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RE: Justin Sun Conversation with Witnesses Is Online. @Ned Sold Out The Community - Failed to Disclose.

in #steem2 years ago

My legal analysis. Justin failed to do due diligence on the public blockchain code which contained restrictions on the ninjamine stake. He bought land on the moon and is now trying to convert it to land on Earth by illegal means.
Second, despite his statements of not knowing about the understandings regarding the stake, he IS bound by them. These understanding bound Steemit Inc which owned the stake. He bought the company and thus became bound by its pre-existing obligations.
More details here: https://steempeak.com/steem/@apshamilton/sun-s-folly-will-be-taught-in-future-blockchain-business-schools

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We don't know what is in the NDA between Tron and Ned. (@48:25)
I'm not convinced that they don't understand what has transpired and there's more to the backroom deal than they admit to.

Hard to believe that a supposedly savvy businessman like JS wouldn't check every potential pitfall before dropping millions on an investment. Interesting times ahead.

Makes sense to me. Those restrictions were stated in writing in public. @justinsunsteemit could have done due diligence and found them. An intern and a couple pots of coffee would have been all it cost him to do so.

If @ned did not disclose those agreements, he's likely to face some blowback from Sun on the matter.

This just gets more fun all the time. I'm still waiting for the meeting to start on the recording, so I'll understand better soon.

Thanks!

A crook cheating a crook. Hopefully they'll eat each other in court but I'm not holding my breath.

While I strongly empathize with your sentiment, it is the hapless investors whose money is being used as a weapon by both that concern me.

We are the parties that matter, and the Steem community is continually stated to be the reason both sides are acting. This is the heart of the matter.

I'm trying to follow that argument but, I don't think I agree.

Big amounts of the ninjamined stash has been sold in the past to other buyers, yet the encumbrance did not get transferred to those buyers. Why should it be any different when the buyer is Justin? Just because he bought the entirety of the remaining stash?

Since Steemit Inc is a sole proprietorship, let's try to pierce the corporate veil and see how this looks: The ninjamined stash was, effectively, Ned's. He promised the proceeds of any sale would go to Steem's development. Now, Justin came and bought that stash of STEEM (again, as others have before, albeit in smaller quantities), paying good money for it. Ned simply cashes out, grabs the cash and walks away, A.K.A. an "exit scam", which totally violates his past promises.

I do not see how the attached strings would transfer to Justin. He just made a perfectly legal purchase. Ned did not misrepresent the property being sold. Ned is still bound by the promises he made and he must thus dedicate the proceeds of that sale to Steem.

2 answers:

  1. it wasn't just 'any' ninja-mined stash, it was the one which specific promises had been made to the community regarding and which a previous hard-fork had put restrictions on.
  2. Justin didn't (or didn't just) buy the ninjamined stake from Steemit Inc, he bought Steemit Inc itself. This comes with all the prior agreements, debts and claims that the company has. That's basic corporate law.
  1. Ok, but you'll agree that sine die freezing those funds precludes from spending them on development, right?

  2. I see the point, but I notice that Steemit Inc was simply Ned's proxy. Promises made by Ned would bind him directly, and not just the company. I highly doubt corporate liability limitations would apply to adequately shield him away from his promises: The "contract" in question is informal enough and unspecific enough to consider it was agreed by Ned himself, not just by him acting exclusively in representation of Steemit Inc.

I think this aspect comes down to which legal entity actually owned the stake and the accounts. Was it actually ned as an individual, via the proxy of the various steem blockchain accounts? Or was it Steemit inc., headed by Ned, but it's own legal entity. This would be within the contracts that TRON holds, so perhaps we will see this at some point.

What if Ned Scott Ned, whatever his name is, made a secret deal with Justin Sun? Imagine that they made a deal where it appears as if Justin bought it and that is just a cover story in order to move the money and the liability of an American Steem INC company might have in the United States under the laws of the USA and move them secretly to China and other countries as a way to avoid paying taxes and who knows what else. Perhaps, Justin is making some money as a fall guy. It is possible that he agreed beforehand that he would take the blame and look like an idiot. That would be like a win win situation where Ned and Justin both make some money and Ned then gets to lay low and avoid liability for whatever might happen legally to a USA company like Steem Inc. That would be like a new movie called Ocean 15, Dealing With The Sun and Moon lol.

Careful, that sounds like a conspiracy theory.. Don't you know conspiracy theorists are terrorists? lol ;)

Yeah lol. A conspiracy realist.

Following on what @apshamilton wrote, I want to picture this, maybe it's easier to understand. Think at Steemit's "ninja stake" as being land. Or any type of security. The owner of it uses that security to entice partnerships. In public writing, @ned committed to use that stake in a certain way in regard to witnesses, and that compelled them to invest.

It's like on some land he owned, @ned said: let's build a condominium. I'm putting the land, you're building. But, after 3 years and a lot of condominiums, he says: "Ups, I changed my mind, I'm going to give my land away". The guys that gets the land from @ned doesn't want to build condominiums, he wants to build a mall.

The problems are:

  1. @ned deceit towards the builders, they wouldn't have invested if the security wasn't there
  2. Justin Tron necessity to comply with any liabilities that he bought (hence the need of a due diligence, which, in my opinion, was made, the parties just decided to ignore it, miscalculating the response from the remaining parties: witnesses & community).

You can't stress too much that analogy. The property in question is a pile of fungible STEEM, not a specific land lot, and Ned had been already selling part of it those last years to fund expenses.

I would say that Ned had been selling parcels in one place to fund the building of the Steem condominium in some different place. Now Justin has come and bought the remaining parcels, but not differently that the other smaller investors before him.

Ned is still bound by his promises and must dedicate the proceeds of the sale to the Steem condominium. The encumbrance did not transfer to Justin, in the same way as it did not transfer to the other investors when they bought a parcel.

obligations are obligations, regardless of who they obligate and what they are obligations on. This is a clear principle at law.

Interesting Analogy

Thank you for sharing this valuable opinion.

"whose voting rights could be frozen by simple board decision".

Sun replace the board with himself and reversed the freezing. What is legally wrong with that?

His coup against the community witnesses (replacing the board) was also done illegally by exchanges powering (locking) up their Steem in breach of their fiduciary and ethical duties. It also appears that Justin misled the exchanges by describing what was going on as a hack and security breach rather than the legitimate governance dispute that it really was.

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