You need at least 3 elements for a class/representative action.  A court to certify that there's a cause of action; a court to certify the plaintiffs as a class (you need a minimum number of plaintiffs for this); and a defendant with deep enough pockets to pay the award being sought.  In this particular instance, you're also going to need a court to accept jurisdiction.  You will need to hire local litigation lawyers in each jurisdiction where an action is bring brought and you will need a means of funding that litigation.  

You also need to make absolutely certain that you are suing the right defendant/s. You need to be aware that exemplary damages are awarded very rarely in some jurisdictions and that any such awards tend to be very low.  It's highly possible that you would ultimately receive less money pursuing a representative action than you would taking action to have a liquidator appointed or seeking payment through conventional means.


This is mostly true but at that point they would no longer control any of the funds/assets.  Those would be under the control of the liquidator/administrator, who has the power to reverse any transactions which took place during the lookback period preceding the insolvency and force disgorgement of funds from anyone who received inappropriate financial preference or who transferred assets during that period.

Not just because of hacks, either.  People need to remember that any of the exchanges could have their assets frozen at any time - it's insane to leave any amount of funds that you might need access to in the short.  These businesses are not insured for the loss of your funds and very few - if any - of them have the capacity to absorb any significant losses or interruptions to their cashflow.

This should have been put into the hands of a liquidator and a police report filed months ago.  But...Bitcoin isn't an excuse - computer intrusions which delete or otherwise damage critical data are illegal in and of themselves and liquidators are perfectly capable of selling assets to pay creditors (after having first secured the assets).  The only real question is what entity should have filed for insolvency, and that's not clear even now. 

This whole process should be turned over to a liquidator/administrator now - it's the only way there's going to be a thorough and transparent accounting of the remaining assets and a public examination of what happened in the months leading up to the insolvency.  NZ insolvency law allows for a liquidator to apply to have their fees paid out of a fund specifically set aside for that purpose so that creditors are not unfairly disadvantaged by liquidator fees.

It is absurd that law enforcement is not being involved in investigating these thefts.  There's no financial institution or company which would not report such large thefts to law enforcement even if they chose not to make those losses public.  The "let's just put it behind us and move forward" attitude only encourages more attempts at theft.  People have been prosecuted for stealing virtual furniture on Habbo Hotel, FFS.  Anonymous members were prosecuted for the HB Gary intrusion (no data or funds were lost).  And yet Bitcoin businesses remain reluctant to involve law enforcement even when intrusions cause a significant loss of user funds.  Why the hell wouldn't you want to see someone prosecuted for those thefts?

Hand the claims process over to a liquidator and the investigation process over to law enforcement - it's the only way that either has a chance of being done competently.

FWIW, I do believe that Amir, Patrick and Donald probably didn't know what they were getting into.  A month simply isn't enough time to do adequate due diligence when you're setting up multiple entities which have varying degrees of liability and the nominal owners are not actually running the business (the reason Tihan keeps repeating that his role was hands off is because he'd lose safe harbour protection from liability if he took part in the day to day running of the company).

Any information about the mysterious Wendon?

To be honest, it's always seemed odd that the Intersango guys were called in by Tihan to do a security audit in March and only a month later the announcement was made that they would be operating Bitcoinica.  I can well believe that they jumped into that deal without fully understanding its implications - even now, it's not easy to determine who was legally operating Bitcoinica at the time the last intrusion occurred as we've been told that not all the paperwork had been completed.

We should probably sticky that somewhere.  Most regulars of any messageboard know that you can search it through Google but newbies are often unaware of that.

The search function absolutely sucks - until that is remedied I think we're just stuck with people starting new threads about frequently asked questions.

The minute you start representing this in terms of some kind of formal, professional or accredited service, you're going to run into licensing requirements in many jurisdictions.

There's also the question of the purpose of these investigations.  Labelling someone a scammer after the fact has limited value.  It might matter to people who want to remain part of this community, but it's not going to matter a damn to those who are going to cut and run from Bitcoin unless the information obtained leads to legal consequences or finds its way to potential victims of their next venture.

People claim all sorts of things on the internet, especially about their mad skillz.  The hacker's not going to get "caught" in any meaningful sense unless law enforcement (who we've been told haven't received a report about the intrusion, the theft or the destruction of data) can prove that the specific person doing the bragging gained unauthorised access to the Bitcoinica server - evidence of that might not even exist after this amount of time.

Check her post history.  Making grandiose claims is one of Maria's favourite pastimes - she helped Satoshi launch Bitcoin, doncha know.

People confusing "than" and "then" drives me nuts.  They don't sound the same and they aren't synonyms - how the hell can you confuse them, especially in writing?

It's easy to distinguish it by typing mod comments in a different colour/font or by enclosing them in [moderator hat on]/[moderator hat off] tags.  For the most part, the mods around here do mostly house-keeping stuff and don't sanction people in public.  I think the default assumption should be that they're posting their personal opinions unless otherwise indicated.

I've been part of a couple of communities which restrict mods and admins from posting as normal posters and I believe those communities are poorer for that choice.

I think I understand what Mt Gox support is saying and hope they'll correct me if I'm wrong.  It sounds like Mt Gox is limiting the amount of user funds being put at risk by only putting a certain amount of Dwolla withdrawals through at any given time, so that if Dwolla does suddenly lock their account they will be able to reimburse users out of their own reserves rather than those funds being unavailable to users indefinitely.

TradeHill claimed in their lawsuit that they had put $2 million through Dwolla in the month prior to folding.  It's not unreasonable to assume that MtGox does a similar volume of Dwolla business but if they kept enough funds in their Dwolla account to cover anticipated withdrawals for the coming month, two weeks or whatever, they'd risk a huge amount of money being frozen at no notice.  The only way to avoid that risk is to put smaller volumes of transactions through and wait until they've been fully processed before putting any more funds into the Dwolla system.  While we don't know what their risk tolerance is, obviously larger withdrawals bring them closer to that ceiling than smaller withdrawals.

That's how I understand what they're saying, anyway.

That's because of the way that payment processors route payments in order to try to get around online gambling laws.  There were millions of dollars frozen in offshore payment processor accounts when the US DoJ cracked down on online gambling.


This can be a difficult problem.  Many nations have AML/CTF laws which prevent "tipping off" which essentially means that you're not allowed to tell a customer that you regard a transaction as suspicious or that it's been reported as a suspicious matter.  You can ask them about the origin and the destination of the funds, but that's about it.  This becomes complicated if you go to wire money and the bank then wants enhanced KYC information on your customer. 

The bank is perfectly within its rights to refuse any transaction for any reason, but it can certainly refuse to process a transaction until adequate KYC information has been provided - but because of the laws against tipping off, when this situation occurs the originating FSP/MSB has to be extremely careful about what information they disclose to the customer.

Transactions which have the appearance of structuring or which raise that money is being sent to fake account holders create another bureaucratic nightmare - service providers once again have to try to determine the legitimacy of the transactions without alerting the customer to any investigation (there's no actual law against dividing up transactions but they have to investigate it for possible AML activity and report it if they cannot establish legitimacy).

If you read the cases where financial services providers have been fined in the millions of dollars for non-compliance with AML/CTF/KYC regulations, it's an eye-opener just how much FSPs are required to monitor customer transactions on an on-going basis and the extent to which they're expected to investigate anything even vaguely "suspicious".

Mt Gox is stuck with multiple AML/KYC requirements.  They have to create their own framework under Japanese law and comply with that.  They must also comply with the requirements of Dwolla and other payment processors and additionally they need to comply with the requirements of their banks.  These will not always mesh seamlessly as the broad principals of AML/KYC/CTF regulations are similar in FATF countries but each individual financial services provider develops their own way of implementing them.

In addition to any AML/KYC/CTF requirements, any FPS also needs to have algorithms which identify possibly fraudulent transactions.  It's not hard to see why 5% of transactions can end up being flagged for one reason or another and when you're moving millions of dollars each month that means that hundreds of thousands can get tied up for varying periods of time.

This isn't unique to Bitcoin exchanges.  Stored value of any kind has become a major magnet for fraud and money laundering and payment processors are starting to freeze accounts through which people are moving larger amounts than would reasonably be expected.

The higher volume makes MtGox more attractive to people wanting to launder money.  They don't care about buying at a higher price as long as they can get their Bitcoins out quickly, and they're still taking less of a loss than they would be if they used conventional means of money laundering.

I honestly think this is good advice when dealing with any of the exchanges now - you just never know when their banks/payment processors are going to require enhanced KYC information on a customer or block transactions as suspicious.  If people understand upfront that they'll likely have to provide that information at some point and do so off the bat, they're less likely to have problems down the track although it means that setting up their accounts initially will take longer.

They probably can't help directly beyond logging complaints and informing people about their legal options at the moment.  It's definitely worth those who believe that WBX was operating as a Ponzi scheme lodging a complaint.  People who have a history of failed businesses also tend to come under closer scrutiny, so it's worth getting the WBX debacle put on record for the future.

The security courses they're offering come at over $600 a pop, so if they can suck people in with their "premier security service" and "high profile clients" bullshit, then it's certainly possible to rake in some dollars - especially seeing they're offering online courses.  

Somewhat ironically, security licences (I checked - their licence is valid until December this year) in Queensland are issued by the Office of Fair Trading - the same government body which investigates scams and fraud.

Andre's opened a new business.  He's now "CEO" at Progressive Security Services Pty Ltd.

Here's the ASIC details.

https://connectonline.asic.gov.au/RegistrySearch/faces/adf.task-flow?adf.tfId=panelSearch&adf.tfDoc=/taskflows/panelSearch.xml&searchText=progressive%20security%20services&searchType=OrgAndBusNm

Note that the company was registered before the deregistration of High Net Worth Property Pty Ltd and before the collapse of WBX.  Andre is a director of the new company.

http://www.mysecurity.com.au/company/Progressive%20Security%20Services%20PTY%20LTD/609.html



For those wanting to serve legal papers, the business address is helpfully listed in the White Pages.

Mobile Service
208 Herses Rd
Eagleby QLD 4207

It's a residential property which was bought for $235,000 on 15/08/2011.  I'll see if I can track down who the buyers were.

It goes without saying that if Andre has taken the route of personal insolvency in order to become judgement-proof in respect of WBX, then he is prohibited from acting as a director of a company while bankrupt.

The company is offering on-line security certification, among other things.

More info here.

http://an6102.wix.com/progressivesecurity#!about

Some Google bombing might be in order here in order to make potential customers of the new business aware of Andre's track record.

It's a combination of cost and convenience.  $4 per month gets me unlimited transactions on my bank account, I can transfer small amounts, and the charge for overseas transactions is trivial (I used my debit Mastercard to pay Amazon $27 last month and my bank charged me a whole 6 cents for making an international transaction).  I'm willing to pay $4 per month for that level of convenience.

You're also not likely to be able to get RCs from the pot dealer who lives around the corner.  It's typically been a market served by mail order from overseas and Silk Road is well designed for facilitating those kinds of markets.  The fact that many RCs are effective at miniscule doses (the average person won't have scales calibrated finely enough to measure them accurately) also means that people are buying less often than with traditional illicit drugs, further reducing the chance of getting caught.