Coinlab are sneaky bastards, investors behind Bitcoinica

[TheKoziTwo]

It would be great to see some proof of that.

[1713565450]

1713565450

[1713565450]

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[repentance]

I'd like to thank both Patrick and Amir for coming out and confirming what many of us have long suspected.  I know that's a difficult thing to do when there are ongoing legal issues related to Bitcoinica but I believe the users deserve to know the truth about what happened.

[muyuu]

I've gotten a lot of hate from people who've blamed me for Bitcoinica, convinced I'm to blame. Maybe now you'll all understand. Here's some basic facts.

Englishman saying "gotten" ಠ_ಠ

Coinlab were the investors behind Bitcoinica. Tihan Seale and Peter Vessenes founded Coinlab together. Tihan bought Bitcoinica and Coinlab was involved from the beginning. Patrick Murck filed the legal papers on behalf of Bitcoinica investors.

We were given fake shares in a fake company. The deal was to contract us to work on Bitcoinica. The site had been losing money for months and had huge security problems. A new company was formed to handle that agreement.

After the first compromise, despite huge problems in the setup and design of the website, they wanted to put it back up as fast as possible. I was against this strongly which is why I released the code. After an employee used this as an excuse to steal more funds (the evidence is definitive), they were upset more over the loss of the 'Intellectual Property'.

You had no right to do that, it was a massive mistake.

They scapegoated me. They wanted no liability and refused to help us complete the job for them. All the emails are public on this forum (I released them) as proof. Donald kept asking to speak to their superior but they refused.

I never had access to money or any servers. I was a programmer working on the hedging algorithm.

IIRC there were keys in the sources that actually led to the loss of funds. Something about Lastpass. You should remember better than me, I didn't even have any funds in Bitcoinica.

They are sneaky, and play dirty tactics. Tihan is a manipulative sociopath.

We had run Intersango, the biggest UK exchange for 2 years without any problems doing 2 million GBP turnover annually. The site has been closed down (due to UK bank problems) paying everyone back and we experienced no security flaws during its history. I had no reason to deliberately cause Bitcoinica users any harm, and if you actually go and study the evidence on the forums, you'll see I acted in all of your best interests.

Except when you broadcasted thousands of email addresses.

When everyone ran off, a programmer was told he was now acting CEO of a defunct company that never was formed and had to make executive decisions despite having no technical control or access to anything. Do you know how fucking absurd this is? Then to be told by many different parties conflicting things to sign for their personal interest and get blamed for that.

These are facts, and every point can be proven.

You may have some points, and you may be right about Seale/Vessenes but your credibility runs really low for a number of reasons. You "could care less" about giving Roger Ver's money back since he's rich anyway, you are a squatter and shoehorned politics in the conference, etc etc.

But yeah, they do seem sneaky and you really seem to have been Zhoutonged in the Bitcoinica deal which you guys should never have taken (and it was quite obvious, you had a business to deal with back then).

Where's Nefario, by the way?

[Frozenlock]

As someone who's finding the whole MtGox/Coinlab contract suspiciously one sided,
it's with great interest that I'm watching this thread. 

[btcx]

If all this is someone else's fault, why haven't the defendants in the lawsuit attempted to redirect blame in that forum?  What you guys say on the forums and on IRC contradict your behavior in the legal matter.  The plaintiffs and Bitcoinica customers all just want their money back, and they want the right guys to pay for it.  Why drag on the case when you could help the plaintiffs fry the bigger fish that set you up?

[repentance]

If all this is someone else's fault, why haven't the defendants in the lawsuit attempted to redirect blame in that forum?  What you guys say on the forums and on IRC contradict your behavior in the legal matter.  The plaintiffs and Bitcoinica customers all just want their money back, and they want the right guys to pay for it.  Why drag on the case when you could help the plaintiffs fry the bigger fish that set you up?

I've been following the documents being lodged with the California court Jesse.  Just recently the court upheld the part of Patrick's demurrer regarding negligence on the part of the defendants and the plaintiffs had to file an amended claim.

I could equally ask the plaintiffs whether they have ever pushed for criminal investigation of the thefts from Bitcoinica.  I'm also curious about why Zhou was going to be a party to the proposed confidential settlement agreement when he was supposedly merely an employee of Bitcoinica at the time and not one of its principals.

The BTC which were never recovered following the MtGox intrusion are now worth more than enough to settle the claims of the plaintiffs in the Cartmell et al lawsuit.  Both AurumXchange and MtGox confirmed a link between Zhou's accounts and the MtGox intrusion.  I would think that the plaintiffs themselves would be very interested in further investigating that link and adding Zhou to your complaint.

Zhou has even stated that he'll be in the US in July, which would be a golden opportunity to have your lawyers take a deposition from him if you believe he's an innocent party in this.

[Seth Otterstad]

Thanks for finally coming on here to lay the smackdown.  It makes me so irritated that your lawyers said you couldn't say anything until now.

[benjamindees]

I never had access to money or any servers. I was a programmer working on the hedging algorithm.

But you did have access to Bitcoins.  Since the MtGox API key was in the source code you released.

[repentance]

Thanks for finally coming on here to lay the smackdown.  It makes me so irritated that your lawyers said you couldn't say anything until now.

It's rather unfortunate that the legal advice given to the various parties involved in the Bitcoinica clusterfuck has ultimately worked against the interests of Bitcoinica users, even though it's not surprising.

[repentance]

Let's go after Gox and force them to give us what is ours! Our money should not be used as leverage in their personal game.

How do you propose doing that Goat?  The liquidator gained control of the funds in the Bitcoinica bank account but it didn't contain a whole lot of money relative to what is owed so spending it on legal costs to try to force MtGox to disgorge funds might not be a popular option amongst creditors.  Is there a creditor willing to underwrite the cost of such legal action (NZ has salvage laws which mean that creditors who help recover funds for the benefit of all creditors can recover those costs).

[repentance]

Let's focus some of our energy on getting the coins back.

My suggestion was a serious one.  Creditors who underwrite the cost of recovering funds for the benefit of all creditors can have their own claims treated preferentially as well as recovering their costs.  It's something to consider.

(e)to any creditor who protects, preserves the value of, or recovers assets of the company for the benefit of the company's creditors by the payment of money or the giving of an indemnity,—
(i)the amount received by the liquidator by the realisation of those assets, up to the value of that creditor's unsecured debt; and
(ii)the amount of the costs incurred by that creditor in protecting, preserving the value of, or recovering those assets.

http://www.legislation.govt.nz/act/public/1993/0105/latest/DLM323545.html

Perhaps you could try persuading Cartmell et al to focus their legal efforts on trying to get MtGox to disgorge funds.

The liquidator has only listed Wendon and Ator as creditors and everyone else as investors so you would need to clarify with the liquidator whether that provision would still apply.

Tihan stated previously that Wendon would not assert its right to be treated as a secured creditor, but it's still listed as a creditor and Wendon could potentially be treated preferentially if it paid the costs of recovering funds from the "Chinese relic collector".

[dancingnancy]

I'm on board to pitch in around $300-$500 to get this going.  I just want my coins back.  I don't care if I have to spend more money to get them back.  I want Mt. Gox's name tarnished, as well.  If it hasn't been already.  Can we directly go after Mt. Gox somehow? 

[repentance]

Can we directly go after Mt. Gox somehow?  

You'd probably complicate the legal situation even more by doing so.  It was Bitcoinica's account and the liquidator has an established right to receive the funds for distribution to creditors.  If MtGox isn't recognising that right, it's even less likely to recognise the claims of individual creditors as people were only able to establish what they were owed by matching up their own records with Bitcoinica's records.  MtGox doesn't have access to Bitcoinica's records so they would have no legitimate way of verifying individual claims.

I would expect the next liquidator's report to address the issue of MtGox co-operation and any legal advice the liquidator has received about the viability of legal action against them.  MtGox has much bigger concerns to worry about at the moment so they may not view obstructing the liquidator as a priority right now.

[repentance]

I would strongly advise Patrick and Amir to inform the liquidator of any evidence they have regarding the originator of the theft/s.  

I have no doubt that the actions of all parties were driven by advice they received from their lawyers but that really hasn't helped Bitcoinica users at all.

Quite frankly, I don't give a shit if further investigations into the circumstances surrounding the MtGox intrusion might fuck up Zhou's immigration prospects.

It's probably worth reminding people that although we don't know the balance of the Bitcoinica account on MtGox prior to the intrusion, we know that 20,000 BTC and $100,000 were returned to the account.  The value of that account is significant given the rise in the price of BTC since the intrusion.  Even if those are the only funds in the account, the account is now worth over 2 million dollars.

[gmaxwell]

With the exception of genjix's motivations for posting the code— which I don't recall hearing comments on before— I believe the factual statements provided in GenJix's posts are consistent with the claims I've heard and impressions I've received all along from the involved parties that I'd talked to.  Basically not a word of hist post is news to me (except the code posting stuff as mentioned). As someone who wasn't involved I can't personally vouch for the truth of any of it but I do believe this has been the Bitcoin consultancy folks position all along.  And I have not seen evidence which contradicts their positions, and as things unraveled new evidence (e.g. about the identity of the mtgox theift) appeared to their prior positions.

[genjix]

BTW, I understand what some of you are going through. My father is nearly 70, and just lost all his money to property investments that never got built. The person responsible took lots of money from many people and ran away. He has nothing left anymore and cannot pay his mortgage on his home. He worked hard his whole life, and now is bust at an age where he cannot work. Now he wants to run off to a small remaining plot of land he has in Iran in some village and live out the rest of his days. He never had a boss and installed a hard work ethic in me and honest morals. We hadn't been speaking for many years before this because he never understood what I was about (why I preferred to write opensource for free instead of make money and get a degree).

[melvster]

I've gotten a lot of hate from people who've blamed me for Bitcoinica, convinced I'm to blame. Maybe now you'll all understand. Here's some basic facts.

Coinlab were the investors behind Bitcoinica. Tihan Seale and Peter Vessenes founded Coinlab together. Tihan bought Bitcoinica and Coinlab was involved from the beginning. Patrick Murck filed the legal papers on behalf of Bitcoinica investors.

We were given fake shares in a fake company. The deal was to contract us to work on Bitcoinica. The site had been losing money for months and had huge security problems. A new company was formed to handle that agreement.

After the first compromise, despite huge problems in the setup and design of the website, they wanted to put it back up as fast as possible. I was against this strongly which is why I released the code. After an employee used this as an excuse to steal more funds (the evidence is definitive), they were upset more over the loss of the 'Intellectual Property'.

They scapegoated me. They wanted no liability and refused to help us complete the job for them. All the emails are public on this forum (I released them) as proof. Donald kept asking to speak to their superior but they refused.

I never had access to money or any servers. I was a programmer working on the hedging algorithm.

They are sneaky, and play dirty tactics. Tihan is a manipulative sociopath.

We had run Intersango, the biggest UK exchange for 2 years without any problems doing 2 million GBP turnover annually. The site has been closed down (due to UK bank problems) paying everyone back and we experienced no security flaws during its history. I had no reason to deliberately cause Bitcoinica users any harm, and if you actually go and study the evidence on the forums, you'll see I acted in all of your best interests.

When everyone ran off, a programmer was told he was now acting CEO of a defunct company that never was formed and had to make executive decisions despite having no technical control or access to anything. Do you know how fucking absurd this is? Then to be told by many different parties conflicting things to sign for their personal interest and get blamed for that.

These are facts, and every point can be proven.

Thanks for clearing up confusion.

I've lost respect for coinlab over this, and even paul graham who invested in them.

Are/were the issues with intersango still unsurmountable?

[w1R903]

I've lost respect for coinlab over this, and even paul graham who invested in them.

I think you're confusing Coinlab with Coinbase (don't worry, I've done the same thing).  Paul Graham/ycombinator invested in Coinbase, which has nothing to do with any of this as far as I know.

[dust]

Yes we can go after Gox but it will not be easy to win.

However it will make the issue public and force them to the table while they get bad press.

I'm willing to burn $10,000 for this.

You will have to be willing to burn a lot more than $10k given the negative effect this action would have on the market price.

Thanks for clearing up confusion.

I've lost respect for coinlab over this, and even paul graham who invested in them.

Are/were the issues with intersango still unsurmountable?

Paul Graham (YCombinator) invested in Coinbase, not Coinlab.  It doesn't help that nearly every bitcoin business has either "bit" or "coin" in its name.

[sd]

So the take home message is that Zhou is a thief and everyone else is extremely untrustworthy.

Also the legal, and practical, protections in the conventional finance world turn out to be necessary to protect people from thieves.