Topic: Bitfloor CrowdSource Recovery Proposal: 224 1k Investors - page 2. (Read 4001 times)

Tangible handled the repayment of TheBitMan's creditors because he had no low cost mechanism to convert USD to BTC and repay creditors.  The Bitfloor, Inc doesn't have that problem so I don't think Bitfloor, Inc needs our assistance in handling repayment.  I did (acting individually unrelated to Tangible Cryptography LLC) offer to provide some capital towards a restart if certain conditions were met.   So far Roman has not accepted that offer.  I only have to assume he has either secured other investors at more favorable terms or intends to handle repayment himself and thus avoid dilution.

I do hope Roman realizes that to restore confidence in the market there are a couple of thing he can do:
1) The creditors deserve to know the exact amount (down to the Saotshi) owed.  This is useful in projecting repayment and considering offers.

2) There should be a mechanism for the debt to be traded.  As an insolvent debtor Bitfloor, Inc doesn't have the right to not assist its creditors.  Bitfloor can certainly charge a fee for its time and can put conditions on the transfer of debt but it needs to be transferable.  All parties benefit from open markets (even in debt).  Some creditors are unwilling to wait and by making it impossible to sell that obligation Bitfloor inadvertently makes their only recourse legal action.  This is counter productive and expensive and can be avoided because there are others who are willing to purchase debt and thus become voluntary creditors of Bitfloor.  Bitfloor also benefits from an open market because it allows price discovery and give Bitfloor the option to repurchase its own debt in a fair and transparent manner.

3) Bitfloor likely needs more outside capital however raising $224K USD to simply pay $224K in debts isn't really an investment strategy.  It leaves the company in the exact same situation it was prior to the hack.  Bitfloor needs to be capitalized and thus have the working capital and funds for capital expenditures that allow it to ignore short term profitability and work on growing revenues in a sustainable manner.  I am not saying Bitfloor shouldn't repay creditors but repayment in full upfront simply doesn't make economic sense.  However if hypothetically Bitfloor raised say $150K to $200K in capital it could make a one time payment of 30% of face value of the debt and use the rest to pay for salary, datecenter space, etc.

4) Bitfloor should attempt to get creditors to voluntarily sign to new terms.   Before someone freaks out notice the "V" world in the prior sentence.  The unknown status and terms of debt is a legal risk (and one reason I made this a condition for any investment).  By offering creditors the option to agree to repayment terms the debt would no longer be in default.  The upfront payment in #3 could be used a carrot and likely most creditors would sign to the new terms.  This puts Bitfloor on a more stable legal and financial footing and makes it more attractive to outside capital.  The terms could specify the repayment schedule, even if the repayment is based on net profits it could contain certain provisions which guarantee a minimum repayment and at the same time protect new investors.  For example if repayment was "done once a month based on 50% of the net profits from the prior capped at 5% per month with a guaranteed minimum of 1% per month" that would provide creditors with some assurances and allow better price discover of the debt.   Investors would be more confident in the success of Bitfloor investment as it limits the cash drain from the company.  The terms could also put a min & max exchange rate which caps the debt in USD terms (say $5 and $20 USD:BTC) protecting both parties from extreme changes in value.

Anyways just my ramblings on the subject.

TL/DR:
Roman,
Transparency, liquidity, and defined terms (voluntarily accepted) can only improve the outlook for all parties (bitfloor, potential investors, and existing creditors).

A back-of-the-envelope estimate:

Bitfloor had a pre-hack monthly profit of on the order of $1000, IIRC.

Thus, Bitfloor would need to pay investors at least 100% of the pre-hack
monthly EBIT for 224 months to bring the prospective investors of this proposal back up to zero.

(This is assuming fixed profits, which is clearly unrealistic, but doesn't affect the conclusion of our analysis.)

Realistically, your ROI is very close to minus 100%. The $1000 you invest have already have been lost.

You could do this for charity. But bailing out Bitcoin businesses that fail hard on security is... BAD.

What's the ROI for this?

No

As it was $224,000 lost, it's easy to deduce he means 224 $1,000 investors

cash or coin? 1k? i am with you on providing support for quality members that serve a purpose to enhance the community in general.

In the best interests of the bitcoin economy and my support bitcoin in general and Bitfloor specifically, I'd be willing to invest 1K for the repayment/recovery of Bitfloor if :

1.  Other members also contribute 1k ( or a pro rata share) to equal the total loss.

2.  Bitfloor provides verified  proof of loss.

2.  Bitfloor Provides a realistic repayment schedule with interest payments on the loan(s)

4.  Bitfloor provides a third party audit/verification of its new security features.

3. TangibleCryptology agrees to handle repayments (with an agreed upon commission for his service).

I have no interest in TangibleCryptology or Bitfloor others then I use both of their services and consider them as individuals and their business as adding  valuable services to the bitcoin economy.

I'm also curious to see if a decentralized, p2p community can come together in support of everyone's best interests to continue creating a robust economy and community.

Thanks.

BCB