I said $5 million (USD) in their bank accounts at the time of shutdown. They had massive profits for years, evidenced by the $40 million and multi-asset seizure from Ray Bitar. I'm guessing you were not a player there in the months leading up to the shutdown. The problem was that they were processing incoming deposits from US customers for several months during that period without being able to collect on them. However, they were paying out all withdrawals promptly. That lead to a huge insolvency that came to light after the shutdown.

Sure, it was a Cinderella Story for players there (although it took me well over a year to get my money back). Funny thing is that Full Tilt being insolvent meant that the US government shutting down Full Tilt and forcing this deal on Pokerstars was the best thing for Full Tilt customer. Otherwise we may have never been paid (US or not).

Pokerstars came out like a champ. An incredibly profitable company that was well capitalized and could save their own ass.

Full Tilt was an insolvent wreck of a company headed by absolute buffoons, who pissed away all their money on marketing, then became entirely insolvent by allowing US players to gamble with unreceivable deposits for months on end. Arrogant retards.

Bitfinex = Full Tilt. There is no Pokerstars in this equation. You do the math.

Well, it depends on the country. Ireland and the United States do appear to have an extradition treaty. It's been in force since 1984: https://en.wikipedia.org/wiki/List_of_United_States_extradition_treaties

So unfortunately for that guy, his government will probably hand him over willingly.

I hear ya. I think more than anything, many exchanges engage in bucket shop behavior (stop running to liquidate traders, etc). I think Bitfinex has been heavily involved in this historically. Okcoin and Huobi also.

However, I think there are degrees to which exchanges are manipulating, and Okcoin and Huobi are the worst offenders. Followed by Bitfinex. Bitfinex has always been very, very shady. Now there is just absolutely no reason to risk keeping funds there.

That bit is not true, though. They made these changes before the CFTC probed and fined them. And it's not clear whether they were even in compliance with the CFTC at the time of the hack -- they don't tell you when you are "in compliance." They only fine you (or worse) when you aren't.

The whole "segregated wallet" BS was just some marketing gimmick for customers IMO. "You can see your coins on the blockchain!" (But per their terms, you can't control them, since even if you have a key and initiate a tx, BitGo can't sign unless compelled by law)

Maybe for major Chinese exchanges. Huobi has definitely been accused of this as well. But if you compare Okcoin or Huobi's volume to Western exchanges, it seems obvious who is really pumping volume numbers. Okcoin was claiming earlier this year that the entire tradeable supply of Bitcoin was being traded every few days on their exchange. Give me a break. Not nearly enough algos running on Okcoin to even begin to make those claims.

That said, I think Bitstamp inflates its volume numbers.

This happened because Pokerstars and Full Tilt were using the same illegal banking mechanisms to fraudulently transmit money to US customers (e.g. coding money transmission as retail sports shop sales). Pokerstars executives were facing prison time; fortunately for them, Full Tilt left a giant hole in US customer pockets that the feds wanted Pokerstars to fill.

Full Tilt would never have been bought by Pokerstars otherwise. They were completely insolvent because they allowed "phantom deposits" on their site for many months without being able to physically receive money from US customers.

Full Tilt did not have $400 million, LOL. They had $5 million in their bank accounts at time of shutdown (more money was clawed back from executives like Ray Bitar). Um, and Full Tilt executives plead guilty to multiple charges. Given that they took $40 million from Bitar and his multiple homes -- no, Full Tilt did not shit on the US government. The judge also expressed that he only avoided prison by having a serious heart issue that require(d/s) a heart transplant; it was believed at the time he only had a couple years to live.  

The US government had an interest in Pokerstars buying Full Tilt; this would compensate all US customer losses. There is no such Cinderella story here. The US government leveraged prison time and asset forfeitures against Pokerstars. That's the only reason Full Tilt was bought and customers made whole. But why the hell would anyone buy Bitfinex?

No serious investor would touch Bitfinex now given that they have now stolen and redistributed customer funds (illegal asset conversion under common law) and securitized a debt note (illegal in many jurisdictions including the US).

Thanks for posting this! I try to comb through 8btc but it can be quite the headache when you don't read Mandarin.

I've always thought Okcoin was shady. First, it was volume pumping allegations, then bucket shop/trading against users/skipping orders allegations. Then the CTO admitting that they gamed the proof-of-reserves audit, and that they trade against users with money unbacked by real assets. They have a real shady corporate structure too, shady people involved (criminals).

No, it's not. Volume is dead, people are saddled with un-backed IOUs instead of real money, and most of their bitcoins held are gone. More than half of the bitcoins left under their control have already been withdrawn.

I wouldn't be surprised in the slightest if these guys started running a BTC fractional reserve. Everything they've done is very desperate.

Well, that's no surprise. Bitfinex is interested in brushing this under the rug, not introducing more law enforcement agencies. They have said that the FBI and some European law enforcement agencies are investigating -- if you want to believe that.

I am more curious about the FBI or US Attorney's investigations into Bitfinex's actions. You can't serve US customers then flout US law. That will get your site shut down and bank accounts seized.

That's gonna work out well. Western users are going to be flocking to deposit money into an insolvent, hacked exchange that just had its domain seized by the US government. And on a .ru domain.

I agree that it would be game over. At that point, Bitfinex is more than likely to have some of its USD bank accounts seized anyway.

I mean, why didn't Full Tilt Poker just spring up on .ru when the US shut them down?

At best, they were willing to burn their reputation to the ground by allowing Bitfinex to run an insecure implementation (i.e. rubber stamping fraudulent transactions for commissions). Possibly worse, this exposes that they have no internal circuit breakers (or ones that can easily be gamed by hackers to prevent them from triggering) to secure against fraud.

The top security firm? That's how they sell themselves. LOL. They are a fucking joke. I hope they are buried in this industry. They deserve to lose everything.

I can't believe BitGo is being suggested here as a long term storage solution in light of what has happened.

Even if we believe the best case scenario (for BitGo) -- that they allowed Bitfinex to run an insecure implementation of their software -- that's still incredibly damaging to their reputation. You can't bill yourself as the top Bitcoin security firm in the industry, act as co-signer for the largest USD exchange in the world, co-sign 120k BTC in stolen BTC, then throw your customer under a bus after you actively participated in the loss.

Sorry, but no. If Bitfinex insisted on an insecure implementation, BitGo should have terminated their contractual relationship in the interests of their customers and reputation. Instead, they rubber stamped the 2nd largest theft in Bitcoin's history. Incompetent monkeys.

How could anyone consider using BitGo? We should be lobbying exchanges to end their relationship with BitGo, if anything.

Pull up a daily chart. Volume is dead -- and a lot of it was the initial exodus that has bled half of Bitfinex's cold storage balances. My guess is volume will simply dry up. Plus, as someone else mentioned, I wouldn't necessarily trust the volume numbers pushed through the API. Bitfinex is desperate, and their whole shoddy criminal plan goes to shit if their platform becomes a ghost town.

You think the owners of Bitfinex will get out of this unharmed? I don't. I think they are headed to pound-me-in-the-ass prison if the US (world police) ever find them. You can't serve massive numbers of US customers, haircut their account balances based on dubious numbers with no relation to actual lost assets, issue and securitize a non-interest-bearing debt note which offers zero rights, and then continue business as usual.

In any common law jurisdiction, they are guilty of theft and illegal asset conversion. There are also likely legitimate fraud allegations, considering they have been completely non-transparent. For example, Phil Potter let it slip a couple days ago that they retained 10-13% of reserves for operating expenses and a legal slush fund to protect themselves from customer lawsuits.

This is outright theft, and despite no transparency, they still come right out and say it.

FBI seizure incoming. Whether tomorrow or next month. Pound-me-in-the-ass prison.

That's Raphael Nicolle -- part owner but I don't believe he is a C-level executive at Bitfinex. He is one of the founders.

https://www.reddit.com/r/BitcoinMarkets/comments/4wocww/daily_discussion_monday_august_08_2016/d69al9z
From one of Zane's posts earlier today:


Not much is known about this Jean Louis Van Der Velde guy.

While I don't totally doubt what you're saying, are you saying that Hong Kong and the British Virgin Islands are completely lawless? I imagine much harder to sue in those jurisdictions than in USA, but I imagine it's not impossible.

But I'd agree that Bitfinex was organized in these jurisdictions (rather than say, USA) for a reason.

I guess we can agree that the communication from Bitfinex has been better than with Crypsty. But that doesn't mean much. Bitfinex really hasn't been transparent; we don't know if they are being honest, and they aren't being particularly clear.

It might be the fairest solution, but it may not be legal. Since the stolen assets were not co-mingled, they would probably be in a stronger legal position if they individualized the losses based strictly on the assets stolen and the customer tied to the stolen assets.

I hear you. I'm angry. But I'm also a realist. The best thing to do would be to withdraw anything you can -- should Bitfinex give you the chance -- and then go after them legally in a class action or something.

But at this moment, I'm not trying to rock the boat. Just sitting on my hands.

Yeah, he doesn't have the greatest history. Also defended Pirat40's scheme in its heyday.

Still, I think he has an ownership interest in Bitfinex and was one of its founders, but I don't think he is a C-level executive. My recollection is that he used to be CEO in the very early days. Past that, I don't know anything.

I agree that what they are doing is illegal. I'm not sure why they are approaching it this way; their first plan (to consider losses as individualized) was legally sound and would easily prevent insolvency. What they are doing is indeed theft, and I imagine people will be pursuing them legally.

The problem is, we aren't gonna get much back that way. If they actually reopen trading/withdrawals, that may be the best chance to get something back.