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Author Topic: bitfloor needs your help!  (Read 92201 times)
IveBeenBit
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September 04, 2012, 10:44:30 PM
 #161

Roman has already said he's going to talk to a real lawyer. So nothing that any of you Internet lawyers say will have any impact on his actions. The only thing to do now is sit back and wait for an update once Roman's lawyer advises him on what course of action he should take.
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DeathAndTaxes
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September 04, 2012, 10:44:39 PM
 #162

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

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

Quote
A transfer will be fraudulent if made with actual intent to hinder, delay or defraud any creditor. Thus, if a transfer is made with the specific intent to avoid satisfying a specific liability, then actual intent is present. However, when a debtor prefers to pay one creditor instead of another that is not a fraudulent transfer.[1]

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.

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iCEBREAKER
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September 04, 2012, 10:44:45 PM
 #163

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Those are my USD, not yours . . .

This is not at all clear under US law, which would presumably apply given Bitfloor's ties to the US.

Au contraire, US law is perfectly clear on the matter:

Quote
No person shall be...deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use, without just compensation.
http://en.wikipedia.org/wiki/Fifth_Amendment_to_the_United_States_Constitution


These are all things for the legal council (and if it goes to U.S. court, the judge) to decide in order to figure out what actions are appropriate. That's where the "due process of law" comes in. You're entitled to your process, BitFloor is entitled to theirs. BitFloor seeking legal council is where he ensures that he is acting in a way most within the law. Your process would be serving BitFloor and/or suing them.

Things are not that simple that withdrawals can happen just for the solvent parts of the business held; welcome to the world of BitCoin, where everything is without absolute legal precedent (yet). If a legal precedent can be set that the BTC has value, it would be illegal for them to use any portion of the assets (including remaining balances held for what wasn't hacked) to pay out to anybody until the appropriate process on reimbursing has been determined in court.

This WILL not be a quick process. The only quick process would be if the coins were returned by the hacker, or if someone invested BTC in BitFloor in exchange for ownership (or a portion of). I'd imagine this case (albeit not a likely one) is the one that BitFloor is hoping for the most.

Best case for USD holders (and worst case for BTC holders) is that his legal council (or the court system) determines that BTC will be considered "worthless" and that USD should be distributed to account holders as it's the only part of BitFloor that needs to be legally held solvent. However, I can just about guarantee that if this happens, anyone holding a large amount of BTC will file an injunction and appeal, which will almost certainly prevent payout of USD funds from happening quickly.

Hang on folks, this is likely to be an interesting one, especially since it's occurring in the oh-so-litigious US.

You are assuming facts not in evidence:

1)  Bitcoins have not been legally recognized as anything other than magical internetnerd tokens.

2)  Bitcoin is an experiment, there is no implied warranty or service-level agreement.

3)  BitFloor has not formally declared bankruptcy, which is the only way they can legally hold USD without the owners' consent.

4)  While bitcoin is uncharted legal territory, regulations for transactions regarding USD are well known and quite settled.  You can't detain or steal legally-recognized USD "because bitcoin."

"Current payment systems simply can’t compete with bitcoin’s fees, security and convenience.  Why spend hundreds of thousands of dollars on bank fees per year and lose hair as money transfers bounce from bank to bank during a wire transfer sometimes taking days to reach its destination, when it can clear within minutes and for mere pennies?  As a currency, no sovereign can match it.  As a payment system, no financial institution can compete with it.  As a distributed network, no government can stop it."     -Chris Horlacher
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September 04, 2012, 10:47:40 PM
 #164

Roman has already said he's going to talk to a real lawyer. So nothing that any of you Internet lawyers say will have any impact on his actions. The only thing to do now is sit back and wait for an update once Roman's lawyer advises him on what course of action he should take.
What !??!?!?   What am I supposed to do with my Internet Law Degree?   I got it from this guy named pirate... he said it was legit....

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September 04, 2012, 10:47:45 PM
 #165

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Those are my USD, not yours . . .

This is not at all clear under US law, which would presumably apply given Bitfloor's ties to the US.

Au contraire, US law is perfectly clear on the matter:

Quote
No person shall be...deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use, without just compensation.
http://en.wikipedia.org/wiki/Fifth_Amendment_to_the_United_States_Constitution


Full text:
No person shall be held to answer for a capital, or otherwise infamous crime, unless on a presentment or indictment of a Grand Jury, except in cases arising in the land or naval forces, or in the Militia, when in actual service in time of War or public danger; nor shall any person be subject for the same offense to be twice put in jeopardy of life or limb; nor shall be compelled in any criminal case to be a witness against himself, nor be deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use, without just compensation.

Based on this it appears that it actually says:
"No person shall . . . in any criminal case . . . be a witness against himself, nor be deprived of life, liberty, or property, without due process of law."

Note the location of the semi-colons.

As such this amendment refers only to a limit on the government's ability to deprive you of your property without due process, and nothing to do with BitFloor's ability to deprive you of what you believe to be your property until they can determine their legal responsibilities.

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September 04, 2012, 10:50:58 PM
 #166

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

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September 04, 2012, 10:51:05 PM
 #167

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

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

Quote
A transfer will be fraudulent if made with actual intent to hinder, delay or defraud any creditor. Thus, if a transfer is made with the specific intent to avoid satisfying a specific liability, then actual intent is present. However, when a debtor prefers to pay one creditor instead of another that is not a fraudulent transfer.[1]

Given that both Bitcoin and USD creditors "could" sue bitfloor and considering the relatively likelihood of each lawsuit and the relative likelihood of being successful the prudent thing for bitfloor to do would be to repay those creditors who essentially have an open and shut case when it comes to a lawsuit. 


^^This^^

Well put, thank you D&T for clearly making the point I've been struggling to establish.

In case it's not clear to the dimwit collectivists, the "creditors who essentially have an open and shut case when it comes to a lawsuit" are we who have USD held by BitFloor, not the magical internetnerd token owners.

"Current payment systems simply can’t compete with bitcoin’s fees, security and convenience.  Why spend hundreds of thousands of dollars on bank fees per year and lose hair as money transfers bounce from bank to bank during a wire transfer sometimes taking days to reach its destination, when it can clear within minutes and for mere pennies?  As a currency, no sovereign can match it.  As a payment system, no financial institution can compete with it.  As a distributed network, no government can stop it."     -Chris Horlacher
ErebusBat
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September 04, 2012, 10:51:58 PM
 #168

Keep in mind that the law is not only the constitution.

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September 04, 2012, 10:53:24 PM
 #169

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.

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DannyHamilton
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September 04, 2012, 10:56:39 PM
 #170

It really would be interesting to have access to the TOS.  Without that, anything said by iCEBREAKER and DeathAndTaxes is nothing more than what they hope/want to have happen.

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Stephen Gornick
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September 04, 2012, 10:57:13 PM
 #171

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

Let's say I make sandwiches and I buy on credit some cooking equipment and I bought on credit some bread, meat, vegetables, etc.

And then my safe gets robbed overnight and I am insolvent.

I am not allowed to then let the cooking equipment vendor come and reclaim his equipment while the unpaid debt to the grocery supplier remains unpaid because I had previously sold the sandwiches and the food is now gone.

When you deposited USDs with BitFloor, you are in the same pool as the person that deposited BTCs.   They are all the same category -- customer assets.

Those with BTCs can get an injunction to freeze the USD funds but apparently nobody cares

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September 04, 2012, 10:58:04 PM
 #172

It simply isn't worth the filing costs for a claim with a snowball in hell's chance of even being heard.
This.

And my guess is that you and TC would be two of the bigger holders.

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September 04, 2012, 10:59:25 PM
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. . .Those with BTCs can get an injunction to freeze the USD funds but apparently nobody cares
Why are you so sure that this isn't already happening?

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September 04, 2012, 11:01:34 PM
 #174

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.

Quote
Tthose (sic) with BTCs can get an injunction to freeze the USD funds but apparently nobody cares
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.

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September 04, 2012, 11:01:54 PM
 #175

. . .Those with BTCs can get an injunction to freeze the USD funds but apparently nobody cares
Why are you so sure that this isn't already happening?

Because there were only crickets after this:

Who will cooperate in filing an injunction?

I do hope that is happening.

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September 04, 2012, 11:04:20 PM
 #176

I wonder how much profit has been gained by keeping your BTC in an online wallet for day trading vs. the amount stolen to hacks for keeping them on insecure online systems.

I run http://mail-to-jail.com. I am "thebaron-btc" on Bitcoin-OTC.
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September 04, 2012, 11:05:54 PM
 #177


Tthose with BTCs can get an injunction to freeze the USD funds but apparently nobody cares


Bitcoinica losses would have been substantially reduced had users sought injunctive relief.


All I can say is that this is Bitcoin. I don't believe it until I see six confirmations.
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September 04, 2012, 11:07:42 PM
 #178

Full text:
[...]
As such this amendment refers only to a limit on the government's ability to deprive you of your property without due process, and nothing to do with BitFloor's ability to deprive you of what you believe to be your property until they can determine their legal responsibilities.

It's even better than that - the 5th amendment, itself, only applies to the US federal government - it can be applied to state governments through the privileges & immunities clause of the 14th amendment, which itself has some similar due process language that might be of interest to our legal scholars.

Of course, they're still going to have to make the leap from the constitution's limits on the behavior of governments to controlling the behavior of individuals, which they will likely find impossible; though with just the right mix of capital letters and accusations of Communism it might be possible. If that's not strong enough medicine, season liberally (ha!) with Halliburton, Blackwater, Vince Foster, Oliver North, Obama's birth certificate, Jack Ruby, the Mafia, Paula Jones, and cocaine in south-central LA to taste.
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September 04, 2012, 11:08:04 PM
 #179

. . .  If Bitfloor is enjoined from making payments I am sure he will let creditors know via this site or forum. . .
I suspect that if BitFloor's legal counsel advised them against further communications via this forum, that they would not let their creditors know via this site or forum.  As a matter of fact, I suspect that we won't see much further communication from BitFloor via this forum at this time unless they find a way to come back online and cover all losses.

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September 04, 2012, 11:11:41 PM
 #180

I suspect that if BitFloor's legal counsel advised them against further communications via this forum, that they would not let their creditors know via this site or forum.  As a matter of fact, I suspect that we won't see much further communication from BitFloor via this forum at this time unless they find a way to come back online and cover all losses.

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.

Gerald Davis  CEO, Tangible Cryptography Inc.
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