would be void. Requesting Tier 1 currency risk insurance on your CD reduces CD's MPR by 4% (absolute, not relative).


Examples:
[1]You would like to purchase a ฿100 32D CD... so you do, and don't bother specifying wanting any complicated currency risk insurance. It turns out Bitcoin & Silk Road were constructed by and are monitored by FBI/CIA/ETC which are now doing a massive round-up of transactors to imprison them. Bitcoins are unable to be sold on markets due to lack of demand (effectively being worth nothing). You're entitled to demand USD payout for $1 per the BTC you're entitled to as specified by CD terms. A week before your CD matures, you tell me you want DwollaUSD instead of BTC. I'll pay you $105 ([100BTC principal + 5BTC in interest currently on 32D CDs]*$1) via Dwolla, and your CD will be void.

[2]You purchase a ฿100 63D CD and specify you want Tier 3 insurance. While the CD is active, weak demand and heavy selling pushes BTC down to $3. A few days prior to your CD maturing, you tell me you want to exercise your option to sell the CD for USD, and would like payment via check. So, I send a check in the amount of $346.13 ([100BTC principal + 12BTC unadjusted interest on 63D loan - 5.5BTC for insurance on this particular CD]*3.25) to the name and address you provide. Once the check is sent, the CD is void.

[3]You purchase a ฿100 32D CD and specify you want Tier 2 insurance. 10 days into the CD's effective start date, you tell me you need PPUSD immediately. I cash out your CD in PPUSD in the amount of $400 ([100BTC principal -- no interest paid due to early withdrawal]*4).

[4]You purchase a ฿100 32D CD and specify you want Tier 1 insurance. Immediately after the transaction, you tell me you want the CD cashed for GoxUSD. I pay you $435 ([100BTC principal -- no interest paid due to early withdrawal]*4.35) in GoxUSD, voiding the CD. I wonder why you went this complicated route instead of just requesting USD for BTC.

[5]You purchase a ฿100 32D CD with Tier 4 insurance. One day before the CD matures, you tell me you want to be paid in GoxUSD. I roll my eyes and point you to this thread, where I specify I require at least 2 days' (prior to the CD maturing) notice.

[6]You purchase a ฿100 32D CD with Tier 1 insurance. The price of BTC remains pretty stable, so you don't request USD. You'll be paid ฿100 (5% MPR - 5% Tier 1 MPR penalty = no interest earned) at date of maturity.

Any questions, please ask. Fwiw, I think reading through the examples will clear up many questions. I will not be adding this ridiculously long post to the OP, but linking to this post. Cheers!

[Kluge]

IF I'M UNRESPONSIVE BETWEEN 3/29 AND 4/2 (possibly beyond), HERE'S WHY:
I've been planning on attending a funeral on Saturday for a distant cousin. It's a fair bit away, so I'll be out all day.
Yesterday, another cousin's (much closer) husband was diagnosed with lymphoma, tumor near the heart. We're babysitting their kids (+ our own) tomorrow, likely a while into the future as things are figured out. If you absolutely need a response from me within ~8 hours, I can be contacted via phone @ *snip*. Otherwise, I should be able to answer all emails/PMs within 24h. If something's become lost in the chaos here, please resend your PM every 24-48h. Eventually, I'll get it.  Sorry for any inconvenience this may cause.

Just thought I'd make this more visible since I'm still getting a steady stream of PMs. There's something up with my Dad, too. I'm not sure what, but he never calls (ETA: And that tid-bit of info is relevant because he did call, three times yesterday while I was sleeping - no message). I'm going to be out-of-town between 4/9 and 4/11, too, for something unrelated to all this. I don't carry anything which connects to the Internet while I'm away from home. I'll update as I know and try to give time-frames on when I'll be slower to respond than usual. Please don't quote my phone #, and please don't call between 5pm-8am US Eastern (and PLEASE don't call me for the sake of conversation).

Thanks. 

[bitcool]

Just found this gem, nicely done.
Wish you good luck with your family.

[John (John K.)]

I'm sorry to hear what has happened to your family, Kluge  . Good luck to you and your family!

[Kluge]

Most of my family stuff should be done and I ought to be able to reply in a timely manner. Cousin's husband most likely (according to the same doctors which said he had a 98% chance of having lymphoma) does not have lymphoma. They found two tumors (instead of the one they previously thought), but they're liquid-filled and thought to be benign, though they're waiting on another biopsy.

The I/O report for March is completed, and April's has been started. We ended the month with ~฿60 in profit (excluding profits from equities), with over ฿4 pushed to IBB & BTC100 (these donations should finally start to be significant in May as "forked" loans expire). We begin April by writing off >$400 in loans, though I still expect profits for April to exceed the value of last month.


Other Recent News:

     S² Capital Management recently made their first deposit which should signify the beginning of a long, mutually-beneficial relationship. First dividends to S² will be made on Tuesday, and each Tuesday after.

     The transaction to get in on Goat's latest (and, IMO, his most interesting) project has gone through. I'm looking forward to being able to talk about it. Also considering investing in his Spread Bot.

     For better or worse, I have gone through with investing more directly with Pirate (currently, only ฿100 is invested in Pirate without it being insured by someone else). I have received a PM from someone who was interested in buying a CD who then cancelled because of this gamble. While I don't yet intend to change course (expecting ฿1000 in Pirate within a few months, though that's the hard limit), I would like to just point out that ownership equity far exceeds not only what I have in Pirate now, but the limits I've set (฿1000 in an insured program, ฿1000 uninsured), so if Pirate defaults AND the insurer defaults, ownership equity will still exceed liabilities -- BDK will still be solvent.

     CD rates will remain the same for the month of April.

[Kluge]

Received another large deposit a short while ago. I'm doing another buy-in soon to increase ownership equity to a level I'm more comfortable with.

63D CDs are no longer available and fwiw, I'm expecting to lower CD rates in May (not dramatically, but significantly) due to being less able to find investing opportunities I like outside of partnerships in future ventures (which have no guarantee of RoI), Pirate, and low-return opportunities. I have no qualms investing in those with my own money, but I don't want to be liable to pay out CDs when I'm receiving either much lower revenues or much higher risk. Also toying with the idea of cashing out. Will likely need to greatly reduce my stake within a few months assuming my house ever sells.

Tomorrow or "soon," I'll once again start accepting loan requests from people I don't have a long-standing relationship with. I'll start another new BDK thread for it, and lock this one. Will look into the different ways other lenders have developed to ensure the lending process is both smooth and relatively secure. Anonymity (pseudonymity, rather) is ideal, but it requires a big leap of faith -- it's quite likely I'll be requiring lendees wait a few days for a postcard with a code on it, then have them repeat the code to me via PM, on top of other methods to ensure identity and ability to repay. I'll see if the other lender has decided to make that website public yet or not. Now that I have the equivalent of well over $8k of others' money, this is no longer an experiment. As they say, shit's getting real. 

In other recent news, due to how what the middleman-insurer between Pirate & I wants (which is deleveraging), I will not be putting a total of 2k BTC into Pirate's programs between uninsured & insured loans as intended. ~250BTC will be insured, ~1000 will be uninsured - by June. Again, ownership equity far exceeds potential losses in Pirate's programs or Goat's programs. Other news... BDK has honored a 6.2-ish BTC pledge to BTC100, as well as a small sum to IBB. No loans are currently "forked," so all interest income off current loans will have a % taken out and donated to IBB & BTC100. Other news... For a fee, I will sell BTC for USD -- PM me. I do not care to sell more than 100BTC at a time. I might be willing to consider selling for PPUSD if I trust you very much and you're extensively involved in the community.


Cheers & good night,

Ben

ETA: BancoKluge.com purchased. More on that soon.

ETA2: CDs are no longer being accepted. I'm quite pleased with what I currently have. This may change ~next week, but rates will likely be reduced.

[Kluge]

I'm considering splitting CDs, where one will function as they do currently, and another will operate more like a messy, partially-insured fund.

CD A would pay 2% monthly, go toward very conservative, diversified investment and give loans to truly productive individuals. These CDs would be 100% insured against loss.

CD B would pay 10% monthly and be lent aggressively to 1-3 high-paying individuals and/or organizations. In the event that one of those lenders default, the loss is immediately written off, and it gets passed on to all holders of the CD (as well as myself insofar as how many special CDs I issue myself, which could, for example, always match the amount of deposits I have). However, I pay out 25% of all losses depositors incur in case of default.

Example of CD B in action: I have 1000BTC in deposits (one person holds 100BTC, two hold 200BTC, and one holds 500BTC). Also in the "fund" is 1000BTC of my own coin, for a total of 2k coins in the fund. The loans are split between two people, both being lent 1k BTC. One defaults.

The person holding a 100BTC CD incurs a loss of value on his CD of 50BTC, but I will cover 12.5BTC of his losses. At date of maturity (we'll assume his CD was for a month), he's paid 50BTC in "principal," 12.5BTC in insurance payout, and 10BTC in interest, for a total of 72.5BTC return.

The person who held a 500BTC CD (let's say it was for a month) would take a 250BTC loss, but I will cover 62.5BTC of that. At date of maturity, he's paid 250BTC in "principal," 62.5BTC in insurance payout, and 50BTC in interest, for a total return of 362.5BTC.

You can figure out how it'd work for the other CD-holders. For myself, I would lose 250BTC due to insurance payouts, and 500BTC in "principal."


Any thoughts?

[exahash]

Any thoughts?

Yes, a little constructive criticism.

CD A sounds like an actual CD.  No problem, sounds good to me.

CD B sounds a bit like a venture capital fund.  IMHO calling it a CD is misleading.  If you have time, I'm sure you could find more detail on how they work, but essentially the fund managers go to investors to "raise a fund" and when they reach the tipping point they close it to new investment and begin investing in companies.  You might want to work option B like that, since determining ownership percentages for allocating losses could be very difficult if you do it on a rolling basis.

No matter what, you'll have trouble raising capital for the June 2012 fund if the April 2012 fund proved to be a big loser in May.  Its the same way for professional fund managers.

[Kluge]

Any thoughts?

Yes, a little constructive criticism.

CD A sounds like an actual CD.  No problem, sounds good to me.

CD B sounds a bit like a venture capital fund.  IMHO calling it a CD is misleading.  If you have time, I'm sure you could find more detail on how they work, but essentially the fund managers go to investors to "raise a fund" and when they reach the tipping point they close it to new investment and begin investing in companies.  You might want to work option B like that, since determining ownership percentages for allocating losses could be very difficult if you do it on a rolling basis.

No matter what, you'll have trouble raising capital for the June 2012 fund if the April 2012 fund proved to be a big loser in May.  Its the same way for professional fund managers.

I've toyed with the idea of just listing separate funds on GLBSE for a while (I have a detrimental attachment to doing everything by hand -- if there were a local "community currency," I'd honestly prefer it be a few people with paper ledgers keeping track of a finite number of "IOUs" to replace taking useful goods out of the economy as is done with the barter system). I think it was the first "BDK" thread where I proposed three or four different funds listed on GLBSE which would go toward different types of investments. "CD B" really isn't a CD at all, but a messy partially-insured HYIP fund, as you mostly say. If I ever took a loss like what I made up in the scenario for CD B, I can't imagine I'd keep it open. - Pay debts due, close it, and focus on CD A.

I don't like how "BDK" operates right now. There are a few high-risk, high-yield investments mixed in with low-risk, low-yield investments, and asset trading mixed in with loans. Issuing CDs makes the most sense AFAIK, but I don't think all CD-holders appreciate the potential of their money going directly to a Pirate account, or Goat's latest scheme. It also ends up making me feel like I need all investments to return more than what I'm paying for interest on CDs. For example, if I issue a 63D CD @ 12% over principal on maturity, I get the feeling that I need to make two 30D loans @ >6%, instead of realizing two 5% MPR loans would be fine given higher-yield investments more than balancing out the difference - assuming the 5% loans are significantly more safe (IMO) than the higher-yield opportunities.

I don't know why I keep posting alternatives to just issuing one-size-fits-all CDs. I have no intention of not paying any of them, and it's profitable. I never follow through with doing something alternate. *shrug* Maybe I'm just passing time until I'm able to fall asleep.

[Kluge]

Thread updated. I am now both issuing CDs again and entertaining loan applications from strangers. Rates have been lowered a smidge. This does not apply to previous CDs, even if they were made in April. However, if you renew your CD (except for renewals committed to prior to today, even if in April), I will only pay the reduced interest rate.

I was hoping to have a website up, but am still playing around with different options, and don't have much energy to do it anymore, so the OP will remain where information is given. As well, the I/O report has been updated to include new quarterly reports. Until June, the Q2 report will have almost nothing in it. An annual report will be created at the end of the year.


While I am now doing loans to strangers again, I currently have no money available for loans. If you ask me for a loan, at least check the I/O report to see if I have cash on hand for it. It's unusual though quite possible for me to have uncommitted coins, so if you have a few days before needing the loan (or even better, a few weeks), feel free to PM me if I haven't disclosed having any coins on-hand. Cheers.

Interest rate structure is roughly as follows:
Very-highly trusted (done extensive business with before or very reputable on forum, solid concept given with prototype) -- 6% MPR (no limit)
Highly trusted (done significant amount of business with before or very reputable on forum, solid business plan given) -- 7% MPR (no limit)
Trusted (done business with before or reputable on forum [or extensive reputation elsewhere], adequate business plan given) -- 9% MPR (500BTC max loan)
Untrusted (no business done with before, has a few successful transactions on forum, adequate business plan given) -- 11% MPR (75BTC max loan)
Distrusted (no business done with before, has at least one successful sell transaction on forum, "fuzzy," optimistic business plan given or consumer loan) -- 12.5% MPR (10BTC max loan)
Very distrusted (no business done with before, no successful transactions, no or likely-nonviable business plan given) -- No.

[Kluge]

CD rate increased beyond pre-reduction rates due to lack of interest. These will not apply retroactively, but do apply for renewals (not renewals already committed to). I'll keep it at this rate until I receive 1k in additional deposits, then it will be lowered again.


Cheers!

[Kluge]

I am also looking for $5k USD in personal loans (all these loans/"CDs" are, in fact, personal loans) for myself (to be repaid in USD, of course). There will be a 96D commitment required. Minimum amount per individual lender = $500. Pays 2% every 32 days. I reserve the right to pay off principal + interest at any time prior (assuming it isn't the due date, in which case I must pay). However, if I pay early, the full amount of interest will be paid. Payment will only be accepted in DwollaUSD or GoxUSD. Paypal can be too-easily reversed, wires are expensive, and ACH transfers & checks take too long. However, if you want to do checks or ACH, that's acceptable so long as it's understood the start date doesn't occur until I have the money in Dwolla.

192D loans pay 2.2% per 32 days on otherwise identical terms.

384D loans pay 2.35% per 32 days.

PM me if interested. ID & utility bill can be provided, but I'm too cheap & lazy to get a promissory note. I'll send you an agreement via email if you'd like, however.

Example: Send me $1k GoxUSD for 96D. On 32nd day, I pay you $20. On 64th day, I pay you $20. On 71st day, I decide it's a good time to pay the loan off and send you $1020 to close the loan.

[Kluge]

USD loan likely covered. Continuing to push for the BTC loans. 200 deposited, looking for 800 more, then rates will be significantly lowered.