Is Bitfloor stealing money from its users?

[SpottedMarley]

With absolutely zero communication from Bitfloor to their customers to whom they owe money to after closing down two weeks ago, the writing is on the wall. Why would they keep their entire user base (ex-user base) completely in the dark and refuse to respond to any and all attempt by users to contact them via email and twitter? (these are the only contact methods they provide)

Bitfloor was robbed of nearly a quarter million dollars of BTC last August and, from what I understand, some sort of angel-investor began fronting them money to begin paying back their users after the theft. It was, after all, Roman's own fault that the BTC were able to be stolen in the first place.

But now that they were forced to cease operation it raises the question... how are they going to pay back that angel-investor the money they were already fronted?

I submit that the absolutely inept handling of the current situation is evidence that they intend not to pay back the money they owe their users and are, in effect, going to steal that money to pay their debt to that investor.

Sure this is pure speculation, but in an information blackout, that's all that's left.

[totaleclipseofthebank]

With absolutely zero communication from Bitfloor to their customers to whom they owe money to after closing down two weeks ago, the writing is on the wall. Why would they keep their entire user base (ex-user base) completely in the dark and refuse to respond to any and all attempt by users to contact them via email and twitter? (these are the only contact methods they provide)

Bitfloor was robbed of nearly a quarter million dollars of BTC last August and, from what I understand, some sort of angle-investor began fronting them money to begin paying back their users after the theft. It was, after all, Roman's own fault that the BTC were able to be stolen in the first place.

But now that they were forced to cease operation it raises the question... how are they going to pay back that angel-investor the money they were already fronted?

I submit that the absolutely inept handling of the current situation is evidence that they intend not to pay back the money they owe their users and are, in effect, going to steal that money to pay their debt to that investor.

Sure this is pure speculation, but in an information blackout, that's all that's left.

The claim that their bank account got shutdown is somewhat plausible, but it seems pretty fishy that they are just "waiting" for a huge check from the bank. How are they actually going to return the USD to the users? It is going to take them ages to set up ACH again using whatever new bank account. I don't suspect that they are going to steal money, but it does seem that it is going to take a long time to get money back.

Also, it's not like we don't know who this guy is, making it unlikely he'll just "run". He knows this and is probably very busy hunkering down with his lawyer(s) and figuring out how to not incriminate himself while returning money.

[SpottedMarley]

With absolutely zero communication from Bitfloor to their customers to whom they owe money to after closing down two weeks ago, the writing is on the wall. Why would they keep their entire user base (ex-user base) completely in the dark and refuse to respond to any and all attempt by users to contact them via email and twitter? (these are the only contact methods they provide)

Bitfloor was robbed of nearly a quarter million dollars of BTC last August and, from what I understand, some sort of angle-investor began fronting them money to begin paying back their users after the theft. It was, after all, Roman's own fault that the BTC were able to be stolen in the first place.

But now that they were forced to cease operation it raises the question... how are they going to pay back that angel-investor the money they were already fronted?

I submit that the absolutely inept handling of the current situation is evidence that they intend not to pay back the money they owe their users and are, in effect, going to steal that money to pay their debt to that investor.

Sure this is pure speculation, but in an information blackout, that's all that's left.

The claim that their bank account got shutdown is somewhat plausible, but it seems pretty fishy that they are just "waiting" for a huge check from the bank. How are they actually going to return the USD to the users? It is going to take them ages to set up ACH again using whatever new bank account. I don't suspect that they are going to steal money, but it does seem that it is going to take a long time to get money back.

Also, it's not like we don't know who this guy is, making it unlikely he'll just "run". He knows this and is probably very busy hunkering down with his lawyer(s) and figuring out how to not incriminate himself while returning money.

You're right of course on all counts and I have been telling myself all of these same things for the past 10+ days since their last vague notice to their users, but the lack of communication is totally unacceptable and I have no doubt that they are completely aware of how it looks and the position it is putting their users in when they won't give us a single bit of information. Not even a "hey guys, just a few more days" or something to that effect would go such a long way.

People are talking about lawyers and class action lawsuits now.. because nobody who is doing good by their users would refuse to communicate with them. In the very least it is unfathomably inconsiderate but I feel that there must be a more substantial reason. I imagine they have a lawyer instructing them not to say anything publicly and that usually means that they intend to be defending themselves in court pretty soon.

[SpottedMarley]

I should qualify my position a little...


I am a long-time trader at Bitfloor. I stuck with them through the August theft (I lost no BTC thankfully) and was one of the only people still trading there for a while after that happened. Everything I saw from Roman during that situation, and since I first signed up at Bitfloor, lead me to believe that he really is an honest guy who wants to do the right thing.. but that was also a guy who was keeping his business open and so, naturally, had a vested interest in making his users happy. Now that they are folding up, maybe his users aren't so important anymore. Well, obviously not.. who would leave their users in the dark like this? The reason, whatever it is, will not be a good one.

Anyways, I had just under $4k of my own hard earned USD in my Bitfloor account when they decided to pull-the-plug on all of us. "surprise!"

And now, for the first time.. I don't trust Roman. He's doing this all wrong.. and theres a reason

[totaleclipseofthebank]

Well, he said on April 20th the check will take 10 days to arrive. It's been 11 days, and knowing banks, they almost certainly meant business days. I think it is too early to worry since I also believe (AKA blind faith with very little objective qualification) that Roman will be honest.

Googling around has shown that refunds for remaining balances on closed accounts generally take 7-12 business days to process, so it could genuinely be that Roman is waiting for the check to come before releasing additional information.

But yeah, if he was expecting a lawsuit you can be sure he will not posting info that could be used against him on twitter.

[MPOE-PR]

You kept using Bitfloor after last time? Why?

[mrbrt]

I should qualify my position a little...


I am a long-time trader at Bitfloor. I stuck with them through the August theft (I lost no BTC thankfully) and was one of the only people still trading there for a while after that happened. Everything I saw from Roman during that situation, and since I first signed up at Bitfloor, lead me to believe that he really is an honest guy who wants to do the right thing.. but that was also a guy who was keeping his business open and so, naturally, had a vested interest in making his users happy. Now that they are folding up, maybe his users aren't so important anymore. Well, obviously not.. who would leave their users in the dark like this? The reason, whatever it is, will not be a good one.

Anyways, I had just under $4k of my own hard earned USD in my Bitfloor account when they decided to pull-the-plug on all of us. "surprise!"

And now, for the first time.. I don't trust Roman. He's doing this all wrong.. and theres a reason

I used Bitfloor exactly one time to get money in and exactly one time to get money out. Or at least I attempted to get money out. Unfortunately, I made the withdrawal <24 hours prior to the announcement that they were closing down, so I didn't get my funds. Bad timing.

Tomorrow (May 3) would be 10 business days, so we will see what they have to say. My guess is nothing since the latest missive "We are still waiting to hear back from the bank regarding our remaining account balance" (May 1) sort of contradicts the April 20th message stating that the bank had already issued bitfloor a check for the remaining account balance. Shouldn't Bitfloor have said "We have not yet received the check from the bank" instead of "We haven't heard back from the bank". Either they are dense or they weren't completely honest in the April 20th message. My hope is for the former.

I admittedly did not do my due diligence before using Bitfloor, and had I known about the previous incident I would not have used their service. I hope this isn't an expensive lesson.

Since Roman is apparently well known IRL, and putting aside any moral obligations he may or may not have regarding the returning of the money, I cannot see him completely running away from his debts, simply because it is not cost effective. Lawyers aren't cheap and neither is the management of 1000's of plaintiff's seeking relief. Although if he does go this route it will take >1 year to see any money, and time gives him the leverage to settle at a lower price than whatever we are seeking. All speculation of course, so lets hope for the best.

[Herodes]

I see complaints about trolls claiming to be Bitfloor representatives on Reddit.

The easy solution is to publish a GPG pubkey on their main website, then sign all other messages with this one. Prob. solved.

[SpottedMarley]

You kept using Bitfloor after last time? Why?

Well the last time, in August, was a theft. Somebody broke in to the server and stole the public wallet. Roman hadn't encrypted the public wallet and so it was his fault they were able to steal everyone's bitcoins once they gained access to the server. Following that incident it seemed highly unlikely that Roman would allow anything close to that sort of mistake to ever be made again and, in fact, security has never been a concern moving forward from that point. This was a mistake that Roman admitted personally, openly and made amends for.

What has happened this time is not a theft.. not a security breach.. this time it seems to have something to do with the bank.. but who honestly knows? Nobody I know. The only person who knows anything about whats going on this time around, Roman, refuses to say anything to anybody. For me, this change in attitude would seem to indicate a change in policy for how he plans to handle the situation. Last time he was very apologetic, very open, communicated what was going on.. he kept us all in the loop and it was well appreciated and doing so garnered a lot sympathy from all his users, myself included. The crisis showed us that Roman cared about what we were ALL going through.

This time it seems as though he honestly doesnt give a shit how any of us are feeling with these intentionally trite, vague, confusing (contradictory) statements.

[MPOE-PR]

Since Roman is apparently well known IRL, and putting aside any moral obligations he may or may not have regarding the returning of the money, I cannot see him completely running away from his debts, simply because it is not cost effective.

The reason you "cannot see" is that you are, in simple words, an idiot. The symptom of this idiocy is that you willfully ignore plain reality if it happens to be uncomfortable - such as for instance this plain statement that you're an idiot, such as for instance the plain obviousness of the situation being exactly opposite of what you "see".

Shtylman is a guy with unserviceable levels of debt. He will walk away from it whether he wants to or not. Whether he sprouts a rambling set of emo nonsense a la Kludge or simply keeps quiet is entirely irrelevant to this point: you can't get fifty dollars out of a dime, and so you won't. No matter what you see or don't see or how unfair or disturbing this fact may be to you. Because fuck you and your feelings, that's why.

The problem is that you knew, or reasonably should have known, that Shtylman is a guy with unserviceable levels of debt. Last time he was hacked and couldn't repay he became one of these walking dead people who are immune from any sort of prosecution. Once you owe more than you can repay it makes absolutely no difference how much you owe in total, ten dollars or ten billion. Giving any sort of credit to such a guy in these conditions makes you sir too stupid to live.

Please do something about it. Preferably about the "stupid" part rather than the "to live" part, and preferably before that reality previously discussed makes its own move. This because reality doesn't give a shit about your feelings (because fuck you, that's why) and consequently is likely to pick the unseemly alternative.

Fucking pussies everyone's raising these days, it's unconscionable!

[mrbrt]

Since Roman is apparently well known IRL, and putting aside any moral obligations he may or may not have regarding the returning of the money, I cannot see him completely running away from his debts, simply because it is not cost effective.

The reason you "cannot see" is that you are, in simple words, an idiot. The symptom of this idiocy is that you willfully ignore plain reality if it happens to be uncomfortable - such as for instance this plain statement that you're an idiot, such as for instance the plain obviousness of the situation being exactly opposite of what you "see".

Shtylman is a guy with unserviceable levels of debt. He will walk away from it whether he wants to or not. Whether he sprouts a rambling set of emo nonsense a la Kludge or simply keeps quiet is entirely irrelevant to this point: you can't get fifty dollars out of a dime, and so you won't. No matter what you see or don't see or how unfair or disturbing this fact may be to you. Because fuck you and your feelings, that's why.

The problem is that you knew, or reasonably should have known, that Shtylman is a guy with unserviceable levels of debt. Last time he was hacked and couldn't repay he became one of these walking dead people who are immune from any sort of prosecution. Once you owe more than you can repay it makes absolutely no difference how much you owe in total, ten dollars or ten billion. Giving any sort of credit to such a guy in these conditions makes you sir too stupid to live.

Please do something about it. Preferably about the "stupid" part rather than the "to live" part, and preferably before that reality previously discussed makes its own move. This because reality doesn't give a shit about your feelings (because fuck you, that's why) and consequently is likely to pick the unseemly alternative.

Fucking pussies everyone's raising these days, it's unconscionable!

Wow! You certainly set me straight! 

I admitted I did not do my due diligence and that I was purely speculating. Had I known my post would be admissible in the court of MPOE-PR, I certainly would have tightened it up. I guess if I changed "I cannot see him" to "I hope he doesn't" I would have not incurred your wrath. Probably not though. Also, in order for me to willfully ignore plain reality I would have to be aware of said plain reality. I am ignorant to Roman's debt situation, but I'm confused as to how that makes me an idiot. I'm sure you will explain.

The thought of being too stupid to live has crossed my mind before and I'm painfully aware of the fact that reality does not care about my feelings. I guess that makes me a pussy, but I refuse to shift the blame to my parents. I'll take responsibility. Are you as frank with people face to face or is it just a message board thing?

Where are you from? Can I buy you a beer and we can discuss all of the above?

[MPOE-PR]

I admitted I did not do my due diligence and that I was purely speculating. Had I known my post would be admissible in the court of MPOE-PR, I certainly would have tightened it up. I guess if I changed "I cannot see him" to "I hope he doesn't" I would have not incurred your wrath. Probably not though.

Probably yes, actually.

Don't sweat it, I'll find something else tomorrow.

Where are you from? Can I buy you a beer and we can discuss all of the above?

I'm from California originally. If you ever run into me somewhere make the offer again and we'll see.

[SpottedMarley]

where in CA? I lived in LA on and off for about 6 years total

[totaleclipseofthebank]

So I did some thinking about what could be going on and looked up what actually happens when a bank freezes an account due to suspicion of money laundering.

The answer seems to be that the bank would just freeze the account and shut off all communication until the account has been investigated by the regulatory authorities and cleared for unfreezing, but this process could take some time.

I think bitcoin exchanges are in the process of meeting the hard reality of money-laundering laws and the fact that the us government is not going to let anyone who wants to move money across their borders and withdraw it from exchanges as if it was an international ATM.

The thing is that in these cases it is often up to the owner of the account to prove the origins of such money, and that if the sold goods (bitcoins) originated from abroad, that the appropriate duties, etc. have been paid, which they almost certainly haven't since the items are not classifiable according to CBP's set of definitions.

Think about it -- a bunch of "terrists" in Afghanistan could sell their drugs on SR, get bitcoins, then withdraw US dollars from bitfloor and start spending a bunch of money on plane tickets, bombs, etc. This is not something I'm concerned about, but is obviously going to be a concern of DHS and FinCEN.

Looks like single digits are back on the menu...

[MPOE-PR]

Well the last time, in August, was a theft. Somebody broke in to the server and stole the public wallet. Roman hadn't encrypted the public wallet and so it was his fault they were able to steal everyone's bitcoins once they gained access to the server. Following that incident it seemed highly unlikely that Roman would allow anything close to that sort of mistake to ever be made again and, in fact, security has never been a concern moving forward from that point. This was a mistake that Roman admitted personally, openly and made amends for.

You are completely missing the point. Irrespective of what had happened, Shtylman was a man owing more than he owned. This is the end of the discussion, he can not be credited anything anymore.

Bitcoin is not about feelings.

where in CA? I lived in LA on and off for about 6 years total

San Diego / Palo Alto.

[SpottedMarley]

Roman Shtylman is a goddamn criminal

I've been putting together the events and it is obvious to me that something along these lines happened..

Roman decided he was going to halt trading, but apparently he also decided who was going to benefit and who was going to suffer.

Certain people got emails in advance warning them, this much has been confirmed in other forum threads.

Not everyone got emails.. I sure as fuck didn't and I know they have my email address because it is attached to my account and he's communicated to me many times before using it.

These friends who were tipped off went on a BTC buying frenzy paying whatever price possible to get rid of their USD before trading stopped, so the demand went way up, the price went way up.. and all us uninformed traders saw this and jumped at the chance to sell for a a high price, all of us intending to then buy back in when the price stabilized.

As soon as he and all his buddies were clear, he stopped all trading and the rest of us were left FUCKED holding on to USD which is now probably never coming back to us.

It's called insider trading, it's a crime and people go to prison for it. Ask Martha Stewart

[SpottedMarley]

You are completely missing the point. Irrespective of what had happened, Shtylman was a man owing more than he owned. This is the end of the discussion, he can not be credited anything anymore.
Bitcoin is not about feelings.

I'm not missing the point, I think you are. The plan after August was to continue paying back money little by little over however much time it took and, at the time, there was no reason to believe (or even feel for the feelers out there) that Bitfloor wouldn't be around for a long time and that eventually, whether by increasing trade fees or whatever the plan was, that Bitfloor would eventually get everyone paid back and over the most recent months volume was increasing by leaps and bounds and Bitfloor appeared to be a very vital and alive exchange, which bodes well for whatever that plan was. I did not see any evidence at all that Roman's debt was insurmountable. In fact, I'd like to hear how you know that this was the case if you don't mind. It appeared to me that, while the August theft really sucked, that it was not going to shutter the business and, in fact, it didn't as far as I know.. but like I said, you may have some information I don't about how serious his financial situation was.

I promise you I don't base anything on feelings and if you knew me you'd laugh at any insinuation to the contrary. Ask every ex-gf I've ever had haha

[repentance]

I did not see any evidence at all that Roman's debt was insurmountable. In fact, I'd like to hear how you know that this was the case if you don't mind.

Seriously?  There was considerable discussion when Bitcoin prices started rising about the impact the price rise would have on BitFloor debt.  The original rescue plan was overly optimistic and ill-conceived precisely because a rise in Bitcoin prices would make an already unserviceable debt insurmountable.  For the plan to actually be viable, Bitcoin prices needed to plummet.

[MPOE-PR]

Roman Shtylman is a goddamn criminal

I've been putting together the events and it is obvious to me that something along these lines happened..

Roman decided he was going to halt trading, but apparently he also decided who was going to benefit and who was going to suffer.

Certain people got emails in advance warning them, this much has been confirmed in other forum threads.

Not everyone got emails.. I sure as fuck didn't and I know they have my email address because it is attached to my account and he's communicated to me many times before using it.

These friends who were tipped off went on a BTC buying frenzy paying whatever price possible to get rid of their USD before trading stopped, so the demand went way up, the price went way up.. and all us uninformed traders saw this and jumped at the chance to sell for a a high price, all of us intending to then buy back in when the price stabilized.

As soon as he and all his buddies were clear, he stopped all trading and the rest of us were left FUCKED holding on to USD which is now probably never coming back to us.

It's called insider trading, it's a crime and people go to prison for it. Ask Martha Stewart

Were this true it'd be pretty serious, actual fraud. It's not really what happened, but anyway, nice story.

I did not see any evidence at all that Roman's debt was insurmountable.

Possibly the most idiotic thing I read all week. Get lost, you're not worth anyone's time.

[SpottedMarley]

Possibly the most idiotic thing I read all week. Get lost, you're not worth anyone's time.

Meanwhile, in the real world, so far you're the only person who has had anything idiotic to say.

All you do is bitch like somebody has been shoveling sand into your vagina, which I don't doubt is a real possiblity.

How about you go away since you obviously are attracted to me, whore.