Bitcoin Forum

http://www.walletexplorer.com/wallet/0dd32fc1a663150a = http://www.walletexplorer.com/address/1QAHVyRzkmD4j1pU5W89htZ3c6D6E7iWDs

http://s16.postimg.org/8mxgsjm7p/bfl_bitpay.jpg

http://s3.amazonaws.com/rapgenius/snl-church-lady.jpg

Looks to me like BF Labs Inc. (Butterfly Labs Inc./BFL) has been using BitPay as their own private exchange. Note the 5562.354 BTC that I highlighted. That was supposedly the $1M USD down payment from HashTrade that Josh Zerlan has NEVER called me out on as being a liar about, yet he's also been quick with that lizard tongue of his each time such in his mind was warranted.

BF Labs, Inc. Processes $1 Million Bitcoin Merchant Transaction for Institutional Bitcoin Mining Hardware Purchase (http://www.prweb.com/releases/2013/10/prweb11283333.htm)

https://bitpay.com/legal



Reads to me like BFL will no longer be using BitPay since I've personally - with no motherfuckin' help from the media - exposed this fraud.

#ASKFTC

Whats the fraud again? That they have sold stolen BTC via BitPay?

BFL is using BitPay as an exchange to convert their BTC to fiat and deposited into their bank oppose to only using them as a payment service provider of which that is all BitPay is, again, not an exchange.

You can't do! I can't do it! Yet, BFL has converted millions via BitPay. I just found three other BFL BWAs that have used BitPay to convert their BTC to fiat. BFL has been sooooo NAUGHTY!

Where's the fuckin' media on this?

#ASKFTC

This should get the media and #ASKFTC attentions: http://www.reddit.com/r/Bitcoin/comments/2kqqyu/is_bfl_using_bitpay_for_money_laundering_purposes/

How do you link that transfer to BFL?

BFL used BitPay to liquidate a million dollars worth of BTC stemming from who knows where, also opting to get their buds, HashTrade, into the act by having them claim that said bogus transaction came from them for the purchase of Monarch bitcoin miners, now getting BitPay caught up in their con actions. Two days later, BFL had a million dollars in their bank account, and that's if BFL used their business account to do such, otherwise Sonny Vleisides and Jeff Ownby split the booty, after giving Josh and Nasser their cuts of course.

The above is fact and breaking news, but for the life of me I don't understand why Matthew N. Wright's Bitcoin Magazine doesn't pen an article around it.

#ASKFTC

http://www.walletexplorer.com/txid/45d41f9297ebfbb0d840b47698698d0b3499b35ce109e55093477ffd97a49763

http://s9.postimg.org/6aj6gshjj/Eligius.jpg

More proof that the QAHVyRzkmD4j1pU5W89htZ3c6D6E7iWDs (https://blockchain.info/address/1QAHVyRzkmD4j1pU5W89htZ3c6D6E7iWDs) BWA doesn't belong to HashTrade but to BFL, for I can now easily site a myriad, as in dozens, such transactions stemming from said and similar BWAs verified to belong to BFL paying Luke Jr. for various services. In fact, if you note the date of the transaction you'll realize that HashTrade had yet to create a web presence as witnessed here: http://web.archive.org/web/20130401000000*/http://hashtrade.com (http://web.archive.org/web/20130401000000*/http://hashtrade.com)

#ASKFTC

This is weird! According to this transaction, BitPay is using BitStamp to ??: https://blockchain.info/tx/baaa36348f7228ec46570ead17f764af133dd5a7cd07c67dd14e31124017ec2f

http://www.walletexplorer.com/address/1L7T67j4um5BTFpzvyqd3ShqEBDruZnEW4 ---> http://www.walletexplorer.com/address/15QTGigFgnMpqcg5tQwBszQ94me98ZTVkr

IRS has been informed about these transactions? This seems to be worse for Bitpay if they were operating as an exchange without a license to do so. Bitpay seems they were doing  BFL a special service doesn't it? Legally what US laws were broken by Bitpay and BFL?

Besides money laundering on BFL's part, I haven't a clue, but I don't think it's legal for one entity - BF Labs Inc. - to pretend that another entity - HashTrade - sent the first entity a million dollars for its upcoming line of bitcoin miners, then even go out of its way to declare the following: http://www.prweb.com/releases/2013/10/prweb11283333.htm


I don't know the legalese term for such practice, but I sure the hell know that it's illegal. And so does/will the FTC and whatever other three-letter agency who reads this post/thread.

Many millions were sent to BFL due to that one endorsement (the PR picked up by dozens of other periodicals) by working folks who are now entangled in the FTC lawsuit. Yet, HashTrade, NimbusMining, Netsolus and LiquidBits have yet to file their lawsuits to get their supposedly tens of millions back for non-delivery of Monarchs, but recall that LiquidBits filed as quick as possible to try to get their $6M USD back from HashFast (not HashTrade, to clarify).

#ASKFTC

PS: Now, I ask one more time: Where's the fuckin' media that has reported on much lesser Bitcoin-related issues? Fuck, I can't even get the Reddit actors to comment: http://www.reddit.com/r/Bitcoin/comments/2kqqyu/is_bfl_using_bitpay_for_money_laundering_purposes/ It's like it's some taboo subject like 'who is Satoshi' or something akin.

this is possible hard to tell

Really? Even after it's shown that the https://blockchain.info/address/1QAHVyRzkmD4j1pU5W89htZ3c6D6E7iWDs BWA was virtually totally funded via blocks found on the block chain and paid out accordingly from BFL's (formally Josh Zerlan's) EclipseMC (EMC) pool? On top on that, Josh has yet to call me a liar even after the dozens of times I've espouse such fact, something he's always done in the past when he believed in his mind such was warranted.

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That about sums it up. But, if I'm incorrect, Josh will be here to call me out a liar and offer up proof depicting how I'm mistaken. http://fans.oilers.nhl.com/community/public/style_emoticons/default/th_blushing.gif

Also, it looks like most all the BTC that the 1QAH BWA garnered stemmed directly from the EMC pool as shown in the following:

http://www.walletexplorer.com/wallet/0dd32fc1a663150a
http://www.walletexplorer.com/wallet/0dd32fc1a663150a?page=2
http://www.walletexplorer.com/wallet/0dd32fc1a663150a?page=3
http://www.walletexplorer.com/wallet/0dd32fc1a663150a?page=4
http://www.walletexplorer.com/wallet/0dd32fc1a663150a?page=5

Then, BFL was using BitPay to liquidate the BTC to fiat, treating them as an exchange oppose to ONLY as a payment processor.

#ASKFTC

http://web.archive.org/web/20020531060043im_/http://ownby.com/jeff/images/jeffhead.jpg

I'll tell you what! Thanks to Josh showing us how the game is played, as well as sharing with us the rules, this sure the hell is a fun sport... And glad I'm on the winning team.

You give BitPay BTC and you get cash.  

You can't judge stolen BTC or it fucks shit up.  Not accepting stolen cash is a felony in the USA I believe.

Be mad at BFL not BP.

Why is nobody paying any attention to this? This could be VERY bad for the bitcoin economy if Bitpay was aware that BFL was using them as an exchange. Am I the only one who realizes what the OP has discovered?

You don't think BitPay's accountants wouldn't notice a transaction that large and look into it?
EDIT: to be clear, I do not believe that BitPay had prior knowledge at this point, as I believe they are a legitimate company and very much respect the business. (And I live right down the street from them).

Lol what do you need a company or government looking over your transactions to make sure they are ok before they give you what is yours?

BitPay supposed to save the day for y'all and steal the Bitcoins back?

I never directly purchased anything from BFL so I have no dog in this fight. My concern is for the impact this could have on the entire bitcoin economy if BP happened to be aware of this (which at this point, I don't believe there is sufficient evidence to make such an assumption).

Basically, I can reply to both your welcome posts at the same time.

Even though I don't like the alternative, I'm working under the assumption that BitPay may have been unaware of BFL's practice, albeit it'd been hard to miss.

I'm claiming that the BTC that BFL quasi-stolen from its customers were converted to fiat and deposited in some bank using BitPay as its own personal exchange, and not as a payment provider that BitPay only is.

I hate to say it, but Sonny Vleisides, Jeff Ownby and Josh Zerlan, et al., have opened up a can of worms that shouldn't have been sealed in the first place.

Suffice to say, I'm been privy to a myriad of information, and I'm hear to tell you it's a lot worse than you can imagine and what I'm all allowed to say at this time.  :'( :'( :'(

#ASKFTC

Sadly, I can easily prove that all the large withdraws from the https://blockchain.info/address/1QAHVyRzkmD4j1pU5W89htZ3c6D6E7iWDs BWA prior to and after the supposed HashTrade $1M USD transaction was via BitPay.

Most the proof can be found here: http://www.walletexplorer.com/wallet/0dd32fc1a663150a

#ASKFTC

Apologies to all you guys inquiring about what's the inside info I possess, but I'm swore to secrecy. Still feel free to PM me though, whereupon I'll personally thank you for thanking me as I've been doing.

On a sad note, now you guys are keeping me busy, with nary a one being some troll PM as far as I can tell.

I agree. It would be wrong to not accept bitcoin just because it is "stolen" as bitcoin is fungible and one particular input is no different then another one (assuming they are both spendable).

I would say this very well could be the FTC cashing out the bitcoin owned by BFL in order to repay their customers, as I would find it unlikely that the FTC would allow refunds in terms of bitcoin

Wouldn't anything over 10k USD give Bitpay pause given the regulatory climate as well as the nature of the company involed. Bitpay was well aware of problems and concerns customers had with fraud from BFL considering they shared a booth at conferences.

I'm too lazy to figure out what you are ranting and raving about this time, but I don't see why BFL selling bitcoins to Bitpay would be considered illegal or fraudulent. Merchants exchange bitcoins to fiat through Bitpay all the time. Why can't BFL? Those TOS that you quoted may apply to you, but they don't have to apply to everyone.

That's right! You or I go and try purchasing an automobile priced over $9,999.99 USD and see what forms are filled out prior to us being allowed to drive it off the lot.

I'm pretty sure that papers would have had to be filed for each amount over $10K transferred to BFL's bank especially since KYC is in place.

But, again, what BFL did was worse, for they put BitPay in jeopardy by pretending to submit payment for products, when in really BFL was using BitPay as their private exchange.

Now, the three-letter authorities will be getting out their microscopes to look further into BFL's affairs, along with the affairs of BitPay, CoinWare, Netsolus, NimbusMining, LiquidBits, HashTrade, Jeff Ownby, Greg (Gregory) Bachrach, Josh Zerlan (because of his fully paid for half-million-dollar home via BTC), Quentin Page, Remy and Jean-Mark Jacobson, James Gibson, and a few more. All because Sonny Vleisides was "on a new track now" with his past behind him. I say he tried to repeat his past several fold... But failed big time, this time bringing down more folks with this resent fall.

#ASKFTC

Hypothetical Example.

I'm a drug dealer with illegal drug revenue denominated in BTC worth 1 million dollars. I have another partner pretend to send this same BTC to my Bitpay account as payment for imaginary goods. I then convert those BTC with Bitpays knowledge and cash out that million to a bank account in USD.

Nothing illegal right?

Bitpay, BFL and HashTrade will all have to explain their roles. Bitpay has a very close relationship with BFL. With laptops now in FTC possesion any emails will likely be available to the Feds. I suspect BitPay should get a lawyer asap regarding this matter as a precaution.

If they did nothing wrong they would be prudent to immediately distance their company from BFL and provide their lawyers with all the emails, communication and get out front of this problem. Better help the FTC wherever possible so as to avoid more digging in their dog patch.

I stand corrected: https://bitcointalk.org/index.php?topic=841416

#ASKFTC

PS: Feel free to open this honest nest a little wider with you wonderful insight.

I think I did a better job, bud: https://bitcointalk.org/index.php?topic=841416  ;D

Obviously not enough if you can't convert readers to your narrative.

You got me on that one. Excuse me while I pick up my epee and try again.  ;D

 Money Laundering a Hypothetical Guide Part 1: The Basics (https://www.youtube.com/watch?v=1ObJPaSZxCs)

Step 1.  “Placement” (also known as) Deposit your cash in a bank.

Fact: BFL sends 1 million to itself disguised as purchase from HashTrade. Converts the BTC through BitPay to their own accounts as USD.

Next to how you made your money, this is the riskiest phase of the laundering process. To prevent banks from reporting you to the government, keep cash deposits to well below $10,000 and spread it out over 160 accounts in 20 or more banks.

Conclusion: BFL failed at this step miserably.


Step 2. “Layering” (also known as) Move your money around like crazy.

Fact: BFL was layering see expense accounts of BFL executives. Respin boards, buying houses, cars etc as well as over paying for engineering of miners to their 'partners' in the scam. Exchange currencies, buy luxury goods, spends on rents for buildings, spas and burn in rooms or off site server locations.

This is the trickiest and possibly most fun stage of the laundering process. Try changing currencies with 20%. Buying expensive items like houses, cars, and art work with 30%. Investing in legitimate businesses with the final 50%. The point is to make the original dirty money impossible to trace.

Conclusion: Whoops failure too slow and not diversified enough to hide it. FTC has evidence after seizures of laptops etc.


Step 3.  Integration. Your 1 million dollars should look like it came back to you as legit legal transaction.

Fact: Whoops Gleb found out it wasn't pretty easily. Now it is clear HashTrade and BFL are laundering the BTC.

Follow up questions:

Was BitPay involved directly with this scheme and did they have full knowledge?
Did BFL do this BEFORE they hired the accountant?
I wonder what the accountant they hired had to say about it?

Wow! That truly does nail it. And only at a cost of 20%. Now, imagine doing the same thing but incorporate Bitcoin. I know it's a stretch, but is it possible to someway, somehow recoup that 20% or even make a profit via laundering money via using Bitcoin as one of the steps?

Apologies for the crazy question.

#ASKFTC

Using BTC... you could cut out a lot of the need to bribe / fees etc.

I think BFL was hoping no one would track this Gleb. But sticking 1 million in like that was the DUMBEST move possible. Red Flags everywhere. I think they got scared and started looking for ways to get the money hidden.

Look at what was going on with BFL at the time.

1. Lawsuits started coming.
2. DA was looking at them.
3. Houses were being bought.
4. No accountant to help them keep things "hidden" or at least be less conspicuous. Look at the accountant talking on Skype particularly about keep the amounts down.
5. Personal loans from BFL.
6. Personal spending on company credit cards.
7. Extensive overseas trips by BFL even though there no real sales being generated after the 65nm debacle.
8. Expense accounts in BTC for major members of the team.
9. Extensive adverting campaigns.
10. Extensive booth purchases for conferences where they were paying a high premium to be the only mining company at a show.

Sonny Vleisides was brazen prior to the infamous $1M USD transaction, becoming even more brazen afterwards all the way up to less than 24 hours prior to the raid by the FTC.

Ironically, Josh nor SLok nor Bruce have taken the time to negate my position. It's almost like I convince them it's true, hence why bother. Besides, I'm just a drama queen that steals barn wood at night to augment what I steal from Bitcoin 100 and the cheap hardware I amass due to getting better queue positions thanks to my vouching efforts.

#ASKFTC

[11/12/2013 1:04:32 PM] Josh Zerlan: Once or twice, ok, people can live with that...but now it's just the way BFL is. We simply don't deliver when we say we will. (http://ia902308.us.archive.org/32/items/gov.uscourts.mowd.117531/gov.uscourts.mowd.117531.docket.html)

Here's the correct link: http://s3.documentcloud.org/documents/1306470/gov-uscourts-mowd-117531-42-7.pdf


That's how a liar lies. Then he goes out to inform others that others are liars and not he.



#ASKFTC

i have never done this, but i do know of other miners that do this on a regular basis. So, im not shocked at all that this has happened.

To be honest, I've known that it's been happening for over a year now, having discussed it with fellow bitcoiners at conferences.

I need to see proof of that, bud.

So far, it hasn't been proven that BitPay is an exchange, nor has BitPay responded to a myriad of emails pertaining to this issue. Still, I like these these guys, but this is so fuckin' sad!  :'(

Bitpay is a payment processor. Someone PAID BFL and bitpay PROCESSED the payment, in which BFL received cash (which was supposed to be used to make products, but thats not bitpays business).

Nothing to see here folks.

HashTrade paid BFL $1M USD via BTC ~2 weeks prior to BFL converting a different $1M USD output BTC via BitPay. Prior to and after that transaction, BFL converted $10M+ worth of BTC at the exchange rate at the time to fiat via BitPay. All documented.

With the exception of the $1M USD worth of BTC from HashTrade, all the other BTC were the direct result of mining revenue from the burn-in process that BFL claimed a myriad of times in no way in hell were they testing their bitcoin miners on the protocol, using a testnet instead. Again, all documented.

Ergo, there's a lot to see here!

#ASKFTC
#TELLKSAG
#Bazinga

bitcoin is actually fungible so regardless of which imputs they sold to bitpay any sale would be from their mining revenue. I think your beef is incorrectly directed at bitpay because they are essentially acting as nothing more then an exchange

I think that is the point....
They are a payment processor NOT an exchange.