Bitgold and GoldMoney Review and Complaints
[NOTE: Bitgold has a very lucrative affiliate program and many of the popular thought leaders are Bitgold affiliates. This page contains no affiliate links to either Bitgold or any competitor.]
- Overview - Table of Contents
- About GoldMoney and Bitgold
- What are GoldMoney and Bitgold's products and services?
- Is GoldMoney and Bitgold Safe?
- Is GoldMoney and Bitgold financially solid?
- 2015 Third Quarter Financial Results
- Bitgold CEO endorses use with Online Gambling
- Confusion with Nick Szabo's mid-2000's Project
- Is Bitgold a Scam?
- Peter Schiff's Allegations
- Dominic Frisby's Analysis
- James Turk Responds
- Executive Management Team
GoldMoney and Bitgold are the same company. Bitgold is a brand new platform for that intends to offer gold payments to customers.
It is publicly traded on the TSX Venture exchange in Canada with the stock ticker symbol (XAU:TSV).
On June 1, 2016 it traded at CA$5.47 or about $7.15. Eight months later on Feb 1, 2017 it traded at CA$3.20 or $2.45. Such terrible performance may be cause for concern for customers who entrust Goldmoney with significant amounts of bullion. What happens to customer funds Goldmoney goes bankrupt or ceases to be a going concern?
About GoldMoney and Bitgold
According to an interview with CNBC they have 104,817 active customers and store approximately 276 kilograms of bullion stored or about $10.7 million at $1,213 per ounce. This means there are approximately $103 per active user.
Major competitors include BullionVault and GoldMoney. BullionVault has approximately 55,000 customers and $2B of bullion stored or about $36,000 per customer while GoldMoney has about 22,000 customers and $1.3B or about $60,000 per customer.
On March 4, 2015 Bitreserve brought suit against Bitgold in the New York Southern District Court case number 1:2015cv01593.
On May 13, 2015 Bitgold Inc. began trading on the TSX Venture exchange in Canada.
On May 22, 2015 Bitgold Inc. announced the purchase of GoldMoney operating subsidiaries and intellectual property in a transaction valued at CAD$51.9m.
On June 26, 2015 Bitgold Inc. announced:
US residents can sign up on the BitGold platform and buy, sell, or redeem gold using BitGold’s Aurum payment and settlement technology. US residents will also have access to the BitGold mobile app and a prepaid card when these features launch over the coming weeks. Send and receive gold payment features are not initially available in the US.
What are GoldMoney and Bitgold's products and services?
The BitGold “Aurum” gold-settlement technology is now integrated via the Automated Clearing House (ACH) network in a NACHA compliant manner with nine of the top US financial institutions including: JP Morgan Chase, Bank of America, Wells Fargo, Citi, US Bank, USAA, Fidelity, Charles Schwab and Capital One. BitGold users with an account at one of these institutions can instantly authorize deposits or redemptions. This makes transactions more automated, secure and avoid possible bank wire fees.
|Users can send and receive gold as payment to and from any BitGold user or seller for free. Gold can be sent as payment to non-BitGold users with email or mobile phone. This does seem like an interesting use case in the Information Age.|
|Users can spend gold with a BitGold prepaid debit card. Since many major credit cards are accepted globally this greatly extends the places where funds can be spent from a Bitgold account. Additionally, the feature includes ATM machines to withdraw local currency.|
|The 10 gram BitGold gold cubes are worth approximately US$380. They can be redeemed by users on the BitGold platform. Being able to demand physical delivery at any time is very important when it comes to gold investments.|
Is GoldMoney and Bitgold safe?
Bitgold is new, unproven and appears to be in a regulatory grey area. The company itself does not appear to state what regulator has jurisdiction and oversees their trade practices such as ensuring that customer funds are kept safe. Additionally, the CEO has endorsed the use of the system with online gambling.
According to page 20 of their initial public filing they conclude that:
"neither company is eligible to be registered with the Financial Transactions and Reports Analysis Centre of Canada ... There can be no assurance that BitGold’s services or Internet platform will be acceptable to foreign regulatory bodies. Foreign governments may seek to restrict access to BitGold’s services, block BitGold’s website, or impose other restrictions that may affect BitGold’s ability to offer service to new or existing users in those for an extended period of time or indefinitely.
Is GoldMoney and Bitgold financially solid?
On May 27, 2015 there was a very thorough article, now unavailable, by Bullionvault CEO Paul Tustain on the Bitgold and Goldmoney merger where he raises very interesting points about the financial stability of the Bitgold and Goldmoney combination and presents a three year comparison chart between competitors Bullionvault and Goldmoney.
Those results made scary reading.
- GoldMoney's sales have collapsed – by 78.7% over three years.
- It lost £9.4 million in just one year – 2014.
- Its net assets fell from £25.4m in 2013 to £13.1m in 2015.
- At its March 2015 year-end it is still posting losses.
The financial statements speak for themselves and tell the story of incredible mismanagement at Goldmoney relative to Bullionvault. It will be interesting to see whether the Goldmoney will be turned around via this merger with Bitgold.
Bitgold's 2015 Third Quarter Financial Results
Bitgold's third quarter financial results issued on February 29, 2016 stated:
* Consolidated Gross Revenue of $80.82 million for the quarter, up 22% from $66.25 million for the previous quarter ended September 30, 2015 BitGold Gross Revenue of $13.26 million up 27% quarter-over-quarter
* GoldMoney Gross Revenue of $67.56 million, up 21% quarter-over-quarter
* Group Gross Profit of $1.15 million for the quarter, up 9.2% quarter-over-quarter
* Total comprehensive loss for the quarter of $2,824,859, or $0.05 per share, improved from $0.09 per share in the previous quarter
* Non-IFRS Adjusted Loss of $1,658,618 after netting out one-time non-recurring expenses and non-cash items
* 257,780 user signups during the quarter, reflecting all-in acquisition cost of $6.43 per user (based on Non-IFRS Adjusted Loss), reducing all-in acquisition cost 27% quarter-over-quarter - significantly below financial services industry average
* 602,120 users holding $1.54 billion in customer assets under administration in both platforms as of December 31, 2015
* Group Liquidity of $28.76 million at quarter end consisting of cash, precious metals, and marketable securities. Pro-Forma liquidity of $63.27 million following completion of a Bought Deal Financing on February 24, 2016
On May 29, 2015 Bitgold announced a CAD$21m bought deal financing which should ally some of the concerns Mr. Tustain raised.
Consequently, while the uncertainty risk from a new service provider may not outweigh the risk of going with a trusted provider like BullionVault the merger with GoldMoney should be taken into account.
Bitgold CEO endorses use with online gambling
From an interview with the Financial Post:
Based on the rapid take-up of the platform in the first few days, he said it appears to be far more than a niche product for a small group of users. He noted that hardcore gold bugs make up less than 10 per cent of the user base so far. “I’m seeing friends who signed up sending payments to each other,” Sebag said. “I know they bet on football, and now they’re paying each other.”
Bit Gold - Confusion with Nick Szabo's mid-2000's Project
Bitgold Inc. should not be confused with Nick Szabo's Bit Gold project. Nor does Bitgold Inc. have anything to do with Bitcoin.
The Bit Gold proposal, by Nick Szabo, describes a system for the decentralized creation of unforgeable chains of proofs of work, with each one being attributed to its discoverer's public key, using timestamps and digital signatures.
It is said that these proofs of work would have value because they would be scarce, difficult to produce, and securely stored and transferred.
Szabo's theory of the economics of such money is described in the linked article on the origins of money.
Transfer with prevention of double-spending, via a Byzantine-resilient peer-to-peer method, is described in another linked article which calls the method secure property titles and proposes also applying it to other kinds of digital property, such as domain names.
However, this Byzantine method relies on a quorum of network addresses rather than a quorum of (hash) computing power, so unlike bitcoin it is vulnerable to Sybil attacks.
Is Bitgold a scam? Opinions by major thought leaders.
There have been significant customer complaints about funds being frozen. However, there have been no actions by regulators indicating evidence of any nefarious or malicious actions being taken by Bitgold.
Peter Schiff's Allegations
On March 23, 2016 Peter Schiff, who owns and operates a competing company, has made some serious complaints about Bitgold's business model, inaccurate claims about being the first gold-backed debit card and serious tax liabilities users may incur by using Bitgold's services.
Before Schiff sold his gold company to Goldmoney he followed this up with the now unavailable article BitGold’s Secret: A Taxation Time Bomb:
I find it hard to believe BitGold isn’t aware of existing prepaid gold-backed debit cards, but they have no problem marketing theirs as being the first and only one in the world. My guess, however, is their real intention is to deceive investors into purchasing the company’s over-priced stock. If investors think the company provides a unique service, they are more likely to overlook huge current losses.
Bitgold's 2015 Third Quarter Financial Results
Bitgold's third quarter financial results issued on February 29, 2016 stated.
- Total comprehensive loss for the quarter of $2,824,859, or $0.05 per share, improved from $0.09 per share in the previous quarter
- Non-IFRS Adjusted Loss of $1,658,618 after netting out one-time non-recurring expenses and non-cash items
- 257,780 user signups during the quarter, reflecting all-in acquisition cost of $6.43 per user (based on Non-IFRS Adjusted Loss), reducing all-in acquisition cost 27% quarter-over-quarter - significantly below financial services industry average
Dominic Frisby's Analysis
However, on May 19, 2015, a few days after the IPO, Dominic Frisby wrote:
Today we consider BitGold. We don’t ask whether you should run away – but how fast. ...
As someone who’s seen what Vancouver is capable of, this has set all my alarm bells off. There’s been a lot of hype and now somebody is selling. There’s an expression for that. ...
Given all this, my view is that BitGold’s founders, Roy Sebag and Josh Crumb, don’t properly understand gold. ...
If BitGold’s founders knew their bitcoin history, they would not have named the company thus. It is yet another factor that makes me worry that this is little more than a gimmick. ...
In short, there is a huge amount of success already priced in here, based on little more than a superficially persuasive idea. As soon as the hype dies out, a lot of money is going to get made shorting this one – and a lot of money lost by those who were taken in.
James Turk Responds
On May 29, 2015 Goldmoney founder James Turk responded to Dominic Frisby:
BitGold is not a “bitcoin company” – if you need a comparison, it is much more “PayPal” than “bitcoin”, but BitGold can be better understood as a “digital gold” company, which of course is what GoldMoney invented and patented.
There exists vast potential for changing online payments, and in my view, BitGold has the right people and resources to take advantage of this potential to the benefit of its customers and shareholders. ...
Importantly, the opportunity to change online payments exists, notwithstanding your concern that metal payments years ago never took off. Nor for example, did ATMs, which existed for many years before bank customers finally understood their many benefits. The point is that customer adoption in financial services often comes slowly; it is a natural response because people do not want to take risks with their money. ...
In 2013, I retired as chairman of GoldMoney, but have remained a member of the board. Once this transaction closes, I will join the BitGold board with two fellow GoldMoney directors, Hector Fleming and Mahendra Naik.
On June 28, 2015 Michael Shedlock [Mish] of the popular Global Economic Analysis blog wrote a very thorough opinion on Bitgold including:
I encourage everyone to Sign Up for a BitGold Account. I have done so myself. ...
Due to my long-standing relationship with GoldMoney, many readers have asked what the purchase of GoldMoney by BitGold means.
After careful review over the past couple weeks with both James Turk, founder of GoldMoney, and Roy Sebag, the co-founder of BitGold, I am pleased to report the news is 100% positive. ...
Seldom does one plus one equal three, but that idea makes sense here. I back promotion of gold as a currency, and BitGold has the resources and institutional backing to do it properly. Attempts by others have failed or languished.
As a publicly traded company with an innovative business model this could be a very interesting speculation. For example, PayPal's $45 billion valuation is 30 times what eBay originally paid for the company in 2002 and it earned about $419 million in net income during 2014.
Nevertheless, potential customers should keep in mind that this is a new and unproven service provider with significant legal questions that do not appear to be definitively answered with a CEO who actively endorses its use for highly regulated activities like online gambling.
It would be unfortunate if this ended up like e-Gold which resulted in the largest digital currency money laundering case of all time or MtGox where customers lost approximately $500m of funds.
Executive Management Team
- Roy Sebag - Co-Founder and Chief Executive Officer
- Josh Crumb - Co-Founder and Chief Strategy Officer
- Darrell MacMullin - Chief Operating Officer
- Alessandro Premoli - Chief Technology Officer
- Daniel Crandall - Chief Financial Officer
- Katy Millington - General Counsel
Darrell MacMullin - Chief Executive Officer
Darrell MacMullin - Chief Operating Officer
Darrell MacMullin has driven successful new payment and commerce innovations for the past 15 years, including the launch and leadership of PayPal during its first eight years in Canada.
He has worked closely both as an advisor and investor with entrepreneurs, developers and industry partners to accelerate the growth of new FinTech payments and commerce experiences.
Darrell provided thought leadership and innovation expertise for the convergence of online, mobile and offline into one commercial stream with government, banks and new FinTech companies.
Prior to PayPal Darrell was part of the successful launches and rapid growth of eBay and Chapters Indigo online into leading commerce players.
Roy Sebag - Co-Founder
Roy Sebag is a Co-Founder of BitGold.
He has been an active investor and portfolio manager for over a decade specializing in distressed, event-driven, and natural resources investments.
Throughout his career, he has correctly predicted important investment and economic themes before they materialized resulting in risk-adjusted returns that significantly outperformed market indexes.
Roy loves to consume information and is a voracious reader of all things science, history, and economics.
Josh Crumb - Chief Strategy Officer
Josh Crumb is a Co-Founder and Chief Strategy Officer of BitGold.
He is an entrepreneur with a background in early stage global businesses.
Josh was previously the Senior Metals Strategist at Goldman Sachs in the Global Economics, Commodities and Strategies research division in London.
He also held various positions within the Lundin group of companies, serving as Director of Corporate Development and Special Project Analyst for group chairman Lukas Lundin.
Currently, Josh is a director of three Canadian listed public companies and plays a large role in many philanthropic organizations.
He holds a Master of Science degree in Mineral Economics, a Graduate Certificate in International Political Economy, and Bachelor of Science degree in Engineering from the Colorado School of Mines.
Alessandro Premoli - Chief Technology Officer
Alessandro "Alex" Premoli is the Chief Technology Officer of BitGold. He is the architect of the BitGold proprietary platform, and leads the BitGold development team in Milan, Italy.
Over the last decade, he has developed encrypted storage and messaging systems for highly sensitive, data-intensive organizations, gaining comprehensive experience in security, cryptography and digital signature solutions.
Alex has been an important member of the cryptocurrency community for several years and has been involved in the Ripple financial protocol since its early days.
He is passionate about open-source projects and is an active committer to the FreeBSD Project under the moniker "Alex Dupre". He holds a Masters Degree in Informatics from the University of Milano-Bicocca.
Daniel Crandall - Chief Financial Officer
Daniel Crandall is a CPA, CA and is the CFO of BitGold.
Dan has provided CFO, accounting, regulatory compliance, and management advisory services to numerous issuers on the TSX, TSX-Venture and other Canadian and US exchanges.
Previously, he was a Manager at Collins Barrow Toronto LLP, a public accounting firm where he worked for over five years.
He holds an Honours Bachelor of Accounting (Co-op) degree from Brock University.
Katy Millington - General Counsel
Katy Millington is the group General Counsel, an executive director of the Jersey companies, and the Jersey Head of Compliance.
She holds a Bachelor of Laws (with honours) and a Bachelor of Arts from the University of Auckland.
Before joining the group, Katy worked as a commercial litigator and regulatory lawyer with leading international law firms across multiple jurisdictions, including New Zealand, Cook Islands, United Kingdom, and Jersey, advising on a variety of issues including companies and securities matters, the UK Bribery Act and US Foreign Corrupt Practices Act, economic sanctions, and worldwide freezing orders.
The group benefits from Katy's considerable international multi-jurisdictional experience when servicing customers and meeting regulatory requirements on a global scale.