The second liquidator's report is due soon, which should update people on where things are at and any barriers to the progress of the liquidation.

Amir has started a thread talking about Bitcoinica and Patrick has chimed in saying that the MtGox intrusion wasn't due to the source code being leaked. It will be interesting to see whether they disclose enough information for criminal action to be taken against the intruder.

According to documents filed recently in the Cartmell action, Bitcoinica Consultancy is now in liquidation too.

Would either Patrick or Amir care to comment on the Rackspace intrusion?

It's also tricky because the contract specifically prohibits CoinLab and the people associated with it from offering services similar to those offered by MtGox and the stipulated damages for them breaching that provision are 50 million dollars.

If you mean the MtGox intrusion, it was the third "hack" that we know of - Linode, Rackspace, MtGox.

The release of the source code provided for the creation of a narrative explaining the MtGox intrusion.  Did the hacker already have the MtGox credentials prior to the release of the source code?  If you believe that Zhou either perpetrated the intrusion himself or was complicit in the intrusion, then the answer is yes.  

Whether something else would have occurred to sink Bitcoinica had the MtGox intrusion not occurred is a matter for conjecture.

To some extent, they tried.  There was an NDA in place.  They publicly asked for the NDA to be revoked after the Rackspace intrusion so they could disclose more information.

https://bitcointalk.org/index.php?action=profile;u=58011;sa=showPosts

Amir posted the email they received from Tihan after they said they were going to make a public statement which would have contradicted some of the information posted by Zhou.

Regardless of whether you believe what Amir is saying or not, it's consistent with what he's been saying since whole Bitcoinica LP clusterfuck began.

It's not hard to see why the Intersango team would feel like they were thrown to the wolves when Zhou seems to have been protected at every turn.

Lulz.

It's not going to crash Bitcoin.  People will be nervous for a few days and then it will be business as usual.  Lawsuits like this take a long time to go anywhere and people aren't going to avoid using MtGox for a couple of years just because MtGox might eventually lose this lawsuit.  Bitcoin isn't MtGox stock.

The terms of the agreement between CoinLab and MtGox restrain CoinLab itself and the people associated with it providing services similar to those provided by MtGox for at least the next two years.  If they open a competing service, then they become liable for paying MtGox 50 million dollars in damages.

Business people may have ideals but that doesn't mean that every business decision is made with those ideals uppermost.  VCs rarely make business decisions based on emotion. They know how to cut bait when things don't go as planned.

Although FATF countries are required to implement the FATF recommendations (AML, KYC, CTF), it's an over-arching framework and individual nations decide on how they're going to implement them.  Most countries specify the minimum KYC information required to open an account (it used to be 100 points of ID in Australia, which meant multiple sources of ID from different classes), but the verification requirements change according to how the account is actually used once opened.  Any transactions which trigger enhanced due diligence requirements (and the bar is set low for this) will trigger increased verification requirements.

Even when it's not technically required, some institutions require full verification at the outset because it's a lot less inconvenient for customers than suddenly asking them to provide enhanced KYC information when the system flags activity on their account as "high risk".  Others work on the basis that the administrative burden of taking this approach is too great and that the majority of customers will never have high risk transactions so they request verification information on an "as needed" basis (which does inconvenience customers).

Verification often requires a combination of old and new documents (many places don't accept utility bills which are more than three months old but won't accept a birth certificate which has only just been acquired).  Forms of ID which themselves require you to prove your identity are often heavily favoured as are types of ID where there's a legal requirement to keep your address up to date (drivers licences in many countries).

Does all of this mean that some people won't be able to meet the verification requirements of overseas financial services?  Sure it does, but they're first and foremost obliged to comply with their local regulations.  They're not obliged to accept you as a customer and bending the rules to do so threatens their own interests as well as the interests of other customers.

Hell, sometimes companies decide to exclude a customer group just because including them would be a total pain in the ass.  This is happening with foreign financial service providers and US customers right now because foreign companies don't want to have to deal with implementing FACTA requirements (which would require them to report the financial activity of US customers to the IRS).

Exchanges are on the razor's edge already when it comes to staying in business and avoiding having their bank accounts frozen.  They don't impose these requirements just for fun.

If you're going to require one to step down then you need to require both to step down (and not replace them with anyone who has an interest in the lawsuit).  The Foundation should not be seen to be endorsing one side of a legal dispute to which it is not a party over another.

That said, the dispute is between two corporate entities and not the individuals who serve on the board of Bitcoin Foundation.  Legal disputes such as this one are extremely common in emerging sectors (see Linux Foundation history) and we're going to see more of them.  Should people who are engaged in Bitcoin related litigation be excluded from "community" roles?  I'm not entirely convinced they should.

Yeah and no.  You're talking about VCs playing hardball here.  We have no reason to believe that MtGox has $50,000,000 in liquid assets so they're going to be willing to settle for something else.  Like IP rights to the trading platform and the Bitcoin trademark.  The plaintiffs could make "a piece of MtGox" the thing they aim for in settlement negotiations (it wouldn't be the first time VCs have basically taken over a company this way).

The question is how long MtGox can go without blinking and whether they'll cave in the face of a long, expensive out legal battle.

Check the history of Linux Foundation and how many lawsuits there've been involving people associated with it.

This really is pretty "normal" for an emerging sector and it's something we're going to see more often as Bitcoin grows.

It's probably also worth remembering that Peter Vessenes and Mark Karpeles are not the parties to this lawsuit.  Neither the plaintiff nor the defendant are natural persons - both are corporate entities which have a separate legal existence.

Do you really think that MtGox is just going to let CoinLab sever and start running new exchange given this provision in the contract?


Or CoinLab wants out of the contract and this is one way they may be able to achieve that without having to pay MtGox $50,000,000 in  liquidated damages.

Exhibit A has been linked many times and finding it online should have been no problem for a journalist.

http://ia601700.us.archive.org/8/items/gov.uscourts.wawd.192566/gov.uscourts.wawd.192566.1.1.pdf

The domain has been transferred.  It hadn't expired so it looks like someone has hijacked it (whoever transferred it paid for another year so it now expires in 2022 - it was already paid up until 2021).

It hasn't expired.  It was paid up until June 2021.  Whoever transferred it has paid another year on it and it now expires in 2022.

http://www.who.is/domain-history/bitcointalk.org

Interesting.  I had to edit my hosts file to access the site.

Your post history shows that you claim to have ordered this month (I presume you actually mean April).  Last month BFL's website was definitely saying that delivery may take two months or more after order and that all sales are final.  It still does.  Accuracy doesn't seem to be your thing.

OK, the last part of this bit of the press release is interesting.


http://coinlab.com/press

Which is why it's always so amusing to see people chasing VC.  They might be "angel" investors when things go well and everyone gets rich but they're fucking pirahnas when it doesn't and they'll take control of everything you've worked for in a heartbeat given the legal opportunity to do so.

I don't disagree with you about MtGox being out of its depth.  FACTA is a huge game changer for any financial services provider in nations which are implementing it and foreign banks and trading houses started dumping US customers long ago to avoid its requirements.  At least on the surface, MtGox had to scramble to find a way of dealing with it.

That said, I doubt that over the longer term exchanges like MtGox will remain relevant.  Different types of financial service providers will emerge and plenty of them will involve partnerships of some kind.  Start-ups plus partnerships in new industries pretty much guarantees that there'll be plenty of contractual disputes and subsequent lawsuits.  Take it as an indication that Bitcoin business is now regarded as worth suing over.

Stop thinking that Bitcoin is "different".  It's going to see the same kind of business tactics as the conventional business world, regardless of how much Bitcoin enterprises might drape themselves in ideology.