Bitcoin Forum

Copy and pasted from this locked thread. https://bitcointalk.org/index.php?topic=101098.0

"I was involved with Alberto on Bitcoin Rebate and Kronos, and worked with ludvig(DeaDTerra) and others to raising bitcoin for both projects on the basis of a 50/50 ownership. Based on everything I was told (and believed), both myself and others believed that it (Rebate) was a viable project. If I could go back and do it again, I would *not* have had any involvement with Alberto.

Right after Bitcoinica shut down, Alberto informed me that he had been working on the beginnings of a margin trading platform. Given that I was looking for opportunities to leverage the ZipConf back end for instant deposits into exchanges, a perfect fit for margin trading / multi market hedging purposes, I actively started working with Alberto to pursue ZipConf integration, and a multi market orderbook for the Kronos project.

After Kronos went live, Alberto decided of his own accord that he would go against Eric, Matthew and my development protocols, and he left the withdrawal page wide open and vulnerable to a scripting attack, without *any* protections or manual verification requirements in place for withdrawals from the hot wallet which he controlled. Alberto also went against protocol and handed out invitations outside of the scope of the defined invitation list for early testers.
As one might expect (hindsight is 20/20), Kronos experienced a massive hack via what ended up being a wide open withdrawal page, and thus ended the Kronos project, and any and all involvement with Alberto and my group.

This staggering loss threw a monkey wrench into further development efforts. When I heard that Alberto was pursuing funding for BDT over a month later, I told the people I heard were involved with helping him the entire back story, and did my best to warn them off helping in any way shape or form. Nobody listened.

I also informed Alberto that I would continue to do my best to block him at every turn, and further demanded that he complete the code base for the Bitcoin Rebate project, and deliver it to my designated 3rd party for audit. Alberto finally agreed after some tense words, and and yet in the end, it's still simply standing still. The initial raise on Rebate was on equity rather than Bond, because it was expected that the development and user growth path may take some time, and would require more organic growth than with something like margin trading, which everyone was already familiar with.

To be clear: I believe (along with others) that the loss sustained was Alberto's doing (Bit day trade). He's not as clever as he thinks he is, and though I cannot prove beyond a shadow of a doubt that he was the thief, I do not for a second believe that Alberto is blameless. Not even a little bit.

The loss experienced was a crushing blow to the team, and if we could all go back and do it again, we wouldn't. We were trying to rush to market to fill a vacuum, and we didn't have a solid security plan in place to deal with these types of problems. I am to blame for trusting Alberto, and for the lack of oversight and necessary precautions. Sometimes opportunity presents itself, and we make terrible, stupid mistakes in our rush to push things out into the marketplace.
I'm working diligently on closing out both Rebate and ZIP.A on GLBSE. I have had nothing but good intentions, yet the end result is that my experience so far has been terrible.

The constant and nagging anxiety of knowing I might let people in the community down because of everything that has happened has severely affected my well being, and has haunted me ever since the day that Kronos was "hacked."

The realization that I had gotten in to bed with a criminally minded guy, leaves me to only blame myself. Nothing changes the fact that I am ultimately responsible to the people who have been in my support. What's worse is that *very few* real world investors want to touch anything Bitcoin related with a ten foot pool. If you have to ask yourself why, take a look at the current price. Look at the ponzis (Pirate), look at the most robust markets and ask yourself "If I was an investor, would I put any faith or money into Bitcoin businesses?"

For 99% of investors who could make Bitcoin happen, the answer is a resounding "NO."

After the hack on Kronos, the developers on ZipConf got spooked, and changed their stance on the viability of a public instant confirmation service, and they changed their stance on operating it publicly. In other words, while the tools and back end have been built to support multiple exchanges through ZipConf, and the technology is solid (and is being audited by a 3rd party as soon as next week), the people involved changed their stance considerably after the Kronos hack; They got spooked, and their feelings regarding risk tolerance turned a slight apprehension of untested technology and theoreticals into a firm stance that they would not operate publicly, and possibly at all, even privately through trusted exchanges and members.

I'm actively seeking the assistance of a few friends and past associates to raise the money needed to retire the BitcoinRebate debacle, and hopefully also retire ZIP.A obligations based on the current negotiations (code audit is first). Since Alberto (Bit Day Trade) has no assets remaining, or intent to pay, I am on the hook entirely to retire all GLBSE obligations. I accept this, and I may have to sell my good kidney to make that happen.

In the meantime, I've been working hard to make a real world retail digital currency exchange happen in San Francisco, which would be a prime customer of the Ringcoin and associated tech.

To everyone who's affected: I'm incredibly embarrassed, and I'm deeply sorry. I still have hope for the future. I can't be certain that it will work out for the best, but I'm going to continue to try until my last breath.

Feel free to call me if you’re a shareholder in either Rebate or Zip.A and have any questions.

Jonathan Ryan Owens
760-420-3577

https://bitcointalk.org/index.php?topic=83784.0
https://bitcointalk.org/index.php?topic=79110.0"

Just want this to not be edited. Thanks

Trading REBATE suspended at GLBSE ?

I get "REBATE not found."

Link to pastebin of behind the scenes conversation between Alberto and Bitcoin Police regarding this.

https://privatepaste.com/5241fafb45

It gives some insight into the level of co-operation between MtGox and Bitcoin Police, which I thought was kind of interesting in itself.



For the record, I got the link from reddit where it's been posted in multiple threads about BitDayTrade.

I'm pretty sure that Matthew wasn't one of the people who went to Iceland.  Also, for those who aren't following the reddit threads, Alberto is probably Bitscalper and BitDayTrade is apparently full of serious security flaws.

It's only suspicions. But it would be interesting to investigate that.
Alberto is indeed saying that he coded an arbitrage bot for Cartmell, but again, doesn't prove anything.

According to MrBitcoinZ on reddit, the codes are extremely similar. Would be nice to have both bitscalper & bitdaytrade leaked code to check

Just qualified my statement with "probably".  I suspect that whoever leaked the pastebin probably has access to more information and will leak it in due course.

Re : Matthew and Iceland.


https://bitcointalk.org/index.php?topic=84302.msg929809#msg929809

uhhh...this is strange (from the pastebin)...


(emphasis mine). So bitscalper/bitdaytrade is also jjfarren, who's also labeled as a forum scammer? That's interesting. In any event it calls into question the validity of the convo.

I don't know enough about the details of their business to say who did what to whom. But I've done some minor work for JRO and been paid on time. I also know from talking to him that he's smart, honest, and he's not the kind of guy who would see his reputation screwed for a few thousand coins. Why would he? He's got way too much to look forward to. And it sounds like this chat is at the very least, very suspicious. Maybe Wayne Lee-Archer can show up and tell us if it's legitimate?

Looks more like a quote from IRC than anything else.

From this post (http://bitcointalk.org/index.php?topic=77195.0) we know that jjfarren was bitscalper (theymos confirmed that they had the same ip).
Now let's see what Wayne Lee-Archer will say about this chat log

There are a bunch of sockpuppets on reddit accusing BDT of being the thief responsible for the Kronos hack.  One previously promoted Yoon Yeonghwa's launch of posadoll.  Could MNW (a known sockpuppeter) be trying to sling mud on BDT?

http://www.reddit.com/r/Bitcoin/comments/yc6rf/we_demand_a_public_apology_from_uthezenpadguy/c5ua667

<conspiracy>
Is MNW responsible for the Kronos hack, and sees the BDT hack as an opportunity to shift the blame?
</conspiracy>

I haven't been keeping up to date with things recently around here but I've just come across this stuff on reddit which is making for an interesting read, especially these leaked emails.
I'm not interested in conspiracy theories or drama, but in my opinion and completely 110% pulled from my ass here I would probably say Alberto is bitscalper and that bitdaytrade uses some reference to bitscalper code, before we terminated contact he was working on multiple iterations of the bitscalper theme and wanted to launch them under my name which obviously never happened, he was working very rapidly on the code and bitdaytrade doesn't look a million miles away from the sneak peeks I got access to while in contact with him.

This is all bullshit and pulled from my ass so don't hold it as gospel truth, its purely my opinion based on what I've been reading for the past 1 hour only

I thought i would check the skype id of Alberto, just in case :
http://imageshack.us/photo/my-images/204/bitdaydrade.jpg/ (http://imageshack.us/photo/my-images/204/bitdaydrade.jpg/)

The post above state that jjfarren is bitscalper, and now I guess his skype profile confirm jjfarren is Alberto. I'm sure i'm not the only one knowing his skype id, so others will confirm.

My name is Alberto Armandi, i was born in Italy, 19/09/1983. I'm an internet entrepreneur who got caught in the Bitcoin phenomena about one and a half year ago.
Before Bitcoin, i have tried to launch several startups on my own, Wozad being one, a system for targeting digital ads based on your browsing history. It was doing well until Google Inc decided
to include the same type of targeting into their pervasive Adsense. The next effort was an hardware startup, Enso Limited, with which i've launched the highly controversial Zenpad. An early 5 inches
tablet powered by Android operating system. Enso managed to fail too, because of lack of funding but my failed endeavours did not leave a trail of destruction behind as i had and still have the determination to face any kind of trouble.
This is s short background, for those who missed it earlier, it can be easily found on the Official Bitcoin forum, in the Securities/BDT thread.
Now, fast forward to around April/May 2012 : I happened to get in touch with Jonathan Ryan Owens, who since the start of our relationship pictured himself as a sort of "Mr. Big" in the Bitcoin world and
shown to be able to use language fluenty, and to be able to convince anybody that he's actually skilled and a serious business man.
Since i did not have a real clue of who's who in this crazy, messed up community (do no take this as an insult, i'm referring to people who don't have exitation in runing other people lifes) i believed him,
and his claims of big success and profits and have developed trust on him and the group of people he was working with, again, i'm not trying to involve other people in this debacle, let's focus on Mr. Jonathan Ryan Owens.
We chatted extensively for a while and one day he came up with the ZipConf idea, inspired by some of my inputs and brainstorming. He started working on that and soon enough a site was online with that name.
Site's scope was allowing instant bitcoin transfers, without waiting confirmation from the network, as in classical bitcoin transactions. Business proposition seemed nice initially and Mr. JRO worked out
a lot of words to convince me and others it was so. He went ahead and held an IPO for this, as he said he needed lots of coins to make this happen. I was so convinced of the genuinity of this operation
that i have put Mr.JRO in touch with a guy i happened to know earlier, which is an important internet business man and investor. I valued highly my relationship with this guy, as he was funding my operations
and showing a lot of trust in me. I was hesitant, but finally made that mistake, i've procured about 2000 bitcoin in funds for the ZipConf endeavour, funded by this guy, which will go unnamed for privacy reasons.
Mr. JRO managed to put in place a written contract between him and this guy, the deal was that Mr.Jro would pay some interest over the 2000 bitcoin loan. I have later learned that this contract was never
signed and everything remained in the form of a legal agreement, bringing in even more liabilites for me, since i was the one to introduce the investor to JRO.
Everything seemed to be taking a great turn and I have then let Mr.JRO join the project i was working on, a custom Bitcoinica clone, coded entirely by me. It was intended to launch under the domain name btcxchange.net, which i own since July 2011, at that time Mr. JRO
said the brand name wasn't going places, and we agreed to call it Kronos.io. I went ahead, completed the coding work and deployed the site onto Mr. JRO controlled servers. The user interface i had
deployed was exactely the same i have in place at bitdaytrade, but Mr. JRO wanted a new design, so he hired someone to work out another skin, that took a couple of days. Please note that Mr.JRO managed
some very talented developers at that time, those who worked on ZipConf, but he never delegated them to have a check on Kronos.io source code, i've only later realized how much this is in contrast
with his claims of operating with high security standards and didn't link it directly to any malice backed act.
Almost At the same time, i was working on an unrelated project  Bitcoinrebate. After having shown Mr. JRO business plans and financial projections for said business, we decided to hold an IPO for it, to gather additional funds to be used on both rebate and Kronos.io.
At that time i demanded a payment for all the time and efforts i was putting in our projects and i was sent about 1000 bitcoin by Mr. JRO, claiming they were coming from a "trusted big lender".
I wasn't aware of how glbse worked at that time, nor i had realized the impact it might have had on my reputation, if things didn't go the way I expected. I have later learned that Bitcoinrebate IPO
was able to raise about 5000 bitcoin. I was never informed about this, not even a word.Mr JRO monopolized it all so i don't have a clue of where those coins (minus the 1000 i have received) ended up.
After Bitcoinrebate IPO i was instructed by JRO ( who always acted like a dictator and a boss ) to complete the work for Kronos ( implementing the new skin ) and prepare it for launch.
I have executed my duties and the site was launched. About one week later, Mr. JRO came up that he didn't need the coins initially funded by the unnamed investor and asked to return them back, to avoid
paying useless interests. Stupidly enough, i told him to just send him back in a mtgox account i was sharing with the investor, for different kind of operations, without asking him confirmation first.
I thought it was safe to do so and really didn't have a clue of what would be going to happen shortly.
I have made another mistake in this context, i have used this mtgox account for testing the Kronos.io hedging bot without asking direct confirmation from the investor, just assuming he would be ok with it
since my agreement with the investor was about generating profits from the coins he lend to me. I was managing money for this guy for a while and so i thought it was ok doing so.
The mtgox account passwords were know only to me and the investor, but Kronos.io had an automatic withdrawal feature, so the mtgox account was configured to allow bitcoin withdrawals via API.
Some days passed and apparently everything was going well, but one morning i woke up to find the mtgox account emptied and Kronos.io hacked.
I freaked out for a while then went ahead trying to track down what happened. It turned out that someone with knowledge of how the site worked internally (someone who was in possession of the source code)
had exploited it, exactely like it happened today with Bitdaytrade, but unfortunately, the mtgox account was emptied too, because of the automatic withdrawal feature.
I still have full logs of what happened then, with IP addresses and bitcoin addresses that received the loot.
Mr.JRO reaction to this was controversial, first he disappeared for days, claiming he was in a confused mental state, and dutied other people to deal with me. I was obviously trying to get in touch with him
like crazy, i couldn't get a hold of him on the phone at that time and i've tried for weeks. Then after some weeks he re-appeared online and blamed me harshly of incompentence and stupidity. Just like
it's happening now with Bitdaytrade, he deemed Kronos.io project dead, and gave me advice to work on different things and forget about Bitcoin.
Obviously i felt deeply ripped off, i had the investor who lost thousands of coins out of this big mess asking me what was my plan to recover the loss and going forward, with our relationship completely
destroyed on a trust level, and on the other hand i had Mr.JRO blaming me in a unmeaningful way about stupidity, incompetence, and such.I had determined at that time that my only choice was going forward with
the project, alone, i had high hopes that i would be able to repay the cumulated debt with profits i would be making from it. I then decided on another brand name, Bitdaytrade, asked support from some trusted
community members for holding an IPO to raise the necessary funds for its operations and went ahead modifying
the source code to allow Gold trading, finally launched a beta with this limited service, to avoid thousands of users flocking in, and keeping the risk level at a minimum while i ironed out all the kinks left.
Sometime passed, some users reported bugs and other problems, i had worked hard to fix all the issues and get the service to an acceptable level for the community. A lot of hack attempts where attempted
but the site did not suffer any major breach, and it was deemed safe by me.
I had initially implemented the blowfish/bcrypt algorithm for storing passwords safely but because of some recent technical problems i had to swith back temporarely to MD5. I had setup the site in way so that
when a user logged in, his password would be recovered and stored in MD5, you could have seen that by looking at the javascript files used in the login page.
Bitdaytrade IPO was held and necessary funds raised, for doing this i had to leverage the trust of other community Members, which Mr.JRO tried to block from putting trust in me, banking on the Kronos hack
story, and telling them all that i was obviously a thief. He didn't succeed as all of you noticed and Bitdaytrade started operating, i've first allowed BTC/USD margin trading feature privately for a week
and then opened it to the public, on Monday 13 of August.
Mr. JRO got in touch with me about a week ago, trying a last approach to block me, he demanded a "rapid prototype of a margin trading site" and in exchange he would not have made the Kronos.io hack public.
He added that i was losing out a great opportunity of working with him on a realworld exchange for virtual currencies and a sort of startup incubator
for bitcoin related projects.I have then understood where the funds from ZipConf, Rebate and Kronos.io ended up and obviously passed on this offer and went ahead with my plans.
What happened today is a reiteration of this blackmailing attempts, but with a more evil and criminal plan.
I strongly believe, and what i wrote in this explainative post gives a clear evidence of, that behind everything that was posted on reddit.com against bitdaytrade there is Mr. Jonathan Ryan Owens.
He used the previously stolen from him Kronos.io source code to orchestrate all of that you witnessed today, and managed apparently to have the community believe his story.
Not even one bitcoin was withdrawn from Bitdaytrade.com under today's attacks, and all funds are safe. Server will be kept offline for further investigation, and gathering of evidences to be presented upon
filing a criminal deposition with all the legal authorities i am/will be able to. Stay tuned for developments.
I'm deeply sorry and i publicly apologize to everyone for the mistakes i made in this mess but it will be sorted out and in a elegant way.

Best Regards
Alberto Armandi

MrBitcoinZ is one of the reddit sockpuppets - the only think in his post history is accusations against BDT

LOL

Alberto = Bitscalper as far as I am concerned. They are both from Italy, they both use the name jjfarren. This is 90% proof that they are one and the same. If we can have IP confirmation from the admins, that would be great too.

Evidence:

https://bitcointalk.org/index.php?topic=77195.0
http://www.mobileread.mobi/forums/showthread.php?t=78064&page=7
http://www.ipadforums.net/ipad-general-discussions/291-tons-ipad-competitors-popping-up-2.html
http://www.who.is/dns/bitscalper.com/


^^^

bitscalper.com   SOA   10 hours 40 minutes      exoware.mars.orderbox-dns.com. jjfarren.hotmail.com. 2012010406 7200 7200 172800 7200

Bitscalper=jjfarren=Alberto=Scammer

Alberto saw hack first, IIRC. He took the action of locking the user's account and telling him he knows where he's located, as you may recall from an earlier Kronos thread. The team was not aware of the issue until the user posted that thread, AFAIK. JRO heard after I did, around the time Nef cancelled the Kronos IPO and the rest of that shitstorm was going -- I remember because I told JRO both those news items on the same morning phone call. The hack's not really the issue here, though, and I'm not taking a side against Alberto necessarily. Keep in mind, JRO didn't lose money from the hack, however. What really set the projects back, first off, was cash-mixing between ventures, and that allowed something much worse to happen, but that's pretty personal, and up to JRO as to whether or not he wants to release that.

I don't see much point in me getting involved, and suggest non-cynics refrain from getting too riled up as it may be more detrimental than helpful for those with money in, but of course feel free to do as you please.

It is, of course, possible that the actions of more than one person are responsible for the set-back of various projects.  In fact, that's what people appear to be claiming - that Alberto is responsible for some stuff which shouldn't have happened and that JRO is responsible for other stuff which shouldn't have happened.

I have some information on this, but Im nervous of I release it in the forums it will breach the trust someone has of me.

However, the info I have can clear alot of this up and vindicate certain people.

Im having a moral dilemma now. Can anyone provide some guidance?

Perhaps without disclosing any details you can just tell us your conclusions on the matter. Some of us only want to know tl;dr from someone they trust, without wasting any time on any details.

I know 100% for a fact Alberto is BitScalper

Bitcoin Rebate and Kronos is Alberto's projects as well, from what I understand John Owens got the bad end of the stick here,

I'm fortunate to have befriended John Owens when I was in San Francisco and he is a super nice guy who is trying to do alot for Bitcoin. He really had no bad intentions.

Any attempt of Alberto (or his pseudonyms) to spread FUD about John Owens is false and I can confirm this. He is attempting to push blame on JRO and make himself look less guilty.

-Charlie

Charlie,

Any comment or knowledge on whether funds were mixed to help launch that bitcoin/tech incubator building project?

My main concern is how this affects people's attitudes towards putting Bitcoins into GLBSE listings, of which I have one. Hopefully it gets resolved relatively amicably for investors.

I really don't think it should be up to the investors to figure out what percentage of blame lies where.

- Robert

None of this reflects well on the people involved.

WTF, so let me get this straight... MNW spent countless hours trying to convince everyone that leo/Coinexchanger/Maria was bitscalper and he was working with the real bitscalper on kronos.io all the time.

Priceless!

Yup see what kind of a scummy douche he is?

Not directed at you, Charlie

But where the f... did all the money go from a fore mentioned  assets?

at the moment i'm not buying neither one of these guys stories, not JRO's nor Alberto's, until there is a solid answer to this question.

You shouldn't have to buy any story, that's for them to settle between the business partners. How they deal with the investors is what's important.

thank you for being clever.

now someone of involved parties please answer the question: where are the money collected from investors on GLBSE?

Actually, how somebody comports themselves is a fairly big part of business unless you're in say Somalia or somewhere similar there it only matters who has the biggest schlong.

Yes that's why I said "How they deal with the investors is what's important." Edit: I suppose for clarity I should have tacked on "at least until the investors are made as whole as possible"

I'm not saying anyone thinking of dealing with them in the future shouldn't consider the fact that they have devolved into open mudslinging, regardless of truth or accuracy. I'm merely saying the investors shouldn't allow themselves to be distracted from the core issue of where their bitcoins went and how they will be returned.

In case there is any confusion I'm referring to "20Mission", http://bitcoinbolt.rememberi.es/category/jonathan-ryan-owens/ (http://bitcoinbolt.rememberi.es/category/jonathan-ryan-owens/) - http://20mission.com/ (http://20mission.com/), as bitcoin.me was concerned about in the Rebate thread - https://bitcointalk.org/index.php?topic=83784.msg1093996#msg1093996 (https://bitcointalk.org/index.php?topic=83784.msg1093996#msg1093996)

Neither the Kronos hack nor the loss of Brian Cartmell's funds should be allowed to have any impact on GLBSE investors, regardless of who was responsible for those events.  The real concern at this point is whether - independently of those two events - any of the GLBSE-raised funds have been inappropriately spent, if so by whom, and how much of their investment can be recovered.

I think this is very much the core issue, there are three assets involved BDT, REBATE, ZIP.A from what I guess BDT funds have been used specifically for the funding of BitDayTrade, whether it's successful or not isn't really important, so I think that asset is ok.

Regarding REBATE, Alberto has said that he'll pay back 1K BTC and JRO told me on the phone that he will match him. Where the funds went? To whom? who knows

ZIP.A, I have no idea what is happening regarding this asset or where the funds are, I did get an email from JRO listing all the dev work that has been done for ZIP.A

If funds have been spent on other projects from an IPO of bitcoinrebate or ZIP.A then  any profits from those should reimburse any loss. Maybe bondholders of failed projects could be compensated with equity in projects the funds were spent on.

https://privatepaste.com/5241fafb45 (https://privatepaste.com/5241fafb45)

I predict a shitstorm is coming.

You can't collect from someone with no money, and a shitstorm will damage reputation necessary to collect funds for payback.

I suggest everyone just keep calm, and give this a couple months' more time. Investors could be screwed, yes, but collecting at this point won't salvage much. We can be angry, but try to keep it out of mind for a while. These various securities have effectively become loans, and I can speak from experience to say it's a very bad idea to ruin someone in trying to collect money when they need to collect money themselves. Loans need to be symbiotic, and that means you can't immediately turn on the rape switch when someone's in default. To do otherwise would result in tragedy for everyone with their neck out. Partial loan calls can be symbiotic if it forces a business/individual to cut away all the fat, but in this case, we'd be taking all his meat.... okay - bad analogy.


JRO might speak in depth, eventually... hopefully - but at this point, it seems we're better off expecting repayment within a year, and not demanding answers in the meantime. I believe I am most exposed, fwiw. I don't mean to be a bully, and I have no authority to do so, but I would very much unappreciate actions which harm JRO, as it harms everyone with money in him. Especially if you have nothing at stake, please shut up.  :-*

ETA: Not directed at anyone in particular.

JRO received from Zipconf and Rebate IPO approximately 10000btc.
Where he spent all this funds? Or all this funds were stolen from the Kronos?
I do not believe it! Why it was necessary to deposit such sum to the beta project?
I invested btc in zipconf and rebate, why I'm losing all their funds because of the Kronos hack? I would like to hear a clear answer from the JRO, what happened with 10000 btc, which were obtained from the IPO?

+1000 My thoughts exactly and the reason why I'm not "shit-storming" right now despite the situation. Instead, I am encouraging Alberto to focus on fixing the security holes in BDT. As I've said several times, these security holes are not hard to fix at all, a few weeks max with the source-code and it could all be resolved, and probably just a few days for the most glaring stuff. Then it just needs a long period of testing and hardening.

But yelling, screaming, and fingerpointing does nothing to help anyone at this point; if anything, as you put it, it reduces the odds of investors coming out on top.

JRO, from the paste:

JRO seems vengeful and angry.  Between the sockpuppeting and this paste, I'm beginning to think JRO is responsible (or coordinating with those who are) for the BDT hack. 

There are some big questions about how he is managing his money.  People who saw ZIP or REBATE as good investments are going to bail regardless - a loan from a deadbeat is very different than a bond/equity in a growing business.   

Sorrry Kluge, but his reputation is already dead from where I'm looking.  I'd recommend dumping and getting out while you can.

You guys lost money? This is why I dare not to touch any GLBSE funds with a ten foot pole.

Frankly, the people who make the most money will be the people who hide all their money under their mattress rather than invest in sketchy companies formed entirely over the internet.

Unless there is some kind of formal mechanism and ways to hold officeholders responsible, I am not investing a bit.

Unfortunately the Bitcoinica folks have made your suggestion less palatable to most. Waiting has the highest chance of succeeding if you have someone guiding the process so it is in the interest of investors (receivership etc.). Otherwise it just gives more time to blur responsibility and muddy evidence.

People who run shady or negligent operations need to be held as accountable as possible. Otherwise it will add unnecessary difficulties to well run operations.

People shouldn't be putting money they can't afford to lose or to which they need short-term access into these ventures anyway, but the moment any question about how funds are being used arises people are going to become understandably reluctant to leave their money in the hands of the person whose actions are under scrutiny for another day/week/month/year.

There's nothing to stop those who are willing to wait for payment from voluntarily placing themselves at the back of the line, but there's also no reason why others shouldn't require more information about how funds have been spent to date and just how large the hole is before deciding whether they're prepared to wait for payment or not.  Some people will let their investment ride on faith and others will want to recover what money they can and invest it in projects they consider more viable. 

With increased use of crowd funding comes increased accountability.  Investors aren't personal benefactors and that needs to be acknowledged by those seeking funding for their projects.

Just as a surveillance society with the ambition of making the world more open end up making a culture of secrecy, the bitcoin culture with its theme of anonymity will lead to a completely open society.  In the future I don't expect many in the bitcoin world will be willing to invest or loan to anyone not willing to publically release personal information and remove any attempt to have limited liability.

In a few months there will be bitscalper part 3 so be prepared.

5000btc of it is sitting in Mt Gox in JRO's name. This account was setup just after the "hack of Kronos.This account has been frozen.

The other 5000 ? Wasted on developing Zipconf which hasnt worked from day one.

lol

I think people are wondering where the money came from for other projects the same people were working on and whether any of the funds raised for Zipconf and rebate was used on those other projects.  It should really be a simple matter to issue a "here's what was raised, here's what's left, and here's how we spent the rest" statement for both Zipconf and rebate and reluctance to do so will only generate suspicion and distrust.

You have a source on 5k in JRO's Gox account?

What do you mean by hasn't worked? You mean hasn't been operational or just not working fullt as intended or having lots of bugs? I'm asking, because I wasn't aware of this and according to dividend payments, ZipConf was collecting around 250+ BTC in fees per week up until the end of July, which would be a bit suspicious if it wasn't operational...

Exactly.

ZipConf is currently unable to prevent sophisticated double-spends, like a Finney attack. AFAIK, it can prevent very simple double-spends, but basically it'd act mostly as an insurance agent, which just makes it a giant target for sophisticated attacks. When it was brought up that the entire system should be re-coded, it was thought to be too expensive, and the project was put on the back-burner. So, it just sits in "beta."

I doubt the dividends were "accurate."

A Ponzi, you mean. Paying dividends to investors from the investors own money until it ran out, right?

Looks like 750-850BTC was paid out in dividends. He allegedly raised 10kBTC (I think it's more likely he paid someone like INAU buy the bulk of shares at a discount and resell them, which isn't too uncommon), and of course he didn't issue more shares of Zip.A, so I'm not sure that's much of a Ponzi. However, he did launch REBATE soon after. I'm not sure how much that one raised -- I never liked the idea much... I'm assuming it raised significantly less than ZIP.A. Again, however, that one I know was sold to a large purchaser/reseller who does roughly the same job as an underwriter - takes the risk and hassle of the IPO, but has a great profit margin unless things go South.

Kronos was scheduled to raise funds after REBATE, but I started some shit with the GLBSE team over launching a competing service, and the Kronos IPO was promptly cancelled by GLBSE, with ZIP.A/REBATE/BDK/BDK.BND frozen for a while. We never re-tried a Kronos IPO, because the service was compromised at almost the same time, which led to Alberto being removed. That was problematic, since he was one of the lead devs. Another was found (the service had to be built from the ground-up because the code was no longer trusted), but he ended up declining. There was, for a time, talk also about raising funds for 20Mission. This obviously won't go forward until the situation changes dramatically, but that may be fine, since they don't need to pay rent until January, I believe, and the idea makes good business sense, even excluding commercial leasing ideas.

Obviously, funds were being muddied. The solution to that was to launch "IceHill," which would've made the sloppy accounting more acceptable, where the parent company would move funds around as needed, instead of having isolated projects which'd need to raise funds by themselves. Based in Iceland, IceHill would be the parent company of the service-providers. The IP rights were to be held by RingCoin, based in SFO, and still in existence, AFAIK. Unfortunately, IceHill ended up existing de facto as JRO, with him moving funds around to different projects as he pleased, without respecting accounting barriers (AFAIK). I'm not much one to talk, though... I fairly frequently mix business funds with personal funds.

Wow, thanks for your answer Kluge, I didn't know this. So it's actually outright fraud, pretending to run a business with income while it's not even operational. I bought shares (luckily not many) based partly on the previous dividends, as the contract explicitly stated dividends would represent 1/50000 of fees. This gave me the impression that the business was up and running and generating income.
I know due-dilligence and all that, but I haven't seen anything about this before in the forums and I'm not the only one, as the bond traded for more than double of face value after I bought.

It wouldn't have bothered me as much if I invested in a venture that turned out to be unprofitable and I lost money, as long as the issuer was honest and did his/her best.

But it does bother me that ZIP.A turned out to be more or less a fraud, and I'm not gong to lie, I was fooled big time.

I don't think I'd go so far as to call it a fraud to pay out "false dividends." Sloppy, though, to perhaps be generous. I know Goat, for example, paid dividends to shareholders of TyGrr when he said he was operating at a loss, and I've paid gratuity dividends to holders of both BDK and BDK.BND, even though I was not contractually obligated to, and it cut into the company's equity, which at least affects holders of BDK. I did make sure to state the dividends were not from BDK profit, however.

ETA: If anyone wants any other questions answered, I'll tell anything I know, with one exception, being why JRO has been despondent and self-isolated for a few weeks, and has not made payments, as that involves something personal to him which I wouldn't feel right about disclosing without permission. I'll probably disclose that story eventually if I'm convinced not to expect repayment, though.

To me, the difference between ZIP.A and the examples with Goat and yourself is that Goat and you were open about what you did. ZIP.A was not. Nowhere did anyone say that the dividends were not coming from fees, so I was led to believe that the business was generating fees, which it was not. Needless to say, if I had known that dividends were not coming from operating fees, I would never have bought.

There is obviously a difference, though there's a similarity in that equity's being removed (maybe not in your case) to pay dividends at a loss, which is where the Ponzi claim was coming from, I assumed. I wasn't trying to defend the lack of communication, and lack of transparency.

From ZipConf.A contract on GLBSE:

Each bond has a face value of 0.5 BTC and gives the holder the right to 1/50,000 of all fees collected by the ZipConf service (“Issuer”), paid weekly (Friday) based on the prior week's earnings. Bonds have no voting rights. The Issuer has the right to terminate the asset in the event of insolvency by liquidating any company savings and pay out a final dividend. The Issuer has the right to buy back, at any time, all bonds issued for twice the price of the previous 120 hour average market price.

---

So paying dividends, from 05/07/12 to 07/30/12, would indicate to holders that fees were being collected. Not sure what kinder spin could be made of paying dividends for 2 months and then having it come out that the service never left the design stage. Have yet to hear of an orderly wind down due to "insolvency" nor of a buy back.

Was the company actually formed ? I mean is there a link to the registration page anywhere ?

What are the chances people can sue JRO or Jared Kenna because money from bond issues was spent on 20mission ?

I mean if JRO is broke where else did the money come from to build it ? I think there needs to be a full accounting before they open because they risk being sued.

Edit: What I am saying is that it might be an acceptable thing to convert REBATE and/or ZIPCONF bonds into "20mission" shares or bonds. Its one possible way out of this mess that prevents a total loss.

20Mission is registered in California. He sent me the ID # and it was on there, but it's no longer in my logs. You might be able to find it doing a search just for 20Mission on CA's business page. Fwiw, Jared didn't have any involvement until 20Mission, AFAIK, and I have no idea if any money was actually spent on 20M, or if Jared paid for everything. However, there was definitely development going on for projects like Kronos before it received any actual funding. I'm guessing the idea was that the funds would be loaned to "Kronos" until fundraising completed. Their rent contract doesn't start collecting until early January since they were doing improvements, IIRC - so the only money that could've been spent would've been fairly minimal... sprinklers, minor furnishings, paint, maybe some lumber... I know JRO was doing a lot of physical work over there, and I believe that's why he has an equity stake.

Everything's hinging on 20Mission, it seems. So... maybe you could get a lien on his dividends, a stake in 20Mission, or imprison him... dunno what beneficial result suing could have unless he really does have 5kBTC in Gox, though that'd be contrary to when he told me he moved what he had to USD something like 6-10 weeks ago.

I agree that suing probably isn't the best course of action.
If getting a stake in 20mission should turn out to be the ONLY way to get back our money, then I guess we don't have much of a choice. Though based on his latest business track record, we would probably end up having that default too and ending up being transferred into shares of yet another business venture of his...  :-\
So if possible I would prefer a buy back at a reasonable price. Is JRO intent on paying investors back or has he simply "moved on"? Would you say there is any chance of getting our money back?

Perhaps I'm missing something (and please point out where that might be if I am), but on what plane of existence do you believe that a judge sitting on a government court would agree with you that because you traded bitcoin credits for "shares" in a cyber equity (i.e., not registered as a corporation) that you would have any claim against future income from a person or other company?

None, I would think. Maybe it could be argued that since no legitimate companies raised funds, and that they were personally issued by JRO - JRO is personally responsible. I have no idea, though. JRO happens to have access to a lawyer. I do not.

If he didn't accept funds as a business he isn't protected from liability. Of course you still have to prove it was him collecting the funds.

Perhaps you can talk to Jared and any profits from 20mission that are due to go to JRO can be put towards a buyback untill such time as it is paid off.  This hinges on what if any stake JRO has in the project.

Its got nothing to do with a judge. However 20mission might need to employ extra security guards. People wont accept JRO getting rich from it while he screwed over past investors.

I'm wondering if this would be something that might be brought up to prevent action against an issuer:
 - http://en.wikipedia.org/wiki/De_facto_corporation_and_corporation_by_estoppel

This exact scenario is one that I've been thinking about -- wondering how it would play out:
 - http://bitcointalk.org/index.php?topic=80139.msg888787#msg888787

Would be pointless until 20Mission is proven self-sufficient. We'd basically get a portion of a lease, which isn't much of an asset. Maybe some convoluted contract could be made up by a judge where everyone owns Ringcoin IP rights. If JRO is indeed keeping money to himself, this would be totally different - but I'm unaware of hard evidence in favor of this. If there's a source for the 5kBTC in JRO's Gox account, everything changes -- but, a court obviously isn't going to award gov't funds on behalf of JRO's debt. Jared, as far as I can tell, has no responsibility in this at all. He's still busy with the Dwolla lawsuit, which may also indirectly result in a payment. So, as I see it, it's just a waiting game. Days, weeks, years - who knows. It's not like with Bitcoinica where they had funds, and then *poof* they disappeared. We're post-poof. If good stuff happens to them, good stuff possibly happens to us. If bad stuff happens to them, bad stuff happens to us. I'm hoping for good stuff. For everyone involved, there's been a lot of frustration, sweat, and tears. Some reversal of luck, I think, would be well-deserved, though unexpected.

I mean, basically - that going to kick down 20M's entry-way and putting a knife to JRO's throat would probably do less good than taking a shit at home, drinking an alcoholic beverage, and enjoying the company of family. I also think filing a lawsuit would do an equal amount of "less good" -- unless it's proven that JRO has 5kBTC sitting in Gox. 20M's address is public. I have no intention of driving from MI to SFO, but if someone wants answers, that's where to go. I think they use some smart-phone app to prevent unauthorized access into buildings, so better bring a crowbar if they refuse entry.

All that said -- 20M is in a high-demand area for their service, and their dorm-style rental units are not too uncommon in that area. The business plan seems solid, and they have delegated appropriately. A successful 20M could effectively result in a "successful" REBATE and Zip.A. I don't think JRO's a scammer, I think IceHill has just been a failure due to mistakes unable to be foreseen, and some mistakes which were a result of not being hardened vets in the field of site design and team management. With almost all Bitcoin-centric businesses, most of us are way out of our comfort zone, and learning as we go along. Though, I'm open to being proved otherwise.

How was Zipconf supposed to make money?  

I saw some marketing and buzz, but still don't understand how a business could make money solving a problem (double spends) that has never been seen "in-the-wild" (as far as I know).

What was their business model?  Who are their customers?

For some reason they thought they could do transactions with 0 confirmations and apparently dividends were being paid so it looked like there were businesses using it. However if it never worked then where did those dividends come from ? The most likely explanation is that they came from IPO funds and it was a ponzi scheme in the end which might have lasted longer if funds werent stolen from Kronos.

tl;dr embezzlement

Generally, when you deposit coins somewhere, you have to wait for 6 confirmations. This usually takes something like an hour, and if you're going to be busy soon, or are looking to do a time-sensitive trade, that restriction's a pain in the ass. ZipConf would have whitelisted BTC addresses with various exchanges, where there's trust established. Gox, for example, would accept ZipConf transactions with zero confirmations. ZipConf, in exchange, would take on the risk of a double-spend, which, as you imply, is very low -- but, by allowing zero-conf transactions, ZipConf would be a huge target for nefarious individuals, so it better work.

ZipConf wasn't for businesses, it was for customers who are annoyed by the 6-conf wait -- especially when many businesses don't even bother to confirm they've seen the transaction, so you pretty much see nothing on their end until the funds suddenly poof in your account anywhere between 30 minutes and two hours.

Even if those funds were collected as a business, protection from liability can be lost if funds were co-mingled.  "Thous shalt not co-mingle funds" is the first commandment of limited liability entities.

Did this progress at all in the last couple of weeks?

In the whole BS&T trouble it's easy to loose focus... Any updates from the issuer JRO?
Or is it safe to assume the money is down the drain? Really didn't expect ZipConf to end this way...

Cheers

from [GLBSE] BDK, Monthly Profit Split from Lending Operations (https://bitcointalk.org/index.php?topic=77343.msg1148583#msg1148583)

I wonder who this Anon is and why they care to pay off JRO's debt.
Does JRO have all the BTC with Pirate? It could explain why the $3xK debt would be paid if Pirate pays.

JRO is not "Anon." JRO does not have coins with Pirate, AFAIK. That'd seem as absurd to me as the person giving me the debt cover proposal, though, so I guess it's possible.... not a reasonable possibility. Incidentally, before reading this, I managed to contact JRO today for the first time in over a month. Sounds like they're busy. The progress report was mostly going over stuff we already went over last month but with exact, soon dates this time, and a new potential investor. 20M is off to the side (but coming along well - waiting on habitation license so they can advertise publicly), and they're focusing on another idea, which is unsurprisingly hyper-ambitious, inspiring, and dependent on a butt-load of outside funds for starting capital. The idea is not new (well - it's new, but it's something they've talked about and prepped for months), so it's not raising too many red flags.

I'm on burn-out vacation, though. We might talk again in a few hours, then I'm going back to sulking and ordering a bunch of specifically-sized boxes and other tediously-specific working capital for a different venture until next Monday, a task which itself loses novelty very, very quickly. - And then I'm pretty much free, I think - just doing quiet, honest work every day at a machine.

On a totally unrelated note.... If anyone smokes cigarettes in Cook County, gimme a buzz. ;)