1. The trust sponsor is wholly-owned by Winklevoss Capital Management LLC.
2. The sponsor is licensing intellectual property from Winklevoss IP LLC.
3. The fee has not yet been determined. Fees are often waived for a period of time with new issues but according to the prospectus, "Presently, the Sponsor does not intend to waive any of its fee."
4. The fee is paid via a transfer of bitcoin from the trust to the sponsor.
5. "There are no regulations, rulings or other authority that address the US federal income tax treatment of Bitcoins. Under one reasonable approach, a Bitcoin should be treated as a capital asset (and not as "currency"). In the absence of any future guidance by the IRS, a change in law, an administrative determination or a judicial ruling to the contrary, the Trust intends to treat a Bitcoin as a capital asset for US federal income tax purposes, including for tax reporting purposes."
The thing that really jumped out at me was the proprietary "Security System" for holding keys developed by Winklevoss IP LLC and licensed to the Sponsor.
...and the fact that the Sponsor is not liable for security-related losses except in the case of gross negligence, which I don't imagine would cover advanced theft/hacking. (I am not a lawyer.)
Something close to 10% of all bitcoin currently in circulation have been stolen— it's a widespread problem and there are presently zero really robust solutions currently in use by bitcoiners. I eagerly await more data about their proprietary setup.
Nothing says "future hack victim" like "proprietary security system". These are the guys so notorious for their failure to supervise subcontractors that Hollywood made a movie about it, and now we trust a high-value high-visibility system they just developed?
One would hope that an entity with enough capital invested in lawyers to draft an SEC filing would have to good sense to properly secure a Bitcoin wallet.
The SEC filing claims that a 51% attack could somehow modify the source code. Obvious errors like that make it seem rushed.
It can't be solved by just throwing money at the problem, either—it takes expertise, too. Nobody in the industry is taking (IMHO) adequate steps for protecting keys worth >$500k presently.
Theoretically I think the 51% attack basically allows you to control the direction of the blockchain.
At that point you could make a slightly different client run on your 51% and do things like (for instance) change the BTC generation rates and cap. Most likely at that point the people running the remaining 49% would find a way to ignore you, or fork the blockchain though.
1. The trust sponsor is wholly-owned by Winklevoss Capital Management LLC.
2. The sponsor is licensing intellectual property from Winklevoss IP LLC.
3. The fee has not yet been determined. Fees are often waived for a period of time with new issues but according to the prospectus, "Presently, the Sponsor does not intend to waive any of its fee."
4. The fee is paid via a transfer of bitcoin from the trust to the sponsor.
5. "There are no regulations, rulings or other authority that address the US federal income tax treatment of Bitcoins. Under one reasonable approach, a Bitcoin should be treated as a capital asset (and not as "currency"). In the absence of any future guidance by the IRS, a change in law, an administrative determination or a judicial ruling to the contrary, the Trust intends to treat a Bitcoin as a capital asset for US federal income tax purposes, including for tax reporting purposes."