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No-pay exchange AllSportsMarket (SBR rating D-) closes

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January 16, 2009
An open letter to the traders, investors and all who trusted in this idea and the
people behind it.
Some of you joined us in the very early days of, some in the beta
stage of ASM and others at all points along the way. For the benefit of all, I will
start this story at the beginning and cover all the major points along our path
that led us to this day.
In early 2001 with the help of a close friend who is a great programmer, we
decided to try and develop a direct trading platform that would be an .exchange
in a box. conforming to the order entry and crossing protocols that I became
familiar with during my experience as a day trader in the late 1990s. After
becoming intensely fascinated with the workings of the stock markets and the
ability to have a trading desk on Wall Street from your bedroom, I began to
wonder if such a system could be developed to run on a PC-based server and
accessed by a web browser. We worked through the intricate logic of how orders
were crossed and if such a feat were possible. During many months of study, we
decided that the technology did exist and we should give it a try. The first
question was to determine what type of instruments we would trade. We settled
on the idea of creating fictional companies with real-world type profiles and a
random news generator to simulate actual events. Once the trading engine and
platform were completed, we created a family of sample companies and opened
up the trading for .free play. using Wartrade Dollars. The initial results were quite
impressive and through the trading of our players we were able to debug and
perfect the trading engine. After several months of free play, we decided to reset
the system and apply real money. Just prior to this, we commissioned a law firm
to study the business model and assess the legal position. The outcome was that
no such product had been developed before and we were in new territory.
Without any specific prohibition, we moved ahead with allowing players to
deposit real funds. The free play site was quite active but once real money was
involved we discovered that the market performed very poorly. No matter what
was tweaked or changed, nothing seemed to have a positive effect on the
market.s performance. It was then that we discovered the fatal underlying flaw
that was somehow completely overlooked. No matter how objective and random
the news generator and other simulation efforts functioned, there was a basic
major flaw. The news and reality simulation information was being generated by
our platform. There was no verifiable way to prove the legitimacy and lack of
manipulation of this market data. That coupled with the mere fact the companies
didn.t exist in the first place was an unspoken major concern in the minds of all
on the platform. In the end, very few clients actually deposited real money or
traded on the live platform. The business never took off and was not even close
to commercially viable. We did accomplish something substantial, however.
Through the development of Wartrade and operation of the beta and live
markets, the backend, engine and trading platform were completed and
functioned well. All of this is pretty amazing when you consider that this all began
with some copy paper, colored pencils, two guys and a flurry of detailed emails
over many months. Through some chance meetings and discussions, the next
project was born as an extension of what was already done. That is what became
During this period, I had some experience developing business systems and
software architecture for the booming sportsbook industry. I had never even
heard the term .sportsbook. prior to this time and didn.t even know what it was.
I was told by an associate that the key element we were missing was the
objectivity of the events and news surrounding the instruments we were trading.
This was not a problem we would encounter if building a market around sports.
Having experience as a day trader in the stock market, it made sense that we
could take what we had done with Wartrade and combine it with sports teams. It
was apparent to me that the market for gambling on sports was enormous and
the only remotely similar product was a bet trading site called We
speculated that we could create a better product that would combine the
elements of a stock with .betting. on sports in the form of a new financial
instrument. We would adapt the Wartrade engine and create a new product and
a new market. While Wartrade was still operating, we began development of
AllSportsMarket® was started up in the same fashion as Wartrade using .play
money.. Many of the same traders opened accounts on the new beta ASM. We
ran this system for a number of months to get a feel for what worked and what
did not. The interest in the ASM beta far exceeded the Wartrade beta and we had
the strong feeling that we had found something. Without any significant
advertising or public relations, we soon had thousands of accounts. They were
pouring in from sportsbooks, sports chat forums and all types of sources from all
over the world. This gave us an even better audience to test and retest the
systems. Through this entire development period, substantial capital investments
were made by the main partners as neither platform had ever made a profit. In
early 2004, we made the decision to reset the AllSportsMarket® platform and go
live with real money. The market opened for worldwide real-money trading on
August 9, 2004. The reaction was immediate and strong. This was a far different
experience than Wartrade and we felt sure that ASM would become a sustainable
business. Several months into live operation, it was apparent that Wartrade had
no future. The decision was made to terminate it.s operations and transfer
accounts to ASM. Even after the Wartrade site was shut down, we left public links
allowing anyone who held a paid account to transfer to ASM and included
bonuses for doing so. When a sufficient period of time had past and no further
requests came in from legacy Wartrade clients, it was shut down and terminated.
That left us to focus full-time on ASM.
Without the benefit of any major marketing or public relations, ASM took off like
a rocket. In fact, it became very hard to control. We quickly discovered the need
to emplace surveillance and monitoring tools along with elaborate systems to
keep an eye on the activities. For the first time, I truly understood the need for
regulation. There were many battles inside and outside ASM on how we should
approach this topic. Some totally free market thinkers said we should take a
completely hands-off approach and let things settle where they may. Others
favored controls and anti-manipulation policies to maintain a fair and orderly
marketplace. I was always of the position that controls must be put in place. In
the early days of a totally free market system, it was much like the .Wild West.
and an .anything goes. attitude prevailed. I studied this over a long period of
time digging deeply into the market and watching the activity. What I saw was
very unsettling. Syndicates quickly formed between the larger players and
amateur hackers spent their days and nights finding holes in the system they
could exploit for profit. Groups would invite innocent new traders into the
marketplace with false appearances only to fleece them causing them to be
disheartened and disappointed. This produced a revolving door of new clients. It
was much like sending your Grandmother through a dark alley at midnight. I
knew that we would never be able to build a fair and balanced market while this
was allowed to continue.
At approximately the same time, we became aware of the need to make markets
to provide liquidity. This is something that is done in all Government Regulated
markets and is especially important in startup markets. Elaborate algorithms were
developed and tweaked to fill in the gaps and operate like market makers in the
Regulated markets. It didn.t take long for the unsavory types to begin unwinding
these moves and .baiting. the automated market makers for their personal gains.
Since we, as a company, were funding this making of markets, this became a
small capital leak that became a river. At this point in time (2005-2006), the
market was so active that it was hard to keep an eye on everything. I now truly
understand the mammoth task that Government Regulators have in trying to
monitor and control these gigantic capital markets. The futures market, for
example, trades more than FIVE TRILLION DOLLARS per day. Imagine trying to
keep an eye on that. This .cat and mouse. game required the inventing,
reinventing and perfecting of a growing set of market analysis tools. Ultimately
we were able to track every trade right down to the actual PC used to make it.
That opened a whole new world for us and spawned the creation of the STCC
(Sports Trading Compliance Commission).
The STCC is an internal group charged with addressing alerts and interpreting the
reports generated by the system. What we found was astounding. Many of the
traders had multiple accounts with some holding 10 or more and running them
all from the same computer. The market was being manipulated in ways that we
never imagined. It became a first priority to clean this up and restore order to the
marketplace. At approximately the same time, banking regulations began to
change. Our banks were asking us if we knew the identity of our clients. The
banking Regulators now required them (the banks) to .know their client.s client..
Our primary bank requested a personal meeting with the top director where we
were asked to outline how our business operated. This was the birth of the
disclosure forms (Know Your Customer) and increased identity requirements. It
was imperative that we identify our clients with the same level of information
detail as if they opened the account directly with the bank. I saw this as welcome
news because it would certainly add to the legitimacy of our market operations
and probably result in less fraud and duplicate accounts. At that point, we began
applying these disclosure requirements to all trading accounts. While most
welcomed this, a select noisy few made a huge fuss over this new requirement.
After closer inspection of their account records, the reason was obvious. The
reaction was unimportant. This was a banking regulation that we must follow.
It became very clear to me that we were quickly evolving into the product of our
stated mission. However, there was a very important critical piece missing,
positive legal certainty. That began my personal search for a Regulatory regime
that would accept our platform (or some modification) and fill in this final
important element to achieve our goals. We studied many different areas of the
World but it didn.t take long to realize where to go. While our platform was
accessible worldwide and we made no special efforts to market to any particular
Country, the vast majority (75%+) of traders were located in the United States.
This was the .fork in the road. and cause of much internal discussion and
argument inside ASM. I was absolutely certain that if we continued on our
present path without legal certainty, it would end in disaster. There was simply no
way we could continue to operate in a quasi-legal condition and access the U.S.
market. The decision was made to go directly to the source for answers:
Washington, D.C.
It would become first priority to seek out a Regulatory framework in which ASM
would fit. To make a long and expensive story short, it was finally determined that
the present platform and product could not achieve Regulatory status. This is due
primarily to the dividend payment system triggered by the outcome of individual
matches. While the ASM sports derivative architecture was absolutely fascinating
to the Regulators in Washington, it would never achieve status and would
probably run afoul of Federal and State anti-gaming statutes. So, we decided to
deploy all available resources on developing a product that WOULD conform to
the Regulatory requirements and be tradable on the global exchanges. This costly
economics and legal work has been going on for about 2 years now and we are
engaged at the highest level directly with standing Government Regulators,
attorneys and economists. Through endless emails, conference calls and trips to
D.C., we finally perfected that formula. This new product is called the
®. It is a cash-settled index futures contract that provides
estimates for the relative value of sports teams (in terms of USD) using a
proprietary formula we developed in conjunction with our team in Washington.
The final tested version was sent in for a provisional patent on December 22,
2008 and remains confidential until the utility filing later this year. Presently we
are about 90% complete with the Regulatory process to receive authorization to
trade. The reason this product can achieve Regulatory status and the present
ASM instruments cannot is primary due to the game related payment events in
the structure. The new instrument behaves like a stock and does not contain any
match win/loss data. It is designed to reflect the financial health of a team much
like an equity stock on NYSE or NASDAQ. The difference here is that there is no
direct connection to the assets or liabilities. It is essentially a .synthetic stock.. We
held very productive meetings with MLB (right up to the President), NHL and
phone conferences with the NBA. The NFL has not yet been approached. So far
all have been favorable. We held preliminary discussions with MLB and NHL to
discuss a revenue sharing program that would provide direct financial benefit
from the trading of instruments on their respective teams in return for
promotion. This has all been very well received so far. So, we are working
through the final 10% with the Regulators and working on establishing
partnerships with existing contract markets to carry our products. If all this goes
as planned, the SRI® will be trading later this year. That brings me back to
About 18 months ago, we formally requested an opinion on what should be done
with the existing market. We were told it could continue to operate provided we
didn.t allow U.S. clients to open accounts. So, for over a year we have blocked
U.S. persons from opening accounts. This has had the effect of making the
business unviable by effectively removing 75%+ of the market. All of our
resources have been directed to the development of the U.S. market products
and the SRI® leaving nothing to promote ASM or effectively adapt it to the
needs of the remaining 25% market share. On top of this, the U.S. company has
borrowed over $1.3 million dollars from a single partner to stay on top of ASM
and continue the work on the Regulated marketplace. This gentleman.s
dedication and commitment to this project cannot be understated. He is truly an
unsung hero of this entire odyssey. Thrown in with this entire process, we have
endured system failures, a fire at the hosting facility, money processor failures
and a host of losses caused by the undetected (until too late) fraudulent activity
of some traders. In spite of all this, we still managed to complete the
development of the SRI®, file it for patent and complete 90% of the Regulatory
process. All of this has cost millions of dollars, over 7 years of dedicated effort,
many sleepless nights and a great deal of stress and strain. But, the product is
done and the permission to operate nearly complete.
Each of you that purchased ASMA1 holds a share in Rainforest Internet Providers,
S.A. (a private investment corporation). Rainforest holds 1 share in Crystal World
Holdings, Inc. (DE.) for each share it issued. This gives you a direct pass-through
1:1 ownership in the U.S. holding company, the SRI® and all other intellectual
property and the future Regulated market operations. Your ASM cash balance
and sports derivative inventory will be exchanged (free of charge) for common
stock in CWH. So, if you have ASMA1 and a portfolio with cash and/or sports
derivatives, you will own ASMA1 (indirect holdings of CWH) and CWH as direct
ownership of the common stock. This will represent a complete liquidation of
your ASM account.
Those of you that did not purchase ASMA1 will have your account cash balances
and/or sports derivative inventory exchanged for CWH common stock at no
charge. This will represent the complete liquidation of your ASM account.
The exchange rate and legal details will be followed up soon. Additional
information and instructions will continue to be posted in the provided link.
The time has come to terminate operations at AllSportsMarket® and move on to
the Regulated marketplace and build The New Sports Economy®