{ANNOUNCEMENT} WBX Exchange Frozen

[Phinnaeus Gage]

I dig some digging around ...

ASIC Gazette advising of company deregistration: http://www.asic.gov.au/asic/pdflib.nsf/LookupByFileName/A081_11.pdf/$file/A081_11.pdf

Social Media:

Linked In: http://www.linkedin.com/in/gorkalitus
FB: https://www.hs.facebook.com/gorkalitus
Twitter: https://twitter.com/#!/gorkalitus
Google: https://plus.google.com/118402445473214777477/
YouTube: http://www.youtube.com/user/gorkalitus
Wordpress: http://gorkalitus.wordpress.com/

His common nickname, gorkalitus, used to have a website (also listed on his LinkedIn profile), gorkalitus.com. It's no longer there, but here's an old snapshot: http://web.archive.org/web/20110203093148/http://www.gorkalitus.com/

It also still has an FB page: https://www.facebook.com/pages/Gorkalitus/313640667659

He has a Yahoo Questions account (http://answers.yahoo.com/activity?show=V8DvbOgFaa), in which he has asked questions about his daughter being injured at day care and what to do about not being able to pay the mortgage on his house in Victoria!! (http://answers.yahoo.com/question/index;_ylt=AslIquUYUaC9sWZEU0pHK_nsy6IX;_ylv=3?qid=20110522042232AA5bkZu) 

There is a photo here (https://www.hs.facebook.com/photo.php?fbid=106283996057507&set=a.103987846287122.7771.100000277203901&type=3&theater) on FB of a website mock up with an address matching the previously registered company address.

He made a tweet (https://twitter.com/#!/gorkalitus/status/85342350313918464) about a fan page for a Kiwi Food online store. (It links here: https://www.facebook.com/pages/Kiwi-Shack/115106271912363#.TgiI0Tx5Abg.twitter). It appears to be run by Andre's wife (https://www.hs.facebook.com/marieannyork?sk=info) at an address: Eagleby, Eagleby, QLD 4207. Phone number: (07)38076011. His wife also appears to work at Makarni Colour Studio, 16 Main St Beenleigh, which is close by Eagleby and has the same phone number as listed the Kiwi Store (https://www.hs.facebook.com/MakarniColourStudio).

This research is getting addictive ...

It's like a drug!

After awhile, you start seeing things. Like how I found this post while Google-searching for wild mustangs in Montana. 

~Cackling Bear~

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[repentance]

Does someone with a reddit account want to let this guy know what's going on.

http://www.reddit.com/r/Bitcoin/comments/x4h2o/has_anyone_had_any_dealings_with/

[dooglus]

Does someone with a reddit account want to let this guy know what's going on.

http://www.reddit.com/r/Bitcoin/comments/x4h2o/has_anyone_had_any_dealings_with/

Thanks for pointing that out.  I don't often look at reddit.

I posted the following there, pointing him to this thread:

There's a long thread on the bitcointalk forum about worldbitcoinexchange, here:
  https://bitcointalk.org/index.php?topic=65867

It's not clear what really happened, but this post:
  https://bitcointalk.org/index.php?topic=65867.msg920163#msg920163
by the owner of the exchange claims that he has lost all the Australian Dollars held by the site and has also lost control of the site.

I was holding the Bitcoins that the exchange was in control of, and I still have them. As soon as the owner of the exchange is able to tell me how much is owed to each client I will be able to pay a proportion of the Bitcoins I am holding back to the clients. I have attempted to contact him, but am yet to receive a reply.

This post:
  https://bitcointalk.org/index.php?topic=65867.msg923845#msg923845
by me lists the liabilities of the exchange as I understood them at the time. Some users have since contacted me regarding other debts that they are owed. I've been unable to confirm these debts with the owner of the exchange, but a ballpark figure is that only around 25% of the assests of the exchange are still around.

[bitcowok]

Anybody made any more progress on this one?  is it time to call it yet and just divide up the BTC ?

[Seal]

Anybody made any more progress on this one?  is it time to call it yet and just divide up the BTC ?

I have a suggestion. Given the appreciation in value of BTC. If the current holdings are liquidated at current price, can everybody be paid back at the rate/price it was when WBX stopped trading?

[PatrickHarnett]

Anybody made any more progress on this one?  is it time to call it yet and just divide up the BTC ?

I have a suggestion. Given the appreciation in value of BTC. If the current holdings are liquidated at current price, can everybody be paid back at the rate/price it was when WBX stopped trading?

I didn't get a useful response from the agency I contacted last month, so checking an alternative.

On the price appreciation, that sounds nice for those out of pocket $$, but those out BTC might be less happy.  I don't think there was ever a comprehensive list of creditors available either.  Given six months has passed, some pro-rating payment might be easiest to put the whole thing to rest.

[Seal]

On the price appreciation, that sounds nice for those out of pocket $$, but those out BTC might be less happy.  I don't think there was ever a comprehensive list of creditors available either.  Given six months has passed, some pro-rating payment might be easiest to put the whole thing to rest.

I did consider that Patrick, however the opposite would be true if the value of BTC went down since then. Having through about it carefully, repayment amounts for the purpose of paying back customers should be calculated as of the rates at the time WBX was shut down.

Happy to hear recommendations though. I agree that something should be done given the time that has passed.

Has anyone made progress from a legal front?

Dooglus, whats your stance?

[PatrickHarnett]

On the price appreciation, that sounds nice for those out of pocket $$, but those out BTC might be less happy.  I don't think there was ever a comprehensive list of creditors available either.  Given six months has passed, some pro-rating payment might be easiest to put the whole thing to rest.

I did consider that Patrick, however the opposite would be true if the value of BTC went down since then. Having through about it carefully, repayment amounts for the purpose of paying back customers should be calculated as of the rates at the time WBX was shut down.

Happy to hear recommendations though. I agree that something should be done given the time that has passed.

Has anyone made progress from a legal front?

Dooglus, whats your stance?

Yes, the opposite would be true - people tend to look at self interest, and if 1700BTC or what ever it is is was worth only $1700, the BTC holders would be pissed off and the $$ holders out of luck.  (hmm, nice asymmetry)

Anyway, I'm still looking at recovery although my progress is slow - but that only addresses one person, and not the actual number of WBX scammed people.  Andre should have some shit land on his doorstep for this mess, but certainly there are many people involved.  It have been six months (or so/or nearly), so some division seems sensible.

either way, it's messy - if I ended up with 1/2 of what I was owed, I'd be content 

[Seal]

On the price appreciation, that sounds nice for those out of pocket $$, but those out BTC might be less happy.  I don't think there was ever a comprehensive list of creditors available either.  Given six months has passed, some pro-rating payment might be easiest to put the whole thing to rest.

I did consider that Patrick, however the opposite would be true if the value of BTC went down since then. Having through about it carefully, repayment amounts for the purpose of paying back customers should be calculated as of the rates at the time WBX was shut down.

Happy to hear recommendations though. I agree that something should be done given the time that has passed.

Has anyone made progress from a legal front?

Dooglus, whats your stance?

Yes, the opposite would be true - people tend to look at self interest, and if 1700BTC or what ever it is is was worth only $1700, the BTC holders would be pissed off and the $$ holders out of luck.  (hmm, nice asymmetry)

Anyway, I'm still looking at recovery although my progress is slow - but that only addresses one person, and not the actual number of WBX scammed people.  Andre should have some shit land on his doorstep for this mess, but certainly there are many people involved.  It have been six months (or so/or nearly), so some division seems sensible.

either way, it's messy - if I ended up with 1/2 of what I was owed, I'd be content 

Hey Patrick, how are things going on your end? Are you taking the legal route?

Dooglus - any decision as to whats going to happen with the BTC you are holding?

[dooglus]

Dooglus, whats your stance?

My stance:

* I'd like to get payments made ASAP
* I don't have a full list of creditors, so don't know what percentage I should be paying everyone
* Andre is ignoring (or not getting) my email
* I am not a lawyer, and don't know what I am allowed or required to do with the funds I'm holding.

I don't know how to proceed from there.  I still have the 1800-ish BTC safe and sound.

As for what rate to use when paying out, I have been thinking about that.  Here's a simple example to try to make the picture clearer:

Suppose there are 1 customers.  A has $1 in his accounf and B has 1 BTC.  At the time trading stops the price is $1/BTC.  The $ goes missing but we have the 1 BTC still.  Then the price goes up to $10/BTC before we pay out.  I see two cases, X and Y:

(X): If we pay out using the old $1/BTC price, total debt = $1 + $1 = $2, we pay out 50%.
A gets 0.5 BTC = $5 and B get 0.5 BTC.

(Y): If we pay out using the new$10/BTC price, total debt = $1 + $10 = $11, we pay out 90.9%.
A gets 0.091 BTC = $0.90, B gets 0.909 BTC.

In X, where we use the old price, the dollar holders end up with more than they were owed, while the BTC holders end up with less.
In Y, using the new higher price, everyone gets the same fraction of what they were owed.

Y looks like the fairer case to me.  What does anyone else think?  Can someone make a case for dollar holders to be making a profit on the dollars they were holding when the price of BTC goes up?  Maybe I'm missing something.

[PatrickHarnett]

Hey Patrick, how are things going on your end? Are you taking the legal route?

Dooglus - any decision as to whats going to happen with the BTC you are holding?

Quick update - I contacted an organisation that claimed to debt collection, but really they were more interested in charging for legal letters.  They didn't respond particularly usefully with any real information.  Andre never contacted my lawyers - they were waiting for his call.




Commenting on Dooglus's proposal, I don't see why a dollar-holder should be making a profit, option "Y" (and I'm in the dollar holding category).

As for what to do next, from a legal standpoint, we've had six months pass, and have some information of creditors.  Creditors are entitled to appoint a liquidator, and as Andre refuses to communicate, it is reasonable for as complete a list as possible be compiled and pay on that.  In the real world, requesting creditors to submit claims sometimes results in some missing out and I expect something similar might happen here.

[Seal]

Given the time that has passed, my proposal to move things forward are as follows:

1. We appoint a creditor to manage this process
2. We set up a list whereby creditors can submit claims
3. This list is held open for an agreed period eg. 2 months or so
4. Claims are reconciled with the most recent backup Dooglus holds (where reasonably possible - I understand there has been some sale of debt and the backup isn't the very latest, I believe a reasonably accurate job can be made)
5. Payments are made following the claim period.


Acknowledged, some people may miss out however in the real world, some creditors will have already written the loss off given the period that has passed. Other people simply will not care as their loss may be nominal.

[Seal]

Suppose there are 1 customers.  A has $1 in his accounf and B has 1 BTC.  At the time trading stops the price is $1/BTC.  The $ goes missing but we have the 1 BTC still.  Then the price goes up to $10/BTC before we pay out.  I see two cases, X and Y:

(X): If we pay out using the old $1/BTC price, total debt = $1 + $1 = $2, we pay out 50%.
A gets 0.5 BTC = $5 and B get 0.5 BTC.

(Y): If we pay out using the new$10/BTC price, total debt = $1 + $10 = $11, we pay out 90.9%.
A gets 0.091 BTC = $0.90, B gets 0.909 BTC.

In X, where we use the old price, the dollar holders end up with more than they were owed, while the BTC holders end up with less.
In Y, using the new higher price, everyone gets the same fraction of what they were owed.

Y looks like the fairer case to me.  What does anyone else think?  Can someone make a case for dollar holders to be making a profit on the dollars they were holding when the price of BTC goes up?  Maybe I'm missing something.

Dooglus, to repeat a point that PatrickHarnett made in an earlier post, option Y wouldn't look as fair if the price of BTC dropped. The increase in price makes option Y look fair today however if the price dropped, option X would look equally as fair.

My recommendation combines both of option X and option Y. After the creditor picks a final payout date. We take the price of BTC on that given (agreed) day and:

(Z): We pay out on an averaged price basis. ie. Take the price of BTC when trading stopped. Take the current price and average the two. Use this averaged price to calculate payments using the same method as above.

This will not bias cash OR btc holders and losses will be equal for all parties. (regardless of if the price moves above/below/ends up the same as before). Happy to hear feedback on this one.

[dooglus]

I see two cases, X and Y:

(X): If we pay out using the old $1/BTC price, total debt = $1 + $1 = $2, we pay out 50%.
A gets 0.5 BTC = $5 and B get 0.5 BTC.

(Y): If we pay out using the new$10/BTC price, total debt = $1 + $10 = $11, we pay out 90.9%.
A gets 0.091 BTC = $0.90, B gets 0.909 BTC.

In X, where we use the old price, the dollar holders end up with more than they were owed, while the BTC holders end up with less.
In Y, using the new higher price, everyone gets the same fraction of what they were owed.

Y looks like the fairer case to me.  What does anyone else think?  Can someone make a case for dollar holders to be making a profit on the dollars they were holding when the price of BTC goes up?  Maybe I'm missing something.

I was in a hurry yesterday when I posted.  There are more options, including the one Seal proposed.  He suggested converting BTC into AUD at the current price, but allocating it to creditors at the old price.  Let's call that option Z.

In Z, we sell the 1 BTC for the new price of $10, but use the old price to calculate the total debt ($1 + $1 = $2).  So we can pay everyone out 500% of what they're owed: A gets $5 and B gets $5.  Actually that seems to be exactly the same as (X) above, except that everyone is paid out in dollars, not bitcoins.

From a practical point of view, I'd rather pay out in bitcoins.  Then I don't have to work out how to make international bank transfers, etc.  Paying Bitcoins is much easier.

I agree with Patrick that (Y) seems to be the fairest option.

I suspect that if put up a claims page, some percentage of accounts will remain unclaimed.  I have no way of contacting account holders; WBX never collected email address (although I expect Andre has a significant number of emails from disgruntled customers in his inbox).  It seems likely that the amounts in unclaimed accounts could offset any new creditors which come to light.  But that's just a guess; I have no way of knowing for sure how many customers made deposits which never got further than Andre's bank account, and never touched the WBX database at all.

[Seal]

I see two cases, X and Y:

(X): If we pay out using the old $1/BTC price, total debt = $1 + $1 = $2, we pay out 50%.
A gets 0.5 BTC = $5 and B get 0.5 BTC.

(Y): If we pay out using the new$10/BTC price, total debt = $1 + $10 = $11, we pay out 90.9%.
A gets 0.091 BTC = $0.90, B gets 0.909 BTC.

In X, where we use the old price, the dollar holders end up with more than they were owed, while the BTC holders end up with less.
In Y, using the new higher price, everyone gets the same fraction of what they were owed.

Y looks like the fairer case to me.  What does anyone else think?  Can someone make a case for dollar holders to be making a profit on the dollars they were holding when the price of BTC goes up?  Maybe I'm missing something.

I was in a hurry yesterday when I posted.  There are more options, including the one Seal proposed.  He suggested converting BTC into AUD at the current price, but allocating it to creditors at the old price.  Let's call that option Z.

In Z, we sell the 1 BTC for the new price of $10, but use the old price to calculate the total debt ($1 + $1 = $2).  So we can pay everyone out 500% of what they're owed: A gets $5 and B gets $5.  Actually that seems to be exactly the same as (X) above, except that everyone is paid out in dollars, not bitcoins.

From a practical point of view, I'd rather pay out in bitcoins.  Then I don't have to work out how to make international bank transfers, etc.  Paying Bitcoins is much easier.

Apologies dooglus, I think I may have confused you with an earlier suggestion in an older post (which i see now is heavily biased towards option X). Let me re-explain my option z which should take the middleground of X and Y:

(X): If we pay out using the old $1/BTC price, total debt = $1 + $1 = $2, we pay out 50%.
A gets 0.5 BTC = $5 and B get 0.5 BTC.

(Y): If we pay out using the new$10/BTC price, total debt = $1 + $10 = $11, we pay out 90.9%.
A gets 0.091 BTC = $0.90, B gets 0.909 BTC.

(Z): Pay out using an averaged price of the old price and current ($1+$10)/2 = $5.5/BTC, total debt = $1 + $5.5 = $6.5, A gets 0.154 BTC, B gets 0.846 BTC.

Fairer?

p.s. Agreed, paying back using BTC makes sense.

[dooglus]

(Z): Pay out using an averaged price of the old price and current ($1+$10)/2 = $5.5/BTC, total debt = $1 + $5.5 = $6.5, A gets 0.154 BTC, B gets 0.846 BTC.

Fairer?

p.s. Agreed, paying back using BTC makes sense.

Well, A gets 0.154 BTC which is $1.54, but he was only owed $1.00, so he's made a profit on the deal which doesn't seem right.  I don't see why anyone would be entitled to get more than 100% of what they're owed, unless everyone does.

I guess at the end of the day it doesn't matter what "seems right", it matters what's legal.  There must be laws about what to do in this situation.  Maybe not about bitcoin, but what if it was gold, or some other commodity.

I was reading the BitFloor thread yesterday.  The situation there is the exact opposite - the BTC are missing, but the dollars are whole.  There's lots of argument there.  The people with dollars on deposit argue that they don't want their dollars being used to reimburse the BTC holders, whereas the BTC holders argue that if the company is insolvent then its assets need to be distributed proportionally to all creditors.  Others say that it would be illegal to distribute any assets at all without bringing in a liquidator, and are telling Roman that he must seek legal advice before doing anything.

In the WBX situation it's more complicated I think.  I don't know if there was ever a company registered that owned the exchange, or if it was all a scam from the beginning.  Even if WBX was owned by High Net Worth, it seems the company registration lapsed while the exchange was still operating, and so some claim that Andre is personally liable for the debts.

So do I need to speak to an Australian lawyer about how to proceed?  I don't want to spend the little remaining funds on legal expenses, but also don't want to do the wrong thing and end up in legal trouble as a result.

[repentance]

So do I need to speak to an Australian lawyer about how to proceed?  I don't want to spend the little remaining funds on legal expenses, but also don't want to do the wrong thing and end up in legal trouble as a result.

I'd just contact ITSA for advice.  There's a toll-free number residents of some countries can use or you could email them if you want stuff in writing.

http://www.itsa.gov.au/dir228/itsaweb.nsf/docindex/contacts-%3Econtact%20us

I'm not convinced that the other directors of HNWP aren't just as liable as Andre, but that's only an issue if people are lodging lawsuits.  

[dooglus]

I'd just contact ITSA for advice.  There's a toll-free number residents of some countries can use or you could email them if you want stuff in writing.

I'm not convinced that the other directors of HNT aren't just as liable as Andre, but that's only an issue if people are lodging lawsuits. 

Thanks.  I'll do that and report back here.

Incidentally, do we have any proof that we were really dealing with Andre or High Net Worth Property and not just an anonymous Internet scammer using those identities?

[repentance]

I'd just contact ITSA for advice.  There's a toll-free number residents of some countries can use or you could email them if you want stuff in writing.

I'm not convinced that the other directors of HNT aren't just as liable as Andre, but that's only an issue if people are lodging lawsuits. 

Thanks.  I'll do that and report back here.

Incidentally, do we have any proof that we were really dealing with Andre or High Net Worth Property and not just an anonymous Internet scammer using those identities?

He's promoted WBE on his Facebook and that ties to his past and present real life activity.  If the bank account he was using was in his name, it was established by someone with sufficient ID to convince the bank they were Andre.  Likewise any business accounts that were used - Australian banks require documentation.

I know Patrick pulled the ASIC records related to High Net Worth Property.  He didn't release information about the other directors, but it would be interesting to see if they're people connected with Progressive Security or on his various social networks.

[Seal]

Well, A gets 0.154 BTC which is $1.54, but he was only owed $1.00, so he's made a profit on the deal which doesn't seem right.  I don't see why anyone would be entitled to get more than 100% of what they're owed, unless everyone does.

Fair point!

And I'd rather this be settled without expensive fees being taken out by lawyers. I've already consulted one who has told me for claims any less than $40k, its simply not worth it as the costs will outweigh the potential return. Official letters have to be sent to serve as notice and fees alone for these letters to start the process are around at least in the hundreds of dollars.