Topic: [BTC-TC] CIPHERMINE.B1 - a virtual corporate bond with a 22% fixed-fiat APR - page 2. (Read 27599 times)

From her google+

legal fees.

she is active now on twitter @memset_kate

Hardware reinvestment fund.

Remember that? *poof* it's gone... where? No-one knows.
Well, Kate knows, obviously.

Yeah, I got one of those too.

Last week I was admitted to practice as a lawyer, so I'm reluctant to post my thoughts on a public forum in case it gets mistaken for legal advice.

However anyone who wants to have a confidential discussion with me on my take on this is welcome to PM me.

I received a email.


URGENT
STRICTLY CONFIDENTIAL
FOR ADDRESSEE ONLY

Dear CipherMine 'bondholder',

We write to you in your capacity as an owner of a 'bond' issued by CipherMine ('CM'). This is an important communication sent to you by Wood Technology LLP ('WT'). Kate Craig-Wood has at all times acted through WT. WT is also the legal owner of the mining hardware referred to below.

You may wish to take legal advice on this communication and its implications for you.


The Purpose of this Communication
---------------------------------

The purpose of this communication is: (1) to inform you that CM is unable to meet its liability under the CM B1'bond' issued last year (the 'Bond'); and (2) to propose a restructure plan which offers you, on a pro rata basis, the assets left at CM's disposal.


CM's assets and liabilities
---------------------------------
CM's assets (the 'Assets') consist of:
1. The existing mining hardware, which includes hardware purchased with the proceeds of the 'Bond'. It is estimated to have a residual resale value of approximately EUR 10,000;
2. A 'share' in the start-up crowdfunding platform CipherTrade ('CT Share') based on a contribution at the relevant time by CM of USD $20,000; and
3. Any remaining cryptocurrency mined. At the date of this communication, this is estimated to have a value of approximately EUR 7,500.

CM's principal liability consists of the 'Bond', which has a total redemption value of approximately EUR 360,000. The maturity date of the 'Bond' was 9 September 2014, and CM is unable to meet that liability.


CM's failure
---------------------------------

CM's failure is the result of an exponential increase in mining difficultly. The situation was further aggravated by the fact that the value of BTC has increased six-fold over the last year or so, and by HashFast LLC, a major supplier of hardware to CM, going out of business.


The Contract
---------------------------------

CM's failure is unfortunate, although from the start it was a possibility and was provided for in various sections of the Contract and Prospectus (the 'Contract'). The Contract set out the terms between the contracting parties and was accepted by you.

The Contract contained the following disclaimer in a section marked "Warning" which makes it quite clear that: "[...] we, Kate Craig-Wood, Wood Technology LLP, Giles Russell, and all other individuals and legal entities associated directly or indirectly with this security, are in no way liable for any losses you may incur in connection with CipherBond or CipherMine."

The effect of this term of the Contract is that you accepted that you have no legal recourse against anyone involved in CM or the 'Bond'.

The Contract also provides: "The bonds shall ultimately be secured against the assets purchased with the funds, but this security would only be needed in dire circumstances where CipherMine had completely run out of cash."

As you are aware, mining hardware was purchased with the proceeds of the 'Bond' which could therefore be sold and remaining funds distributed amongst 'bondholders' on a pro rata basis. However, CM's 'shareholders' do not intend to do that.

Instead, they would like to offer you a pro rata share of the Assets in accordance with the restructure plan below which has been approved following a vote of CM's 'shareholders'. Those Assets comprise the proceeds from the sale of all mining hardware (and not just the hardware purchased with the proceeds of the 'Bond'), any remaining cryptocurrency mined, and the CT Share.


The Restructure Plan
---------------------------------

The following restructure plan is proposed:
1. Incorporate a new limited liability company ('New Company');
2. Transfer the CT Share to the New Company;
3. Make shares in the New Company available to 'bondholders' on a pro rata basis;
4. Sell CM's mining assets and make the proceeds of sale available to the 'bondholders' on a pro rata basis, along with any remaining cryptocurrency mined.


Next Steps
---------------------------------

Please indicate whether you agree to the restructure plan by sending an email by midnight (GMT) on Wednesday October 1st 2014, to [email protected] with your full name and the email address you used to register with BTC Trading Corp. (btct.co) quoting the original public withdrawal address given, or CipherTrade and your vote by indicating 'Yes' or 'No' in the subject line.

If a majority of 'bondholders' agree to the restructure plan, then it will be put it into effect. In return, you acknowledge that you have waived any right you might have, or have had, to take any action whatsoever against CM's 'shareholders' and/or any other individual and/or entity, arising out of or in connection with CM and/or the 'Bond'.

Finally, please note that if the restructure plan is agreed, you will need to subscribe for the shares in the New Company and, as part of the Know Your Customer procedure, to identify yourself at the point of subscription.


Yours faithfully,

Wood Technology LLP

Oh gee, the Bitcoin difficulty went up dramatically. Who could've foreseen that?!

CM should've sticked with altcoin mining since their resident entrepeneurial genius was unable to properly appreciate the effects of exponential growth.

e^x - Bankrupting suckers since the dawn of time.

Yes, it was just either mismanagement or plain fraud.
Kate's fault.

"CM's failure is the result of an exponential increase in mining difficultly. The situation was further aggravated by the fact that the value of BTC has increased six-fold over the last year or so, and by HashFast LLC, a major supplier of hardware to CM, going out of business (please see http://docs.ciphermine.com/HashFast%20bankruptcy%20notice.pdf)."
All of this is not a reason.
The price of BTC  is lower than it in Dec.2013.
The Kate is a fraud 100%.

I'll let you know.

What does your lawyer say about the mail from CM? Care to share?

Read what I said, carefully. I didn't say that.

I'm not paying shit.  FuckKate, fuck CipherMine, fuck litecoin.

So you're all in agreement that CipherMine shareholders should be held responsible for repaying the bonds?  So not only do CM shareholders lose everything, but they have to pay out of pocket as well?

After several months of complete silence, I received an email from WT which is probably relevant for this topic as well:

In Sep.10 2014,We will find if Kate is a fraud.

What a highly successful and well-known British entrepreneur she is!!!!!!!





Kate Craig-Wood (aka. woodrake on bitcointalk.org, woodtech on all other cryptocoin sites) is the principal founder of CipherMine. She is a highly successful and well-known British entrepreneur with deep expertise in cloud computing, hosting, data centre energy efficiency and cyber security. She is also in the final year of a part-time PhD with the local university’s computing department. Her principal responsibilities in CipherMine are business administration, finance, purchasing and software development.

I believe the situation is a bit different to what you describe.

In common law systems, like the UK, US and Australia, in order to enforce your legal rights you need to identify the correct counter-party to sue. The counter-party will be a company, an individual or a group of individuals.

As far as I can tell, there was no company in existence at the time the bonds were for sale. Therefore the counter-parties are the individual founders, as they are the legal persons who were effectively making the offer, and controlled the use of the funds raised. In a legal sense, there is no 'Ciphermine', there's just Kate, Giles, Simon and Ross (being the people who held themselves out as the founders and operators of Ciphermine), and possibly anyone else who can be identified as being in that class of person. Ciphermine.B1 bondholders have a contract with those people. The terms of the contract require full payment of the bonds at face value upon redemption.

For reasons I've already gone into I think their liability waiver is void.

The only situation in which we should contemplate not getting our whole investment back is if all of the people who are counter-parties become bankrupt. It is my opinion they are all personally liable for the full amount, unless they show that the representations made about their involvment were incorrect. They also cannot avoid responsibility by simply claiming to have 'left the project'. The contracts are still in force.

Another crypto scam. At least we know the face of this one.

I don't understand what Kate is doing. If she can't honor her debt, she should announce CipherMine's bankruptcy. She should liquidate CipherMine's assets and the proceedings of this action should be paid to bondholders. If there is anything left (which there won't be), she should pay the rest to CipherMine's shareholders.
It is unreasonable to expect we could get our whole investment back. But Kate should act on her own words and move ahead as she promised she would in a situation like this.
Not only is Kate building up an untrustworthy reputation in the Bitcoin community which might affect her future career in technology. By being inactive, she is also incentivizing us to carry legal action against her, the costs of which she will have to cover. And she clearly IS breaching the terms of contract if she continues to operate CipherMine.

Yea Thank you both for posting /linking. This pretty much confirms my worst fears as I was heavily involved in CipherMine and have not had dividends or communication in the last couple months.

Sounds like CipherMine shareholders need to go ahead and file a joint lawsuit as well.