HashFast announces specs for new ASIC: 400GH/s

[cedivad]

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.

[Minor Miner]

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.

[Scared]

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.

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.

[Scared]

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.

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.

[cedivad]

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

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

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.

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.

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.

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.

this is why we are hosting the interactive phone session tomorrow, so that we can explain the terms document more clearly to people.

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

[perezoso]

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?

[cedivad]

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?

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

[perezoso]

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?

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

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

[cedivad]

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.

[stan258]

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

[Minor Miner]

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.

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.

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?

[perezoso]

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.

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....

[RoadStress]

I got it 

they will have about 27,000 chips. 

will transfer $10 million to the new company in cash

[Scared]

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

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

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: 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.

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.

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: 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.

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.

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.

LBS: this is why we are hosting the interactive phone session tomorrow, so that we can explain the terms document more clearly to people.

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

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]

[cedivad]

>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.

[Minor Miner]

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.

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?

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?

[digitalbrass]

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.

[aasl]

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.

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

[stan258]

Everything should go out to the highest bidder. Everybody thought the Fed auctioned btc was going to be under market value. Lb can bid on it just like everybody else. Everything from desks, chairs and the damn chips to the shades on the windows. I want every penny on principle now.

[cedivad]

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.

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

What have you guys smoked? I mean, its a bankruptcy, right? Maybe Wikipedia could help?