That's pretty disturbing.  While zhoutang not being privy to everything that is going on behind the scenes is understandable, it's hard to think of any positive reasons why you would be excluded from the loop.  

Who the hell does know what is happening and when are they going to announce how user funds will be returned?  This appalling lack of communication isn't just damaging the image of Bitcoinica - it's raising serious doubts about the competence of "The Intersango Guys" in general and tarnishing the reputations of their other business ventures.

The OP could make a complaint to AUSTRAC if he genuinely believes that CryptoXchange is abusing AML/KYC requirements in order to keep his funds for themselves.  Of course he might have some explaining to do if he took that option.

Most likely it means that they will not be protected by the safe harbour provisions of the AML/CTF Act if they do not perform appropriate ongoing customer due diligence in relation to this customer - that requires them to take satisfactory measures to establish the true identity of the customer and the destination of funds according to the AML/CTF Rules Instrument which derives its authority from the Act.

Hey Ken.  When did you lose your capacity to speak and write English?

That isn't what is happening here though.  


MtGox is exercising both a legal right and a legal duty.  Nor is their any evidence that MtGox has appropriated the OP's funds for their own use.

Anybody who expects to be able to deal anonymously with the exchanges at this point is a fool.  AML/KYC requirements are not going to become less stringent and just because new services tend to ignore them when they first start up doesn't mean they'll continue to do so as they grow and their banks require them to be compliant or risk their accounts being frozen.  Expecting anonymity from businesses which are looking to establish themselves as legitimate financial service providers is ridiculous and those who prefer to deal with services which offer anonymity need to find individuals or services willing to provide it.

My apologies.  I hate how the forum nests quotes by default.  Fixed now.

Whether group litigation is the most appropriate form of legal action depends on whether there are any "deep pockets" plaintiffs.  If there is no insurance company involved and the company has no substantial assets, it's not generally a cost effective way to recover money.  Even when exemplary damages are awarded, the awards tend to be low - from memory, I think the largest amount of exemplary damages by an NZ court was under $100,000.  And even when costs are awarded, it isn't actual costs but a proportion of them as determined by a formula used by the court.

Issuing Statutory Demands may be a cheaper and quicker alternative.  From the time a Statutory Demand is issued, they have 10 working days to dispute the debt or 15 working days to pay the debt after which the company is deemed insolvent and creditors can apply to the court for the company to be placed in liquidation.  The company has only 14 days to file notice of intention to defend the liquidation.  If the company's defence fails or they don't file one, the court appoints a liquidator to take control of the company and ensure creditors are paid as required by law. Unsecured creditors are at the bottom of the list when it comes to receiving payment, though.

None of this applies to you because they are requiring you to comply with the law.  There is no crime being committed by MtGox and nor are they committing any tort.  Asking you to identify yourself in accordance with AML/KYC requirements is not coercion or extortion.  Nonetheless, I really hope that you do make a complaint to the A-G and file a civil action.  You'll give the lawyers some free entertainment and likely end up with your financial accounts being investigated for possible tax evasion.


This may or may not be true.  Many jurisdictions have a minimum level of identity verification which must be applied to all accounts no matter how small the balance/transactions and funds can and will be held indefinitely if the customer does not satisfactorily identify on request.  Certain types of transactions trigger ongoing and enhanced due diligence requirements and providers can ask you to re-verify at any time.

Dwolla has put some very onerous KYC requirements on merchants with little or no notice.  In addition to their ToS now stating that neither merchants nor users will use Dwolla in association with any virtual currency without written consent (MtGox is still waiting on written consent and I suspect that you haven't sought it), starting 17 April Dwolla imposed the following conditions on users sending money to the accounts of merchants who've had reversals.

MtGox publicised the new Dwolla AML/KYC requirements both here and on their website when Dwolla changed their user policy.  There were multiple threads about Dwolla changing their ToS around the same time.

Even prior to Dwolla deciding to make Bitcoin-related transactions difficult, there have been plenty of threads on here over the last 9 months about MtGox enhanced AML/KYC compliance requirements as well as multiple announcements on their website.

It says right in MtGox ToS that they may freeze transactions pending satisfactory identity verification and that you agree to supply them with accurate, up to date and complete information about yourself.  Redacting the number from your driver's licence would definitely make the information you've provided incomplete.  Do you honestly think that the A-G is going to find your refusal to adequately verify your identity in accordance with AML/KYC requirements reasonable?  Do you really believe that they're going to view MtGox enforcing those requirements as "abuse"?

I'm tempted to tell you to read the ToS before you sign up for services, but given how far off the mark your understanding of "extortion" is, it's highly possible that you did read the ToS and somehow convinced yourself that they don't apply to you.

You seriously have no idea of what the terms "extortion" (which isn't a tort, by the way, but a crime) and malfeasance actually mean.

You have no case for your $100 lawsuit because you are required to mitigate your damages and the only thing stopping your from accessing your funds is your refusal to supply MtGox with satisfactory ID.  Not only would MtGox win such an action, you'd likely have costs awarded against you.

How likely is some random mugger to even realise what the device is and that it can be used to transfer funds?  It seems more likely that they'll steal the device thinking it's a tablet than that they'll realise its true purpose.

However, would it possible to build into the technology a "disable" code Matthew - a number which could be punched in to totally disable the device for a set period and which could only be later over-ridden by multi-factor account owner verification?  It sounds like something which should be possible.

Somehow I suspect that the seed funding which CoinLab received from the Draper VC group can't just be pulled out of that project to cover Bitcoinica losses - and why would you, even if you could, when you'd likely just be throwing good money after bad for no benefit.  Tihan specifically said that the investments he has facilitated in other Bitcoin businesses are unrelated to Bitcoinica and I'd be utterly surprised if that was not the case.  Venture capitalists and angel investors don't survive long without knowing the difference between when further investment in a business is worthwhile and when to cut their losses.

I sense a sock puppet meltdown approaching.

That would absolutely count as money-laundering.  You're literally charging someone extra to accept funds of questionable origin and you'd be wide open to serious criminal charges.

Anything over and above returning user deposits is really a moot point unless there's a substantial excess of liquid assets remaining after those deposits have been returned (if that was the case, Bitcoinica wouldn't be reliant on Tihan injecting more funds in order to meet anticipated claims).

I wouldn't throw yet another $200,000 at Bitcoinica unless I was certain that it would rebuild the credibility of the brand and make the business profitable again - I'd invest it in another company which didn't have reputation damage and whose management wasn't distrusted by customers.

Excellent job.

That's something the general partners will decide.   It's unlikely that they're just going to come up a plan which they think is "fair" without having it reviewed by lawyers and accountants to ensure that it's compliant with their legal obligations (and it this point they haven't disclosed whether they intend to cease trading and liquidate the company entirely or whether they intend to resume trading once this clusterfuck is sorted out).  With several hundred thousand dollars involved, it's unlikely that they'll risk their legal protections by not doing things according to established practice.


Were you able to act without Tihan's approval during that period?  Were you solely responsible for making decisions about Bitcoinica's day to day operations between January and April?  If not, with whom were you required to consult?


According to them, Bitcoinica Consultancy is the General Partner in Bitcoinica LP and the recent name change seems to support this.  What's not clear is who was actually in control of Bitcoinica prior to the "official" date of ownership change as opposed to who was nominally managing the company.

Dwolla may or may not have something to do with it.  It people are putting funds into MtGox via Dwolla and then rapidly trying to withdraw via wire transfer, that should definitely flag their system as potentially fraudulent/ML activity and trying to limit their exposure to potential reversals is not just reasonable but essential to the best interests of all customers.  A lot of payment processors won't let you withdraw money via a method you haven't previously used to fund your account and the exchanges may very well end up having to put such restrictions in place eventually just to stay in business.

Yep.  While I don't think Andre would have a hope in hell of shifting legal liability to Chris if refunds were made in a manner not consistent with legal requirements, I'd still like to see Chris as protected as possible regarding the disbursement process without him having to shell out for legal advice.

Chris, it might be worth you making contact with ITSA for advice on how to proceed.  Explain to them that you have control over the only known assets of an insolvent sole trader although you were not involved in operating the business itself, that adequate business records for establishing the amounts owed do not exist and that you do not feel comfortable making any disbursements without appropriate authorisation.  Make sure you explain that you have no reliable means of contacting those who may be owed money.

They have a toll-free number which some overseas callers can use.

http://www.itsa.gov.au/dir228/itsaweb.nsf/docindex/Contacts-%3EContact%20us#overseas

You can also make an email enquiry.

info@itsa.gov.au

It's possible that they may not be able to assist you, but even a "can't help" from them establishes that you tried to seek appropriate guidance on how to proceed.

Credit providers run pretty sophisticated software, too.  It's simultaneously looking for fraud, assessing customer risk in real time, trying to detect money laundering and terrorism financing, looking for indicators of tax evasion and a bunch of other things.

I remember being told years ago that tax department auditors could estimate income to within a few hundred dollars based on lifestyle alone.  I expect that technology and powerful software makes that possible on a larger scale than ever before.

It's important for people to remember that as a general rule transactions of $10,000 and over are not illegal per se.  In the vast majority of cases they'll just be automatically reported and there'll be no further investigation unless some additional factor identifies the transaction/s as "suspicious".  Even when a transaction is flagged, it will often be determined to be legitimate through the most basic of investigations and there'll be no need to report it as "suspicious" to FinSEC/AUSTRAC  or whomever.