Topic: Bitstamp's first annual statements (Read 5337 times)

No one knows (apart from them). What you see in the first post of this thread is all the financial info publicly available at the moment. As a small company they were entitled to present abbreviated accounts, so pretty much only the balance sheet.


That's probably a good point.

The most bitcoin gurus and angels and those who are making a lot of noise in media. a lot of noice = new fools with new money in Bitcoin.
There is a gang who is controlling the system even it's saying it is decentralized

Bistamp is related with Ripple, Bitcoin Foundation and others. Their shareholders are shareholders for many other bitcoin companies.

i think they will cover the loss because the scandal will be TOO BIG and it will involve all these companies and Bitcoin will crush.

So, they are a gang who is manipulating the market how they want and each of them are taking a piece of the cake named Bitcoin.
Proofs are everywhere : fake transactions, bitcoin price is given by few companies who are controlled by the same people.

Bitfinex, Coinbase + other many small exchangers are related with Bitstamp. Bitstamp is processing their orders.

Indeed, my mistake.


That is a good question.  OKCoin and Huobi too received similar VC investment.  They have a much larger staff (Huobi claimed to have ~50 people just on customer support), but being in china all their costs should be even smaller than in Slovenia.

A company that moves that much money will need several people in finance and accounting.  They will need people to take care of AML/KYC, or (more likely) sub-contract a specialized company (which are said to be quite expensive).  

I would weakly defend my estimate of 5 M$ for expansion of operations and 1 year of expenses.  I cannot find fault with the lower estimates that people have posted (around 1 M$/year), but do not feel them compelling either.

What were their costs in 2013?

One thing to note is that most of the VC investments that were announced through 2014 were actually negotiated in late 2013 or early 2014.  (For example, OKCoin said that their 10 M$ investment, announced in Mar/2014, had been closed in Dec/2013). At that time, expectations for the growth of the bitcoin economy and price were still in outer space   (By May 2014, most bitcoin gurus and angels were still predicting 3'000 USD/BTC or much more by the end of the year.)  That may explain why the investments were so big compared to the current profits.

Big players throw their money in lots of directions hoping that one of them is the miracle investment that buys that island in the pacific they've had their eye on. Some of them fail and some of them make money. I'm not saying stamp won't bounce back. I just don't believe looking at the VC money source or employee roster matters as much as people think it does.

correct but their exec are Arthur Britto, Daniel Wayne Morehead, Steve Waterhouse, Cto Damijan Merlak, Nejc Kodric
Arthur Britto is founder:  Ripple Labs too. So, Bistamp is related with Ripple.

 Daniel Wayne Morehead is Pantera Capital Management who lend Bistamp with 10 MIL. Same with Steve Waterhouse,  founder:  Ripple Labs ,  Pantera Capital Management.

Cto Damijan Merlak, Nejc Kodric are the owners.

Who will lose his job, the programmers?

I'm not sure the "too big to fail" scenario works in this case. Execs lose their jobs all the time. The only difference between them and a regular Joe is that their CV helps them land somewhere else pretty quickly.

Do not forget the former Paypal exec. who come to Bitstamp last year. I am sure he is not paid with the minimal wage.
 He didn't leave Paypal for some pennies.
Also, count the exec. trips. USA, Canada, whole Europe, Asia. These trips are not so cheap.

I am sure all the exec.(even they are shareholders) had BIG salaries and not minimal wage.

What I want to say is that a such company is hard to maintain. Nobody will use it in the near future even they pay everybody back.

It's the registered office (London), it doesn't have to be their operational office, and probably isn't.

Were did you get those 7 executives from? I only see 5 directors + 1 secretary (they don't have to be exec, and exec doesn't have to be official director).

Exec's salary is just a guessing game. It could be zero, or minimal wage (if the exec is also a shareholder, in such case he'll get most through dividends), it could be performance-related salary etc. They'd have to be really stupid to sign up an exec for ridiculous fixed salary without tying it to performance.

their office is supposed to be in England not in Slovenia.
The office rent is around of 3000-4000 euro/month because they are in 5 New Street Square, London.
They wanted to be "trendy".

I do not believe they have more than 2-3 employees for customer support and order processing(bank wires). They have 1 programmer + 7-8 "executives". I counted 7.

The executive salaries must be BIG(over 10K per month).
in summary, Bitstamp expenses should be around of 1 mil EURO per year due to their "executives"

If they're operating in Slovenia, the total annual operating costs (for 20 staff) should easily close within $1 million (excluding execs' salaries, as this could be anything). And it's probably much less. It's a straight-forward business, don't think they need 20 employees, and office space rental (with internet + electricity + basic equipment) is not that expensive.

There's no way they could make a profit (and they did in 2013) with $5-10m expenses. They've never had enough volume for that.

After paying salaries, bonuses, shareholders and perks, a company doesn't just put away tons of money in the company bank account. They make sure they spend the profits.

As for finding an investor to bail them out, who is going to loan them big money when they just lost the next 5 years profit and they don't even know how it happened?

Actually it is not that much. Considering office space, furniture, equipment, marketing, energy, internet access and other bills, etc, I would guess that it may support a 20-person company for 6 months, maybe a year.  Probably they have already spent half or more of that amount. (Investors do not give money to a company for it to keep unused in its bank account.)


I believe that is called "sending good money to chase after the bad" in finance.  

Pantera would have to choose between writing off 10 M$, or investing 20 M$ that will take 10 years to be paid back, before it can start yielding 1 M$/year profit (maybe).  Will Bitstamp survive 10 years?


The loans would be repaid from the revenue, and that extra expense would decrease their profit by the same amount.  So yes: effectively, the loan would be paid from the profits.   In that scenario the other investors may not receive any profits for the next 5 years.

Thanks for the link.

I was referring to 'net profit' (assumed $1m, after tax). If I'm not mistaken, they can charge the amount of stolen bitcoins as an expense and do the same with interest on the (hypothetical) $5m loan, effectively reducing taxable profit (to a loss) and don't pay any tax (for a few years) which could speed up the loan repayment.

YES !  and these exchangers are making the market. they make the cards, setup the Bitcoin price and the fouls are paying

Look to the Bitcoin price today. It's frozen at 270 USD EVEN most of the people are selling !

Volatility is only good for business of an exchanger.

it is true what I am saying. BitStamp received 10 MIL from Pantera last year.

http://www.coindesk.com/bitstamp-got-10m-fortress-linked-hedge-fund-last-year-bloomberg/

The loan cannot be paid from people's deposits. Then, it must be paid from profit.

Pantera won't lend them other money. Be sure of that. Bitstamp won't be able to return 15 MIL.

Bitstamp won't have a good profit in 2015 because of these problems of credibility. Bitstamp  has a lot of expenses. Do not forget, PayPal chief compliance officer came to them too. He must paid with a BIG salary.

Wasn't aware of that $10m from Pantera. That's indeed a lot. And if that's true, they're likely to have a lot of that left (depends on the terms of the funding), so they don't need any extra funds to cover the hacked wallet.

Also, if Pantera invested such capital, you can be sure they won't let BitStamp die.


If BitStamp goes under, the $10m will be lost forever, so it makes perfect sense for Pantera to further capitalise the business (if that's needed) and have realistic chance for ROI, even if it takes a long time.

Edit. The loans are not repaid from net profit, so it can take less than 5 years to get those $5m back.

its look like mtgox
if it cant fix in a few days bitcoin prize go to deep..
darkly days wait us..

agree with you BUT these things are happening in a normal industry not with Bitcoin.
According to Bitstamp,  Pantera Venture already gave them 10 MIL USD  (I am not sure why...why would they need a such amount???!!)

we are talking about 10 MIL but it's a LOT of money. 1 MIL is huge...10 MIL USD is ENORMOUS
This investor must recover these 10 MIL first...
$1m profit per year (after tax, salaries etc) = 10 years, let's say 5 years because Bitspamp will doble its profit. 5 years are too long for a Bitcoin biz.

Of course, 1 MIL per year profit is a very good business but when you are dealing with something with a huge volatility like Bitcoin....you can never know. Nobody will make an infusion of 5 MIL now, knowing that Bitstamp will need at least 6-10 months to reestablish their credibility(IF they will be able to do it).

It's fair to assume that BitStamp is generating ~ $1m profit per year (after tax, salaries etc). The last thing you want is to close such business.

If any of the shareholder's (say Pantera Venture Fund LP) can afford to provide such loan - they'd likely do so. They should get it back (+ interest) in 4-5 years.

Even if later something goes wrong and BitStamp becomes insolvent, they won't lose the entire $5m, as they'd get paid proportionally along with other creditors from the remaining funds. So it's not as risky as it sounds.