The "pirate thing" hit the fan exactly on Aug 17th.  That was the day people tried to withdraw were denied and he closed it down to begin repayment on Monday.  Which turned into the next week, which turned into the next two weeks.

Border is your brain incapable of logic?

Why exactly would Roman need Bruce help to steal from his own server?  Even assuming he did this as an inside job (which I doubt) why exactly would he want to include Bruce and split the profit?  What exactly did Bruce bring to the table?  Did Bruce drive the getaway car?

I mean lets compare:
a) do it yourself:  $200K & no accomplices.
vs
b) include Bruce: $100K & an accomplice who would probably rat you out for $20 and a pack of menthols.

Hmm.  You sure cracked the case wide open Inspector!

IMHO generally a bad idea.

1) US Securities Law.
It would be a violation of securities law in the US.  The Job ACT hasn't been implemented and even when it is implemented there are significant restrictions.  The biggest restriction is the site offering equity must be a broker dealer and CAN'T allow trading of equity.  While in theory it is possible for an broker to offer equity in startups priced in BTC, GBLSE as it exists right now would not be able to get a broker dealer license in the US.  The idea of a licensed kickstarter platform is a pretty cool concept though but that is a different topic.

Outside of kickstarter proposal, the simple (and consult your own legal counsel) version is that as a non-public company you are prohibited from soliciting investment from non-qualified investors.  Now the reality is if you found an investor on this forum, hashed out a deal, and offered him x membership units for $y or y BTC you probably would still be technically in violation of the law but nobody is going to be "coming after you".  It is kinda a gray area where the line between acquiring a partner and solicitation the public for investment is drawn.  On the other hand offering 10,000 shares to hundreds of people on an exchange can't be viewed as anything but a solicitation for investment.  Also LLC can't offer shares.  There are legal differences between shares of a corporation and LLC membership units (sometimes just called units).

2) Taxes.  
Your LLC a legal entity registered with the state.  Unless you plan on engaging in tax evasion for the rest of your life at some point when you post a profit you are going to have taxes due.  Depending on how your multi-member LLC is taxed (partnership, S-Corp, C-Corp) some or all of that tax liability will pass through to members. The LLC is legally responsible for reporting on the profits of its members.   How are you going to do that if you don't even know who owns your LLC?

3) LLC protection.
An LLC is only an LLC because the state says it is.  You should have an operating agreement and that operating agreement specifies the conditions under which a new member can be added.  Violating your own operating agreement is grounds for nullification.  That means the courts rule the LLC never existed and any liability protection or tax advantages disapear overnight.  You could find yourself personally liable for the LLC debts, or facing masive tax bills.  Don't risk nullification of your LLC for ANYTHING.

4) Future complications.  
Someday you may be approached by venture capitalists (traditionally before going public and being a traded company).  Any liabilities you have incurred on GBLSE are almost guaranteed to make VC nervous. VC aren't interested into pushing the boundaries on new law or dealing with companies where the legal or ownership structure is in question.  They are already taking a huge risk simply investing in a startup.  Say you become massively profitable only to have some GBLSE "shareholders" file a lawsuit saying they actually own x% of the company and the VC (and you) see your share dilluted.  You don't want that, VC don't want that.  Keep the ownership and legal structure of your company on solid ground.

+1 to jwzguy.

IIRC Roman even posted a while back that he went on the show because Bruce lived in the same neighborhood.  Utterly bizarre people from the same neighborhood might use the same Post Office.

DUN DUN DUUUUNNNNN

EskimoBob most of them still won't even believe he stole anything.  The goal posts just keep getting moved further and further back.  Going after Pirate would be admitting they got conned by the worlds worst con ever.  

I mean lets step back and objectively look at Pirate's offering:
"3,400% APR, send me anonymous irreversible money, I can't tell you how it works just trust me you will be a billionaire in a year or two".

 

I mean shit, even Nigerian scammer wouldn't try something that blatantly scammy.

As long as they don't admit it was a scam they don't have to come to grips with how asininely stupid they were for getting rolled by such an obvious scam.

People like to compare every ponzi to Madoff so lets look at Madoff.  He ran a well respected hedge fund (legit for 20 years before the ponzi), generated fake trades, quarterly summaries, investment outlooks, employed an entire staff (90% who were equally clueless), paid rent, taxes, kept his seat on the exchange (despite not needing it), was routinely audited by CPA, got a seal of approval from the SEC, held a broker dealer license, was personally wealthy before starting the ponzi, and offered realistic albeit somewhat too consistent returns (~11% APR) over the course of over a decade.

Now compare that to "Pirate".  A deadbeat, broke, part-time loser who has multiple lawsuits, criminal convictions, judgements, and foreclosures in his short and otherwise unremarkable adult life.  Someone getting rolled by Madoff well they probably should have seen the warning signs but honestly Madoff was very good at what he did.  Someone getting rolled by Pirate ... what can you say.

Hmm anyone know a good SEO company which deals in search engine deoptimization?

To the OP,

How did you find Bruce Wagner?  Just curious.  I am surprised he is still able to pull in marks.   He can't advertise here, he can't on rediit, he can't anywhere there is any significant bitcoin presence (because people will drown him out with calls of scams).  Yes somehow he still gets his message to the people he scams.

Any links you can provide will be useful.  Oh and next time buy from someone you can trust ... like Tangible Cryptography.

Well the OP wasn't asking that.  Your scenario is different in a couple of ways and I also think you are confusing some key terms.

1) While you could produce an address randomly it would be useless.  The address is the hash of the public key which is derived from the private key.   The private key (secret) for the address give you control over funds sent to that address. Generating a random address without a private key simply produces an address where coins are lost forever.

2) Addresses have a 32 bit checksum.  4,294,967,295 out of 4,294,967,296 random addresses will just result in an invalid address.  Your client decodes and checks the address and if it is invalid it will not create the transaction.

3) If you did happen to beat the odds (1 in 4,294,967,296) and randomly generate a valid address then whoever has the private keys controls the funds.  Given how many possible addresses there are, the probability that you would randomly type an address someone (anyone) has the key for is essentially 0%.   If you did that person would have access to any funds sent to their address. Otherwise any funds sent to it will be lost forever.

3)  Address =/= Wallet.  A wallet is a client side "concept".  It is a collection of private keys (and other tx data).  The network doesn't "know" about wallets, just addresses.  The input for every txn is the output of a prior txn.  If nobody has the corresponding private key then nobody can spend the coins.

Tangible Cryptography doesn't have 24/7 manned monitoring or independent auditing.  Then again we never accept sales we can't promptly pay and we hold all coins in an offline wallet which greatly reduces out attack surface.

The reality is setting the bar that high is probably useless.  Bitcoin simply isn't that big.  MtGox "maybe" meets your requirement.  All the hacks to date could have been prevented and/or reduced in scope with some more realistic standards.

Lets cut to the chase.

What you are really asking is, if can you steal a huge amount of money offering 3% per week returns and running a painfully obvious ponzi. One so ridiculously obvious it would have no hope of working anywhere else.  Right?

The sad reality is you probably can.  Despite the "Pirate incident" there are people right this very second invested in painfully obvious ponzi's and when they collapse the suckers will say "there was no way to know".

So yes this community has a huge number of suckers for you to take advantage of.  Just make a slick website, a cool logo, don't reveal any details, and later find some of the veterans with low ethical standards to operate MJPT (MegaJames Pass Throughs) for you.   My guess is you can defraud suckers for at least a cool million.

Sorry for cutting through the charade but I figured I would save you some time with an executive summary.

Well no security system is absolutely foolproof.  Even a 100% cold wallet can be compromised by physically attacking the cold wallet and/or operator.  The idea is to make the attack harder.

The hot wallet can validate commands internally.  For example it could limit the tx based on:
a) limit per hour
b) max limit until supervisor reset
c) limit per tx/address
d) limited to only preset withdraw addresses (adhoc address may be allowed but at lower limit)

If the attacker can't steal the keys directly, and must send commands to the hot wallet indirectly the attack becomes more difficult and the amount limited.  It is possible the attacker doesn't know that a withdraw request of 6,000 BTC will trigger a lockout and in doing so prevents him from stealing anything.   Combine that with sending all incoming funds to a cold wallet and only keeping say 10% of total funds in hot wallet and the potential theft becomes even more limited.

Even simply limiting the size of the hot wallet to say 10% of total funds and doing nothing else would have limited the attack to ~$20,000.  That is a bad breech but far easier to overcome than a complete loss of funds.

Well sadly Stephen was misinformed and likely turned a bad situation into a worse one.  His talk of injunctions and criminal activity were simply false.  I am just not certain if it was coming from a place of intentional malfeasance or simple ignorance.

I do agree with you jwzguy, that bitfloor has a lot going for it and the situation isn't intractable.

Our maximum payout is based on available funds.  Our funds are currently low.  We should have more funds available later today or tomorrow.

The max of $25.24 is somewhat confusing I think I will modify the code to simply say "no payout available" when funds are below $100.00

BTC sent in after the hack will be going directly to the attacker.

So Roman would work eternally for 0% equity?  I don't see that being viable.

He would be much better off under Bankruptcy protection.

Well if Bitfloor is enjoined by a court order they would be required to inform their creditors of that material fact.   They don't have to use this forum or their website but that would be the most effective means of communication. They don't need to explain the injunction or provide any other information but they do need to let their creditors know.   The court order would also become public record.

Of course all that is academic because no injunction will be granted.

Well no.  The last sentence is correct but the rest isn't.

IF under an injunction bitfloor would be prohibited by law to make further repayment of any of its creditors.  However no injunction has been filed and certainly none is already enjoining bitfloor from resolving business debts in the manner it sees fit.  If Bitfloor is enjoined from making payments I am sure he will let creditors know via this site or forum.

I would question the probability of a BTC injunction being successful but I do concede that if a judge enjoined bitfloor from paying any of its creditors pending bankruptcy protection then you would be correct.

Well technically those with BTC (myself included) could SEEK an injunction.  It isn't that I don't care I just feel it has a 0.0% chance of being successful.  A sought but unsuccessful injunction would not provide any relief.

Injunctions are only granted where "no relief under the law" is possible.  Even if the claim otherwise had merit (which it probably doesn't) it would not be possible to show that their is no other "relief under the law".

For example if someone is going to tear down a historical building getting an injunction is viable because dollars can't compensate for the loss of the historical building if later the plaintiffs win in court.  The burden for injunctions are high as due to their time sensitive nature, they preempt the other business of the court.

I would also point out that our company is owed both USD & BTC but I am willing to give shtylman time to resolve the situation.  If it came to a lawsuit well we are simply writing the BTC off as trading losses and going forward with a USD lawsuit.  It simply isn't worth the filing costs for a claim with a snowball in hell's chance of even being heard.

Yeah IceBreaker the US constitution has absolutely nothing with this situation.  It actually weakens your position because it is so off-the-wall offtopic.

Not sure where people get the idea that bitfloor "can't" repay USD account holders.

http://en.wikipedia.org/wiki/Fraudulent_conveyance


Given that both Bitcoin and USD creditors "could" sue bitfloor and considering the relatively likelihood of each lawsuit and the relative likelihood of each being successful, the prudent thing for bitfloor to do would be to repay those creditors who have a high probability of success to preempt the lawsuit and seek plans for long term restitution (if viable) for those who's only recourse would be a totally unproven lawsuit of dubious merit.