This.

As far as I'm aware, everyone's funds are currently in a frozen MtGox account which can't be accessed by anyone associated with Bitcoinica.  What the Intersango guys are doing is refusing to sign the paperwork which would allow Bitcoinica to be put into liquidation without a High Court order.

+1

The company is being put into liquidation, not receivership.  It cannot be put into liquidation until either a special resolution is passed by the general and limited partners - the famous document which Tihan wanted the Intersango guys to sign at the London conference - or an order is made by the NZ High Court putting the company into liquidation.  So the next step is Wendon seeking an order from the NZ High Court to put Bitcoinica into liquidation (creditors could also seek such an order).  I have no doubt whatsoever that Wendon will proceed with this step.

Although claims are submitted early in the process (usually within a month of the liquidator being appointed), they're not usually formally validated until the liquidator has recovered funds and is ready to disburse them.  This is to save on liquidator's fees.  The liquidator will check any claims against the company's records.  Disputed claims cannot be paid so if there is a dispute about the amount owed, agreement on the value of the claim needs to be reached with the liquidator.

One important point to note is that users will need to give the liquidator their real life details in order to make a claim.  The claim form is standardised and very short.  You can submit your supporting evidence with your claim but it's not necessary to do so - the form asks you to describe the evidence you have, though.

The increase in the price of BTC since Bitcoinica ceased operating may mean that there are now sufficient funds to meet the claims if the liquidator values BTC still owed at ~USD 5 as Bitcoinica did when they began the refund process.  If there are insufficient funds to meet all claims and claw back is not appropriate or viable, it's possible that some people who have already received a partial payment will have their claims subordinated - ie, they will receive no further payments until all users have received a payment of at least the same proportion (in egregious cases of inappropriate preferential payment, a claim can be made totally subordinate and not eligible for payment until all other claims have been paid in full) .

Although the liquidator should have a good idea of what funds will be available quite early on, the state of the financial records could be an issue - the liquidator must satisfy himself that they were reconstructed fairly and accurately.

One thing which could slow the process down is a finding of personal liability on the part of the principals and a decision by the liquidator to take legal action against them.  This is not generally pursued unless there is a significant likelihood of legal action recovering substantial funds for the benefit of creditors.  

Based on what Tihan has posted previously, Wendon is a secured creditor but will be waiving its right to be treated as such in the liquidation.  They will also be entitled under NZ law to be treated as a preferential creditor due to their role in recovering and securing some of the funds which were lost in the MtGox intrusion, but Tihan has not yet indicated whether they will be claiming that status.  The tone of Tihan's posts regarding the liquidation strongly suggests that he views the liquidation as the means to return user funds and that other means may be used to pursue Wendon's claims.

hey dank, I think I've found a benefactor for you.

http://www.dailymail.co.uk/news/article-2208967/Cecil-Chao-Sze-tsung-Billionaire-offers-40million-reward-man-marry-lesbian-daughter.html

You will get no disagreement with me on that.

I have no idea whether Phin's problems with the EPA are truly related to people he knows losing money on Bitcoinica, but if they are it's a classic example of someone suffering real life harm because of people jumping to conclusions and "punishing" the wrong person for their loss.  If Phin is having trouble "clearing his name" in a town where he's well known, what makes you think it's easy for random people on the internet to prove a negative?

The truth is that people don't verify information before jumping in with both feet.  That's true when they get involved in these investments and it's also true when they're seeking retribution.  And it doesn't apply simply to Bitcoin.  Look how many times people have been targeted because some kind of "shame and blame" site wrongly identified them as a paedophile.  People act first and think later far more often than is reasonable and they frequently do so on the basis of information given to them by others.

Nobody is saying that the credibility of those hawking their wares here shouldn't be investigated, but no-one's going to pay much attention to any such investigations if the majority of information published is inaccurate or irrelevant.  Three Olives' doxing of Bruce is a case in point.  He waited until he had overwhelming evidence to back up his claims before risking the wrath of Lowtax by posting what he'd found.

I'm talking about bitlane's comment regarding the problems being tied to a single entity (pirate).  The cascade effect is because people who already had exposure to pirate also lent funds to others to invest with pirate.  Those people are down two lots of money - the money which they didn't receive from pirate and the money from borrowers who invested funds with pirate and are now in default. That kind of double exposure to pirate was an insane risk to take.

I think that bothers me most is Sonny trying to explain it away as "jurisdiction arbitrage" or a government conspiracy.  No-one who has read the documents can believe that a scheme which was so aggressively marketed and which openly lied to its users about what was being done with their money was a victim of some kind of technicality.  It was outright fraud and no amount of spin changes that.  Sonny trying to portray himself as some kind of victim of the US government is at odds with someone who has honestly turned their life around and regrets their past actions.

"The authorities" have already taken their cut.  He was fined $4 million.  There are over 1 million investors in Zeek and over 200,000 affiliates.  The amount of work it's going to take to begin unravelling it is astronomical.  Someone has to be paid to do that work and people would whine like babies if it's was team of government employees using tax-payer money in order to facilitate Mr Average America getting a refund of $5.

I'm pretty familiar with the NZ liquidation process.  If what we've been told is essentially true - that the MtGox intrusion caused a shortfall of about 30% in the amount of outstanding claims valued at the date Bitcoinica stopped operating but that a significant portion of the funds lost in the MtGox intrusion have been recovered - then the two key issues for liquidation will be adequacy of records and any preferential payments which were wrongly made. 

Preferential payments shouldn't be an issue if the value of Bitcoins has risen sufficiently to cover the outstanding claims (which were based on Bitcoin being valued at around ~USD 5).  Even if they become an issue, subordinating the claims of creditors who have received preferential payments is an option which the liquidator can use as an alternative to claw back and I've read case after case where NZ liquidators have chosen that option (sometimes in conjunction with demanding the return of an agreed portion of funds).

The biggest problem with the Bitcoinica liquidation is going to be the adequacy of records.  Tihan has indicated that Wendon intends to waive its right to be regarded as a secured creditor.  Under NZ law, Wendon would still be entitled to be treated as a preferential creditor due to its role in recovering the funds from the MtGox intrusion, but Tihan has given no indication that it intends to pursue such status or even that it intends to lodge a claim as an unsecured creditor (secured and preferential creditors can choose to waive that status and be treated as unsecured creditors). 

There are some wild cards regarding Bitcoinica and the adequacy of records is one of them.  It could make the process of validating claims time-consuming and costly.  But liquidators don't formally validate claims until they are ready to distribute funds, so there'll be a reasonable indication of the likely pay out by that point.  The existence of a currently unknown major creditor could also drastically reduce the return to users, but no-one has even hinted at the existence of such a creditor despite some pretty public slanging matches.

Bitcoinica users have far more reason to be optimistic about receiving some eventual pay out than Zeek Rewards "investors" do at this point.

Which comes down to risk management.  If you have significant enough exposure to an investment that its failure would cause you significant liquidity problems then you shouldn't lend money to others to place in that same investment because if it collapses there's a high risk that they'll default and you'll get squeezed from both sides.  This isn't a novel concept.

This is what worries me most.  One day his assertions will hurt someone innocent who has both the will and the means to strike back and he'll perceive himself as being victimised for trying to do the right thing by the Bitcoin community.

I think Phin genuinely believes that he is doing something helpful for Bitcoin.  He just gets easily distracted and doesn't really have a filter so his investigations come out as a garbled stream of consciousness and it's difficult to sift the valid information from the absolute crap.  I do worry that his style will get him into real world trouble one day.

It's pretty much a blog.  Any resemblance to a thread with an actual topic is purely incidental.

There is currently ~$225 million of Zeek funds in domestic and foreign financial institutions.  The emergency order has frozen those assets so that the receiver can recover them and distribute them to investors.  The sheer number of customers and the huge number of affiliates means this is going to be complicated, but it's likely that the receiver will seek to claw back payments and go after the millions which were transferred to family members as well.

While this is typically true in the corporate world, people running small businesses have a habit of giving themselves vanity titles which bear little resemblance to their actual duties within a company.  Self-awarded titles are pretty meaningless and in no way reflect the duties or the capabilities of those who choose them.  Styling yourself as the CEO or COO of a small business doesn't make you sound important, it just makes you sound like an egotistical wanker.

No-one's suggesting that people shouldn't be able to trade defaulted assets, but that trading needs to happen in a high risk environment where the responsibility for due diligence rests entirely on the investor.

Personally, I think that trading in defaulted assets should have been halted from the outset but sooner or later the Bitcoin world is going to need to come to grips with the concept of "sophisticated investors" and offer certain investments only to those who can meet certain income/asset benchmarks.  Of course this requires verifying people's real life financial information so it's likely to be unpopular with many.  And people are still going to create pass-throughs to high risk offerings, but it's a step towards making those who promote high risk investments more accountable.

http://www.ncruralcenter.org/index.php?option=com_content&view=article&id=535:new-gen-ventures&catid=51:leadership-a-engagement&Itemid=257


This is the type of thing dank could look at, but I suspect he wouldn't like the conditions attached to the programme.  He doesn't believe that people lending him money have the right to judge him as a person or his business proposal, let alone that they have the right to insist on third party oversight of his operation.

dank is pretty much looking for people who'll just throw money at him and say "do whatever you want with it whenever you get around to it and don't worry about repayments in the meantime".