Topic: BitShares scam2.0, Still scamming (Read 12188 times)

https://bitcointalksearch.org/topic/m.13530000

I believe the name of the law firm is "Howe, Dewey, Phoolem & Robem".

Nobody wishes for jail time, but "It is difficult to get a man to understand something, when his salary depends upon his not understanding it". I think Stan is largely sincere. Hard to believe perhaps.

It is pretty clear that when you consider the totality of Protoshares, Angelshares, Bitshares, Invictus, Cryptonomex, and the Larrimers' activities viewed together, the economic reality of who launched, issued, and sold "Bitshares" is obvious. But then my salary does not depend on not understanding it.

I do not see you state the name of the law firm you paid to provide you legal advice. Rather you named a the law firms that composed the working document you linked to. I am asking for the name of the law firm that has advised you that you are not subject to the Howey test. If you wish to decline to provide it, that is your prerogative. I don't believe you have consulted any law firm. I believe you are bullshitting.

Sorry. I am not the altcoin police. Do what ever you want. I guess some people have a criminal mindset and wish for jail time.

You erect false strawman assumptions and then attack them.

Our lawyers require me to pass all public remarks on this subject through them, so I'm afraid I'll have to decline further comment.

I do appreciate your interest.  At least your posts have elevated the discussion far beyond what we usually get in threads like this.

Okay I read that very long document.

I am claiming you are bullshitting, because if you understood the following working paper, then you would understand it does not state that you no culpability under the Howey test. There is no way an attorney has advised you that you are not culpable.

What it says is that only in the case that non-tradeable tokens are issued for DAOs, does it appear to not be an investment security. Whereas, you guys issues tradeable tokens where there is an expectation of profit and the investors are depending on your development actions to generate the expected gains.

Get a real attorney to advise you and stop bullshitting.

Do you not realize what kind of serious trouble you could be in? Securities law is not a joke. There are many people in Federal prison for violating securities law.


You did not quote any relevant text to our discussion, instead you hype Dan. The mention of Dan there is irrelevant to our discussion. Focus on the legalities of the Howey test.


Dan was involved in the issuance of the tokens. If by now you have created some legal structure to obfuscate the economic reality, the Howey test specifically said those obfuscations of form will be ignored and the economic reality will prevail.


Daniel and you are promoting Bitshares 2.0 all over the place, such as even Let's Talk Bitcoin sitdowns.

The Howey test includes when the investors in the tokens are relying on the promotional efforts of others.

I can't believe you are this clueless.

I see you claim are not indemnifying others who build products on your system. And it appears you haven't even done your legal due diligence. I don't want to get involved in such a potential legal mess. If I am mistaken and you have an official legal document on your website which clarifies matters, then please enlighten me. Also seeing you reveal the name of a respected law firm would also add some credibility to your claims that you should not be subject to the Howey test. I assume you won't lie about that, because I believe that could be illegal to claim you've been advised by a specific legal firm when you haven't.

Please name a law firm. How can we believe you?

Also do you have an official legal statement about all this any where on your website?

I am analyzing the rest of your post and will reply shortly.

We have consulted some of the biggest law firms in New York, Washington and Virginia.  I'll refer you to the following white paper.

Members of policy group Coin Center, law firm Perkins Coie as well as Harvard and MIT have released a new working paper that aims to illuminate legal questions surrounding the non-financial use of the bitcoin: 
   

...and this higher level Coindesk article:  Token Security Research Analyzes Blockchain US Law

These top tier firms explicitly considered Howie and what we and others are doing. Quoting from the above Working Paper:


Cryptonomex does not issue tokens or operate any blockchain.
We publish and maintain open source accounting software that others are free to use for public and private applications.

We also provide consulting services to help others develop public and private blockchains with all kinds of different specs for their own purposes.  This is no different than companies that sell accounting software to banks and firms on wall street.  It is those banks and firms that are regulated.

There are multiple independent software providers contributing to the body of open source software and multiple organizations using it for their own businesses.  We do not restrict, nor are we able to control, what others do with that public domain software.

We scrupulously adhere to this bright line limitation to our activities.

People who use the public domain software are naturally presumed to comply with all applicable regulations in their various jurisdictions.

1. Have you consulted an attorney and may we know the name of the legal firm standing behind your assertion?

2. I was told by someone (I think smooth?) that there are payments to stake holders and at least with Dash's masternodes some percentage of that gets paid to the developers. How are you and Dan being paid? Somehow you are receiving remuneration for working on this and thus you are part of the enterprise. And it doesn't even matter if you are being paid (that just makes the case more iron clad), because the Howey test has very minimal requirements to ensnare you. Thus I say you or your attorney does not understand the Howey test:


It is very clear that people are investing in BitShares because they are expecting development efforts from you and Dan. Come on that is blatantly obvious. How can you justify that you are not subject to the Howey test  

Non sequitur.  We are not designing a cryptocurrency.  We are designing blockchain based accounting software for businesses that offer a variety of financial products. Some need a self-governing model.  You continue to project your preconceptions on our products and then expect us to comply with them.  They only have to meet the business needs of entrepreneurs who choose to use our free software.  There is no intent or need to comply with your particular philosophy - which we agree is valid, but not exclusive.

We are totally aware of the Howey test and have scrupulously avoided engaging in any business governed by it.  Our only activity is developing an open source software toolkit which others have used or are using to deploy their own applications including BitShares, MUSE, PLAY and Identabit.  We do not operate any of these businesses or pay ourselves anything.  We do accept contracts to provide and maintain software for other manned and unmanned entities.  At no time have we sold anything.

Stan, I suggest you not sell the future as you have done in the prior post. Because all this selling the future is potentially getting you in deep trouble with the SEC. Both you and Dan are US citizens as I am, correct. The other flaw of PoS, and especially DPOS and Dash masternodes (as pointed out by smooth et al) is you are paying yourselves via the shares from an enterprise that issued unregistered investment securities and which also requires each stakeholder to register as a money transmitter with FinCIN. I can't fathom how you convinced yourself that you are not going to jail in the future or end having to lick the boots of the SEC as Erik Voorhees did to wiggle out of jail time.

As of now what you have is:


You and Dan are intelligent and good with bending words. I am good at drilling down between the lines. What the above sentence means is that you think crypto currency is politics and governance. Others of us think it is permissionless commerce.

If you guys become more aligned to reality and stop the delusion, then I would be more inspired (say to work with you or build apps on top of what you are doing). But for one thing I can't even fathom to support your operation because it appears to be illegal according to the Howey test.


Then if you are selling shares in such a corporate development, then register them with the SEC or document your exclusion. Do the required disclosure to investors and those building apps on your platform, so we know the legal and criminal ramifications. Private businesses have to follow the laws. Leading others into potential jail time and not informing them is going to make the court that much more hard on you two brothers.

Funny how so many people think that crypto is limited to only one application.  The ideal design for an autonomous cryptocurrency does not necessarily apply to other business applications, including private applications which have no need to be decentralized at all.  One should avoid imposing a one-size-fits-all set of requirements on every use of the blockchain.  That's way to limiting to its potential and will cause you to miss out on many opportunities to provide the world with something new and useful.

We agree that the application level has huge potential.  BitShares is a real-time platform with a built in decentralized exchange (DEX) as it's first app which also serves as important support infrastructure for many other applications by us and others.  Think of the DEX as an anchor store at a mall where we plan to add and attract other businesses over time.  The platform gets a small share of the fees from each business in exchange for providing and infrastructure and ecosystem that accelerates the time to market for new businesses.

That DEX has a variety of products including Market Pegged Assets (MPA), User Issued Assets (UIA), and Fee Backed Assets (FBA).  But BitShares is not defined by any particular single business or business product.

BitShares meets all our threshold design objectives for a practical engineering solution to a secure self-governing real-time blockchain.  We expect to continue evolution of our free public domain software, but this was not a reason to delay releasing it to the public for others to start building a user base and providing useful services.  It has run for 18 months in two generations without any serious problems.  It is blazing fast, scalable to 1 second transactions and 100,000 transactions per second (when eventually needed), and completely controlled by its token owners proportional to their stake in the system.

We understand that others may have other design criteria, for other applications.

So do we.  

First two quotes:



The entire point of DECENTRALIZED contracts, apps, databases is that they are permissionless. If we don't need the permissionless (End-to-End) principle, then a corporation/government can nearly always do that feature more efficiently and provide more robust servers to the users (e.g. have you scrolled the Facebook timeline lately and see all videos, games, and mesmerizingly addictive content that loads as you scroll it ... it is like a TV with 1000 channels).

DECENTRALIZATION is a threat to the Corporations (and they are the government), thus if a DECENTRALIZED paradigm becomes popular, the government is going to attack it the same as they did Napster.

Thus if your block chain design is not truly permissionless, then you've accomplished nothing.

Ethereum, BitShares, etc are Napsters. Daniel can't figure out how to make something truly decentralized so he argues that we substitute politics and governance for protocol. Sorry I am not inspired by that.

We are still waiting for someone to invent the Gnutella of crypto.

After that we can use that technology to go make the correct block chain for all these 2.0 features.

True DECENTRALIZATION enables the End-to-End Principle which enables grassroots wildfire viral adoption, because developers and others who invest in it are confident that no one owns it (i.e. just like open source, their investment doesn't depend on any third parties), as that is embodied in the definition of the End-to-End Principle.

And besides I've been thinking (since 2013 or 2014 when I first read gmaxwell's Coin Witness thread) the only way to do programmable block chain scalably is ZK-SNARKS. But first I want to perfect the block chain.

Sometimes the turtle and not the hare wins the race.

Based on your writings here and other posts, it appears you believe critical mass adoption still lies at the blockchain level instead of apps built upon a blockchain?  Seems all the "2.0" chains are going more for apps (marketplaces, exchanges, social interaction, etc...).

Based on where this began with Bitcoin and where we are now, I am not sure if the average Joe will care about the underlying technology.  We see this everyday with consumer perception and marketing instead of performing due diligence into competitive products.  Unfortunately, average Joe's just want a simple app on their smart mobile phones and cars that drive themselves

My current thought is Dan and Stan prioritize getting things done. Whereas, I prioritize getting a design that I believe in before implementing. They appear to think politics is a protocol and a coin is like a government. There is a core philosophical difference. I have implemented hacks in the past and made a lot of money (e.g. CoolPage was a hack in my opinion even though it fulfilled a market need, I wasn't satisfied that it didn't import general HTML because of a disonance between pixel-aligned layout and HTML in general...and I was never able to think of a way to make the two resonate so that is one reason I stopped working on while I was trying to find a solution and never came back to it after 2001).

I don't think I should try to change Dan, nor would he try to change me. He has implemented a lot and I have implemented not much (just some code, no launched coin).

At this point, I am less interested in being a voice of the community or driving the work of some other group that has philosophical tension with me (e.g. include Monero in that group even though I know they have very smart developers) and more interested in finding a design I believe in and implementing. Because at this point I feel shame for not having delivered a coin (or found a coin to contribute to which I believed in).

I like technical discussions, so a discussion with Dan isn't out-of-the-question, but I think it is not the right priority now. Also I would be in a better position in discussion if I had also accomplished a coin, so that it would look like I am just whining.


Edit: this is where I think politics and government ends up:

So, I'm just curious Stan... What's it feel like to be literally stealing kids' lunch money?

AnonyMint

Every Friday the BitShares group has a live mumble session with Dan where updates are discussed along with new ideas/comments/concerns.  You mentioned wanting to compile a more detailed analysis, thus what better way to do it but with Dan himself?  The two of you have built quite a reputation in the crypto space and a simple discussion would make a highly educational learning experience for others.

Any chance you could make that happen?

The voting implementation in NXT does NOT control who secures the network.  It is only for posting polls like asking "Who has the longer nose? Stan Larimer? or Pinocchio?"


Who secures the blockchain in a PoS system should be the currency holders.  The motives of those who secure the chain should be aligned with the holders of the currency.  Bitshares' DPoS breaks this notion, intentionally.


I'm going to make this really simple for you:

https://en.bitcoin.it/wiki/Genesis_block

Assets listed on NXT's asset exchange are of course susceptible to the same scenario occurring from a falling NXT marketcap.  The difference is that NXT assets holders are not contractually entitled to a guaranteed return.  THERE IS NO PEG WITH NXT ASSETS.  Bitshares is going around claiming to have developed a safe, pegged asset market when it is clearly not safe and not pegged.

You know the common man's perception of that statement is based on the old ideas.  What about the statement "Your own Fort Knox!"?  Are you going to rationalize its usage by saying, "Well really there's no gold in Fort Knox"?  Give us a break.


You haven't used this slogan yet in any advertisements anywhere?  Rly?  Wow, I must have been hallucinating for about a year because everytime I went to your website, Bitshares.org, "Safer Than A Swiss Bank" was plastered on the main page!  Of course, you're going to say as you've said before that you didn't have any say in what was posted on Bitshares.org.  Interestingly, you were listed as "President/Chief of Operations" on the very same website.  Gee... I wonder why people call you a liar?

Btw thank you for your kind statements. I also have no animosity towards you. Just sharing openly my thoughts.


BitShares is so diverse in what it purports to do, I haven't had time to compile a detailed analysis. I do know they liedhyped/mislead about the 100,000 TX/s rate of the 2.0 release, and I had to do some research that it really only is about 10 - 100 TX/s realistically as of now.

I will need to spend more time in the future doing a comprehensive analysis of all major coin technology. But for now that would slow me down too much on more urgent work.

I must admit I still have a philosophical bad after taste lingering from my debates/discussions with Daniel Latimer from 2013 in this forum, because he was proposing features which seemed to me to be the antithesis of decentralization, e.g. some thing about paying interest rate to stake holders in a namecoin variant which I explained to him was socialistic and opposite of our goals for End-to-End principled protocols. He dismissed me, as most good socialists do to the ideals of Libertarianism (the true anarchistic kind). So when I read him writing that decentralization is impossible therefor we should make a coin a corporation, I want to puke. I try to believe people can change, but I know rarely they do. I almost got desperate enough recently to consider testing whether I could implement some anonymity for BitShares and get paid for it. But then it only took 3 minutes at their forum to change my mind. Search my old username there "AnonyMint".

I am not accusing scam. Rather I think difference in core philosophy.


You forgot my point that the attacker can short the coin. And that delaying transactions is an attack that could cause the share price to crater. Or DDoS attack all the others and then force all transactions on to your block. This is the problem with PoS and DPOS, because the ordering of who will mine is known before the transactions are sent. That is a major flaw compared to PoW.