I think it is pretty obvious that redemptions are not occuring right now. If Graet and Ukyo had funds ready for redemption, they would be buying their shares at bitfunder itself for <0.01 instead of redeeming yours for 0.01. The only option left for those who wish to redeem the shares at face value is to wait. I have a considerable amount of BTC in those shares, but I am aware that there is no way to redeem them any time soon at face value, and I also do not want to redeem them with a loss.
Wait how long? If we don't sell by November 1, and then the issuer still doesn't come through, then we're really screwed.
I'm aware that the circumstances going on right now are pretty exceptional. But it seems to me that a contract is still a contract, and if they don't have enough cash on hand to redeem, they should use their credit card or get a traditional bank loan if they have to in order to get the funds to cover the redemptions. After all, it's not like most people are suddenly for no reason deciding they want to redeem (although even in that case, the redemption requests should still be fulfilled). In this case, most redemption requests are as a result of the policy changes Ukyo himself implemented, where he created all these new verification requirements and told US users and non-verified users that they can only sell until Nov. 1, and that all their BTC and shares will be transferred out of their accounts on Dec. 2. So that imposes a certain deadline on the process. When Ukyo made his announcement, he should have anticipated the US and non-verified bondholders needing to redeem, and should have secured the necessary financing. I'm worried about the precedent that could be set here. Otherwise, what is to stop someone else in the future from opening an exchange and raising funds by selling bonds, then telling the majority of investors they have only a few weeks to get out, not redeeming bonds, and forcing people to sell back at a loss just to meet the exchange operator's arbitrary deadline? I realize that these are trying times, and a situation that Ukyo probably didn't envision when he originally issued the bonds, so I do not mean to accuse Ukyo of planning to scam investors or anything. But the result seems to be the same, and I worry about the precedent if a bond issuer is allowed to just ignore the redemption clauses in their contracts like this. I'm not really happy with explanations from Ukyo like "the expectation was to use the funds for other things."
Graet I am less sure about; I don't know if Graet was involved in planning the policy changes at BitFunder or not (if he was involved in planning the policy changes, then IMHO he should have obtained the necessary financing to fulfill bond redemption requests as well). Actually, my opinion is that if a bond issuer does not have enough cash on hand to redeem a bond when requested, he should always get the cash and fulfill the redemption request, even if he has to take out another loan to do it, not just in this case. Otherwise what's the value of a bond if issuers are not going to redeem it when requested? But it just seems worse in this case if Ukyo makes these policy changes without obtaining the cash to cover redemption requests on his own bond. And then the lack of communication is the worst thing; it would be different if an announcement were made that bond redemption requests would be fulfilled on October 25 (for example). At least then investors could be sure that they will be able to get out by redeeming before the Nov. 1 deadline. I don't know if anyone else has heard anything from Graet, but I sent him a PM and never got a reponse back. I'm sure he is probably getting tons of PMs these days and may be overwhelmed. But if he doesn't want to respond to tons of PMs from individual investors asking the same questions, the solution is to post an announcement in the forum with basic information like 1) the future plans for the assets he is managing and 2) how he will be handling redemption requests, or even a short one-line announcement like "I am still checking on options; I will be making an announcement about my assets and redemption requests by (particular date before November 1)".
