P

[MrTeal]

So Goat is issuing more bonds even after pirate obviously hasn't paid many "investors" back?


Wow

Why would he do this?

Assuming your conclusion is correct, there is quite a simple explanation. People were (and some still are ) buying pirate debt. For pennies on the dollar, but those newly issued bonds dont even have "a dollar" backing them. Its Goat gambling or knowing pirate wont pay back, so he wont have to buy those bonds back either.

According to Goat, his personal + TYGRR BTCST deposit is greater than the 40k bonds so they do have a BTC backing them. At this point it appears that Goat has basically zero faith that Pirate will pay back and is using the TYGRR.BOND-P issue as a way to sell his personal Pirate stake for ten cents on the dollar. I'd guess he's doing it privately through transfers though, the jump in the number of active bonds since Sept 1st doesn't seem to correspond to an increase in trade volume.

[P4man]

Its Goat gambling or knowing pirate wont pay back, so he wont have to buy those bonds back either.

Whatever you'd call this fraud -  it it's hugely illegal, as for my knowledge.
Especially if you consider that these are "bonds" traded on a "stock exchange", based on a "contract".

As long as Goat respects the contract, I dont really see the big scam here. Well, no different than before Pirate's default anyway. Wether or not those PPTs are illegal or immoral has been discussed, but Goat selling bonds now isnt different; If people want to bet on Pirate paying out, they can do so Matthew style betting 1-1 or by buying up debt and get 1-6 odds right now. Its quite possible Goat has a lot of coins in BCTST, so this could be a way to bet the other way, as a hedge.

[Mousepotato]

So what's this I hear about sending a receipt of your GLBSE holdings directly to Pirate in order to be paid out?  I read that in this thread: https://bitcointalk.org/index.php?topic=104944.0

Can anybody verify this is how PPT bond-holders are supposed to recoup their funds?

[MoPac]

So what's this I hear about sending a receipt of your GLBSE holdings directly to Pirate in order to be paid out?  I read that in this thread: https://bitcointalk.org/index.php?topic=104944.0

Can anybody verify this is how PPT bond-holders are supposed to recoup their funds?

Right now, the only thing to do is to either sell at the drastically reduced open market price or to wait for Pirate to pay Goat and Goat to make a buy wall.  (Maybe if Pirate were to make a partial payout, Goat could issue a giant dividend - shrug).

Pirate requested that PPT managers pass him sub-holder information directly as a condition of repayment. Goat has not done this because (1) Goat doesn't have this information; (2) it is probably a breach of UK law for the exchange to provide this information; (3) Goat's account with Pirate is actually a personal account and was never structured as a trust account in the BTCST scheme of things -- Pirate owes Goat the coins; (4) Pirate has offered goat no satisfactory explanation -- actually no explanation at all to anyone -- about why this is being "required"; and (5) Pirate has acknowledged that Goat cannot really comply with this demand but has not made any attempt to talk about the actual nature of his needs.

I would advise you to be wary of any scheme set up to circumvent Goat and settle up with Pirate directly.  Firstly, keep in mind that more or less nobody has been paid back yet: for all the talk about Goat, he is not actually in any kind of exclusive position of being left out of reimbursement.  Secondly, unless someone can mount a very strong case in an actual court that this is an intended third-party beneficiary situation (https://en.wikipedia.org/wiki/Third-party_beneficiary), it is not clear that anyone has the right to go behind Goat's back on this.  There might be a legitimate fear that doing so could constitute tortious interference (https://en.wikipedia.org/wiki/Tortious_interference) with Goat's contractual rights.

Lastly, remember that if Pirate wants to pay bondholders for their shares, all he would really have to do is go on GLBSE and set up a buy wall on the asset (announcing his intention beforehand, if there is an ethical bone left in his wooden leg).  If someone is trying to get you into some scheme where you do a share transfer for a personal BTC payment, you have to ask yourself what's really going on.

[JoelKatz]

I would advise you to be wary of any scheme set up to circumvent Goat and settle up with Pirate directly.  Firstly, keep in mind that more or less nobody has been paid back yet: for all the talk about Goat, he is not actually in any kind of exclusive position of being left out of reimbursement.  Secondly, unless someone can mount a very strong case in an actual court that this is an intended third-party beneficiary situation (https://en.wikipedia.org/wiki/Third-party_beneficiary), it is not clear that anyone has the right to go behind Goat's back on this.  There might be a legitimate fear that doing so could constitute tortious interference (https://en.wikipedia.org/wiki/Tortious_interference) with Goat's contractual rights.

Not to mention the rights of other bondholders who are entitled to a portion of any payout on the shared debt. If two people jointly own a home, one person can't pick a half of the house, sell it keeping all the money, and tell the other person "well, I sold my half. You can sell yours". The agreement with Goat determines how payments on the shared debt is distributed.

By the way, I've done some more research, and I'm much less confident that the intended third-party beneficiary argument would work unless you could show that Goat was not making reasonable collection efforts.

[MoPac]

I would advise you to be wary of any scheme set up to circumvent Goat and settle up with Pirate directly.  Firstly, keep in mind that more or less nobody has been paid back yet: for all the talk about Goat, he is not actually in any kind of exclusive position of being left out of reimbursement.  Secondly, unless someone can mount a very strong case in an actual court that this is an intended third-party beneficiary situation (https://en.wikipedia.org/wiki/Third-party_beneficiary), it is not clear that anyone has the right to go behind Goat's back on this.  There might be a legitimate fear that doing so could constitute tortious interference (https://en.wikipedia.org/wiki/Tortious_interference) with Goat's contractual rights.

Not to mention the rights of other bondholders who are entitled to a portion of any payout on the shared debt. If two people jointly own a home, one person can't pick a half of the house, sell it keeping all the money, and tell the other person "well, I sold my half. You can sell yours". The agreement with Goat determines how payments on the shared debt is distributed.

By the way, I've done some more research, and I'm much less confident that the intended third-party beneficiary argument would work unless you could show that Goat was not making reasonable collection efforts.

At this point what would be considered reasonable collection efforts?

Thanks.

I demand that you send Pirate a picture of you with a shoe on your head, just to show that you mean business.

[totaleclipseofthebank]

Why all this discussion?

Pirate has defaulted. Tygrr.bond-p is worthless, and holders take the loss, end of story.

An uninsured pass-through will pass through losses, just as it did dividends.

[MoPac]

Why all this discussion?

Pirate has defaulted. Tygrr.bond-p is worthless, and holders take the loss, end of story.

An uninsured pass-through will pass through losses, just as it did dividends.

As you are well aware, there is still plenty of speculation that Pirate might pay, pay in part, or be successfully sued for part or all of his debts.  "Default" does not mean the story ends.

[sadpandatech]

Its Goat gambling or knowing pirate wont pay back, so he wont have to buy those bonds back either.

Whatever you'd call this fraud -  it it's hugely illegal, as for my knowledge.
Especially if you consider that these are "bonds" traded on a "stock exchange", based on a "contract".

As long as Goat respects the contract, I dont really see the big scam here. Well, no different than before Pirate's default anyway. Wether or not those PPTs are illegal or immoral has been discussed, but Goat selling bonds now isnt different; If people want to bet on Pirate paying out, they can do so Matthew style betting 1-1 or by buying up debt and get 1-6 odds right now. Its quite possible Goat has a lot of coins in BCTST, so this could be a way to bet the other way, as a hedge.

The problem that our local, investments expert Piotr does not understand is that Goat has not 'issued' any new bonds. There were 40k bonds issued at the start. Any bonds that were held by Goat that had not previsouly been traded would have been non dividend bearing and also would not have showed on the total bond number that Piotr is looking at. Goat has every right to sell his bonds. If people are buying them, then they are doing so on purpose.

The benefiting scenarios for him or anyone else still trading them for potential profit has zero effect on the legality of it.

[JoelKatz]

At this point what would be considered reasonable collection efforts?

It depends who is suing who.

If a bondholder were suing you for failing to protect their interest, I think you could make an argument that nothing is a reasonable collection effort. You have no way to recoup your collection costs from bondholders. And there's no particular reason to think any collection effort would be effective. There's no precedent for successful recovery.

If a bondholder were suing Pirate as an intended third-party beneficiary, I think they could more plausibly argue that your collection efforts were insufficient.

It may seem odd that there's a difference, since it's fundamentally the same question. But the basis for comparison is different. In the case of someone suing you, they're basically arguing that you should undertake recovery efforts that are unlikely to recover much at your own expense and then give the bondholders all the proceeds. In the case of them suing Pirate, they'd presumably be attempting to recover at their own expense with only those actively suing Pirate benefiting.

Another possibility would be your bond holders suing you for running a Ponzi scheme. I don't think that's likely to work for a variety of reasons. Similarly, I don't see Pirate's other victims suing you either.

Essentially, from a legal perspective, you can probably do pretty much whatever you want and get away with it (just like Pirate, assuming someone doesn't track him down and give him some street justice). The one thing you probably can't get away with is trying to get your bondholders for pay for you to go after Pirate. Even if that's in their interest, it's not in the agreement. (That was a mistake, by the way. The agreement should have let you deduct reasonable collection and extraordinary operating expenses from recovered funds.)

IANAL. This is my speculation. Since there's pretty much no precedent for any of this, we're all just guessing.

[totaleclipseofthebank]

Why all this discussion?

Pirate has defaulted. Tygrr.bond-p is worthless, and holders take the loss, end of story.

An uninsured pass-through will pass through losses, just as it did dividends.

As you are well aware, there is still plenty of speculation that Pirate might pay, pay in part, or be successfully sued for part or all of his debts.  "Default" does not mean the story ends.

Yes, sure. The bonds have some speculative value and that's fine. If pirate makes a payout, or Pirate is successfully sued (lol), TBP holders will get some BTC. All Goat needs to do is continue acting as a pass-through of whatever comes through the Pirate pipeline.

If pirate pays out and Goat uses the money to buy back bonds, that is a breach of contract. The pass-through as described passes through as dividends.

[sadpandatech]

Yes, sure. The bonds have some speculative value and that's fine. If pirate makes a payout, or Pirate is successfully sued (lol), TBP holders will get some BTC. All Goat needs to do is continue acting as a pass-through of whatever comes through the Pirate pipeline.

If pirate pays out and Goat uses the money to buy back bonds, that is a breach of contract. The pass-through as described passes through as dividends.

A breach of whose contract? If goat is paid out by Pirate the bonds would be bought back @ (paid out amount /40k)

[JoelKatz]

If pirate pays out and Goat uses the money to buy back bonds, that is a breach of contract. The pass-through as described passes through as dividends.

All he would have to do is use some other money to buy back bonds slightly before passing through the payments as dividends. It's a pretty scummy thing to do, but it's not an explicit breach of the contract. It might be considered implicit breach, similar to constructive fraud.

[JoelKatz]

The contact says I will buy back the bonds if the deposit is refunded...

I'd have to look at the contract to see exactly what that means. The issue would be if you were the only person who knew that you were going to get a refund of, say, .33 BTC per bond and bought up a bunch of bonds for less than that prior to passing the payment from Pirate through to bond holders. That could be argued to be constructive fraud. I'm not sure that argument would work, but someone could make the argument. It's also a pretty scummy thing to do because it's an act based on inside information gained in the course of actions you take on behalf of your bond holders that's against the interests of those bond holders.

Say McDonald's hires me to scout out locations that are best for a new McDonald's. And say I find one that's absolutely perfect and selling for $100,000 and because of the inside information I gathered doing the scouting, I know it's worth $150,000 to McDonald's. Can I buy it and resell it to McDonald's for the $150,000? Or can McDonald's reasonably expect that I won't use information gained in the process of acting in their interest to perform a personal transaction for my personal benefit at their detriment? I would think McDonald's could sue you in that situation, and I think your case would be similar.

[totaleclipseofthebank]

If pirate pays out and Goat uses the money to buy back bonds, that is a breach of contract. The pass-through as described passes through as dividends.

All he would have to do is use some other money to buy back bonds slightly before passing through the payments as dividends. It's a pretty scummy thing to do, but it's not an explicit breach of the contract. It might be considered implicit breach, similar to constructive fraud.

Again, if an issuer of a bond buys back bonds at a discount with "some other source of money" they are defaulting in breach of contract. This is because bondholders who don't happen to have asks up will get the shaft if the bond later becomes completely worthless.

If pirate refunds all deposits and closes accounts, Goat should buy back at face value (BTC1.00) using a bid wall.

If pirate provides a partial refund, Goat should pay that out as an equally diluted dividend, and let everyone know under what conditions the payout was made, and whether he expects further payouts.

The reason Goat can't buy back bonds is that the future payouts from Pirate are not certain and buying back would be deleting information. This is unfair if Pirate eventually pays sometime down the line.

Basically, Goat does not have the freedom to speculate as to what should be the fair price at which to buy back the bonds. He can only retire them at face value or pay out dividends of whatever Pirate sends him.

[JoelKatz]

Again, if an issuer of a bond buys back bonds at a discount with "some other source of money" they are defaulting in breach of contract. This is because bondholders who don't happen to have asks up will get the shaft if the bond later becomes completely worthless.

I don't get it. He's breaching the contract because not everyone gets nothing?

If pirate refunds all deposits and closes accounts, Goat should buy back at face value (BTC1.00) using a bid wall.

Yes, if he makes a full refund.

If pirate provides a partial refund, Goat should pay that out as an equally diluted dividend, and let everyone know under what conditions the payout was made, and whether he expects further payouts.

I agree.

The reason Goat can't buy back bonds is that the future payouts from Pirate are not certain and buying back would be deleting information. This is unfair if Pirate eventually pays sometime down the line.

I don't get that. So long as he doesn't trade on inside information, I don't see why he can't buy bonds just like anyone else could buy bonds. Presumably, the people selling are happy to sell at the prices they chose to sell at. (Again, assuming he has no special inside information.) And these buys push up the prices of the bonds, which benefits all the bond holders.

Basically, Goat does not have the freedom to speculate as to what should be the fair price at which to buy back the bonds. He can only retire them at face value or pay out dividends of whatever Pirate sends him.

I don't see why. Why can't he benefit his bondholders by allowing those who prefer to sell to do so and at the same time boosting the value of the bonds? If it's not done on inside information, it's win/win for everyone. How are his interests averse to the bondholders?

[totaleclipseofthebank]

If it's not done on inside information, it's win/win for everyone.

Just the fact that Goat receives a payment makes him privy to inside information! Don't get me wrong I think Goat is honest, it's just that the fair thing to do is not always obvious.

The problem is that if Goat buys back bonds, he still has the Pirate deposits that were backing them. If pirate pays out later, it will be impossible to pass-through those payouts to the bondholders. This would not be acting as a true pass-through. The pass-through operator should just be moving money from A to B, and buying back some bonds at a discount would be causing a distortion.

In order to act as an accurate pass-through Goat should simply funnel anything he gets from Pirate through as a dividend, and be open as he can about any communication with Pirate.

Sorry for talking about you in third-person all the time Goat! I think you are doing as well as you can under the circumstances.

[JoelKatz]

If it's not done on inside information, it's win/win for everyone.

Just the fact that Goat receives a payment makes him privy to inside information!

I agree, that's why I limited my argument to only trades not done with inside information.

The problem is that if Goat buys back bonds, he still has the Pirate deposits that were backing them. If pirate pays out later, it will be impossible to pass-through those payouts to the bondholders. This would not be acting as a true pass-through. The pass-through operator should just be moving money from A to B, and buying back some bonds at a discount would be causing a distortion.

Not at all. He just pays through precisely the same way and winds up paying some of the money to himself. It is no different from anyone else buying the bonds -- it just happens to be him. (Again, assuming he doesn't leverage information he gained as the operator. By the way, if it were me, and I had any good reason to believe a payout was imminent, I would freeze bond transfers to protect bond holders from others who might get word early.)

In order to act as an accurate pass-through Goat should simply funnel anything he gets from Pirate through as a dividend, and be open as he can about any communication with Pirate.

I agree.

[totaleclipseofthebank]

The problem is that if Goat buys back bonds, he still has the Pirate deposits that were backing them. If pirate pays out later, it will be impossible to pass-through those payouts to the bondholders. This would not be acting as a true pass-through. The pass-through operator should just be moving money from A to B, and buying back some bonds at a discount would be causing a distortion.

Not at all. He just pays through precisely the same way and winds up paying some of the money to himself. It is no different from anyone else buying the bonds -- it just happens to be him. (Again, assuming he doesn't leverage information he gained as the operator. By the way, if it were me, and I had any good reason to believe a payout was imminent, I would freeze bond transfers to protect bond holders from others who might get word early.)

Think about this: Imagine the Greek govt used their current funds to buy back their own bonds for pennies on the dollar. They would have much less debt outstanding, right?

This is a breach of their bond contract because as the issuer of a bond you (and only you!) are obligated to pay back bonds at face value, and using funds to buy back at a discount is an improper use of available funds.

Now, if you are saying that if Goat makes a distinction between his personal speculation on GLBSE and Tygrr operations, we run into the whole insider trading debate. Should the CEO of a company be allowed to short the company's shares in his own e-trade account? No. Shareholders should demand that their CEO does not create conflicts of interest via his personal trading/security positions.

[MoPac]

Think about this: Imagine the Greek govt used their current funds to buy back their own bonds for pennies on the dollar. They would have much less debt outstanding, right?

Right, and entities do indeed buy back their own debt at steep discounts when they see the opportunity. See http://www.investopedia.com/stock-analysis/2009/Four-Companies-Buying-Its-Own-Debt-XLNX-CIT-AMKR-AN0218.aspx#axzz25eLn0FJ4 .