Topic: Legality of IPOing securities on GLBSE - page 2. (Read 10088 times)

Ouch! Such an elementary mistake and shame on investors not doing their due diligence.

So here's an example of a situation relevant to this conversation:

BTCSYN reports a $12k (1,852 BTC) theft
 - https://bitcointalksearch.org/topic/btcsyn-reports-a-12k-1852-btc-theft-92142

BTCSYN is a GLBSE asset, with multiple people (from Canada) listed as being the asset issuer.

So the "CEO" had $12K USD of [the "company"'s] funds on Mt. Gox, didn't have two-factor authentication enabled, and the funds got stolen.

A day or so later, shares were dumped on the exchange and currently GLBSE has halted trades for the asset.

And now, there are pissed off "investors".

If BTCSYN was an LLC or corporation and suffered this loss, it might consider liquidating, and returning whatever is left to the shareholders and that's that  (except, if there were some lawsuit for negligence, but that's a separate concern).

So here, you have multiple people that received money from the IPO.  If there were a "shareholder" suit filed, it would go after those named as the issuers.  I'm not a lawyer and have no idea how such a suit would be decided.  I'm not even asserting that the "shareholders" try to take this through the legal system -- the amounts are too small for an attorney to take this on contingency, and the "shareholders" are likely from many different jurisdictions.

There will be a day where the party (or parties, in this instance) that "issued" an asset on GLBSE finds themselves faced with a court case.

http://www.bankrate.com/financing/banking/can-facebook-compete-with-banks/  I wonder if you could create a facebook share market game ?

For what it's worth, a partnership is not an incorporated entity. Perhaps you are thinking of a limited liability partnership (LLP).

IIUC, the very basics of contract law require only agreement between legally recognized entities: a natural person, or an incorporated entity (corp, partnership, etc.)

It is doubtful that an anonymous, undefined entity ("internet nickname 'foo'" or "IP address 10.20.30.40") would be found to be a valid entity under contract law, but I would love to hear the opinion of an attorney.

Mt. Gox isn't soliciting investment nor offering equity to non-accredited investors.

Does the sec regulate contracts between two parties or multiple parties ?

I dont know of any actual incorporated companies or LLC's  in the regular sense that use glbse.

What is the difference between a guy running a mining "company" and Mt Gox which is an actual corporation registered with the government ?

I agree, it is fascinating seeing the capital formation in the BitCoin economy begin to take shape with this thriving bond market.

um, well, it depends on the arrangements (and I would be better answering this tomorrow).

For some of the projects I'm involved with there is a formal document and agreement, for others, it is, as you say, a "gentleman's agreement".  Not normally a donation, but a recognition of contribution.

I agree the listed entities could be an LLC, and then there is a distinction between a company raising funds versus simply adding liquidity for existing shares.

Part of my interest in this is my having done several different entities, and being a qualified chartered secretary - so it's a bit of fun watching the evolution of this.

But in no jurisdictions yet is there a legal entity for a "project".  Kickstarter has projects, but no equity so the funds to the project on Kickstart are not "investments" but instead are donations (or pre-sales, in most instances).

So currently these "shares" sold on GBLSE have no legal claim against the profits from the project nor would they have any claim against any assets purchased from either those profits or from the proceeds of the IPO.

Think of "investments" in any of the current GLBSE assets as gentleman's agreements backed by reputation.  (Well, I've seen loans and bonds listed as assets, so maybe those would be the exception where it is a legal contract which could be enforced through the legal system.)

There's no reason a GLBSE asset couldn't truly be a chartered corporation or LLC though (except for how offering equity to the public in this manner is something that is illegal in certain jurisdictions).  There might be tax havens like Anguilla or Cyprus that don't have restrictions against offering equity to the public (unaccredited investors).   Iceland is looking at the concept of a VLLC which presumably would be owned by shareholders.

The reason this entity definition might be relevant has to do with the ability to claim capital gains instead of having to declare proceeds from selling shares as regular income.  Listing an asset on GLBSE as a corporation or LLC entity would probably satisfy the definition of being an equity, and thus long term investment gains would enjoy the benefit of a lower tax rate as being capital gains.  Additionally, with a corporation or LLC there is civil and crimiinal code that limits actions the issuer might consider.

You do not need incorporation to be a legal entity.  There is a lot of ignorance about companies, company formation and entities.  For a lot of what appears on GLBSE an unincorporated joint venture is a good vehicle.

As an aside, have you bothered to check the legality of Apple, WellsFargo or any other "company" you've done business with lately (eg - your local food mart)?

Are the companies listed on the GLBSE public companies? Seems like some of these "companies" aren't even incorporated. I smell illegality in all corners I'm afraid.

We should see about moving the glbse server to iceland. Ive been reading about them opening large data centres there because the power is so cheap.

Does anyone know anything about this?


 - http://gigaom.com/2008/06/17/vermont-oks-the-creation-of-virtual-corporations/


The Icelandic Modern Media Initiative is a proposal that was passed by their legislature.


 - http://blog.p2pfoundation.net/icelandic-modern-media-initiative-press-release/2010/06/21



 - http://en.wikipedia.org/wiki/Virtual_limited_liability_companies

We could buy an island somewhere then use wave power for the DC lol

sub.

http://empireavenue.com/

and

http://www.hsx.com/

I see both of them use their own virtual currency and dont handle actual fiat. I think glbse will be ok as long as it doesnt do anything silly like get a  bank account and allow direct transfer of fiat to buy assets.

Untill you can pay tax in bitcoin then I am fairly sure it is not considered money by the government, if so which country issues it ??

If the owner were clever he'd incorporate in the US state and form a different corporation in another country. Then instead of the domestic corporation hiring the employees it would outsource the work to the foreign corporation, which would hire the US employees as contractors and pay them using Bitcoin. It would then be up to the contractors to take care of their tax liabilities themselves.

How is that relevant?

Possibly related, a post:

Judge.me - Transnational Law (or Small Claims Court for the Internet)
 - https://bitcointalksearch.org/topic/judgeme-transnational-law-or-small-claims-court-for-the-internet-83981