Of course this has happened to Gox, it is all public information - Department of Home Security seized a Gox account holding $5M in customers funds, Gox lists those $5M in the "assets" part in their bankrupcy protection filing.

If they were compliant, meaning that every customer had a single and separate bank account, that wouldn't have happened - because LEGALLY it would have been customers money, each customers would have held its OWN money in a separate bank account, and it wouldn't have been "Gox money", arbitrarily seizable by LE at the first sign of suspicious activity. The problem here is that getting a banking license costs DOZENS of millions + years of burocracy, and getting an established bank to become your partner by taking full responsibility as Fidor does with Bitcoin.de is no easy job at this stage - hopefully it will become easier in the near future.

Kraken is well known to have made a huge marketing effort to make people believe they are compliant. The reality is that they just have two banks accounts:

1) OPERATIONAL EXPENSES ACCOUNT (this is where the money to pay for company's expenses sit)
2) DEPOSITS ACCOUNT (this is where customer's money sit)

They say the never mix the funds, which is better from a practical POV (Bitstamp mixes everything on a single account, which is simply suicidal), but legally it is exactly the same as having a single bank account: both accounts are ON KRAKEN'S NAME, which means that if regulators need to go after a Kraken customer, they will just freeze the whole account because legally it is a property of Kraken. They do not have a banking license and when they are questioned about HOW can they say they are compliant if they are not compliant with the european Directive for Payment Services, they respond with a vague "we are operating under Fidor's banking license" which is NOT true - Fidor has no responsibility on none of their accounts, in fact they are "lending" their banking license to Bitcoin.de but NOT to Kraken.

As per Bitcoin.de legal disclaimer:


Now read the aforementioned sections of the Banking Act and you will see that it is very clear: if you are a financial intermediary/investment broker, etc. (which means holding/managing funds on behalf of third parties) you need to be either a bank, or a tied agent of a bank, which means that the bank is supervising and controlling the customers funds, which are NOT sitting on an account on your name. This is true for Bitcoin.de, NOT true for Kraken. Kraken is NOT a tied agent of Fidor, if they were they would NEED to state that clearly on their ToS. Fidor has no control nor supervision on neither of Kraken's accounts, you can call them and ask yourself (and then ask the same question on Bitcoin.de to see the difference).

Believe me if I tell you that I did a thorough due diligence on the matter and I've received formal replies from financial regulators on more than one EU country: Bitstamp is absolutely non compliant under EU regulations, I can guarantee you that.

Coinbase is a completely different business: they are not an "exchange", they are a "bureau de change" (like the one in which you exchange currency at the airport): the main difference is that when you are buying or selling on Coinbase your legal counterpart is Coinbase itself, and NOT another customer like it happens on Bitstamp, Kraken, etc.. When you are sending money to Coinbase from a legal POV you are transacting with Coinbase itself, they are not holding the money on your behalf while you transact with another customer - the reason they are operating that way and NOT as an exchange of the kind of Bitstamp (which is much more profitable revenue wise) is PRECISELY because they are a serious company and they know they cannot do that - at least currently, as having a banking license (as it IS required for a trading exchangr as per Bitstamp) is not only expensive but very lengthy as the barriers for newcomers are high.

If you read carefully the ToS of the emerging exchanges you will see hints of what I'm saying: the new one based on the UK is registered as a "bureau de change" in a Coinbase fashion precisely to avoid to adquire a banking license; the one just launched in Mexico says clearly that by sending them money you are adquiring their own virtual currency, which only purpose is to buy and sell cryptos, and that they DO NOT HOLD customer deposits (because from a legal POV you are buying their own "virtual currency" by wiring them money) - those are just tricks to try to avoid the hard cold truth, which is that you need to be a bank to hold deposits on behalf of third parties.

About the escrow: I've never looked into that business model, but I approached regulators explaining them EXACTLY how a Bitcoin exchange work and they have told me that under the PSP (payment service provider) / financial intermediaries EU regulation I needed to either have a banking license or to have a banking partner holding, controlling and supervising all customer deposits (because that money is not YOURS, it belongs to your customer). While I'm ignorant on that aspect, at this stage I'd bet that an escrow would need to comply with the same regulation, as they are acting as financial intermediaries by holding funds that do not belong to them.

The only way to have Armory working with Tor is to have listen=1 on bitcoin.conf, or to start bitcoin with the -listen=1 argument, right?

The fact is that an exchange commingling all their customers funds in one single bank account is simply non-compliant, and even illegal in most of the EU.

Just check how brokers work: you need to open a bank account UNDER YOUR NAME on a certain bank, and give the broker an authorization to operate with your account for this or that purpose - but customers funds are never commingled, each customer has his own separate bank account.

Bitcoin exchanges (apart from B-C afaik) do not operate that way (not even Kraken), exposing customers to a huge risk. It just takes one rotten seed (eg, a drug dealer) operating in exchange X and the only option LE has is to freeze the full account - that's why you cannot take customers deposits* in the EU if you are not a bank.

*deposit = holding funds on behalf of a third party - those funds are NOT legally yours, you are just holding them on behalf of your customer - that's what banks and only banks do.

There's definitely a good chance of that happening, as Bitstamp is operating with a corporate account - exactly the same type of account that you would have to receive payments for selling goods or services, the type of account in which you can commingle funds because they are legally yours as soon as you get them - but as Bitstamp is not selling goods or services but acting as a financial intermediary you can see clearly how they are non-compliant with EU regulation regarding PSP (payment services providers) and other financial intermediaries. They either need to have a banking license (lengthy and extremely expensive process) or to operate under the banking license of a banking partner (not easy because the bank would have full responsibility on customer funds - Fidor is doing that for Bitcoin.de as you can see on Bitcoin.de's disclaimer, while Unicredit is definitely NOT doing that for Bitstamp).

All in all, what davout (founder of Bitcoin Central) is saying HERE is definitely right, I can guarantee you that as I've made my own thorough due diligence with regulators in more than one EU country. Truth is Bitcoin Central is *mostly* compliant, as they are using a banking partner that opens one separate bank account for each one of their customers - that's the way to go, otherways as soon as regulators needs to fine you, or to freeze a certain amount of money because of suspicious activity, they will have to freeze all customers funds as they sit on a single bank account that is legally property of the exchange and not of the customers themselves.

Bitstamp either becomes compliant or it gets sold to a big fish that will make it compliant or it will be shut down eventually. Probably they have made enough millions to become a bank, but saying that there is less than 1% chance for them to be shut down is simply delusional.

You can bet your hat there was a huge amount of "insider trading" on Gox, and that currently that's happening on Bitstamp too.

Do not forget people running those service are a bunch of amateurs (at best), which are not compliant with current financial regulations - to operate as an exchange in the EU you need to have a banking license, in most of the US states you need to be registered as a MSB, etc. - Bitstamp is operating with a SINGLE corporate account where they mix all customers funds, and probably their own too. Taking deposits without a banking license is illegal in the EU, and it is also very dangerous for the customers: if ONE Bitstamp customer is investigated the relevant authority will have no other option that to freeze the ONLY bank account Bitstamp has, de facto screwing up all their customers. That wouldn't happen if they were compliant and thus acting as a bank, setting up a separate fiat account for each one of their customers.

From a legal point of view, currently Bitstamp is the sole owner of the corporate account in which customers are depositing their trading funds, which is very bad for their customers and totally non-compliant, as customers are not exchanging their money for a service but DEPOSITING it in order to trade with each other.

You can bet Bitstamp knows this very well, and yet they continue to operate because the risk is worth it - you can bet they are ready to take other kinds of risks too as per "insider trading".

That said, while operating an exchange without a banking license (or a banking partner providing that license as Fidor Bank does for bitcoin.de, which from a legal POV is just a tied agent of Fidor) is illegal/non-compliant in the EU, Bitstamp is not giving a shit about that fact risking all their customer funds to LE or regulators, I bet the apply the same standard for other dangerous practices.

We are still in the wild west, folks... But probably not for too long.

Wumpus, Gregory, Gavin: Thank you very much for your efforts. You are all doing a GREAT job, it has to be said!

I've opened a dedicated thread in Technical Discussion for this purpose.

Some questions about Heartbleed and Bitcoin Core:

• Could somebody describe how the attack would work if somebody had been using Bitcoin Core 0.9.0 and clicked on a "bitcoin:" link?
  
• Could the private keys be compromised even if I generated the "bitcoin:" link myself and clicked it just to see how the new payment function worked?
• In that case, how the private keys would have been exposed? Because of a MITM? How would it work?
• Would the wallet be considered compromised if I clicked on a "bitcoin:" link but didn't go through the payment, and thus I did not sign any transaction?

I just cannot wrap my head around it yet.

But who could have MITM'd me? A malicious node? How can my priv keys be exposed just by clicking a "bitcoin:" link that I generated myself, especially if I did not go through the transaction and thus I didn't sign and broadcasted it?

Could somebody describe how the attack would work when somebody had been using Bitcoin Core 0.9.0 and clicked on a "bitcoin:" link?

Would the wallet be considered compromised even if I generated the "bitcoin:" link myself and clicked it just to see how the new payment function worked? In that case, how the private keys would have been exposed?

Would the wallet be considered compromised if I clicked on a "bitcoin:" link but didn't go through the payment, and thus I did not sign any transaction?

I just cannot wrap my head around it yet.

FYI:

I hope you are joking.

CPU or GPU is pretty much the same, as they are both "commodity hardware" which has multiple uses besides cryptocurrency mining. The theoretical problem that pose ASICs is that we will probably reach a point in which very few players (chip manufacturers) will monopolize the mining scene, which would mean that Bitcoin is centralized de facto.

Please let me know what other improvements over BTC you are talking about.

You all seem to forget the ONLY reason for the existence of Litecoin (and all the other Scrypt coins, BTW) is that it uses a different hashing algo that was supposed to be ASIC resistant.

Now Scrypt ASICs are coming and Scrypt coin developers do not give a shit, they do not even think about forking their creations to change the hashing algo, they just want to keep milking their very own cash-cow.

Serious questions: what is the value proposal of Litecoin now that it will have ASICs? What is the innovation? Why Litecoin should be considered a valid alternative/complement to BTC?








Disclaimer: I own a substantial amount of LTC.

Same here. Still vulnerable.

I would advise you to take the profits during uptrends and following a rational plan (when we will hit this price I will sell x% of my stash, etc.) - I hate stating the obvious, but I'd avoid selling during dowtrends and buying during uptrends.

Because of its design Bitcoin won't be able to support real-world payment volume if the price per coin is not high, thus pure speculation (which currently amounts to 99% of the BTC transactions) is just making it easier for companies like Square to adopt it. In fact, the wild speculation on Bitcoin's future price is precisely what is making the price to reach quickly a level that makes it possible for bitcoin to support a real economy transaction volume.

Bitcoin has everything to change the world, quickly: it is a huge innovation that solves real life problems and has numerous applications apart from being "digital cash", and it has also built-in a huge financial incentive that makes its adoption to go viral - nothing speeds adoption faster than the promise of future wealth.

You only have fear when you are close to the very bottom. Those who feel euphoria or fear always lose, because they buy near the top and sell near the bottom.

Just buy when this forum is bloated by FUD-spreader trolls, and sell when the thread is completely bloated by train pictures.

For the record: I'm buying myself, going in the $300 range is possible in my book, but no way we are going below $266. Given the fact that I bought most of my bitcoins in the $10 to $20 range, buying a little more at $450 or $370 is not really affecting much my average buy-in price. In fact I'm just buying back aprox. the same amount of bitcoins I sold in the $700 to $900 range, which is just the course of action I had in mi mind when I sold.

If we go below $266 (VERY unlikely) I'd expect a long, multi-month bear market, but I'm betting on it NOT happening.

EDITED (some grammar + additions)