Topic: [BTC-TC] CIPHERMINE.B1 - a virtual corporate bond with a 22% fixed-fiat APR - page 3. (Read 27544 times)

thanks stripykitteh, a very interesting update. i am also a bond holder but significantly less than you. i have linked this thread to the one on litecointalk as there are many more bond holders who would be interested in your story and becoming part of a joint action against kate and the other founders.

Hi everyone,

My name is Phillip Monk, and I hold about 1500 CIPHERMINE.B1 bonds. I live in Australia. I hold some legal qualifications, but I am not a lawyer.

In March this year I gave Kate 3 month's notice that I wanted my bonds redeemed. She acknowledged my notice.

In early June, the redemption date came and went. I received nothing, so I asked Kate what the problem was.

She told me that Ciphermine didn't have the funds to pay me back. She cited a number of reasons for not paying up, including exponential difficulty, delayed hardware and an increase in the price of BTC.

She said that she was working out what to do, and asked me to keep the information confidential. I waited for a while, but heard nothing. I noted that during this period Ciphermine paid at least one dividend to its shareholders on June 29, and apparently put new hardware into service. Presumably Ciphermine are still operating that hardware.

In July I engaged a lawyer based in the UK to request payment. Since then, there has been some back and forth between her lawyer and mine, but essentially she has not conceded liability to me, nor has she offered any payment.

My analysis of the situation (which Kate's lawyers have neither confirmed or denied), is that the founders of Ciphermine (Kate, Giles Russel, Ross Martin and Simon Weald) were not operating under a corporate structure at the time the bonds were available on btct.co in September and October last year. Therefore, I believe that the bondholders are in a contractual relationship with the founders, and the founders are personally liable to the bondholders for the value of the bonds.

The latest response from her lawyer to mine was fairly terse and claimed that Kate and the other founders were relying on an exclusion clause which was (I presume) listed on the asset details page for CIPHERMINE.B1 on the btct.co website:



Has she taken all necessary measures to ensure the bonds were repaid? No. She has apparently continued to operate Ciphermine after she refused to redeem my bonds (new hardware was received on 14 June apparently), and has even paid dividends to her shareholders (last one was paid around 29 June).

Onerous clauses and reasonable notice

I also had a quick look at common law. Cases like Interfoto Picture Library Ltd v. Stiletto Visual Programmes Ltd [1989] 1 QB 433 have held that reasonable notice of onerous clauses must be given for them to be effective.

I based my decision to invest in CIPHERMINE.B1 on the basis of the terms given on bitcointalk (see https://bitcointalksearch.org/topic/m.3071632). This posting did not mention the liability disclaimer, which I presume was only listed on the CIPHERMINE.B1 asset details page on btct.co (the crypto exchange the asset was listed on).

It did include a statement at the bottom linking to the home page of btct.co:


However this link only takes you to the btct.co home page, not to the asset details page with the full terms. There was no requirement to acknowledge and accept the term in order to purchase the bonds. In my opinion, Kate and the other founders did not do enough to draw this onerous (and unreasonable) clause to the attention of prospective bondholders (though, as I said earlier, I believe the clause is void for unfairness anyway).

---

So, that's pretty much what I've been up to on this. I do not see any prospect of Kate honouring the contract, and I do not intend to reward her conduct, so it's time to move on to other measures. I have instructed my lawyer to refer this matter to the Financial Conduct Authority (FCA) in the UK, which he informs me can investigate what the Ciphermine founders have been up to, and if necessary enforce the contract. I have also instructed him to report this to other law enforcement authorities in the UK as he sees fit.

Whilst it's a good development that the authorities in the UK are about to become involved, I am also considering filing an action against her and possibly the other founders on my own behalf. The benefits of filing are (as explained to me by my lawyer):

• As the coins are not considered currency, the claim would be for breach of contract, not a money claim. Therefore costs may be awarded (basically I get most of my legal costs back).
  
• It may be quicker than relying on the FCA, who have to prioritize any investigation with other work that they are doing.

So far I have funded this out of my own pocket, but if it becomes necessary or desirable to file there will be more costs. I am asking people to come forward if they wish to consider a joint action, and potentially save some money.

If you wish to find out more, you can PM me here. It is entirely up to you but it might be helpful if you tell me which country you are in, an idea of how many bonds you own and whether you have tried to redeem them yourself yet. All of the bonds become redeemable on September 10, so we are not that far away from all bondholders being in the same boat I am in (unless for some reason you were able to charm Kate into repaying you).

Cheers.

its time to make the scammer thread for kate and ciphermine including updating her trust.

It's surprisingly dead here considering some people must have lost quite a bit of money. I mean, it was always clear this bond could never be repaid in full and would have to default at some point since it was used as capital for something that is inherently unprofitable. But I really hoped I could see at least some part of this misfortunate investment back (investment I as well as other Deprived fund participants were forced into) . Technically, in nominal fiat terms, I thought it could even be more than what it was back in September last year as Bitcoin has raised so much since. Why is everyone so quiet?

have both ciphertrade and ciphermine gone into hiding?

Any news on this?

Yes, I'm one of the people who gave 3 months' notice in early March. I guessed it would not be liquid before early June. I will certainly be telling the world (for better or worse) what my experience is with redemption.

And before this date, you can redeem the bonds within a 3 months period. There are some people who redeemed it in March I guess, so we'll see if they get their coins back in June.

Second possibiliy is that the bond starts trading on Ciphertrade any time soon, but.... you know.

I can.

It was released on 10 September 2013 so it's redeemable on or after 10 September 2014 without notice (as per the contract).

Who can tell me what date we can take the BTC back??

It’s good to see that another company has adopted bitcoin. Indeed, BTC is a great medium of exchange that makes it very appealing for business owners to integrate in their business. And I have seen a lot of bitcoin casino websites including Betcoin™ that became successful after the integration.

Looks like it's now Monday, April 14th.
https://litecointalk.org/index.php?topic=7176.msg150299#msg150299

Absolutely.

Trading on Ciphertrade should start friday, then you will be able to sell your bonds.

Ciphermine should show some goodwill to their sorely afflicted bondholders and set up a bidwall at face value, so that every bondholder is able to get out without a loss.

i want my BTC back!

When will you provide a detailed list of the dividends and the calculation last months?

Hi guys

You'll have noticed that dividends were paid last night - however due to a miscommunication, they were far far less than they should have been. We're currently transferring fiat in to cover this and you will receive all which you are owed as soon as the funds have cleared.

Really sorry about the mistake here guys - it won't happen again.

On a side note - I now understand how we calculate the interest payments for the bond, so you should see payments going back to a more regular schedule.

According to the client I use for sending the dividends, the last payment was on 24/11/2013 at 21:19. If you're referring to the last payment via BTC-TC, we moved to paying direct when it closed down (first direct being the 26th October). Those direct payments were sent to your public withdrawal address, as set on BTC-TC. As issuers we just got a list of email address, number of shares and public withdrawal address - that is why I asked everyone many times, both here and via the messaging facility on BTC-TC to set their public withdrawal address (which was separate to the main withdrawal address on the site - specifically for use by issuers post-closedown).

Kate.

Dear All,

Apologies for both my absence (I have been very unwell) and for the lack of dividends. Unfortunately the siutation has not changed since I last updated you about it; the smallest dividend payment is still below the "dust" level / minimum transaction size level for the bitcoin network, and I therefore cannot send an aggregated payment. We have many single bondholders and even with an aggregated balance of several BTC now, one hundred thousandth of a few BTC is below the minimum transaction size which will be accepted by the network. This will not be a problem once they are on CipherTrade, but for the time being we're a bit scuppered.

For the time being please consider CIPHEMINE.B1 to be frozen. However, the dividends will still be paid and are being sequestered safely. They are still calculated based on the 30 day weighted moving average price (ie. you get more when BTC is rising, as it generally has been in recent months). I do have a conundrum now though in terms of how to keep the dividends now that I've simplified our approach re. CIPHERMINE divi calcs (ie. the BitStamp account gets completely emptied). Currently the CIPHERMINE.B1 divis are BTC in a cold wallet, which has been good for investors thus far but I understand that increases your risk.

I cannot do anything else right now, but CipherTrade is poised to launch after many delays so it will get resolved soon I promise.

However, should you wish to give us 3 months notice to redeem the bonds then please email [email protected]. The email must come from the email address associated with your old BTC-TC account. We will then send you a unique code to verify you do have possession of the account. Redemptions will only be made to the public withdrawal address associated with your BTC-TC account.

Kate.

PS. For your convenience I've uploaded a PDF of the BTC-TC "contract" page for CIPHERMINE.B1, here. Unfortunately I did not forsee the possibility of the exchange failing/closing combined with this bloody minimum transaction limit getting in the way. In the circumstances we're doing the best we can (ie. building a new exchange so that your securities will be liquid again!). The entirety of the funds were spent on mining hardware, as planned.

I note that CIPHERMINE shareholders received dividends yesterday.

Now that Kate is back I would expect that CIPHERMINE.B1 bondholders are due to receive all interest payments since the last one (which my records suggest was late October).