Topic: HashFast announces specs for new ASIC: 400GH/s - page 77. (Read 880461 times)

I agree that refund should be hashfast's top priority.

How about you take 2 million dollars Pay us all back in full, then do whatever it is you want. How about that. That sounds good to me. Surely out of that 10 million youll have enough to pay us back. or at least partial payment back then rest of it after you are up and running.

I dont want to hear about how this company is giving you money or more wafer and chip talk. Talk refunds. Give us our money back before you go about buying more wafers or else you will be in the same boat as simon barber. Believe that.

You did not answer my question about why your claims here do NOT match your court filed document.   
You also do not provide a list of the inventory that you are getting and your valuation of it to support your assertion to creditors that they will only get 25 cents on the dollar in liquidation and your deal of 0 cents to a maximum of 100 cents over two years is superior to that (both points are debatable).
Thought you wanted to clear things up?

>Liquidated
I'm talking about the top 20 creditors list. Your claim is listed as unliquidated, in that context it should mean that funds are still in escrow.

>This point was vindicated in the arbitration hearing for the injunction/TRO (which we won)
The emergency arbitrator said that he enterered the order to protect against a mishandling of the resources, not because your claim was legitimate. He said you had 50-50, right? I'm not sure of why you are quoting your arbitration to prove that your claim is "legitimate". You certainly have one, I dont think that to be in discussion.

> As already mentioned their IP is not especially valuable, and other than in Simon’s imagination we cannot find anyone who has concrete reason to think otherwise.
I dont have any problem believing this, but I can't know for sure. The same goes for whatever other benefit you could have from a similar plan; since that I can't predict every occurrence, I need to be sure there to be enough incentives in place to cover creditors interests. Giving up to a 5M claim and spending 2M for the secured claims is one thing, spending 10M upfront locking them into the "NewCo" somehow is a completely different one.

> As already mentioned the ownership of the IP is under dispute (the developer, claims he was never paid), and if we just wanted our engineers to study it, we could get that for a lot less than $2 million (the developer is already shopping the IP around).
I'm incredibly curious. Are we talking about the first ASIC IP? Who is the engenieer? I was under the impression that it was only developed from Barber, Chad (and his team?).

>  Finally, and this should be conclusive, the Note/IOU is backed by all of the assets of the company, including any IP which we might develop from or after looking at Hashfast’s IP, so if we did as you suggest we would still get nothing.
Yes, but the company you are talking about is a purposely created LLC (where you have complete control of the management).

> Actually the funding will likely occur prior to us taking physical delivery of the chips.
If you could guarantee enough cash to be *locked* into the company to pay for the build of every chip, and you locked it upfront of the delivery of goods, you would basically have my support for this sale. I would have additional questions, things I would want to be sure of, but this is certainly the biggest point.

I'm naturally waiting for some of the committee members to raise problems that I was too blind to see.

LBS:  I think we are using the term “liquidated” in different contexts with accordingly different meanings.  Since you original question referred to escrow, I assumed that was the context/meaning you were using.  100% of the funds we cite were paid in liquid cash and fully released from escrow, and Hashfast took possession of that money.  If this is not your question, could you specifically identify the usage/citation you are referring to? We see a great deal of documents each day, and guessing or looking through them all would be impractical.  Once you give us the citation, we will reply with an answer.


LBS:  Four points here: 1) Our claims are valid.  This point was vindicated in the arbitration hearing for the injunction/TRO (which we won).   2) As already mentioned their IP is not especially valuable, and other than in Simon’s imagination we cannot find anyone who has concrete reason to think otherwise.  3) As already mentioned the ownership of the IP is under dispute (the developer, claims he was never paid), and if we just wanted our engineers to study it, we could get that for a lot less than $2 million (the developer is already shopping the IP around). 4) Finally, and this should be conclusive, the Note/IOU is backed by all of the assets of the company, including any IP which we might develop from or after looking at Hashfast’s IP, so if we did as you suggest we would still get nothing.


LBS: Actually the funding will likely occur prior to us taking physical delivery of the chips.  Specifically, some still need to be cut from wafers into chips, and the $2 million will need to be paid instantly on closing (whereas the chips will need to ship after being processed).  The precise timing and other fine details are generally addressed within the final contracts which are agreed before the sale closes.
Given how much we are paying for these chips, we don’t believe it is fair to characterize them as a “gift.”  Beyond that point, however, you have a number of meaningful and robust protections, including anti-dilution, non-consensual changes to economic terms, rights to inspect the company’s records and books, the right to periodic financial reports, the fiduciary obligations of directors to minority equity holders (which are established by law), and a Note/IOU which specifies payment dates and payment rates which is backed by EVERYTHING the company owns, literally all of the assets.


We are happy to reply in the forums as well, but some things will be better and more quickly handled in an interactive environment.



[/quote]

I got it 

Oh, sorry.  Maybe I haven't been paying enough attention. I hadn't seen the claim of additional evidence and divide and conquer approach before....

If that is the truth,  it does not correspond with what you filed with the court.  You have not filed with the court that you will fund the company with 10 million dollars of equity.  Your document does not say that.  It says 2 million.   You have obligated yourselves to nothing more in the court filed document.  So why are you on here stating 10 million will be put in newco immediately?
You also need to provide the math behind your claim that under liquidation we will only get 25 cents on the dollar since treat math does not add up to the sworn testimony that there are more than 8 million in inventory to be sold.   Then you have the IP that can be sold.  Those two alone get everyone over 80 cents on the dollar.    
Why don't you list the inventory that you claim is only worth 25 cents?

What can he do that is not already being done by the committee?  Vulture can smell a fresh kill, liquidation = payout. 

Ok, the same marketing. I'm not sure on what basis customers that didn't requested a refund in time will be granted a btc one. Anyway, he is also advertising it on Google AdWords. Contingency works, I guess.

Reconcile this with Ray's other actions and the Liquidbits proposal....  



Dear [Perezoso]:

HashFast took your money and didn’t deliver. You would like your refund. Gallo LLP is an elite law firm that helps people like you. Our results are widely publicized. I invite you to verify those results for yourself, and to do your own homework on me.

We have been advocating for Batch 1 customers since HashFast first broke its promise to deliver by December 31, 2013. We originally filed arbitrations for 19 customers who wanted their bitcoins back. We now represent those 19 plus 46 more customers (a total of 65) in the HashFast bankruptcy. We are doing what we can to maximize the size of the bankruptcy estate and our clients’ recoveries.

HashFast continues to deny that Batch 1 customers are entitled to their bitcoins back. HashFast contends customers are only entitled to the August 2013 value of their bitcoins in dollars even though you paid in Bitcoin and even though we believe HashFast promised to refund Bitcoin payments in Bitcoin.

There are no guarantees. But we believe we will win for our clients on this issue. In addition to the public evidence that HashFast made this promise, we believe we have found other persuasive evidence. As you know, this can make a 7.5X difference in the size of your recovery.

If you are a Batch 1 customer, asked for your bitcoins back, refused late delivery, and didn’t get your refund, then we are ideally situated to help you. With numerous clients in that same situation, we can afford to do the extra work required to put on the best case, if anybody decides to argue about it. And somebody probably will, since if Batch 1 creditors win this issue they may take 7.5 times as much of the bankruptcy estate, diminishing all other creditors’ shares proportionally.

We will work on contingency.

Please go to [Ray's URL] today and sign up. We are doing what we can to get money back for HashFast’s customers.

Best personal regards,

Ray Gallo

Post it here, please. Create a newbie account in case.

Oh jeez.  Who else has gotten the latest, really sleazy, e-mail from Gallo?

Who's the bright customer that got this scumbag involved to begin with?

If every payment was liquidated, why is your claim listed as unliquidated in the schedules?


Maybe you think your claim to be worthless already and 2M is peanuts in respect to the value of having your engenieers studying the IP and using it for whatever purpose. So I'm sorry, but that explanation is inconcludent.


You get to fund the llc only after having received the chips, with whatever amount you want. You should move the money first and move ahead with the judge after. I also need be sure that our interests will be covered. You will have the control of the administration of the company, so our interests must be protected. I dont know how, I dont know from what. I just dont like the idea of gifting a company the chips in exchange for a promise of doing something while not having any kind of control on the delivery of the promise at all.


As you can see, forums are working great as well.

We still intend to host the telephone meeting because some things are just more quickly and effectively answered in an interactive setting. That said however, we are happy to answer your questions here as well as many of these questions seem to indicate large misunderstandings about what the 363 sale terms document says/means.

The current terms call for the formation of a new company (sometimes called “NewCo” in the documents).  We are not taking over Hashfast, or its estate or anything else; we are forming an new company and it is buying some assets from Hashfast’s estate.

Once this new company (“NewCo”) is formed, Liquidbits/its investors will transfer $10 million to the new company in cash.  This cash will then be used by NewCo to pay $2 million to the Hashfast estate for administrative/priority expenses and to satisfy executory contracts (who by law would be paid ahead of you or us anyway), and $8 million to pay to convert the chips and wafers into usable mining rigs and get them hosted (which is how the money to pay everyone back will be generated).

I think from your question you may have been thinking we were going to do something like give $10 million to the estate, then take over the estate and immediately get our money back.  As you can see from the above explanation, this is simply not the case.

1) How much of your $5M payment is unliquidated, hold in an escrow account? People tells me its a relevant amount, but you look like to be denying it.

LBS: All of our payments were liquidated.  There was originally $1 million in an escrow account, but Hashfast claimed they needed that money to complete our order, and the funds were released from escrow.  Hashfast has received all of the payments we cite directly and in cash, nothing remained in escrow.

 

2) What guarantees us that you would build boards and mine with it for our benefits, apart from your words? You could do nothing, keep the IP and use it for whatever purpose, give the chips back after a few months quoting whatever problem, and we would be all completely screwed with no recourse.

LBS: Please recall that the $2 million paid to the estate for executory contracts, administrative expenses, etc. is non-refundable (i.e. we cannot get it back) as is the $5.3 million claim waiver.  The performance/payment of the Note/IOU is backed by all of the assets of the company; this includes any cash in the company, all the hardware, and all the IP both received and independently developed.  As a result, if we did as you suggest, we would pay $2 million in cash, forfeit our right to ever collet on the $5.3 million Hashfast’s estate would otherwise owe us, and get nothing in return (the hardware and all the IP and everything else would go back to the estate if the note/IOU is defaulted on).  So, short answer what guarantees you that we will build the boards is our own enlightened self-interest; building the  boards is the only way we get paid back, and not building them means we have just given away $7.3 million ($2 million in cash, $5.3 million in waived claims) and get nothing in exchange.

I will propose you a better and simpler company definition:

LBS: As you know, an amount of fixed processing power gets less valuable on the network every day, and we are very nearly at the point where we will have to withdraw the offer. So, it is a little bit late in the game to be making major changes to the proposal, but fortunately most of what you discuss below is already addressed within the context of the terms/offer.

1) You create a new company and send $10M to it. You bind yourself not to withdraw that money in any way other than for board build costs and admistrative expenses.

LBS: This is already the case.  Specifically we are forming  a new company in which this venture will occur (sometimes called “NewCo” in the 363 sale terms), and Liquidbits cannot take any profits or dividends from this company until after the note/IOU and the stock/equity given to the creditors has been totally paid off.

2) You get every chip and asset you want.

LBS: Also part of the current terms.

3) You mine with it and keep 100% of whatever you mine until when you recover the build costs.

LBS: Already part of the current terms except that it is less than 100% which less favorable to us and more favorable to you.

4) Once that you have recovered it, you only get to keep 20% or so of the mined.

LBS: Once that has been recovered, we keep nothing until the note/IOU and the creditor preferred stock/equity has been paid off in full.  Only once all the creditors have been paid back (via the note/IOU and equity which should total about 100% of what Hashfast owes them), do Liquidbits and its investors get to keep the profits.  All of the creditors we spoke to early on in this process, expressed interest in terms which ensured they would get paid first (and therefore minimized down-side risk), rather than increased risk for the possibility of more profits down the road assuming all continues to go well (up-side risk).  Please keep in mind though, our investors are bringing $10 million in cash to the table (and Liquidbits is waving $5.3 in claims), for what would be characterized as a high risk venture.  Accordingly, the ultimate Return on Investment (ROI), has to justify that risk and investment when compared to the other places/ways they could invest it.

5) We get to audit your books and the datacenters continuously and at any time. You will basically give us access cards for the datacenters.

LBS: The right to inspect and audit the company’s books and records is already explicitly stated in the 363 sale terms.  While we cannot give each creditor an access card to the data center (other people have equipment there and it would be a major security violation), we would be happy to provide escorted tours/inspections of the data centers at reasonable intervals on very short notice.

Everyone wins. No one can screw anyone.

LBS: That is what we are aiming for and we like to think that these terms accomplish that.

If you are legitime, those terms should be appealing. If you are not, you need to find a way to screw us, and that document looks quite like it.

LBS: We are legitimate.  As discussed above virtually all of the terms you discuss are already part of our proposal, or even more favorable to you.  We regret that many people are getting the impression that the 363 sale terms document is giving people the wrong conclusion.  We suspect that this may be the result of some unfamiliarity with documents written in heavy Legalese; this is why we are hosting the interactive phone session tomorrow, so that we can explain the terms document more clearly to people.

Why don't we just ask questions here so everyone can read them?   I have a lot of questions but so it is not confusing I will ask them one by one.  I will be upfront and tell you that I think your offer is terrible and puts the creditors at more risk than they have now for recovery.  
You have provided me details of your company's capitalization, yet you expect us all to invest in it.  The deal means creditors could get zero.   Just from hf's sworn testimony it looks like I will get minimum 50 to 75 percent back before the IP is even sold. 
First question,  please detail out how you feel lb is putting 10 million in cash in this business.   If you plan to take over the business and it's assets and from that 10 million will be realized you really are not providing the money, the estate is.  If you really plan to put real cash in this new business then why did you file with the court,  the words Up to 8 million?   That means you could put zero in after the two million (in claims not necessarily the amount you need to pay)  is resolved. If you are sincere,  please answer this first.

Is that you Greg? A few fast questions, because I'm from a phone:

1) How much of your $5M payment is unliquidated, hold in an escrow account? People tells me its a relevant amount, but you look like to be denying it.
2) What guarantees us that you would build boards and mine with it for our benefits, apart from your words? You could do nothing, keep the IP and use it for whatever purpose, give the chips back after a few months quoting whatever problem, and we would be all completely screwed with no recourse.

I will propose you a better and simpler company definition:

1) You create a new company and send $10M to it. You bind yourself not to withdraw that money in any way other than for board build costs and admistrative expenses.
2) You get every chip and asset you want.
3) You mine with it and keep 100% of whatever you mine until when you recover the build costs.
4) Once that you have recovered it, you only get to keep 20% or so of the mined.
5) We get to audit your books and the datacenters continuously and at any time. You will basically give us access cards for the datacenters.

Everyone wins. No one can screw anyone.

If you are legitime, those terms should be appealing. If you are not, you need to find a way to screw us, and that document looks quite like it.

There seems to be a lot of misinformation and misunderstanding regarding Liquidbits, our offer to Hashfast’s estate, and the bankruptcy process itself.  We would like to take the opportunity here fill in some blanks and correct some errors which seem to be feeding some of the anger and mistrust.  If you have any follow-up questions, please feel free to e-mail us at hashfast(AT)coinware.io (this is a subject name only, Hashfast is not in any way associated with this).  In addition, we will be scheduling a live call in event on July 22 at 10AM PST/1PM EST, so that you can ask any questions or register any complaints directly with the Chief Executive Officer and Chief Strategy Officer of Liquidbits. (Conference #: (712) 432-1500, Participant Access Code: 700281#). 

The chapter 11 bankruptcy law establishes a hierarchy of creditors which determines who gets paid first.  The top tier are secured creditors; they have a security against certain assets of Hashfast’s, and proceeds from the sale of those assets is used to pay them back 100% , before anyone else.  Next comes things like Hashfast’s bankruptcy attorneys, employee wages, court costs, and anyone who needs to be paid to provide services for them after the bankruptcy started.  Next comes the largest category, general unsecured creditors consisting of anyone else Hastfast owes money to who isn’t in a higher tier.  This category includes Liquidbits, and if you paid for equipment (or anything else) and haven’t received it, it includes you too.  At the very tail end, after anyone and everyone has been paid back 100%, are the Hashfast stockholders (basically, unless Hashfast has a drawer full of winning lottery tickets, the Hashfast shareholders won’t see a dime).  This is an important point to recall, as you may see things like “payment to Hashfast or Hashfast’s estate” and this is money which is being used to make good on the people they owe money to, not to go to Simon, Eduardo, or the Hashfast stockholders.

Now, regarding some of the specific comments:

Liquidbits, its officers, and its shareholders, have NO connection to Hashfast, Simon, or Eduardo, except that we paid  over $5 million for mining rigs they never delivered (just like many of you), nor will there ever be a such connection. Simon and Eduardo were not involved in the negotiation or development of this proposal in any way. Liquidbits lost more money to Hashfast than anybody, and we are not looking to let them get off lightly.  You may notice the terms we proposed allowed for the Hashfast estate to sue anyone who stole or mishandled money, but if the estate declines to sue, then we have the right to file that suit precisely because we don’t want anyone who engaged in shady practices to get away with it.
 
The listing of the principals for Liquidbits is available from public domain government sources at: http://search.sunbiz.org/Inquiry/CorporationSearch/SearchResultDetail/EntityName/domp-p11000084688-a24cc0de-1b71-4c2d-a0dc-be0acfc07400/liquidbits/Page1

Hashfast has not given Liquidbits any insider information in preparing this offer that was not available to any of the participants or the creditors committee.  In fact, Hastfast stalled us for some weeks while they shopped their assets around.  It was not shared with us to whom they shopped these assets, but rather than customers, it was likely companies which could demonstrate millions of dollars in cash on hand.

Contrary to some of the comments, Liquidbits does have the money to conduct the proposed deal and we are not getting the chips for free:
 
After selling some to keep the lights on and pay for other bankruptcy expenses, like lawyers and consultants that the creditor’s committee is using and billing to the Hashfast estate, they will have about 27,000 chips.  Some of these chips are in wafer form and will need to be cut before they are really “chips.”  These chips, as many of you may know, are not capable of mining in their current form.  The must be mounted on boards, given a cooling unit, and set up in a data center or other similar environment at a cost of about $400 to $500 each and a month’s time.  As a result of this cost and delay, and the ever increasing network difficulty, these chips keep selling for less and less.  Hashfast had to go back to court to amend the approved pricing list, because they could not sell them at $200 per chip, and our information is that they are now selling at under $175 per chip and falling rapidly.  Even using $200 per chip this means they have an inventory of at $5.4 million under implausibly rosy assumptions.  Talk of $9 million in chips is outlandish and becomes more so each day.  Contrary to Simon’s fantasies, the Intellectual Property (IP) is basically the plans for a chip not noticeably better than the new ones already coming to market and not particularly valuable (and to boot its ownership is contested). Liquidbits just wanted a license so that we would not step on anyone’s toes while using and improving the chips we are getting.   If the Intellectual Property has value, the Hashfast estate can still sell or license it to raise money for the creditors.

Hashfast currently has, we believe, about $12 million in general unsecured creditors, and a further $2 million in secured, administrative and executory contract creditors.  If the chips and IP were sold on the open market, assuming one could even find a buyer for them all, you would be looking at recovery of about 10% to 25% of what you are owed.  As an alternative to this bleak outcome, Liquidbits proposes to pay/provide to the Hashfast estate:
➢   approximately $2 million in cash to handle administrative and executory contract debts (recall, by law, these debts get paid fully before unsecured creditors like Liquidbits, and other Hashfast customers, so this does increase the amount of money you eventually get)
➢   $8 million in cash to convert the 27,000 chips into usable mining rigs
➢   a note (an enforceable IOU) for $3 million which is secured by every asset the company has, with a short maturity date, and minimum repayment rate of 17% of total revenue
➢   preferred stock** in the new company, which get paid out in full before Liquidbits or any other investor can ever get paid a dividend in the amount of $3 million
➢   the waiver of Liquidbits of the approximately $5.3 million debt which Hashfast’s estate would otherwise owe to us (recall, there is currently, we think, about $12 million in unsecured debt, of which we are half, so waiving this means that you and any other unsecured creditors get almost twice as much money as you would otherwise) 

Combined with the IOU and preferred stock**, this should leave all remaining unsecured creditors recovering 100% of what they are owed.

So bottom line, Liquidbits provides $10 million in cash, $6 million in enforceable IOU’s (seller note and stock**), and the only payment we get on our $5.3 million claim is whatever profit remains in the company AFTER you and all these other items are paid off.  How anyone can construe this as “Liquidbits gets paid first” or “Liquidbits is screwing the other creditors” is a mystery to us.  Our lawyers keep advising us, that companies making this type of offer are not usually so generous, but Liquidbits intends to operate in the Bitcoin sphere for a long time to come, and we really are trying to turn another “Bitcoin scandal” into one where the people get their money back at the end.

Please note, for purposes of clarity and brevity, some matters have been condensed, and readers are advised to read the terms of sale and 363 motion for greater detail.

** LLC’s technically use equity units in place of stock.  The preferred equity units for the creditors would have a liquidation value of $3 million.

I'm not mixing currencies, all miner prices make sense only in BTC, expressing them in local currencies like US$ or Chinese Yuan is a big mistake since their price is only driven by their profitability (ROI), and profitability can only be calculated considering the value of the product we get from these miners - and it is BTC. If you calculate ROI in US$ you can make as big error as the exchange value of the BTC changes. For instance, if the BTC exchange rate doubles, your miner is 1/2 less profitable in US$, and if BTC exchange value halves your miner is double profitable in US$. This topic is discussed thousand times in this forum, please look around for detailed explanations why calculating ROI in fiat doesn't work.