Oh... Tainted coins.

It seems that random donations are a good way for hackers to wash their coins nowadays.

All times are in UTC+8 (as I'm traveling in Singapore at the moment).

I notified Bitcoinica team at Friday, 13 July 2012 9:14:51 AM.

I posted later, when genjix promised a response.

If you convert all the time to UTC there shouldn't be any problems.

No. I received this email. I was still in the verify@bitcoinica.com mailing list.

I believe that the theft happened much earlier and no one discovered. No one cared about this spammy-look email either (or they don't check their mailbox).

My version of the story is, Tihan selected a password from one of the Mt. Gox API keys and we face-to-face agreed to use that. There was no plan to release the source code ever (and if I did it myself, I would at least remove the credentials). The password has never been changed for 5 months, despite the transfer of ownership.

I didn't expect to be able to log in to LastPass after Bitcoinica Consultancy took over. So I didn't try.

I don't think it's efficient to send the coins directly to Bitcoinica. I intended to help people who were severely affected by Bitcoinica fiasco. The payments can be made very quickly to everyone (in about 7-10 days).

Thanks for the feedback. I'm actively improving my coding skills and I admit that I could do a much better job on Bitcoinica. I failed at DRY, obviously.

Since I have a much longer timeframe for NameTerrific (5 months, not 4 days), I'm quite confident in my code quality and maintainability for my new project.

It's okay, and thanks!

I tried my best to be independent from Bitcoinica, but if you don't trust me with donations due to my previous association with the company, it's absolutely fine.

UPDATE: The program has ended.

In order to prevent further confusion, I have terminated this program. Again, this is not affiliated with Bitcoinica. It's just a voluntary donation to anyone who feels negatively impacted by Bitcoinica's actions. I do not assume responsibility for Bitcoinica's debt. I do not represent Bitcoinica in any way. I do not claim that Bitcoinica has done anything right, or wrong.

Total claim value is 81787.2334 BTC. Total available funds is 5101.01 BTC. Everyone will be paid 6.237% of their claim, rounded to nearest 0.0001 BTC. You can use the link in the email to see your eligible payout.

No complaints or disputes are accepted. You still deserve a full refund from Bitcoinica. If Bitcoinica repays you in full, or you want to financially support me for my projects in the future, I would appreciate if you can send the coins to: 1G4iqMitXTmNYvY5tDaaYANWxhwJW84sr2. I will take all the money in this address to do whatever I wanted to do otherwise.

Again, this is a no-strings-attached program for both you and me. It shouldn't affect any legal proceedings or value judgement. If you have read the Conditions of Claim carefully before you submit it, you should understand everything by now.

Payments will be sent in the next 48 hours. I'll make this as quick as I can.

UPDATE 2: Everyone has been paid!

It took me about 8 minutes of hard work to finally pay everyone something. TXIDs:

50ec12d08970ade781bda0b65c4b17cf59745828898094567c0f7bec5fce988f
045dbab77795fc1f1ba700e92c18987aaabd5793b512ecfc442d1d0154666a4c
1bb7983de928455d804f82be4156beb5f56022f7efaa51bf1b69db1bb77ca31b

Everyone who submitted a claim and verified through email has been deemed as accurate. I have also checked the top list and I can recognize all usernames. If you have intentionally/unintentionally submitted a wrong claim, please pay me back so that I can build good stuff for the world. (Sponsor Zhou Tong @ 1G4iqMitXTmNYvY5tDaaYANWxhwJW84sr2)


=========== Archive ============

Dear community,

First of all, I would like to clarify that I had zero financial interest in Bitcoinica since January 2012. I can't touch any of your funds or Bitcoinica's profits. I was paid for operating Bitcoinica on monthly salary basis until April 1.

However, I did sell Bitcoinica at a profit last year. I know that I have no responsibility to pay for Bitcoinica's losses occurred after the transfer of ownership (it's business common sense). I do feel that some Bitcoinica customers were unfairly treated by inefficient internal operations.

I was born in a middle class family and vast majority of the sale was used to pay back the mortgages for my family. The remainder was used to fund my education in Australia. I don't have much money left but I'd like to contribute as much as I can.

I pledge to contribute 5,000 BTC to all Bitcoinica customers. The money comes from my personal investment in Bitcoin and I wouldn't have touched it at all without the disaster happening. In order to reduce potential problems and inefficiencies caused by Bitcoinica team, I have spent 3 hours to independently develop a claim system for this purpose. Please note that it's not affiliated with Bitcoinica in any way. The claim form was not designed to be secure because payments will be made in a separate program.

Everything will be done in a voluntary basis. Please be honest. All payouts will be made in proportion. I'll verify the claims based on the information I have. I have the right to disregard any claim if I feel it's not genuine.

If you want to contribute some money to offset Bitcoinica customer losses, please send the coins to 1Lmb3fGLtizurD3mBq3QAKZ6mVb9kGMLSh. I will add 100% of the donations in this address into the pool. Any contributions, big or small, are appreciated.

Please submit your claim here: http://bitcoinica-compensation.zhoutong.com

(Please read the Conditions of claim carefully before you submit anything. The claim will close on July 21, 2012.)

If you have any problems, simply reply to this thread.

EDIT: This is entirely separate from Bitcoinica's own claim system. You can submit a claim here regardless of your status at Bitcoinica. However if you have received full payment from Bitcoinica please give the opportunities to others. Total amount of funds is highly limited and we can only expect a small percentage of funds to be reimbursed. If you're feeling generous, you can ignore this claim system and give your share to others, who may need the money more. All payouts will be made after July 22, 2012 (depending on my availability).

EDIT 2: I can't be involved in such kind of program. Help is needed: https://bitcointalk.org/index.php?topic=93401.0

No, I was merely stating a fact. I discovered something unusual and I emailed them. They promised an update. And that's it.

I don't have the right to update you publicly because I have some advantage in obtaining insider information.

I'm not part of the "bad news" and I'm not involved in Bitcoinica. If I didn't tell them they will discover the problem anyway.

If it's related to my previous email to the Bitcoinica team, no, it's a bad news.

Dear Bitcoinica team,

Please stop using my name "Ryan" for any outbound emails. It's my de facto Christian name.

Also, stop mentioning my "plan". I have received no contact from you for almost two month and it's simply wrong for you to judge my involvement in Bitcoinica either morally or legally.

I'll resign immediately when 50% of funds have been paid back, or upon receiving your instruction, whichever is earlier.

I reserve the right to protect my reputation.

EDIT: Amir has clarified that the first name is a random one due to Gmail's naming policy. He didn't intend to mean me personally. He has changed it to "Jason Bitcoinica".

This is ridiculous! I didn't register that email.

The email was not sent by me.

Really? I didn't reply to any email regarding the claims. Please check the sender again.

This option should be made available. Bitcoinica team please consider it.

It's absolutely fair to exchange a 10 USD Mt. Gox code with the 100 BTC refund in the above-mentioned situation. No one will complain about the price any more.

Bitcoinica only hedges when there is a change in net position. After shutdown, no change happens so no hedge should occur either.

The open positions for both long and short are almost equal, so there's no profit/loss to Bitcoinica regardless of the liquidation price they set. It can be $100 if they really want to. However, the people with short positions would have been forced to liquidate and there was no way to recover the losses beyond their deposit, it makes sense to choose a price close enough to the market price when liquidation is no longer possible, so that no one will owe anything to Bitcoinica and everyone will be able to get a fair share of refunds.

If you set the liquidation price to $6.5, my estimation is that you'll only get 50% of your money back (unless the shorts pay for their losses by extra deposits, which they won't). For most people they will be worse off.

It's a zero sum game to return the money. Any unexpected benefit for anyone means an unnecessary loss to someone else. What Bitcoinica is trying to do is to make everyone happy with priorities: prevent "real losses" rather than "opportunity cost", making the winners profit less rather than losers lose more.

I'm not involved in verifying the claims or refunding customers (if Bitcoinica wants me to I would be glad to dedicate some of my time), but I'm following this thread continuously.

I may not be able to give you some official information, but based on all the sources I have (including some big customers who have close contact with people at Bitcoinica), I can answer some of your questions:

> Why are you not paying out in full for the funds that you have good clearance on?

The team is quite skeptical in making payments. Because the amount of funds is limited (Tihan has exceeded his legal responsibility as a Limited Partner by chipping in *personal* funds, and no more such kind of contributions is available or expected), every cent extra paid to claimants means one cent less for other honest customers. AFAIK Donald doesn't want the team to consider the reputation of the customers so it's assumed that all the money paid out cannot be recovered if it's found to be wrong later.

> What about the US$ funds you are holding- they have never been disputed?

The funding account has sufficient funds to cover the vast majority of the claims. Whether Bitcoinica LP is still solvent depends on the claim verification. After removing the scammers from the list, they may have the funds to cover all the claims. But it's also possible for the company to become insolvent. In that case, Bitcoinica should make fractional payments to customers with less evidence or verifiable data. Again, this is just a suggestion based on my personal value judgement. It's not official.

> Who is truly in charge, and more importantly, what business entity has taken on the legal responsibility for the fiduciary responsibility of all of the many tens of thousands of dollars in value you hold in trust?

Based on government records, Bitcoinica Consultancy Ltd is the General Partner of Bitcoinica LP. AFAIK the owners of Bitcoinica Consultancy Ltd are Donald, Patrick and Amir (or possibly Bitcoin Consultancy Ltd). Tihan is a representative of an investment group, which is the Limited Partner. He is never in charge of the company after the corporate reorganization.

I have not received any official information from Bitcoinica for more than a month. So there are nothing more I can comment on. The whole thing is very complicated and I do believe that the team has good reasons for the delay.

I have received my copy of Bitcoin Magazine (in Australia).

Thank you Matthew!

I haven't resigned, nor received any notification regarding my employment status. I was just explaining the current situation, not decisions for the future.

When I sold the site, I was selling the intellectual property of the site and future profit opportunities for cash compensation. The AML requirements were set up after the acquisition and at that time, I was the main operator of Bitcoinica, which means no one else was representing Bitcoinica. The handover to Bitcoinica Consultancy is something happened after that. When the handover happened, I was not involved in negotiation or any business contracts, and by common sense, I should still have access (but not sole access) to all the customer deposits and ID documents. No one has ever contacted me about a formal handover of the accounts and ID documents.

My assumed responsibility as the main operator of Bitcoinica ceased at the time of press release. That's the public side of things. At the business side, nothing happened since then.

Yes, I secretly sold the intellectual property of the Bitcoinica website to a 3rd party without informing the community, but the handover to Bitcoinica Consultancy was a secret to me as well. I didn't even look at their contracts. The only message I got was like "Hey let's contract Intersango guys what you do you think?" I trusted the investor enough that if anything went wrong at his side, I should still bear responsibility to the community as if I never sold the site. And this absolutely ended at the time of press release of the handover. It was extremely clear that "Bitcoin Consultancy" will take "dominant role".

If you can provide a legally sound way to resolve this issue I will be glad to hear about it. As I said, there were no instructions at all therefore no actions were taken.

Anyway, these things are clear:

- It's illegal for me to delete the data without giving them to Bitcoinica Consultancy first.
- It's illegal for me give the documents to Patrick, Amir, Donald or Tihan without informing the public.
- It's illegal for me to use the data for anything else other than AML for Bitcoinica LP.

If you assumed that you were NOT giving the access to the documents to me (Zhou Tong) when you submitted the AML documents (i.e. You believed that Zhou Tong didn't have any rights to review the documents on the date of submission), please email me at ryan@bitcoinica.com, I will give your documents to Bitcoinica Consultancy and delete it from my repository immediately. (I doubt anyone would fall in this category.)

PS. I haven't even looked at or reviewed a single Photo ID after the handover.

I have no idea. I haven't heard anything from Bitcoinica for more than a week.