Bitcoin Lolcows, the musical. Today, Kludge

Thursday, 04 October, Year 4 d.Tr. | Author: Mircea Popescu

Exhibit A :

Quote from: Kluge on August 20, 2012, 05:35:34 PM
Re: [GLBSE] BDK.BND (1%/week)

I currently own far more than enough USD to buy back BDK.BND if my BTC operations were to become a total clusterfuck. I don't say that to be a jackass, just to state that there is no reason for current investors to worry. I do not plan on issuing any more BDK.BND units until I have a better idea of what will happen from Pirate closing shop. I do not plan on issuing a buyback, but Pirate closing up may accelerate my plans to eventually buyback and issue a lower-yield bond. I will have a better idea of what I want to do within a month.

Just to be absolutely clear -- there is nothing that can happen in the Bitcoiniverse which would cause me to default on BDK.BND. There is no need for investors to worry.

Exhibit B :

Quote from: Kluge on September 30, 2012, 05:44:56 AM
Re: [GLBSE] BDK.BND (1%/week)

kludgeI am defaulting on my BDK.BND debt. Beyond this, I will no longer be honoring the contract in the form I originally laid out. I previously intended to empty my non-legal wife's (we personally consider ourselves married, but legally, we are individual and thus have rights we'd otherwise forfeit) 401(k). I obviously did not want to do this, but it became clear it was necessary as I was looking at $200-250/wk interest on this single debt while having been financially raped by loans to various members of the community (No, Pirate is not the primary cause of my distress. Please don't turn this into some Pirate discussion.). After weeks of tha stress, on top of previous stress... heated arguments... -- this is no longer an option. I do not think her response to my actions is unreasonable (she's already effectively lost tens of thousands due to my actions), but this clearly affects my ability to repay within what I'd consider a reasonable time-frame. I currently have a negative net worth excluding my residence which would be protected under a personal bankruptcy filing which I will not pursue unless a suit is formally filed against me. I'd advise against taking action on potential cynicism, and suggest you give me at least a couple months to confirm I am indeed making a decent effort toward repaying what I owe.

I am unable to pay interest on my current BDK.BND debt. It's impossible for me to keep up with that, living expenses, and interest on other debts which are small enough where I can close them - and I apologize, in a sense, for the unfairness of how this is being handled. BDK.BND-holders, who I've always wanted most protected from risk, are now getting the shaft. I cannot subject my wife to more loss, and will be forcing BDK.BND holders to suffer as a result of my unwillingness to liquidate my residence. I apologize for the trust I've violated, the business mismanagement, and this default as a result. If I were unable to compartmentalize, I would be unable to write this. I am truly and deeply sorry. I also apologize for not having the emotional fortitude to prevent what I'm also about to announce: I will not be communicating much, if at all. I will likely not read anything written in this thread beyond this post for months. I just can't handle it when there are many things I need to do to get the situation in order. I will not be responding to phone calls, Skype messages, nor responding to emails. I will not be clarifying what I've written, and will not be responding to questions. I just can't right now, and understand how bad that looks and is. Again, I apologize. I will post an impersonal message each time I make a dividend payment.

All BTC I currently own will go toward BDK.BND payments. These will come in the form of irregular, unannounced dividends -- there will no longer be .001BTC/bond dividends each week. I will never buy BDK.BND back, and that section of the contract can be considered practically void. I can do nothing but assure everyone that I have no intent to make any purchases of BDK.BND units, and will allow them to trade freely on GLBSE as people value them given I have absolutely no information on when, and in what amount, these bonds will be repaid. However, I promise I will repay the debt as it stands, as I'm able. So long as GLBSE is active, I am alive, and earning income, I will continue to make dividend payments on BDK.BND units as a gesture of goodwill (and appreciation for not suing me into bankruptcy) beyond the .101BTC "hard debt" I currently consider as existing. Basically - I will be making larger, more rapid payments until dividends beyond this date reach .101BTC/bond. After that time, I will continue paying irregular dividends in a way which is appropriate for the gratitude I owe, and possible for the amount I need to live. I am unable to provide a repayment schedule or dividend schedule. Essentially - I'm giving what I can without forcing an unreasonable amount of loss (beyond what I've currently caused) onto my non-legal wife, and I naively hope everyone trusts me to be doing exactly what I'm saying I will. I'll provide instructions in my will to give an update (with death certificate) on this forum in the event of my death. Though things have been pretty shit lately, I am not at all suicidal -- just gave the info in that last sentence as an FYI.


This turn of events is particularly funny for our Romanian friends reading this blog for the following reason :

April 30 :
These bonds will be partially insured and backed by a cartel of some of the most reputable and well known BTC lenders in the lending forums: BurtW, PatrickHarnett, dollartrader, hashking, imsaguy and ineededausername.

September 6 :
Trust's low across the board, and it's a terrible time for all this to happen in some ways. Just bought a property outright. I have enough left-over to still go a couple years with all the repairs needed, and covering $5-10k in a failed venture, but it's getting too close for comfort. I'm not too interested in re-capitalizing until I know I'm personally in a secure position, and for me, that means taking a steady job again for 2-3 years, and maybe doing this on the side. I'm not one of those people who come to people with an idea, no sweat-equity put in, and ask for $250,000 - fuck that, I like being able to sleep. One thing I definitely don't want is to operate with insignificant equity compared to liabilities like the majority of conventional banks. They usually are able to get away with this by having hundreds of thousands, or millions, of customers, where operational income/outgo can be reasonably estimated day-to-day (bailouts are probably pretty helpful, too). Someone could withdraw $500k from Huntington one day, and their operations would be only negligibly affected. The way Bitcoin lenders work is by being extremely meticulous in making sure loan repayments line up with deposits, and there are at least two back-up plans if the lendee of the depositor's money ends up disappearing. The way many of us operate - we merely guarantee a lendee's loan in many cases (maybe not most, though). All the risk's on us for a much, much smaller reward than depositors receive - BUT, there's been pretty severe competition, and Pirate's really fucked with the rates. If someone can personally guarantee 2%/wk and deposit almost all of it into Pirate, there's not really a place for me. It practically forced us to put money into Pirate because it's the only way to be competitive, and we did this in a very cannibalistic way. We should've just stuck with what we had, not taken on debt the way we did, turned money down, and operated either entirely on equity and the few depositors willing to take 1/10 the rate guaranteed PPTs offered. We didn't do that, though - we had gentlemen's agreements on the maximum rate we could offer on guaranteed deposits, but it wasn't enough, and once PPTs started popping up, those agreements pretty much went out the window, especially since many were operated by individuals outside the lending cartel.

It's not all bad, though. With Micon's shit-brush, Pirate defaulting, JRO defaulting, the asinine warning on the top of "long-term offer" threads (just sent theymos a long rant about that...), and the massive runs these have all colluded to create, Patrick's more-or-less out of the game. HK will probably wind down if Pirate doesn't repay, Imsa's possibly gone, Burt might be gone... The playing field's going to be pretty empty -- all these great people who ultimately should've overshadowed me - people who have been extremely generous to me in sharing lots of information on finance an innovation (and their coins when I've needed it!) -- many of them will be leaving, or are already leaving. I'll be less without them, and the economy on the whole will be less without them, but as far as business opportunity goes, it's a great time to really push forward (well, it would be if I had lots of spare cash to throw back in).

I happened to have been winding down operations and I believe I only have 3 outstanding fixed-term deposits. The rest are in BDK.BND, which people can't force me to give them face value for at any time of their choosing - and, if people sell that down on the open market, I win, anyway, by getting to buy back my debt very cheaply. So, I believe it was mostly only coincidental that I've been pretty-well protected in the current environment (even with all the horse-shit which's happened since June). There are still people willing to deposit money with me... but I'm not interested until I feel better about where I am financially.

Idunno. Sitting and waiting with BDK/IOU, for now. I put the designers for on hold, and that's close to being canned altogether after the dev's paid for "phase one." I have a house to fix up, and we just found a cat crying outside a few hours ago. Named her Rusty Joe.

ETA: And thanks everyone. I should've received way more shit than I did for pulling a "voluntary recall," I think. I appreciate the trust. I was pleasantly surprised by how many requests there were for BDK.BND over BTC payout.

You see, five years or so ago Romanian blogs had a "cartel". It died. On the heels of that April announcement my representative promptly declared war to this "cartel" (1, 2, 3). It... died ?


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3 Responses

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