Topic: Lab Rat Data Processing, LLC (LabRatMining) Official Announcement - page 73. (Read 452170 times)

Wouldnt the worse case scenario be that LRM does what Gigavps did? After reading the IRS and Fincens ruling, miners need to pay taxes on the coins value at the time it was mined and if you lose money when you sell it, claim the loss there. So, technically, all he would need to do is get our personal info and send us a 1099 at the end of the year. Thats how I read the laws... Maybe  im wrong... Also, I dont think mining is considered a money transmitter. Also, now that bitcoin is considered property, I think the form is 1099-k...

I just dont see where we need to be limited to 300ghs per share. I dont see anything in the IRs nor Fincens ruling that states limits...

Again, maybe im wrong, lol... But, I understand the issues one could have with lawyers,I had a lawyer that would never get back with me. That was a quick fix, I got a new one.. But, I bet it would be a pain get a new lawyer up to speed and LRM has probably already paid a lot for a retainer..

I have a lot invested with LRM. Im still willing to give Zach the benefit. I have faith that he will work everything out. Those that want to start suing right now would only hurt us.  Where do you think all the money is going to come from to fight it? Granted, there is a time when you say enough is enough, but I dont think we are there yet...

I don't think it's that simple. Then when you pay the grocer you'd be a money transmitter... and every employer would be a money transmitter... The last FINCEN report I read clarified it, and my interpretation of it means LRM is not a money services company. We discussed this report briefly in this thread some time ago.

I was just clarifying your post because it contained some inaccuracies, but it's nothing to get defensive about.  MT can happen between two parties exclusively.  I have Marco under retainer for the handling of MT businesses, and I trust his assessment about MT.  

Aside from that, I am not trying to claim labrat has MT issues.  I just didn't want people to have misinformation about the handling of MT in the USA.  

I get what you're saying, but that's nonsense.  Then every single business would be a money transmitting business and be required to file for a license.  That's not how it works.  The Government sees Bitcoin like it sees bricks.  If LRM handed out bricks it wouldn't need a money transmitting license just like it doesn't need one for bitcoin.  The reason folks like Mtgox got nailed was because they were depositing fiat/cash into a bank account and then wiring that to people.  They were transmitting money through the banking system without a license to do so.

This Bitcoin business is like Warcraft Gold to the Government.  It doesn't matter until you cash it for Fiat.  Then they want a piece.  And it's not up to LRM to declare anything about that.  It's on whoever cashes out the Bitcoins to do it. 

I think everyone is trying to look for reasons why Labrat has a good excuse for what is going on.  He might, but guessing what it is isn't helping.  It'd be better if he told people otherwise it appears he's hiding something.  I can't imagine what on Earth a lawyer would be able to write up about this except terms of a new contract that we would have to either accept or go to court over it.  What else could it be?  The lawyer isn't going to be writing up some big excuse document.  "This is why LRM can't do what they said they were going to do after taking your money."   

I believe something probably went wrong.  LRM speculated and lost, or invested in something that failed, or partnered up with someone who blew a bunch of cash for no results.  There probably isn't any new hardware, it was probably scammed out from under him or some embarrassing thing like that, and dude can't come clean about it because there would be pitchforks and torches.  So instead he's pointing to nonexistent legal issues and saying they are the reason why we're not all getting 2gh per share right now.   I don't believe for a second it's a legal reason, because there are multiple similar operations currently up and running and doing the same thing this one is, and they aren't having any problems.  So I don't buy that it's a legal issue.  If it was, we would be able to see the Government's demand letter.

@labrat

I know you are trying to hold everything together.  Why not give us a completion percentage estimate?  I know you can't give out dates yet, but posting a reply like
or

would go a long way to helping people feel informed about this issue and progress.  That means we can at least get an idea if this contract will be done in September vs May.  Or April.   

Money transmission is not limited to third parties. A transaction between two parties can be money transmission if the company is moving money.  For example, think of a bitcoin atm where you exchange bitcoin for money.  If you stand at the machine, send the bitcoin, and then cash out, no transmission has occurred (assuming the atm company is not depending on a 3rd party.)  But if you send the bitcoin from your house (so you don't have to wait for confirmations), and then drive across town to get your cash, then that IS money transmission.  The atm company just transmitted your money across town.  

Now I know it sounds ridiculous, but that is the law.  MT laws were never designed with bitcoin in mind, so some "stupid" scenarios exist where MT is happening per the letter of the law, even though it doesn't make sense in real life.  It's plausible that labrat got ensnared in a similar "stupid" MT scenario, although there is no basis to assert it is a MT issue.

MT Source: Marco Santori

LRM is NOT a money transmitter.  A money transmitter is a business that acts between payer and payee.  Paypal is a money transmitter.  The only thing LRM is doing is letting us buy hashing power that results in Bitcoin distribution based on our share of it.  The same thing CEX or Cloudhashing or any other cloud mining service does.  The reinvestment for more hash power is also part of their strategies as it is here.  No difference and not illegal.

I think there are real concerns that everything is fake and made up.  Labrat hasn't taken any photos and refuses to even talk about the hardware order that he likely has right now or never bought which would bring up questions about where the money went to.  This has nothing to do with lawyers writing anything up.  It's about being shady and creating suspicion about what is really going on.

Lawyers might not get anything suing him.  Then again, it seems unlikely LRM will go to whatever jurisdiction and fight this out in court.  He'll ultimately get a lien on his property if he doesn't, and his future wages can be garnished and property can be seized.   It depends on how much is won in the judgement and his willingness to battle it out in various courts.

So it would be better to refuse receiving dividends?

Please reference the changes noted to BTCGuild in the most recent news posts...

Seems to me ANYTHING that relates to a payment of any sort can and will fall under IRS and FinCen regulations. If LRM is PAYING us dividends... he is transmitting monies. BTCGuild's solution is apparent in the way they have decided to redefine everything as a reward for participation in the pool... some of that mentality applies here but needs further legal scrutiny to define once and for all.

Give Zach some slack... anything he says before the lawyer gives it to him in writing could make everything that much worse.

This is just nonsense, the only way what your saying could be true is if Zach was pre-informed by the IRS and/or FinCen and well the chances of that being the case are at best 1 in a million.

The legal issues Zach isn't talking about were first known to Zach months before these rulings and as pointed out before Zach does not qualify as a money transmitter by any current ruling.

My understanding is that LRM isn't a money transmitter. He isn't taking fiat or exchanging it. And according to one of the last fincen papers I read, that you may be referencing, LRM falls moreso into the category of doing a service regarding investors. That's different than being a money transmitter.

Regarding the IRS. I think the main point from that is that bitcoin is considered property - not a currency.

Anyone, correct me if I'm wrong on these points. But if you do, please cite why and sources if possible.

Regarding the bolded part, I guess my perspective is opposite yours.  I see it as there is a lot to lose. The entire upside potential, since we have NO idea what is going on and what the proposed solution will look like, it seems hasty to assume that the near zero value we have at the moment will be a persistent thing.  Right now the potential downside is losing the final few pennies per 'contract' but the upside potential I think is pretty significant.

Best case scenario I think is all the new hardware has been hashing for a month and after restructuring we get back dividends and things move on as originally intended and share value returns to what it was prior to "the announcement".  Or even better, we get some form of exchange and the 'contract' price goes up.  Assuming trust is repaired, transparency improves etc etc. 

I am patiently waiting(for now) because there will be plenty of time (years) to pursue lawsuits and criminal charges if things do not shake out favorably for 'contract' holders.  Any sort of lawsuit would likely take a long time to resolve, at the very least a year or more, by which time all of the assets owned by LRM that could be liquidated would be almost worthless and worse yet, any damages wouldn't be recovered in terms of BTC but in terms of USD you paid for the 'contracts' when you first acquired them at the exchange rate AT THE TIME you acquired them and possibly just the USD value at the time of the IPO.  Courts may even look at the USD value of the BTC received weekly per 'bond' and determine that all USD value of payments received exceed the original cost of the 'bond' so there are no damages to claim.  Bitcoin is in new uncharted waters so it seems pretty hard to predict how any sort of legal action would be resolved.  I see a lot more downside risk to legal action than upside potential.

Has anyone ever bought shares in a company with lawn furniture or hammers?  Since the IRS has advised bitcoin is to be treated as property, courts may compare it more to lawn furniture than to dollars or gold / silver.

I'll probably start to run out of patience though around mid to late May.  That would be a full 6 months since this issue came up on the radar judging by the 'for 2 to 3 months' comment.  A description of the issue at hand would be really nice.  I am hoping the issue is 'we want to avoid a need to collect personal information and issue 1099's' or even 'we want to avoid having to register as a MSB'.  Those seem like the most likely legal issues to me.  And I am pretty sure there would be legal means around both of them.  I really would like to know more about what is going on.

Exactly this.  There is absolutely no legal reason why we can't be made aware what the issue itself is.  There is no reason for the statements like "I'm talking to my lawyer about stuff" (not a real quote, but just the idea around it).  We don't necessarily need the solution, but the description of the problem would be nice.  It is complete bullshit, imo, that we still don't know exactly where the issue lies. Fortunately for labrat, my husband has been on vacation during this time and I've taken a breather.  That time is not infinite. With the lack of value left in the shares, there is very little to lose by asking government agencies to look into the legality/execution of this project.  I do believe we have passed the acceptable time frame for "my lawyer is sick", "my dog ate my homework", "my aunt died" and "I'm working on it". . . .and then some

Yeah, we've all seen and read those requirements. To the best of my knowledge, none of them should warrant labrat from keeping us out of the loop. He's implying a different issue.

Not all that expensive. 23 TH/s isn't that much... I am personally mining at a few Terahashes myself with about BTC10. Those Antminer S1's are worth the investment. Granted of course, they probably costed a few extra Bitcoin per unit back in December. But lets say he paid top dollar. Real wild example, so bear with me: You can reach 23 TH/s with 46 of BFL's old 500GH/s (the ones that costed a little over $20k back in the day). That's still only a small portion of the Bitcoin we've given him.

grnbrg.

Which could in theory* buy over a petahash in hosted mining by the gigahash contracts at the moment...


(* I only know for defninite that pbmining (see left hand link in sig) has ~180Th on hand though.)

@fractal02 funny pictures.  Thanks for the laugh.  I'd have to go with the first one.

@mufa23, the idea that LR is just recycling the bitcoin originally acquired through IPO into dividends seems extremely unlikely IMO.  There would have to be an accomplice selling him recently mined coins and letting him use the stats feed from CEX.io (which just jumped to near 23TH... that seems promising).  That seems like an overly complicated (and expensive) way to scam.  But I suspect you don't really think that, just making a point that pictures of the hardware are long overdue.  Which I agree.  I was really looking forward to pictures once the first batch of bitfury equipment came in.

@grnbrg *throws whiffle ball* How's that for abuse!

Having been through a few legal 'things' personally, I do know that sometimes lawyers move at excruciatingly slow speeds depending on what the situation is... especially if they need to do a bunch of research on precedents and related cases.  Lawyers do have their own reputation to look out for and don't want to slap their name on a legal document unless it is highly likely to be legal.  However, I think LR should consider shopping around for new council after this.  :-/

You guys and dolls haven't yet figured out what the "legal issues" most likely are, have you?

Check the recent IRS rulings and FIN-Cen requirements, especially those requirements concerning Money Transmitters.

My $.02.

I completely agree with you. I think legal action will just screw us all over, and most of the money will end up with the lawyers.

But you've got to understand...

You've taken some BTC8,000+ (currently valued at $3.6+ Million dollars) from us, and we've heard little of these supposed legal issues you are caught up in. In fact, if memory serves me correctly, I have only seen the one photo of all the hardware you supposedly have at the data center (which consisted of one BFL 500GH/s miner, and a few other miners). On the website, I've only seen the 17.5~ TH/s that has been there for awhile. You were supposed to provide more photos via grnbrg, but I don't think they ever surfaced. Similar to your trading platform which was a high priority for you.

From my perspective, this all looks like a scam. As far as I know: you took BTC8,000+ from us, and never/hardly bought any hardware with it. You're been slowly paying us back with it, and are now running off with thousands of bitcoins and won't tell us why because of imaginary legal reasons that you coincidently can't elaborate on; and ask us to wait "Two Weeks^tm ".

I really want to believe, but it's looking more and more like countless scams we've witnessed on this forum for years. That's why legal action is looking more and more like a good idea for (us) investors.