Well maybe there is a simple balance-reconciliation system that could not only work for Cryptsy but as a regularly running reconciliation routine all exchanges could use, akin to the trial balance and month-end balance used in business accounting routines.

Simply add up regularly the number of actual coins of each type that are actually held by the exchange, compare that to the total of each coin the customer balances add up to, and apply the ratio to the customer balances.

Basically reflect the fractional reserve directly by converting all customer balances every day or week or month or whatever so they add up to the number of coins actually in the exchange.

If that was running all the time, within hours or a day or whatever of any coins vanishing of any type, all the customers holding coins of that type would see their loss right away.

If one third of a given type of coin goes missing, presto all customer balances of that type of coin go down by one third.

Simple, direct, and avoids co-mingling of coins of different types.

Coins more highly targeted by thieves and thus presumably at higher risk would reflect their temptingness by people's relative reluctance to hold that type of coin as compared to some other coin they feel is less likely to be targeted.

All losses would be seen as soon as possible, so people could adjust their trading strategies accordingly.

Nice and transparent and simple, and it even keeps the risk / reward of each coin type to itself instead of holders of one kind of coin being forced to pay for the losses of folks who choose to hold a more risky / more likely to be targeted type of coin.

-MarkM-

Going bankrupt will be more than a quagmire, as it will very likely result in many coins having their value destroyed by being dumped to try to pay off the losses.

For many coins they would probably get a better price by treating them as already sold, for the bitcoin people sent in there to buy them, as that would value them at the prices people actually already paid for them.

In other words instead of dumping them treat them as already having been dumped, deliver them to their current owners of record in the exchange.

After all it is things like bitcoin and litecoin they are short of, all the other coins people already paid litecoin and bitcoin for have already done their part in helping recover the bitcoin and litecoin losses by having already been sold off for such coins.

For many of the coins there is now nowhere TO sell them anyway, so they already had their last sale already did their part in helping restore the balances of the stolen coins...

Unfortunately it seems likely "bankruptcy trustees" would not handle them that way, instead dumping them destroying their value and not incidentally stealing them from who-ever currently holds them on the exchange. Though they would not call it stealing it kind of obviously and clearly would be.

-MarkM-

Unfortunately it seems likely that if they go the bankruptcy route the thieves known as "trustees" will steal all our IXCoins and dump them at auction or whatever, at lower prices than we were actually demanding for our IXCoins, instead of simply giving us our share of the specific types of coins we had chosen to be in possession of.

Also they will probably penalise the holders of all coins instead of just the holders of the specific types of coins that were stolen.

So not only will they probably steal our IXCoins to bail out the holders of bitcoins and litecoins, they will probably also forced-sell our IXCoins at prices lower than we asked for them, even lower than we actually paid for them.

In addition to also stealing the bitcoins we paid for them so that we won't even be able to buy them wherever they do dump them even if we happened to have accounts wherever that turns out to be, because they are also holding the bitcoins that constitute the "treasury" that was "backing" IXCoins ensuring there were indeed bitcoins there to buy them.

-MarkM-

There is no way any ordinary/available/typical kind of machine, even high powered ones, could run all the coins Cryptsy was running.

Try it!

So it makes even less sense that some pathetic scamcoin would even be on the same physical machine as top of the line actually-valuable well-established coins, let alone on the same username in the same virtual machine.

For a newly-remade trojan without a large team of well known developers with expensive reputations on the line all using verifiable compile processes to sign releases and so on to manage to get run on the same machine as e.g. bitcoin itself would pretty much require a deliberate intent to expose a specific, known number of bitcoins to attack by that new potential-trojan.

In other words, when you choose which physical machine to run a coin on, and which virtual machine on that machine, and which username on that virtual machine, you are specifically deciding how many of which other coins you want to give that new program the opportunity to "attack if it is going to", so you know how many of which coin you want to put at risk and why, such as for example to decide how much temptation you want to expose that program's developer to in order to test his or her integrity and the integrity of the code they have provided.

It is thus pretty much unbelievable that some scamcoin such as lucky7 would ever even be on the same hardware machine, let alone virtual machine, let alone username, as bitcoin...

...Unless you chose for example to test the integrity by putting a half a bitcoin, or a bitcoin, or whatever your chosen bounty is for discovering a trojan, into its reach to test whether despite all your efforts to inspect it it might still harbour some nastiness...

-MarkM-

Alt withdraws worked fine until they ceased trading and withdraws.

Unfortunately the way U.S. bankruptcy works apparently is not likely to make a distinction as to whether each user chose to be in possession of fractional-reserve coins or of full-reserve coins, instead of checking which exact type of coin you had and giving you your share of that specific coin they are more likely to pretend there are dollar values for them all and thus spread the losses of the people who chose to be owning fractional-reserve coins across everyone, and in addition probably destroy the values of coins by throwing them on the open market at auction or some such thing, at least for coins with no other exchanges, so people holding lots of a coin they consider valuable and paid a lot for will likely not be given back those specific coins they paid high prices for and consider valuable. More likely those special coins you paid high prices for because to you they are valuable will be thrown away for almost nothing in some stupid auction or on some exchange you are not even a member of and you'll be lucky to even get a share of the pathetic dollar prices they will get for them.

So basically the most likely bankruptcy proceeding will be the "trustees" stealing your valuables and forcing you to accept a lower price for them than you would in reality ever have parted with them for.

Take for example IXCoin, people (well me anyway) paid up to about 14,200 satoshis per coin for those and would not part with them for less.

Yet most likely the thieves calling themselves "trustees" will sell my IXCoins for less than that instead of giving them to me to part with only at the price I actually demand for them...

Basically the whole "trustee" concept seems like a massive scam in and of itself, but it seems unlikely we can sue the trustees for not giving us the prices we were actually asking for our goods, or giving us the good to hold for ourselves until we can in fact get the prices we are willing to sell them for.

It is because of precisely that kind of scam that I have tried to establish for my Open Transactions server, if I ever get it running again, that each coin is distinct, that theft of one kind of coin can and will only put that specific coin into a fractional reserve situation, that all other coins are to be totally unaffected, so if e.g. bitcoins are stolen then only holders of digiBTC are affected, all other coins remain at full reserve and so on.

( See https://bitcointalk.org/index.php?topic=53329.0 )

But the thieving scam crap legal system maybe would not even honour such "contracts" or "statements of intent" and still cause loss of one coin to screw up holders of all coins, I would not be surprised.

-MarkM-

If they intended to make good the losses they could have raked in 25 to 30 bitcoins per coin per day on some altcoins that had 100 bitcoins a day of volume and were much cheaper on other exchanges than on Cryptsy.

Part of what made them seem solid, over and above Vern's purported claims that they were not running on a fractional reserve, was the sheer amount of coin they could easily bring in per day just by doing arbitrage.

Now it is starting to seem more likely Vern and/or others who knew what was going on and could bypass withdrawal restrictions might have been doing arbitrage for personal gain not to rebuild the reserves, if they were doing any at all.

Seems pretty unlikely they won't be looking at some serious criminal charges?

And pretty stupid of they planned to make up the losses not to have been doing as much arbitrage as they could with all the bitcoins of their own they could muster.

Especially since by not reporting the theft right away they surely must have shattered any possibility of pretending the company is an entity apart from themselves, so that surely all their own personal wealth became as much at risk as the company? (Unlimited liability due to criminal culpability?)

-MarkM-

The claimed way the attack was supposedly done makes no sense, even without using virtual machines no coin daemon running as one user would be able to access another running as another user unless someone deliberately forced passwords into the ps or top type readouts by putting them on commandlines, so even incompetents could hardly be expected to make the proposed attack method workable unless they really went out of their way to ensure such an attack would work, such as by running untrustable shitcoins as the same user as a real valuable coin, and on the same machine, or by deliberately passing passwords on the commandline so other users could see them on top and ps and such.

Basically you'd have to deliberately go out of your way to circumvent all the usual procedures everyone is always instructed to use even for just small personal wallets.

Such deliberate setting up of a situation intended to enable some pathetic excuse like "oh one daemon had a trojan in it" is surely at best criminal negligence and far more likely conspiracy to defraud and steal?

It is a pity really that there are so many regulations around this kind of app because all the perceived/expected additional expense imposed by red tape kind of makes the whole idea of running an exchange at all look way too expensive to the kinds of folks who might be competent to run one, whereas script-kiddies just wanting to set up a nice hackable environment so they can claim they were hacked can do so much cheaper / easier...

...Also come to think of it an IRC command-and-control on a cold-wallet machine would never be able to be commanded and controlled because cold means not on the net, right? Hmm...

-MarkM-

Corporations or companies don't seem much relevant to court cases in this kind of thing, surely?

Aren't the criminals who actually told the lies committed the fraud stole the funds and so on the responsible parties, no contract or company or corporation protects the individual living human perpetrators in such cases does it?

-MarkM-

Surely the limited liability shield is void in the face of so much totally criminal activity, lying etc?

This talk of a company going bankrupt seems off the mark, since a company is just a fiction that counts for nothing against criminal negligence malfeasance fraud theft and so on?

-MarkM-

Sounds like someone switched to a new (upgraded) hosting account without first ensuring they had copies of all the relevant configurations for all the webserver modules wiki modules and so on?

Seems maybe it could be harder to try to start from scratch than to just fix the thing?

Who the heck lost all the possibly quite intricate and detailed module config options and such from the working site, though?

-MarkM-

Is this data supposed to indicate that maybe Big Vern is lying about it having been a cold wallet that was stolen from, that in fact it was a hot wallet?

(Assuming of course the entire claim of having been stolen from is not a total fabrication itself.)

-MarkM-

I read somewhere that Cryptsy had specifically denied running on fractional reserve, but this recent Big Vern blog post, if it is legitimate, seems to be claiming they have in fact been running on fractional reserve?

In addition to their purported outright claims that they were not on fractional reserve one could simply look at the massive profits available to anyone able to run arbitrage loops (by remaining able to withdraw bitcoins, as Cryptsy itself was presumably capable of doing, being in charge of the withdrawal-preventing measures).

So it seemed pretty obvious that even if they had lost some coin at some point the arbitrage opportunities alone would enable them to easily make up their losses.

Also, cold wallets are by definition cold. How could a trojan daemon running in its own virtual machine possibly enable the moving of coins by another daemon running on another virtual machine?

-MarkM-

Doesn't that simply mean it is a lottery like Bitcoin, all the miners compete to get the pay because the time they do win it pays for all the failed attempts?

Surely like Bitcoin only as much mining power will tend to be applied as the payouts generally tend to cover on the average?

-MarkM-

CEX last price was just people too lazy to withdraw their coins from there and bring them to Cryptsy to sell them.

On Cryptsy the price did not go that low despite all the people buying coins cheap on CEX and dumping them on Cryptsy.

I have been paying up to 14200 satoshis per IXCoin on Cryptsy when they will let me, that is, when they allow my pile of buy offers to grow that high.

Right now if you come buy on Cryptsy you can get them as cheap as 7500 satoshis per coin a couple times lately, and they have not allowed my buy offers pile to grow past 11400 satoshis per coin in last day or two.

Come type in buy offers every satoshi or few satoshis of price and see how high you get before a dumper dumps away all your offers that took hours to type in, giving you coins insanely cheap...

-MarkM-

Cryptsy, I was trying to place a stack of buy offers all the way up to "I will buy 100 coins at 14000 satoshis each".

Because I have only so many hours per day to spend typing in offers, I was going to place one offer each 100 satoshis of price, then fill in the 5,10,15,20,25,30 etc - each five satoshis - afterward.

I could not build past 11400 satoshis, so I started the filling-in instead, 7505, 7510 etc; but just got up and went to continue those only to find those are gone now too, I am having to start building up from 7500 over again. Exchanges need an option where you tell them "place offers from this price through this price, this many satoshis apart, for this many coins per offer"...

Until they do, building a deep order-book is going to continue taking countless numbers of sixteen-hour days of typing in orders...

-MarkM-

Since you are talking shares anyway, why not simply issue so many common stock shares that they are tiny value per share, comparable to a cryptocurrency value per coin or maybe less since shares have no decimal-places they are whole things, integer things; issue the shares on an existing platform such as HORIZON or NXT or Ethereum or the like, and use the API of that platform from your app to let people earn shares.

-MarkM-

Looks like some insane person is truly determined to crash the price of IXCoins no matter how much lost profits that costs them...

For example I cleared a path upwards by buying up to a point, then started to fill in the buy-side, but they are not willing to even let me finish typing in all the buy orders up to where I cleared away the sells, instead each time I type an offer they take it, when I had many more offers higher than that still to type.

They refuse to let me get around to typing in the higher offers, like huh what the heck?

I cleared up through 14000 satoshis but they won't let me type in offers above 11400 or 11500 satoshis.

-MarkM-

A while back I was willing to sell VladVlad 100k IXCoins for ten bitcoins.

But that was before the buy-side order-book building reached 10,000 satoshis.

I told him days ago he was too late to get that offer, but maybe if someone was quick I could let them have 100k IXCoins for 15 bitcoins.

Same for I0Coins, which right now are momentarily listed as cheaper than IXCoins.

-MarkM-

Burning coins other than the actually-pre-mined ones is pointless, all that does is increase the relative value of the pre-mined coins, making them more of an issue not less of an issue because the pre-mined coins would still exist but less other coins will exist.

So you need to get hold of the person who has the private keys of the pre-mined coins in order to actually burn them, and if you can do that then you should be able to have them actually use those coins for bounties or put them into a Foundation-controlled multi-sig account or something instead of burning them.

Either way, it all depends on Thomas showing up again. Until he does you might just as well rant on about how Satoshi should burn all his coins.

Only satoshi can burn Satoshi's "pre-mined" coins, only Thomas can burn Thomas' pre-mined coins.

Until Thomas shows up again we are just as screwed as Bitcoin, oh wait, no, not as bad actually since Thomas only "pre-mined" 580k coins supposedly whereas Satoshi is reputed to have more like a million or more.

If everyone except Satoshi burned their coins that would make Satoshi's coins MORE of a problem not LESS of a problem.

Same thing if coins other than Thomas' pre-mine are burned of IXCoin.

But congratulations you apparently have talked yet another someone into dumping shitloads of coins, driving the price way back down under 7500 satoshis.

Which was kind of what the building of the buy-side in steps of 5 satoshis of price was all about anyway: to  have the price drop faster when a dump happens.

The one satoshi at a time pile of buy-side offers is currently only climbing through the 3500-satoshis range of price, it will take a while to climb to 7500+ but when it does dumping will take five times as many coins to drop the price, like has been the case with I0Coin all along. Meanwhile though today you can buy IXCoins cheaper than I0Coins, so get them while you can...

-MarkM-

Actually since it was the insane amounts of shares being given out to Devtome authors that screwed DeVCoin, maybe having Devtome out of commission could be a good thing, if it means no-one can get paid for writing on the Devtome wiki anymore.

However, it seems like some people can still write there.

Plus supposedly Devtome now only pays out of its own quota of the total DeVCoin shares, so that no matter how many authors write how many articles they make no dent in the pay going out to the admins and the various free open source software projects and so on?

-MarkM-