Bitcoinica stolen coin returns

[Luke-Jr]

oes anyone know , or have any idea about, his reasoning? Doesn't seem like a rational decision ....

Based on his comments on IRC, it seems his intention is to harm Bitcoinica more than anything else.

1BPKHoL1sAVnfzxnH38RfXYYcHrEcniUKW

Did you use Vanitygen to create the address? How long did it take you to create that 10 character address?

It's an ordinary address, with quite a bit more than 10 characters...

[wachtwoord]

Haha Luke-jr isn't pretending to be Bitcoins holy saviour  (where would the PK stand for anyway?)

[elux]

Could anyone be so sweet as to pastebin the relevant IRC logs?

How much was returned in all, the full 18k? Or just specks and dust?

[Raoul Duke]

Could anyone be so sweet as to pastebin the relevant IRC logs?

How much was returned in all, the full 18k? Or just specks and dust?

This? http://pastebin.com/3ukW7NpN

[giszmo]

WTF? Ah!! I want to know the reasoning!?!? If he wanted to return the money he could give it to any public address of Gavin or any other honorable member here. The stunt doesn't look like good intention to me.
OTOH for mixing he could have done other things. I'm curious for your analysis and guess he is, too.

[apetersson]

[Serith]

oes anyone know , or have any idea about, his reasoning? Doesn't seem like a rational decision ....

Based on his comments on IRC, it seems his intention is to harm Bitcoinica more than anything else.

I am sure that not everyone who got bitcoins will return it to Bitcoinica, so  it's a clever way to launder bitcoins by giving portion of it to random people.

[hazek]

oes anyone know , or have any idea about, his reasoning? Doesn't seem like a rational decision ....

Based on his comments on IRC, it seems his intention is to harm Bitcoinica more than anything else.

I am sure that not everyone who got bitcoins will return it to Bitcoinica, so  it's a clever way to launder bitcoins by giving portion of it to random people.

That's what I was thinking. Now he can simply claim he got them donated when the hacker was giving them away.. reasonable doubt established.

[R-]

I am sure that not everyone who got bitcoins will return it to Bitcoinica, so  it's an expensive way to launder bitcoins by giving portion of it to random people.

Fixed your statement.

[lulzplzkthx]

Just thought I'd remind people of this.

[Daily Anarchist]

So we know he doesn't like Bitcoinica because he thinks it harms Bitcoin. So, he likes Bitcoin but not Bitcoinica.

The only extrapolation I would make is that he doesn't understand economics very well and thinks derivatives, short-selling, etc. are evil capitalist things.

The problem is that this guy sees what Wall Street does and thinks when Bitcoinica does it it must also be evil. The evil part of Wall Street is not the derivatives, short-selling, etc. It's the fact that when their investments and risks go bust they get FedGov to print new money up out of thin air to bail them out. This leads to moral hazard by essentially risking other people's money.

But when individuals risk their OWN money, it's not the same thing as evil Wall Street.

 

[elux]

So we know he doesn't like Bitcoinica because he thinks it harms Bitcoin. So, he likes Bitcoin but not Bitcoinica.

Maybe.

[EskimoBob]

oes anyone know , or have any idea about, his reasoning? Doesn't seem like a rational decision ....

Based on his comments on IRC, it seems his intention is to harm Bitcoinica more than anything else.

1BPKHoL1sAVnfzxnH38RfXYYcHrEcniUKW

Did you use Vanitygen to create the address? How long did it take you to create that 10 character address?

It's an ordinary address, with quite a bit more than 10 characters...

This was the topic of the IRC channel, before luke-jr started to act like a frack'n lunatic and change it.

"<BitcoinicaHacker> STATEMENT:: Bitcoinica caused much harm to the value of Bitcoin. They were targeted and destroyed. As sure as Bitcoinica fell, the value of Bitcoin rose. Profit from devaluation surely destroys a currency."

[wachtwoord]

So we know he doesn't like Bitcoinica because he thinks it harms Bitcoin. So, he likes Bitcoin but not Bitcoinica.

The only extrapolation I would make is that he doesn't understand economics very well and thinks derivatives, short-selling, etc. are evil capitalist things.

The problem is that this guy sees what Wall Street does and thinks when Bitcoinica does it it must also be evil. The evil part of Wall Street is not the derivatives, short-selling, etc. It's the fact that when their investments and risks go bust they get FedGov to print new money up out of thin air to bail them out. This leads to moral hazard by essentially risking other people's money.

But when individuals risk their OWN money, it's not the same thing as evil Wall Street.

 

So much this^^

We should embrace freedom and if people want to gamble (erm: speculate ) with their money that's their own choice.

[elux]

So we know he doesn't like Bitcoinica because he thinks it harms Bitcoin. So, he likes Bitcoin but not Bitcoinica.

Maybe.

This was the topic of the IRC channel, before luke-jr started to act like a frack'n lunatic and change it.

"<BitcoinicaHacker> STATEMENT:: Bitcoinica caused much harm to the value of Bitcoin. They were targeted and destroyed. As sure as Bitcoinica fell, the value of Bitcoin rose. Profit from devaluation surely destroys a currency."

Ahh. Thanks. That clears it up.

[gmaxwell]

The problem is that this guy sees what Wall Street does and thinks when Bitcoinica does it it must also be evil.

What Bitcoinica does is not what Wall street does.  The trader's positions on Bitcoinica were not backed by actual (virtual) assets—  As their FAQ said: "To make things simple, there are no deliveries of Bitcoins."  Bitcoinica was not a brokerage, it was not a stock market, it was not engaging in margin trading of any kind most people are familial with. Nor was it a derivative markets with contracts backed by assets or at least strong, enforceable, obligations to furnish the assets.

Bitcoinica was a bucket shop, a kinda of gambling business that looks on its surface like a brokerage house.  Bucketshops had waves of popularity after the invention of live stock tickers allowed realtime stock data in hotels and bars all over the country. They were roundly outlawed in the US (and most of the world) in the early 1900s— because of their habit of bankrupting the unwary and because of the manipulation they caused on the actual markets.

In a bucket shop participants come to place bets against multiples of the change in price in stocks or commodities, with a house take added to the spread. There are no actual commodities traded at any point, however, and the commodities don't even have to exist (at least not at the quantities traded in the bucket shops). The operator of large long lived bucket shops may engage in moderate hedging to prevent regular volatility from putting them out of business to quickly— but the essential behavior is the same: You're not actually buying or selling the underlying asset and it's possible to end up short (or long) more of the asset than is actually available on the market.  The widespread mistaken belief that bitcoinica hedges 100% is now easily disproved by the lack of an enormous decline in MTGOX's volume— if that wasn't already clear enough from bitcoinica's frequent delays to pay withdraws, trading freezes, or the impossibility of hedging shorts using MTGOX.

Bucket shops are very risky— especially ones as narrow as Bitcoinica: A large bucketshop with many 'assets' for sale could potentially cover the losses should one become wildly successful. A single item bucketshop like Bitcoinica would rapidly bankrupt if there were large price motion against their favor.   So when people think about the risk/reward they often get the wrong ratio because highly successful trades are likely to never be paid— because there is no delivery of underlying assets there is no guarantee of being able to cash out your profitable trades.

Worse— Bucketshop operators have inequitable visibility into their markets and a financial incentive to abuse it:  A well timed but momentary increase/decrease of a few percent will wipe out the balances of people in "leveraged" short/long positions, converting their balance to the houses' balance. Between their ability to opaquely adjust the spreads and their holding of (apparently) a good hundred thousand btc of customer coins triggering these events would not be difficult.

Bucketshops also potentially have a distorting effect on the real market— to the extent that traders don't realize that its just gambling the fact that the buckshop exaggerates the supply of long or short positions is potentially a source of inefficient pricing (This is why on real markets there are rules abolishing or at least limiting uncovered shorts and regulating when short trade can take place).

I think Bitcoinica skirted the fine line of dishonesty about the nature of their business.  As far as I'm aware they did not outright make any dishonest claims,  but their appearance left many people with misunderstandings and they have happily sat quietly while other people told outright untruths in support of them.   Fortunately(?), their failure took a form that could have befallen a real brokerage created by completely inexperienced people— risks that the even the biggest rubes could have foreseen— instead of the specialized risk associated with bucketshops.

I will continue to caution Bitcoin users from participating in bucketshops, just as I would discourage them from participating in classic ponzi schemes, negative expectation gambling, apparent money laundering operations, pool defrauding attacks, and fractional reserve banking — especially in the nascent and unstable Bitcoin economy.

[Soros Shorts]

Although bucketshops in equities were outlawed a long time ago, there are plenty of bucketshops around today in forex trading.

E.g. OANDA

[gmaxwell]

Although bucketshops in equities were outlawed a long time ago, there are plenty of bucketshops around today in forex trading.
E.g. OANDA

There are procedural and regulatory distinctions which separate forex brokers from the business Bitcoinica is engaging in, random link— but even so many people regard forex brokers of even the most reputable type as scams, just google around a bit.   If Bitconica had advertised itself as forex for Bitcoin rather than margin trading I think people would have somewhat more aware of the relevant risks.

[Daily Anarchist]

At the end of the day people valued Bitcoinica's service, whatever the hell it was. If they didn't value it they wouldn't have put their money into it.

Did anybody get defrauded? I am not sure, but I don't recall a bunch of people on the forum claiming they've been defrauded by Bitcoinica. Just the opposite.

If somebody DID get defrauded, who would they run to? Hopefully not the state, considering the entire existence of the state is based on fraud.

This brings up the topic of much needed voluntarily contracted dispute resolution organizations. Hopefully some get built sooner rather than later. I'm sure they will as state institutions continue to decline in legitimacy.

[marcus_of_augustus]

So would it be reasonable for anybody lucky enough to receive refunds from Bitcoinica, via Luke-Jr's recovery of stolen coins operation from those handed out by BitcoinicaHacker, to request that they be suitably mixed first, e.g. http://www.bitcoinfog.com/
 .... since those coins that were once "tainted" are now no longer "tainted" having been returned to their original owners, albeit via many entity's addresses and sundry circuitous routes? Is it legitimate to "untaint" your own previously held coins "tainted" by the baddies?

Enquiring minds are wondering.