It's a real shame Andre didn't handle this better from the outset.  Given the relatively small total amount involved, it might have been possible to put together a rescue package which ensured users had most of their funds returned and Andre was able to walk away from WBX with no further legal liability.

You know I think a lot of people would wear this change if it mean that no claims for reversal would be allowed after 21 days.

.com, .net, and .org are the common seizures.  Where the sites are located is irrelevent.  There are a number of different laws they use, from IP laws to racketeering laws.

How many customers need to be paid out Chris?  If it's substantially more than the number who've contacted you through this thread, then maybe there needs to be a thread on reddit or some other places so customers who don't frequent here have some idea of what's going on.

Companies routinely offer stuff which they eventually withdraw because they find it's not economically viable for some reason.  A certain amount of fraud is expected in providing any financial service but no company has the capacity to absorb unlimited amounts of fraud.  Once a particular vulnerability gets exploited, it becomes well known and more people exploit it - when losses become unacceptably high, the underlying mechanism which allows the fraud is often withdrawn or heavily restricted.  Small start-ups often grossly estimate the incidence of fraud they're likely to encounter.

How much do those missing claims represent?  While it's likely a lot of people won't bother making low-value claims, from an accounting viewpoint you need to make provision for them.  If you add that value to the other numbers, how do they change?

Also, do you mean that the value of claims exceeds the total deposits by 35% rather the total of Bitcoinica's assets (which should be more than just the total of user deposits-whether user deposits could even be classed as Bitcoinica assets is an interesting question in itself as generally speaking they would be regarded as a liability from an accounting viewpoint)?

I know that you're talking somewhat informally, but just be careful about using terms like assets and insolvency - it could really bite you on the ass down the track if people are unhappy with the way this is ultimately resolved. 

I also wonder about the ratio of USD to BTC deposits.  While we know that they're going to be holding back 18k+ Bitcoins, there's no way of knowing how much in USD is being held back (it could be in the hundreds of thousands of dollars if significantly more people have USD on deposit).

So this means that you're with-holding 20% of people's USD deposits as well as 20% of Bitcoin deposits?  I think that you need to define "later" in that case.  Given that people are expecting you to replace the missing Bitcoins by buying them on the open market, it would be wise to provide evidence of doing that.  People want to be confident that you actually have the 20% of both BTC and USD which you're intending to with-hold.

And yes, people need to realise that no matter what system is in place, someone's going to get paid first and someone's going to get paid last.

Manual verifications aren't a viable once you reach a certain level of transactions without putting on additional staff.  Most small businesses either run at a loss or barely break even in their early stages and can't afford to hire more staff.  Manual verifications are extremely time-consuming, so small, start-up businesses operated by one or two people have a limited capacity to perform them as the need to do so increases.

And no, it shouldn't take a month or more for them to process transactions, but if they have been hit with deposit fraud who knows how it's affected their cash flow or their trading accounts (both currency and Bitcoin)?  When they were first mentioned on the forum, the thing which struck me most apart from their fees was how vulnerable their business model was to fraud.

Any business which allows instant transactions is going to get hit with fraudulent transactions sooner or later.  Smaller businesses have little capacity to cope with this.  People have probably tried to manipulate their system with fraudulent transactions and they're likely trying to work out a way to deal with that.

At a local level, sure.  Lots of legal systems regard certain types of mediation as binding and allow for something called "consent orders".  Without some kind of overarching reciprocal agreement, though, (treaties and conventions are essentially just civil law agreements between nations) or legislative requirement (such as a full faith and credit law) there's not really any legal basis for enforcement across jurisdictions.  As it stands, even when those requirements are met, there's no certainty that one state will domesticate the orders of another jurisdiction.

Sharia courts in Western countries would be an example of this.  People can voluntarily subject themselves to Sharia justice, but the ability to enforce its provisions is extremely limited. 

I didn't really pick up on it before, but do you mean that when funds hit your Dwolla account they automatically get transferred to your bank account without any further action on your part?  If that's the case, it could explain your account being flagged for enhanced verification.  It's a common technique for layering transactions in money laundering (such accounts are called "walking accounts").

Why bother with an alt blockchain at all when you could just sell shares/bonds which can also be traded or bought back by the issuer?  How does adding an additional layer of complexity benefit anyone, especially given how alt blockchains tend to pan out?  For that matter, why not use something like Kickstarter to raise start-up funds?

Honestly, more people need to explore this option.  AML/CFT/KYC requirements are only going to get tougher and bring more services under their regulations (even non-financial service providers such as jewellers have been added to the list here). 

You've been Matthewed guys.  This thread isn't about the magazine at all - there's already a thread for that.  It's Matthew way of reminding people that he's going to Iceland.  Lucky bugger.

Dwolla reverses instant payments all the time.  If I was going to accept Dwolla instant payments from a customer, I'd want to know more about them too before I allowed them to trade.

And despite claiming to have large amounts of money on deposit with the exchanges they make demands in the forum rather than spending a few hundred dollars to pursue recovery of their money through the legal system.

It's kind of funny given New Zealand's history of not letting itself get pushed around by America.  I remember the outrage when the ANZUS treaty pretty much fell apart because NZ refused to let US Navy vessels have access to its ports when it created a nuclear-free zone.  I think the US was genuinely surprised that such a small country would stand up to it in that manner.

It's a bit sad to see Australia and New Zealand now caving to US pressure again in many ways and once again allowing the US to exert its influence over domestic affairs.  I hope the voting public gets tired of it again very soon and before too much damage is done.

NZ is classed as an offshore financial centre by the IMF and others, meaning it has laws which are friendly to non-resident businesses.

It's way too early to be thinking about legal action in respect of Bitcoinica.   Commonwealth systems do tend to take into account what attempts the parties have made to try to resolve the issue between themselves and often get pissy if people haven't made such an attempt.  I think you'll find that even at the small claims level, information about how you've attempted to resolve the issue is required.

I doubt that any court would regard Bitcoinica as being "in default" at this point in time.  Inconvenient as it is for people to be unable to access their funds, it's unlikely a court would entertain an action until they have been given a reasonable opportunity to resolve the problem and return funds to users.  I doubt they would be found to be under a legal obligation to return funds "on demand" and their ToS may even exclude them from liability for loss of funds by any means.

Right now, the thing most likely to ensure that Bitcoinica users receive their funds back is the fact that Tihan's projects are being backed with venture capital.  CoinLab doesn't need to scare aware other potential investors by mishandling this incident.  It's already been stated publicly that the association with Bitcoin made raising venture capital more difficult.  Believe it or not, they have a lot more at stake if they fuck this up than Bitcoinica's users do.

Maybe the mods should lock all Atlas threads every time he gets banned.  He's on a posting frenzy over at reddit if you want to catch up with his latest ideas/philosophy/bullshit dribbling.