Bitstamp's first annual statements

[pawel7777]

Just thought it may be interesting for some to see the first financial statements of Bitstamp Ltd. Not much in them, since they've chosen to file the abbreviated accounts.

They made a profit after tax and salaries of $833,430 * and noted impressive cash balance of $65,667,026 (I reckon it includes customers' deposits).

Here's the Balance Sheet:




EDIT:

* Since no income statement is presented, I assumed that profit equals "profit and loss account" reserve shown in the Balance sheet, but that wouldn't be correct if they paid out any dividends.

[1714914537]

1714914537

[1714914537]

1714914537

[Nagle]

They need an audit. They're not entitled to the "small company exemption" with assets of US$64 million. Here's the "Companies Act" section to which they refer. They may be able to claim that they were a small company in 2012, and get a year after becoming a large company in 2013 to comply. For 2014, they need a full audit.

Also, an annual statement normally contains both a statement of operations and a balance sheet. They just have a balance sheet, and one with too little information. All their liabilities, including customer deposits, are consolidated into one number.

This is worthless.

[Walsoraj]

I'd like to know how much of that $65 million is frozen due to suspicion of illegal activities. If none, then I'd like to know more about Bitstamp's KYC/AML procedures, or lack thereof.

[twiifm]

Thats the most abbreviated balance sheet I've ever seen.  What's the point of this?

[QuestionAuthority]

I thought Bitstamp was in the UK? Why is their financial statement in dollars?

[pawel7777]

They need an audit. They're not entitled to the "small company exemption" with assets of US$64 million. Here's the "Companies Act" section to which they refer. They may be able to claim that they were a small company in 2012, and get a year after becoming a large company in 2013 to comply. For 2014, they need a full audit.  

They may be entitled, if they have less than 50 employees (very likely) and turnover less than £6.5 million. The section of CA2006 quoted by you says:

The qualifying conditions are met by a company in a year in which it satisfies two or more of the following requirements

Also, an annual statement normally contains both a statement of operations and a balance sheet. They just have a balance sheet, and one with too little information. All their liabilities, including customer deposits, are consolidated into one number.

This is worthless.

As a small company they can choose to present abbreviated accounts (and they did) with very limited info.

What I'm wondering is whether company with such activity falls under FCA/PRA regulations...

I thought Bitstamp was in the UK? Why is their financial statement in dollars?

UK law allows companies to present statements in their operational currency (for Bitstamp it's USD), they have to convert to GBP for tax purposes though.

[QuestionAuthority]

They need an audit. They're not entitled to the "small company exemption" with assets of US$64 million. Here's the "Companies Act" section to which they refer. They may be able to claim that they were a small company in 2012, and get a year after becoming a large company in 2013 to comply. For 2014, they need a full audit.  

They may be entitled, if they have less than 50 employees (very likely) and turnover less than £6.5 million. The section of CA2006 quoted by you says:

The qualifying conditions are met by a company in a year in which it satisfies two or more of the following requirements

Also, an annual statement normally contains both a statement of operations and a balance sheet. They just have a balance sheet, and one with too little information. All their liabilities, including customer deposits, are consolidated into one number.

This is worthless.

As a small company they can choose to present abbreviated accounts (and they did) with very limited info.

What I'm wondering is whether company with such activity falls under FCA/PRA regulations...

I thought Bitstamp was in the UK? Why is their financial statement in dollars?

UK law allows companies to present statements in their operational currency (for Bitstamp it's USD), they have to convert to GBP for tax purposes though.

Oh, got it, thanks.

[2dogs]

They need an audit. They're not entitled to the "small company exemption" with assets of US$64 million. Here's the "Companies Act" section to which they refer. They may be able to claim that they were a small company in 2012, and get a year after becoming a large company in 2013 to comply. For 2014, they need a full audit.

Also, an annual statement normally contains both a statement of operations and a balance sheet. They just have a balance sheet, and one with too little information. All their liabilities, including customer deposits, are consolidated into one number.

This is worthless.

Agree, worthless - why publish this at all, Bitstamp?
Doesn't add much to their credibility - in fact, subtracts from it.

[ChrisKoss]

What is the source of this document?

[pawel7777]

What is the source of this document?

Companies House (UK)

Agree, worthless - why publish this at all, Bitstamp?
Doesn't add much to their credibility - in fact, subtracts from it.

Bitstamp didn't publish that. IMHO they should have prepared proper accounts (audited) and publish it, but they didn't.

What you see is an extract from the abbreviated accounts, which, by law, they have to file with Companies House every year. Such accounts are publicly available in CH (for a small charge).

[2dogs]

What is the source of this document?

Companies House (UK)

Agree, worthless - why publish this at all, Bitstamp?
Doesn't add much to their credibility - in fact, subtracts from it.

Bitstamp didn't publish that. IMHO they should have prepared proper accounts (audited) and publish it, but they didn't.

What you see is an extract from the abbreviated accounts, which, by law, they have to file with Companies House every year. Such accounts are publicly available in CH (for a small charge).

Thanks for the clarification.
Then it's not Bitstamp's election, but a regulatory compliance report, correct?

[pawel7777]

Thanks for the clarification.
Then it's not Bitstamp's election, but a regulatory compliance report, correct?

Yes, it's a regulatory requirement. The thing is, they did the very minimum they were required by law. It would be very wise of them get proper financial adviser/auditor and also prepare the extended, full accounts (to be more transparent and credible).

They also had some issues with filing the papers on time. I hope that any of the newly appointed directors has some solid knowledge and experience in such things.

[sobriket]

The state of assets is most worrisome.

[dleader]

The state of assets is most worrisome.

servers... office equipment. what more do they need?

[2dogs]

Yes, it's a regulatory requirement. The thing is, they did the very minimum they were required by law. It would be very wise of them get proper financial adviser/auditor and also prepare the extended, full accounts (to be more transparent and credible).

They also had some issues with filing the papers on time. I hope that any of the newly appointed directors has some solid knowledge and experience in such things.

Agree, quite poor.
Statements dated Oct 2013 (almost a year ago) and not approved by their board until last month?
No income statement, or statement of cash flows.

In fact, that stinks.

[JorgeStolfi]

It does not say how much profit they made.  It says only that, *as of Oct/2013*, they have about 64.9 M USD that belong to clients and about 820 k USD of their own.  Apparently it does not include their bitcoin holdings, since their assets (65.7 M USD) are described as "cash in the bank". 

[pawel7777]

It does not say how much profit they made. 

I explained that in the first post. Look at the Profit and loss account reserve. It's their first period of trading, they started with P&L reserve being zero, so they made a profit of $833k, possibly more if dividends have been declared/paid.

Apparently it does not include their bitcoin holdings, since their assets (65.7 M USD) are described as "cash in the bank". 

Agree, these accounts should have been more clear. They couldn't just ignore the BTC holding tho, therefore it must have been included in 'cash in bank' position, which is not incorrect imho, despite the name 'cash...' it can also include cash equivalents.

[JorgeStolfi]

Look at the Profit and loss account reserve. It's their first period of trading, they started with P&L reserve being zero, so they made a profit of $833k, possibly more if dividends have been declared/paid.

They must surely have taken some profits out over that year.

They couldn't just ignore the BTC holding tho, therefore it must have been included in 'cash in bank' position, which is not incorrect imho, despite the name 'cash...' it can also include cash equivalents.

If they did that, they took quite a bit of liberty in their reporting... 

They had to pick a price to convert BTC to USD, and on 2013-10-31 the price varied from 195.10 to 203.75.  Which one?  (OK, they are not required to say, apparently.)

Also it would be ironic for them to call the blockchain a "bank" 

Let's round the price to 200 USD/BTC.  Then, if that number includes the bitcoins, they held at most 330'000 BTC on that day, probably only some fraction of that.  Just for comparison, on that day, their trade volume was 13741 BTC, MtGOX's was 4608 BTC.   Hm...

[BITCOIN-PIZZA-DAY]

Now bankrupt?

[pawel7777]

Now bankrupt?

Don't think so. Even if they indeed lost 19000 BTC, the situation is manageable, if they have right people on-board.