Bitcoin Forum

Proposal:
1. Bitcoinica should admit that they own people money and make sure the amount of it.  But the Bitcoinica users have to wait after the amount of money is confirmed by Bitcoinica.  Bitcoinica pay 70% of the money first,  ASAP.
2. Intersango should build Bitcoinica from 0 right now, and reopen it ASAP.
3. Bitcoinica repay the left 30% money they own people with their profit, within like 6-18 month periods after the reopening of bitcoinica, with or without some interest. As the money Bitcoincia owning people is paid by the profit, the new users of Bitcoincia won't have to worry the problem of fractional reserve.

Anyone setting up a poll for me, please?



What we know now:

1.There is not enough money after the hacks, at least now.
Bitcoinica suffered huge losses, now the Intersango\Bitcoinica\Bitcoin Consultancy don't have the money to pay us back. No matter what kind of legal\illegal action we take, there just not enough money for paying us back.

2. Lots of people still and will trust  Intersango\Bitcoin Consultancy.

Genjix\Intersango\Bitcoinica\Bitcoin Consultancy have run their own exchange quite safe, but when they were taking over bitcoinica, they don't have the required time\resources\chance to make it safe. However, some people will still trust Intersango, and if Bitcoincia reopens, lots of people will still do margin trading there.


3. If Bitcoinica reopens, it would be a profitable business.

We all know that.


For every party of this disaster:

@Genjix\Intersango\Bitcoin Consultancy: He claim that he appreciate the network, the trust he has among bitcoin community. And I don't think he would like the idea that lots of people blame him and being dragged into the legal war.

Genjix, you should talk. Act like a man, please not be so afraid of talking something "wrong" or "inaccurate".

If most of the users accept this plan, genjix, why not accept.

@every bitcoincia users: legal wars cost lots of money. And there is just not enough money. If Bitcoincia can give us promise that they will return the money later, IMO we should be satisfied.

Google battered wife syndrome fergoshsakes willya?

EDIT: My bad, maybe try Stockholm Syndrome or somesuch? Apparently battered person syndrome doesn't mean officially what it colloquially used to denote: the victim who keeps going back to to the abuser hoping all will be better, batterer promised not to do it again etc etc. Chronic return to batterer syndrome maybe?

-MarkM-

So you just think genjix is a scammer, right? but not everyone think so. And you have no 100% sure evidence for this. It's just an reasonable guess.

 if the bitcoinica reopens, lots of people will still chose trust bitcoincia for margin trading.

genjix has long history in this community, and no scamming rumors around Intersango exchange.  if he reopens the bitcoincia, he has no excuse for another hacking accident.

Then we have hope for getting the money back with the profit bitcoinica make.

Of course, Bitcoinica should payback the 70% of the money fisrt. And we still have the weapon of legal action.

He might need to remove all the passwords from the code first....

In my understanding, Intersango will rebuild Bitcoincia from scratch.

Actually no its not Genjix I think did it at all. Zhou Tong and Genjix could easily just be dupes of the lets buy up a trusted site and rape it gang. They both seem [pathetically? naively? childishly? charmingly? can haaz hamburger?] lacking in streetwise.

-MarkM-

Who the hell will actually put their money in bitcoinica again? Not after a 3rd time, I tell ya. Bitcoinica is doomed.

Maybe they simply change the name   ;)

Yes, its already been decided, remember? I saw it announced in one of these threads.

MyBitcoinica.

-MarkM-

look at the example of Mtgox. Do you trust Mtgox? After all the incidents happens with mtgox, people use it.

I don't think this is said by Intersango team. it's just a joke/sarcasm by the angry and astonished users.

1.  It is illegal for companies to continue to trade while insolvent unless they do so under the control of an administrator/receiver.

2.  When Bitcoinica was taken offline back in May, there was no projected date given for when it would resume trading.

3.  While creditors can agree to accept less than what they are owed under an insolvency agreement, this involves a proper audit of available assets and distribution by an appointed third party.

4.  It is not clear at this point whether anyone involved with Bitcoinica would even want to continue operating it.

<sarcasm>Ya think?!?!</sarcasm>

s/Yes, its already been decided, remember? I saw it announced in one of these threads./<sarcasm>Yes, its already been decided, remember? I saw it announced in one of these threads.</sarcasm>/

Better?

-MarkM- (And yes, I know, I shoulda used a separator other than / ... oops my bad.)

http://www.bis.gov.uk/insolvency/personal-insolvency/making-someone-bankrupt

If you make a legal claim and they fail to pay you by the court ordered date its an act of bankruptcy.

The potential profit of Bitcoinica is the only realistic hope I see for get full repayment. However, we can still take the legal war as a threat to the Bitcoinica.
Bitcoincia is and will be profitable. I think the 350K USD debt caused from the loss is small money compared with its potential. If the creditors can accept repay the money within 6-18 months, the operation of bitcoincia won't be put into pressure. So I think they should be interested in such circumstances.

IF, bitcoinica reopens and running with lots of revenue and profit, another round of VC financial might get into this business, and the creditors can get the money back faster than expected.

 

give them some time, there will be hope for getting all the money back.

@genjix, act as a man please. running away from this and make every user suffer 30% loss is not good for your long term reputation.

Bitcoin Consultancy/Intersango/Bitcoinica Consultancy don't own bitcoinica so its not up to them.

Nobody is stopping Tihan, Andrew Thornbury, or whoever bought bitcoinica from launching the site. They're venture capitalists and can certainly afford $300k to give the bitcoinica users 100% of their funds. As far as I'm concerned, they are legally obligated to do so and have been so since the moment they bought bitcoinica from zhoutong. If they trusted bitcoin consultancy with their mtgox password and no 2-factor auth, then its as much their fault that it was stolen.

Tihan/Thornbury can bear this cost and make it back from profits after they re-launch. Tihan should post and acknowledge whether they will bear the cost, or whether they intend for customers to bear a 30% loss.

You're right.

All the bitcoincia users won't care about the weird legal disputation of "who is the GP or there is no GP". We care about getting back our money. If we cannot, all of you are just BAD. just give us a plan to give back the money. You don't have to give back right now, if you don't have the money,  but a time schedule is required.

Are you serious? There are so many things wrong with this suggestion I don't even know where to start.

Who will fund this new venture? How will it pay employees? Who will be in charge of its security? Who will pay them? Why would anyone trust this? What if their costs exceed their profits?

It is extremely hard, as Bitcoinica itself proves, to do this successfully -- even without a massive pile of debt to start with before you even invest a dime in the business. There is no conceivable way a business could succeed starting with such a massive disadvantage.

And these are just the most obvious problems.

There is a business man in China called Shi Yuzhu （史玉柱）. He had loss lots of money in speculating in the real estate bubble, which drag other people into losses who buying his commercial real estate which never complete the construction. He is bankrupted.

However, he managed to start other successful business with only 300k RMB and become billionaire again. Then he pay back all the money which legally he won't have to pay back anymore( he was bankrupted)

I think Intersango/genjix/Tihan should do this likely. reopen the bitcoinica again. it will be a profitable business, and you can pay back the money then.

I wonder if Tom Williams bought bitcoinica.

Just ask how much Zhoutong earned from the bitcoincia business. IT IS PROFITABLE!

Genjix/Intersango have the experiences running an exchange, it won't cost that much to rebuild another exchange with a margin trading function.

yes, I'm serious. this tough of voice won't help.


The man see the potential profit of the margin trading exchange business.


look at mtgox. lots of people trust it after the incidents.
and the gesture that they are willing to take the responsibility.( If the accept to fully repay the money)

They also said 80% of funds were safe in cold storage.....apparently that was bullshit too.

Okay, say I'm that man. Now I have two choices, I can do that assuming all this debt. Or I can do this without assuming all this debt. You're arguing that I should do the former?

I'm going to go out a limb here and speculate that you've never owned a business. It's difficult and risky under the best conditions. Starting out with large debt makes it almost impossible to succeed. It seems easy because you only see the successes. The failures never get on your radar screen.

If they cannot even just cover the loss and move on, what is the percentage fee per transaction even for?

Open Transactions does not even implement a per transaction percentage fee, you pay a usage point per API call whether that API call is "send Mr X a million bitcoins" or "show me the inbox of my bitcoins account".

If the huge percentage fees everyone charges aren't actually enough to cover the running costs (such as insuring customers against incompetence of staff and suchlike costs of doing business) then the claim it is profitable is a red herring; what is profitable is getting out quick with a quick buck leaving the customers to hold the bag...

-MarkM-

well, if the bitcoin boost into sky rocket, I will hire someone on the Tor net to take you down with bitcoin I still have, If you chose the later.

And you need that act of bankruptcy in order to force someone into insolvency - but they don't have to wait for a creditor to do that before they can put the company into receivership/liquidation.  The advantage of insolvency proceedings, whether forced or voluntary, is that a third party takes control of the assets and distribution - it's no longer under the control of those who created the mess in the first place.

From a purely pragmatic point of view, the best option would be for the company to be placed into insolvency now and for a similar service to Bitcoinica to be opened down the track once all the bugs have been ironed out.  The new venture need not even involve anyone who was involved with Bitcoinica.


It's possible that the funds were transferred to MtGox to keep them "safe" while payments were being processed.  A clever hacker would have foreseen this possibility and just waited until it happened to take a second bite of the cherry.  We're never going to know "who, what, when and how" unless there's some public investigation of everything which has occurred since Wendon bought Bitcoinica from Zhou.

If someone else wants to start a margin trading service, then they won't like to take on the loan behind bitcoincia. They can just start a new exchange service. and running such an exchange service needs experiences and time, and if someone can do this for the insolvency, why not just start one of his own?

genjix decided to take over the Bitcoinica, and Tihan decided to buy Bitcoinica. Whatever the excuse and whoever should be blame, you should make sure that all the users have their money back.

Just act for your own reputations, and make a debt restructuring which will give you enough time to repay the money pack 100%.

A significant fraction of population of this forum is that stupid. Wont surprise me at all.

People lead their life in different styles. The poll shows that there are still 35% of people don't think Bitcoinica is scamming. If it can reopen again and running for three month without another hack, more people will start to use it again.

Tihan was involved with Bitcoinica prior to the Intersango guys being brought onboard first to perform a security audit and then as general partners.  What's less clear is the overlap between Wendon purchasing the Bitcoinica domain and IP from Zhou and Tihan's group becoming involved with Bitcoinica.

Nobody at Bitcoinica can simply restructure their debt.  They are insolvent and cannot legally trade at this point without oversight even if their creditors agreed to letting them try to trade out of financial trouble.  More importantly, they cannot be forced to continue operating Bitcoinica.

I doubt that there are going to be a lot of Bitcoinica users who are going to be willing to be "paid back later" in order to help those involved salvage their "reputations".  I suspect many users would much rather have 70% of their funds returned now rather than some indeterminate amount at some unknown future time.  Nobody's going to loan Bitcoinica money to continue operating or inject capital into the business at this point, so how are they going to make this imaginary amount to cover the difference between what they currently have on hand and the total owed to users - they cannot trade without allowing users access to their funds.

first let's learn to quote others correctly without taking it out of cotext. Like this:


Now whether people think they are scamming and whether people think that trusting money to that team again is a good idea are two rather different things.

I do not know whether they are scamming or not. It is totally plausible that they are just that grossly negligent or simply incapable of implementing a sane information security management system. In either case it would be unwise to trust a single BTC to that team ever again.

Comparing this to mtgox would be incorrect. Comparing to this mtgox were acting like champs in their worst days. And mtgox indeed behave much more professionally lately, plus mtgoxes stance on this bitcoinigate is rather very mature. I still would not trust any nontrivial amount of BTC to mtgox, but it is just old careful me, YMMV.

Of course, They should pay back the 70% of the money ASAP. I just mean the other 30% money can be pay back later. I will edit my OP to make it clear.

I would like to see the Bitcoinica users and myself give them some time, during which they can earn profit from business, but their walking away with tons of excuses and users eating the loss is totally unacceptable.

MtGox is lucky. The hacker didn't delete their database, for once. Bitcoinica wasn't so lucky.

The nice thing about mtgox is that they apparently not only were able to dodge a bullet but was able to learn from their lesson. Bitcoinica didn't. Instead, they got hacked 3 times.

Lady Luck is smiling to those who are well prepared.

They have already walked away and the money is most likely gone.

You can't force other users to effectively give them a loan, which is what would need to happen in order for them to continue trading.  The minute they re-open for business, people are entitled to withdraw their funds in full and we already know that they don't have enough funds to meet those claims.  "Giving them time" to earn a profit means people's funds being put at further risk - it's absolutely possible that users would end up receiving even less than 70% of funds owed.

They could open a separate business which exists purely for the purpose of making enough profit to compensate Bitcoinica users for the lost 30%, but how would they raise the capital needed?  Do you expect them to funnel Intersango profits towards Bitcoinica returns, because that could create separate legal nightmare.  And I've yet to hear any of the Intersango guys say that they'd even be interested in running Bitcoinica again.

Given Tihan's comments here and elsewhere, I'd be hella surprised if the partnership - and therefore the company - is not dissolved.  It's not clear whether Patrick has resigned from the partnership or whether he just wants nothing more to do with the claims process. The possibility of the limited partner suing the general partner exists - Tihan has made very clear that he holds the general partner responsible for the latest security fuck-up and that his fund is considering their legal options.  Even if it were not illegal for an insolvent company to continue trading, the whole legal context in which Bitcoinica currently sits makes it highly undesirable.  

Maybe there exists somewhere an investor willing to bail Bitcoinica out in return for equity in the domain and IP, but the question remains of who would then operate the business.  I doubt they're going to find an investor who is willing to assume responsibility for the outstanding 30% which will be owed to users.

It's also worth remembering that Bitcoinica's compliance with KYC/AML requirements may well come under scrutiny as this drama continues to play out.

You would need to start a separate company altogether perhaps through an IPO although I cant see the shareholders agreeing to essentially hand over their profits out of charity.