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Author Topic: Gigamining / Teramining  (Read 201432 times)
miscreanity
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December 05, 2012, 12:47:49 AM
 #1501

Write it off. An opportunity for a clean start exists, but only if the legal advice is applied to VPS operations after the GLBSE shutdown.
I'm not sure what you mean by this. Could you please explain further.

Legal advice was obtained after GLBSE closed. Prior to that, assets were held by VPS. Any business conducted after that point would have to be subject to the proposed rules and personal information requests. I would expect this to include dividends generated during the interim, but for assets being held before then, such a retroactively applied stipulation becomes a bait-and-switch scenario.

The blockchain is an irrefutable record.
I am not sure what you mean by this either. There is no way to tell what BTC purchased what assets.

At the moment and to my knowledge, no. Digital forensics is not a static field, though. There is always a possibility that links could be established beyond what Nefario has provided.

Do you want to deal with claims in the tens to hundreds or thousands of dollars range now, or wait and see if Bitcoin climbs in valuation until the claims are worth 7-figures or greater?
The one thing you forget is that bitcoin mining produces bitcoins. While I don't want to deal with claims for years to come, nefario has left me little choice since his lists are incomplete and in some cases excluding Gigaminers without any known cause.

The fact that mining generates bitcoins is exactly why this is concerning - the longer dividend yields accrue, the more the stored value becomes a target for litigation. The fewer claimed assets are held by VPS, the lower the long-term risk.

Best effort verification would allow for much of the assets held prior to GLBSE's failure to be cleaned out. If those asset holders wish to pursue continuing business, they can follow the new legal procedures to renew their investments.
Isn't this exactly what I am doing? Again, to make direct payments, VPS needs to know who they are dealing with. The penalties for not doing so are very high, so high that they might take me away from my responsibilities as a father. That is unacceptable.

Yes and no. This again hinges on the circumstances before and after GLBSE closing.

There are ways of protecting yourself and your family that don't involve the legal mess currently surrounding VPS. Still, there's only so much that can be done when in the lion's den, regardless of whether you make every humanly possible effort to remain compliant or not. I certainly wouldn't want to see anyone made a martyr in any form, but that may be unavoidable for a lot of people no matter what's done now.

What is the threshold, in fiat dollar terms, for paying out without requiring personal information?
As stated in Quentin's response, the threshold is $10 - $600.

Would it be possible to pay out in batches of value equivalent to less than $10-600?

Are there any further details on the automated system or a potential time-frame?
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December 05, 2012, 01:07:51 AM
 #1502

Legal advice was obtained after GLBSE closed. Prior to that, assets were held by VPS. Any business conducted after that point would have to be subject to the proposed rules and personal information requests. I would expect this to include dividends generated during the interim, but for assets being held before then, such a retroactively applied stipulation becomes a bait-and-switch scenario.

All payments while GLBSE was open were made. Like clockwork. GLBSE closing is the only reason I was unable to make payments. So, I am doing EXACTLY what you stated above.

At the moment and to my knowledge, no. Digital forensics is not a static field, though. There is always a possibility that links could be established beyond what Nefario has provided.

GLBSE, to my knowledge, used only two wallets to (hot and cold) to move coins around. So GLBSE was effectively a big coin mixer just like Mtgox is. And if they were crediting coins to your account without tracking which transactions where used to purchase which assets, I'm pretty sure no amount of digital forensics could be done to make a conclusive determination.

Yes and no. This again hinges on the circumstances before and after GLBSE closing.

Before GLBSE closed, Gigamining had a flawless record of on time payments. Again, GLBSE closing is the only reason payments stopped.

Would it be possible to pay out in batches of value equivalent to less than $10-600?

Not according to what I have been advised to do.

Are there any further details on the automated system or a potential time-frame?

My top priority is to have this system up and running to be able to make payments. I am working on it everyday.
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December 05, 2012, 02:24:34 AM
 #1503

I've seen you mention the $10 - $600 figure, which I think comes in reference to issuing 1099's.  Out of curiosity, how are you planning on handling the IRS reporting?  What 1099 are you going to file?  How are you handling the valuations?

Doing some cursory research it looks like the commodities 1099's (1099-B) are supposed to be issued by your broker, who tracks your USD value when you buy or sell your commodity through said broker.  You are not a broker, and any such 1099 would not come from you, rather, it would come from the exchange used when gigaminers buy or sell their commodities.  (BTC<->USD)

Being a commodity, trading BTC for other commodities = bartering.  When bartering, you are responsible for reporting your own income, unless dealing with a bartering exchange, in which case they will give you a 1099-B at year end.  See: http://www.irs.gov/taxtopics/tc420.html

None of the other 1099's seem to have any relevance to commodities?  And as far as I can tell there's no way you could be privy to how your users make use of their commodities?  Thus any dollar values you report on any 1099's are going to be inaccurate, and worse, could end up screwing your customers.  (eg, you report a value of $12, but when the customer exchanges it they exchange at $6)

Is your lawyer a tax attorney?

The more I read, the more worried I get that your lawyer may be barking up the wrong tree here.  You should not be on the hook for any 1099 reporting.  That responsibility falls on the exchanges.

Cheers.


Edit: I think I figured out the answer.  Giga has to become a barter exchange (threshold is 100 barters in a year) and track current FMV on every barter transaction.  Then at the end of the year he issues a 1099-B with the FMV transactions all added up.  Crazy.






I'm not a Coinbase fan -- I placed a buy order, they took the funds out of my account, then a week later the price went up and they canceled the buy and closed my account.  You've been warned.  Use a different exchange.
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December 05, 2012, 03:07:09 AM
 #1504

I've seen you mention the $10 - $600 figure, which I think comes in reference to issuing 1099's.  Out of curiosity, how are you planning on handling the IRS reporting?  What 1099 are you going to file?  How are you handling the valuations?

Doing some cursory research it looks like the commodities 1099's (1099-B) are supposed to be issued by your broker, who tracks your USD value when you buy or sell your commodity through said broker.  You are not a broker, and any such 1099 would not come from you, rather, it would come from the exchange used when gigaminers buy or sell their commodities.  (BTC<->USD)

Being a commodity, trading BTC for other commodities = bartering.  When bartering, you are responsible for reporting your own income, unless dealing with a bartering exchange, in which case they will give you a 1099-B at year end.  See: http://www.irs.gov/taxtopics/tc420.html

None of the other 1099's seem to have any relevance to commodities?  And as far as I can tell there's no way you could be privy to how your users make use of their commodities?  Thus any dollar values you report on any 1099's are going to be inaccurate, and worse, could end up screwing your customers.  (eg, you report a value of $12, but when the customer exchanges it they exchange at $6)

Is your lawyer a tax attorney?

The more I read, the more worried I get that your lawyer may be barking up the wrong tree here.  You should not be on the hook for any 1099 reporting.  That responsibility falls on the exchanges.

Cheers.


Edit: I think I figured out the answer.  Giga has to become a barter exchange (threshold is 100 barters in a year) and track current FMV on every barter transaction.  Then at the end of the year he issues a 1099-B with the FMV transactions all added up.  Crazy.







My guess would be a 1099-MISC

http://www.irs.gov/uac/Form-1099-MISC,-Miscellaneous-Income-

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December 05, 2012, 03:23:32 AM
 #1505


Eh, I answered my own question in the edit.  Smiley

It's not a 1099-MISC because 1099-MISC is for when you pay someone, and sitting in the IRS office, when they use the word "pay", I think they mean USD.  They use the word "cash" repeatedly, and they do not mention commodities or FMV or anything like that.  I'm pretty sure 1099-B is the right form.


It occurred to me that using an exchange may get you out of the 1099-B requirement.  Since the threshold for having to issue a 1099-B is the number of barters (trades) and when you use an exchange your trades are greatly reduced, you may get in under the 100.  For example:

- You trade BTC to the exchange.  (1 trade by you)
- The exchange divides it up.  (XX trades by the exchange)

or

- You offer 1000 shares for sale on the exchange.  (XX trades by the exchange.)
- You withdraw the funds.  (1 trade by you.)

So as long as your Issues + Dividends add up to less than 100 barters per year, you may be in the clear.  (Any lawyers around to interpret this?)

And since there are no operating BTC stock exchanges in the US, I don't think any of the exchanges are subject to the barter exchange reporting requirements.

Thus, it's on the individuals in the US to report their barter income.

Thoughts?



I'm not a Coinbase fan -- I placed a buy order, they took the funds out of my account, then a week later the price went up and they canceled the buy and closed my account.  You've been warned.  Use a different exchange.
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December 05, 2012, 01:46:25 PM
 #1506

Hi burnside,

I'll take your questions one by one below.

Out of curiosity, how are you planning on handling the IRS reporting?  What 1099 are you going to file?  How are you handling the valuations?

Direct payments will be reported via 1099 as your suggested. As to which 1099 it is, is yet to be determined. My accountant is also a tax lawyer and will be advising me on this end of things. Valuations are handled at the time of the payments, so if BTC is $13.5 and you receive 4 BTC, the total value transfered is $54.

Thus any dollar values you report on any 1099's are going to be inaccurate, and worse, could end up screwing your customers.  (eg, you report a value of $12, but when the customer exchanges it they exchange at $6)

I believe your thinking here is incorrect. I must report the value give at the time it is transferred. It is up to you to report any gain/loss incurred from converting the coins to something else. So in your example, I'd report the value given at $12 and you would report a loss of half the value because of the exchange rate fluctuation.

Is your lawyer a tax attorney?

Please see my first comment.
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December 05, 2012, 03:27:46 PM
 #1507

Edit: I think I figured out the answer.  Giga has to become a barter exchange (threshold is 100 barters in a year)

I strongly suspect this isn't the case.  There are lots of examples out there where organizations make payments to individuals or other entities in a noncash manner, but they aren't considered barter exchanges. While I can't name the proper form, I'm sure it can be reported more simply than what you're describing.


It occurred to me that using an exchange may get you out of the 1099-B requirement.  Since the threshold for having to issue a 1099-B is the number of barters (trades) and when you use an exchange your trades are greatly reduced, you may get in under the 100.  For example:


I think the situation in the past was something like this: when the exchange was handling the actual processing of dividends, the responsibility was on the exchange, not Giga.  Now the responsibility shifts.  What you say might be correct, but I think it's more or less moot now given that there really is no viable exchange alternative for him to move to at the moment.

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December 05, 2012, 04:12:36 PM
 #1508

Suggestion: After waiting 6 months or so, any leftover BTC could be split proportionally among the unpaid people on Nefario's list. Then people who won't/can't submit the documents can still get something.

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December 05, 2012, 04:19:00 PM
 #1509

Suggestion: After waiting 6 months or so, any leftover BTC could be split proportionally among the unpaid people on Nefario's list. Then people who won't/can't submit the documents can still get something.
But he has been advised to not send anything to anyone without docs.  No docs = no payment because he cannot send payment to countries on the US government's naughty list.

Our family was terrorized by Homeland Security.  Read all about it here:  http://www.jmwagner.com/ and http://www.burtw.com/  Any donations to help us recover from the $300,000 in legal fees and forced donations to the Federal Asset Forfeiture slush fund are greatly appreciated!
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December 05, 2012, 05:48:18 PM
 #1510

Suggestion: After waiting 6 months or so, any leftover BTC could be split proportionally among the unpaid people on Nefario's list. Then people who won't/can't submit the documents can still get something.

There'll still be people who for some reason didn't get to that list Nefario sent to issuers. I wasn't included in the shareholder list for some reason (paid him back the double payment he made in error long time ago). Nefario is not responding to e-mails, calls, nothing.
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December 05, 2012, 08:15:18 PM
 #1511

The contract specifically states that if I want to enact a buyback, I can, at the highest traded price on GLBSE over the last 15 days. The highest traded price on GLBSE over the last 15 days was 0.

Giga, please don't write crazy stuff like this. It doesn't help. Please, just do the right thing.

I personally think that bringing a lawyer into this was the wrong thing to do because it replaced a big mess with a big-but-not-quite-as-big mess. But here we are.

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December 05, 2012, 08:38:37 PM
 #1512

I sure hope there is a LARGE sweetener with 'teramining', if the contract is written up with the old ideas i think people may break down the forum :\

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December 05, 2012, 09:00:52 PM
 #1513

Legal advice was obtained after GLBSE closed. Prior to that, assets were held by VPS. Any business conducted after that point would have to be subject to the proposed rules and personal information requests. I would expect this to include dividends generated during the interim, but for assets being held before then, such a retroactively applied stipulation becomes a bait-and-switch scenario.

All payments while GLBSE was open were made. Like clockwork. GLBSE closing is the only reason I was unable to make payments. So, I am doing EXACTLY what you stated above.

That's what's being done now, yes. If we discard dividend payments to separate the assets before and after, there should be a clear delineation of what is subject to the updated legal guidance.

Let's say I had 10 shares prior to GLBSE closing. After the event, dividends accrue. The dividends that have accumulated since would unquestionably require personal information to release. Without that information, any payments since would be forfeit.

As for the initial investment to acquire 10 shares, that's where the bait-and-switch comes in because now new rules are being applied. A partial return of pre-GLBSE failure funds would be better than freezing them.

Since the concern seems to be about liabilities regarding sanctioned nations, would it be possible to log the IP and browser information that a request is made from to show it isn't being made from one of those locations? What are the legal ramifications of accepting funds from such locations in the first place?
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December 05, 2012, 09:06:51 PM
 #1514

I sure hope there is a LARGE sweetener with 'teramining', if the contract is written up with the old ideas i think people may break down the forum :\

He used the opportunity of the ASICs free upgrade to come up with an additional paid option when it first happened what makes you think he is going to do anything different now he has your money and the shit has hit the fan.

What are the legal ramifications of accepting funds from such locations in the first place?

The same except now he cannot claim no knowledge of the fact as it could possibly be argued with initial scoop of your cash.
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December 05, 2012, 09:23:36 PM
 #1515

To all Gigaminers:

I have received an new list from GLBSE with 7 more people on it. I will update the claims list on the website tomorrow.

I am still waiting to hear back from Quentin regarding the affidavit. I will update everyone when it is available for download.

Best,
James
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December 05, 2012, 11:45:25 PM
 #1516

To all Gigaminers:

I have received an new list from GLBSE with 7 more people on it. I will update the claims list on the website tomorrow.

I am still waiting to hear back from Quentin regarding the affidavit. I will update everyone when it is available for download.

Best,
James

Great news, hope I'm in the list finally  Cool

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December 06, 2012, 05:44:53 AM
 #1517

Hi burnside,

I'll take your questions one by one below.

Out of curiosity, how are you planning on handling the IRS reporting?  What 1099 are you going to file?  How are you handling the valuations?

Direct payments will be reported via 1099 as your suggested. As to which 1099 it is, is yet to be determined. My accountant is also a tax lawyer and will be advising me on this end of things. Valuations are handled at the time of the payments, so if BTC is $13.5 and you receive 4 BTC, the total value transfered is $54.

Thus any dollar values you report on any 1099's are going to be inaccurate, and worse, could end up screwing your customers.  (eg, you report a value of $12, but when the customer exchanges it they exchange at $6)

I believe your thinking here is incorrect. I must report the value give at the time it is transferred. It is up to you to report any gain/loss incurred from converting the coins to something else. So in your example, I'd report the value given at $12 and you would report a loss of half the value because of the exchange rate fluctuation.

Is your lawyer a tax attorney?

Please see my first comment.

Appreciate the response.  The IRS will expect a person to report on their taxes whatever you report to the IRS on the 1099.  Please keep that in mind when determining FMV.  For instance, you could probably get away with taking the lowest traded price for that week from across a selection of exchanges.

Edit: I think I figured out the answer.  Giga has to become a barter exchange (threshold is 100 barters in a year)

I strongly suspect this isn't the case.  There are lots of examples out there where organizations make payments to individuals or other entities in a noncash manner, but they aren't considered barter exchanges. While I can't name the proper form, I'm sure it can be reported more simply than what you're describing.

1099-B isn't any more difficult I don't think than any of the other 1099's.  What other organizations do you have in mind?  Based on what I was reading, the barter exchange concept was designed specifically for the sites and organizations out there that allow swapping of non-cash goods and services.  Apparently they even recently sent out a notice to people on their mailing list (tax accountants and attorneys mostly) saying that they're focusing on it more now because as the economy got worse, more people started resorting to barter.


It occurred to me that using an exchange may get you out of the 1099-B requirement.  Since the threshold for having to issue a 1099-B is the number of barters (trades) and when you use an exchange your trades are greatly reduced, you may get in under the 100.  For example:

I think the situation in the past was something like this: when the exchange was handling the actual processing of dividends, the responsibility was on the exchange, not Giga.  Now the responsibility shifts.  What you say might be correct, but I think it's more or less moot now given that there really is no viable exchange alternative for him to move to at the moment.

I guess Giga's already been delisted from MPEx, but there are other options.  Cryptostocks.com and BTC Trading Co (btct.co) are established and gaining ground.  A couple of others are getting close to launch.  But I'm not sure it'd be ok for him to use any of those.  The new Gigamining LLC is a US entity, and as such probably can't legitimately use any foreign exchanges.


I'm not a Coinbase fan -- I placed a buy order, they took the funds out of my account, then a week later the price went up and they canceled the buy and closed my account.  You've been warned.  Use a different exchange.
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December 06, 2012, 07:06:01 AM
 #1518

I guess Giga's already been delisted from MPEx
That's not giga himself, it's a pass-through.
But I wouldn't trust MPEx. Not sure why, probably just a feeling.
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December 06, 2012, 08:39:53 PM
 #1519

Suggestion: After waiting 6 months or so, any leftover BTC could be split proportionally among the unpaid people on Nefario's list. Then people who won't/can't submit the documents can still get something.

There'll still be people who for some reason didn't get to that list Nefario sent to issuers. I wasn't included in the shareholder list for some reason (paid him back the double payment he made in error long time ago). Nefario is not responding to e-mails, calls, nothing.

I suspect he's not responding to the email address in his profile.  I resent my request to support@glbse.com and james@glbse.com on 29 November.  He replied this morning with a request for the email address and Bitcoin address I had used for the refund.  I passed those along; he replied with an address to which to send back the second payment.  I sent that in; he acknowledged receipt and said the next update sent to gigavps should have my information in it.

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December 06, 2012, 09:45:26 PM
 #1520

To all Gigaminers:

I have received another list from GLBSE today. All of the new information is up on the website if you would like to check to see if you are in the list.

The affidavit is also up as a Google Doc.

https://docs.google.com/document/d/1oz5y4beQ_V3Yk59ZPEAMpjELchfXZdyxYYzZotE9GsE/edit

As I have stated before, claims will be reviewed once per week so if you send your information in and do not hear anything immediately, please be patient.

Best regards,
James
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