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Author Topic: [Payout Updates] Bitcoinica site is taken offline for security investigation  (Read 145798 times)
Raoul Duke
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August 11, 2012, 09:34:59 PM
 #1581

AurumXchange is listed as a partner of Bitcoinica's competitor for margin trading/futures.

Isn't that kronos.io, the company where you have some kind of major role?


No, I've never heard AurumXChange being mentioned as a partner or even remotely connected to Kronos.io.

So, who is that competitor you're talking about?

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August 11, 2012, 10:20:38 PM
 #1582

AurumXchange is listed as a partner of Bitcoinica's competitor for margin trading/futures.

Isn't that kronos.io, the company where you have some kind of major role?


No, I've never heard AurumXChange being mentioned as a partner or even remotely connected to Kronos.io.

So, who is that competitor you're talking about?

I honestly don't understand why AurumXchange continues to evade my very important questions, questions that would obviously help put this entire argument to bed. I think it's important that we solve this issue. I did a bit more research to see if I could answer these questions on my own for the inexplicable behavior addressed earlier in the thread and happened upon this: http://icbit.se/

AurumXchange is listed as a partner of Bitcoinica's competitor for margin trading/futures. I hope this doesn't have anything to do with their interests in attacking Zhou, but even Charlie Shrem told me that it was intended to be a private investigation and not public. Weird.

Roberto, if you could be so kind as to answer the questions below I've already ever so politely asked (twice!), I would be ever so grateful. I have never run an exchange before myself, so I understand there are some things I might not be aware of. I look forward to your explanation! Thanks!

The matter of the fact is, we have never released any personal, sensitive, and/or confidential information regarding Zhou Tong that has not been previously and compulsory disclosed by himself to the public.

* To my surprise, upon further examination of our order system, I found an order from Zhou Tong to sell Liberty Reserve to us for the amount of USD 40,000, requesting a wire to his bank account in Singapore. The amount for the order closely matches the total USD exchanged through us (after fees) using the MtGox USD codes stolen from the Bitcoinica account.

1) Shouldn't the amount of the active order be covered by the customer's privacy agreement?
2) Shouldn't the location of the customer's bank account be covered by the customer's privacy agreement?

1. Here is the information Zhou Tong released BEFORE any statement from us:
- He acknowledge that he performed an exchange with our company for 40K LR:

I have also placed a single $40K AurumXchange order during the same period.

Note that he neither mentions it being frozen nor active, and does not give a specific date, just vaguely refers to having made a transfer.


* This order was placed the next day the hacking attempts occurred.

1) Shouldn't the time of the active order be covered by the customer's privacy agreement?


* Mark replied stating that there was activity on this account, that the account was opened using an IP address belonging to Microsoft Singapore, that Zhou Tong was known to have worked for said company at said location, that the email stevejobs807@gmail.com have been verified, and that ALL activity on this account is linked to the MtGox account belonging to Zhou Tong.

1) If there is an active AML investigation, wouldn't providing this information publicly be against the law for both parties?


At this time, it appears that there is an overwhelming amount of evidence linking Zhou Tong personally to the Bitcoinica account hack at MtGox. Our legal department has advised us to freeze the funds for the exchange order mentioned above until further investigation by the authorities and/or legal proceedings are concluded.

Anyone can understand that as an exchange, you wouldn't want stolen funds running through you. What you have repeatedly failed to answer (and I mean -repeatedly-) is whether or not it is true in the operating country of AurumXchange that discussing details of an open investigation (which had been going on for over 10 days, correct?) publicly is in fact illegal and punishable by up to 10 years in prison. If it was not an open investigation, then you'd have to change a lot of what you've been saying.

By making this information public, and by begin the question of why his funds were being withheld on a public forum, we are well within our rights, both from a legal and ethical stand point, to make an statement regarding the situation. I will invite anyone to challenge this under the laws of the Commonwealth of Dominica.
Not even Charlie Shrem agrees with you on that.

Quote from: Charlie Shrem
Whether or not we have information on this and Zhou, our lawyers told us its a breach of TOS to release it without Zhou's permission or a letter for the authorities


So Matthew, Vitali et al, would you be so kind as to point out what specific sensitive information we have disclosed that was not compulsorily offered by Zhou Tong previous to our statement? Could you also indicate how have we broken our own terms and conditions specifically?
I believe I have above, thank you for being so cordial. I still invite you to contact Vitalik Buterin directly if you have any issue with the article he wrote, but in the meantime, most of us will still like an answer to the question that has been repeatedly unanswered.

Our legal department has advised us to freeze the funds for the exchange order mentioned above until further investigation by the authorities and/or legal proceedings are concluded.

Is it not illegal to discuss openly an active AML investigation with the public, including freezing their accounts for the purpose of an AML investigation regardless of what the customer in question has posted on a public forum?
Is it not illegal to hold funds for longer than 7 days if there was no investigation?

At this time, it appears that there is an overwhelming amount of evidence linking Zhou Tong personally to the Bitcoinica account hack at MtGox.

Is it not unlawful as an exchange to publicly insinuate that one of your customers is a thief without empirical conclusive evidence provided by authorities care of an AML investigation?

Thanks for helping to resolve these confusions. Feel free to answer when more information is allowed to be revealed. I am confident we can get to the bottom of these confusions that are causing us to butt heads so long as both parties are willing to answer questions openly and transparently.

Cheers



P.S. For anyone interested in the Bitcoinica debacle, we've interviewed the major parties involved and compared it with publicly available information. You can read the balanced and consolidated results of our findings in Issue #2 of the Bitcoin Magazine, here.

Raoul Duke
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August 11, 2012, 10:37:48 PM
 #1583

Were they a competitor of Bitcoinica? Never heard of them on that way, hence my confusion.  Undecided
Also, wasn't aurumxchange also a Bitcoinica partner, both of them having a $10k LoC with each other?

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August 11, 2012, 11:22:15 PM
 #1584

I honestly don't understand why AurumXchange continues to evade my very important questions, questions that would obviously help put this entire argument to bed. I think it's important that we solve this issue. I did a bit more research to see if I could answer these questions on my own for the inexplicable behavior addressed earlier in the thread and happened upon this: http://icbit.se/

Thanks for my daily chuckle.

Quote
Also, ICBIT is not a place for money laundering, so we are not going to enforce any AML measures like ID verification requirement.

Not verifying customers is apparently the latest way to avoid your exchange being used for money laundering.   Roll Eyes

All I can say is that this is Bitcoin. I don't believe it until I see six confirmations.
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August 11, 2012, 11:23:55 PM
 #1585

I honestly don't understand why AurumXchange continues to evade my very important questions, questions that would obviously help put this entire argument to bed. I think it's important that we solve this issue. I did a bit more research to see if I could answer these questions on my own for the inexplicable behavior addressed earlier in the thread and happened upon this: http://icbit.se/

Thanks for my daily chuckle.

Quote
Also, ICBIT is not a place for money laundering, so we are not going to enforce any AML measures like ID verification requirement.

Not verifying customers is apparently the latest way to avoid your exchange being used for money laundering.   Roll Eyes

Well, I don't think they have much need for that.
Have you seen the order books there? They're almost empty. They have no ID's to verify Grin

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August 12, 2012, 12:55:06 AM
 #1586

Matt,

Just because they are listed as partner, doesn't mean he owns it or anything.

Partner probably means Roberto is working with them on deposit/withdrawal methods like he does with other exchanges, same like Bitinstant.

Also, you should know that Roberto, Mark and I all agreed that Roberto should bring the information to the forums that he found.
As he said, you can bring him to court if you think it was illegal to do so.


By making this information public, and by begin the question of why his funds were being withheld on a public forum, we are well within our rights, both from a legal and ethical stand point, to make an statement regarding the situation. I will invite anyone to challenge this under the laws of the Commonwealth of Dominica.
Not even Charlie Shrem agrees with you on that.

Quote from: Charlie Shrem
Whether or not we have information on this and Zhou, our lawyers told us its a breach of TOS to release it without Zhou's permission or a letter for the authorities


You misread my statement. Our lawyers told us it was a breach of TOS to release information BitInstant had on Zhou Tong according to US law, not AurumXChange

Man, Im so jealous of you right now, all this controversy is forsure helping you sell some magazines! It makes me kinda wonder if adding fuel to the fire is ethical  Wink Anyways, its not my territory so carry on!

Thanks

Charlie

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August 12, 2012, 01:19:19 AM
 #1587

Thank you Charlie for clearing this up.

Matthew, I will not entertain your personal circus since I do not consider you a serious person, and much less an unbiassed one on this issue. Like I said before, if you believe we acted against the law, please do elevate a complaint, or sue us. If not, please stop the libel, including putting words in other people's mouth without knowing what you are really talking about (read above).

Recently, your magazine had to retract an article written about our company. It seems you are focused on the fact of ID verification, instead of the hundreds of thousands of dollars missing because of events that, to say the least, are highly suspicious.

Most people in the forum are smart and I will let them draw their own conclusions as to your motivations regarding this matter.

Roberto

Are you able to give us any further information about the transactions in question?  While I realise that privacy/confidentially considerations come into play here, it would be absurd if you were able to publicly state your suspicions to us but unable to publicly disclose to us if you were now satisfied that the transactions in question were legitimate.

To avoid the "retraction being buried on page 13" scenario, are you willing to undertake that if further investigation on your part reveals that Zhou's transactions were entirely legitimate you will publicly make a statement to that effect in a separate thread so that your findings are as visible as your original statement?

All I can say is that this is Bitcoin. I don't believe it until I see six confirmations.
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August 12, 2012, 04:10:25 AM
 #1588

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Matthew, I will not entertain your personal circus since I do not consider you a serious person, and much less an unbiassed one on this issue. Like I said before, if you believe we acted against the law, please do elevate a complaint, or sue us. If not, please stop the libel, including putting words in other people's mouth without knowing what you are really talking about (read above).

Reporting facts and asking inconvenient questions you want to dodge is not libel just because the journalist in question doesn't want to sue you. 

"Money is like manure: Spread around, it helps things grow. Piled up in one place, it just stinks."
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August 12, 2012, 08:01:08 AM
 #1589

Just because they are listed as partner, doesn't mean he owns it or anything.
Of course! I would prefer he speak for himself though on his involvement with that company. I am only trying to understand the bigger picture here since we can all agree there is something that just doesn't feel right.

Partner probably means Roberto is working with them on deposit/withdrawal methods like he does with other exchanges, same like Bitinstant.
Could be, but I'd prefer Roberto speak for himself. Thanks!

Also, you should know that Roberto, Mark and I all agreed that Roberto should bring the information to the forums that he found.
As he said, you can bring him to court if you think it was illegal to do so.
I don't think it's my job to bring him to court. I don't have an AurumXChange account. My job is to uncover the truth and be unwavering, even in the light of louder voices and big business.

You misread my statement. Our lawyers told us it was a breach of TOS to release information BitInstant had on Zhou Tong according to US law, not AurumXChange
I understood your statement. What I'm wondering is why that doesn't also apply to AurumXchange. Are their TOS and Privacy policy so much different from BitInstant? I can't find the privacy policy for BitInstant online anywhere so I couldn't check. Thank you for clarifying though, I am sure Roberto can clear it up on his own.

Man, Im so jealous of you right now, all this controversy is forsure helping you sell some magazines!

If Bit-Pay would add a "referral" tag to their invoicing system to show where orders were coming from, I'd gladly tell you if that were true or not, but I assume it's not. I'm not here representing the magazine, I'm here as a forum user who still feels there's some funny business going on and just trying to answer questions so I can put it to rest.


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August 12, 2012, 08:13:24 AM
 #1590

Thank you Charlie for clearing this up.
Charlie cannot legally speak for your business, so I do not consider anything he said as a statement on your behalf. I am still interested in a response on your part regarding the questions posted above.

Matthew, I will not entertain your personal circus since I do not consider you a serious person,
Why are you responding then? Now I'm just confused.

please stop the libel, including putting words in other people's mouth without knowing what you are really talking about (read above).
Asking questions is libel now?

Recently, your magazine had to retract an article written about our company.
Recently an article about Zhou Tong had a single line changed because the author made a mistake in his wording, which had nothing to do with me or my forum posts here looking for answers. The article was not about your company. The article was not retracted.

It seems you are focused on the fact of ID verification, instead of the hundreds of thousands of dollars missing because of events that, to say the least, are highly suspicious.
I'm not a libertarian, but I have learned quite a lot from these forums, enough to know that if we're starting over with monetary policies through bitcoin, we can't afford to let the same draconian empire control everything we do and scare us into submission. When an exchange makes a mistake for example, the exchange should correct the mistake, not constantly attack and spread rumors about the individuals requesting more information and pointing out concerns. If Bitcoin Magazine made a similar mistake, I would hound our own faculty until the issue was resolved just the same I would against MtGox, BitInstant, Bitcoinica, or even my grandma.

To summarize, everyone here is grateful in the proactive nature of AurumXChange, MtGox, and especially Charlie Shrem of BitInstant who literally flies around to solve problems (definition of Super man LOL). No one is arguing anymore that posting a thread in itself on a forum about potential stolen funds is an issue, unless those funds were under investigation. So very simply, Roberto, I am asking you (and you are avoiding answering, which throws up all kinds of worrying red flags):

were the funds under investigation at the time of posting the thread?


Thank you for helping to clear up this issue so that we can put it to rest. I enjoy contributing to the community and I also enjoy seeing issues resolved. I hope that you can see the benefit of resolving this outstanding issue on the part of AurumXChange so that customers and journalists alike will not need to continuously ask the same questions to you in the future.

Thanks!

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August 13, 2012, 11:28:31 AM
 #1591

Actually I would prefer if this thread remains unlocked since all new Bitcoinica threads are being moved to Service Discussion where there is little visiblity/interaction.

Also it would be great if we can actually get the outcome of the 'security investigation' as that has been going on for over 3 months now. (Not that I am holding my breath).
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August 13, 2012, 11:47:50 AM
 #1592

Actually I would prefer if this thread remains unlocked since all new Bitcoinica threads are being moved to Service Discussion where there is little visiblity/interaction.

Also it would be great if we can actually get the outcome of the 'security investigation' as that has been going on for over 3 months now. (Not that I am holding my breath).

I think the "investigation" was limited to establishing how the hacker gained access to the Rackspace server - something which was made public quickly.  As far as we know, there's been no criminal complaint made which might have allowed law enforcement to try to establish the identity of the hacker - the focus rapidly shifted to the claims process.

It would probably be better to keep the most current threads in the Discussion forum and move the older ones.  The older threads contain little information which is relevant to where things are at now.

All I can say is that this is Bitcoin. I don't believe it until I see six confirmations.
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Charlie 'Van Bitcoin' Shrem


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August 14, 2012, 12:06:27 AM
 #1593


Recently, your magazine had to retract an article written about our company.
Recently an article about Zhou Tong had a single line changed because the author made a mistake in his wording, which had nothing to do with me or my forum posts here looking for answers. The article was not about your company.

The article was not retracted.


Do you have a link to that? I'd like to see it.

-Charlie

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More about me: http://CharlieShrem.com
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August 14, 2012, 12:13:26 AM
 #1594


Recently, your magazine had to retract an article written about our company.
Recently an article about Zhou Tong had a single line changed because the author made a mistake in his wording, which had nothing to do with me or my forum posts here looking for answers. The article was not about your company.

The article was not retracted.


Do you have a link to that? I'd like to see it.

-Charlie

Quote
In a comment in the above titled article posted on July 18th it was misstated that both MtGox and AurumXChange have broken their own privacy agreements regarding information they released on the forums suggesting Bitcoinica’s founder Zhou Tong is connected to funds stolen in a hack of their exchange accounts. In the absense of a court ruling on the matter, a statement of such by the article’s author cannot yet be made in the manner it originally was worded, which may have been erroneously perceived as a statement of fact instead of the opinions of the author as is the case. Innocence for all parties will be assumed until a court of law decides otherwise based on factual evidence, including any connection between the theft and Zhou Tong. Bitcoin Magazine apologizes for the miswording on this matter and do not purport ourselves as a judge or jury on any legal matters that affect the community regardless of how passioniate our authors may be.

http://bitcoinmagazine.net/the-july-13-bitcoinica-investigation-and-sound-justice/

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August 21, 2012, 08:03:25 PM
 #1595

...then... where is MY MONEY?

Sorry for my bad english Wink
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August 21, 2012, 08:09:25 PM
 #1596

...then... where is MY MONEY?

Receivership litigation takes a while. Have a seat.

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August 23, 2012, 12:32:12 AM
 #1597

...then... where is MY MONEY?

Receivership litigation takes a while. Have a seat.

I'm not sure whether Wendon will need to litigate for receivership.  They may be able to put the LP into voluntary receivership without agreement from Bitcoinica Consultancy.  If they do have to litigate, it's possible that the Official Assignee will be appointed as both receiver and liquidator which makes things a bit more complicated than if a private receiver/liquidator is appointed.

All I can say is that this is Bitcoin. I don't believe it until I see six confirmations.
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August 23, 2012, 01:08:16 AM
 #1598

...then... where is MY MONEY?

Receivership litigation takes a while. Have a seat.

I'm not sure whether Wendon will need to litigate for receivership.  They may be able to put the LP into voluntary receivership without agreement from Bitcoinica Consultancy.  If they do have to litigate, it's possible that the Official Assignee will be appointed as both receiver and liquidator which makes things a bit more complicated than if a private receiver/liquidator is appointed.

It will take time in any case.

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August 23, 2012, 01:16:05 AM
 #1599


It will take time in any case.

The return of funds will take time.  Going into receivership/liquidation is a matter of filing paperwork - that part of the process takes very little time (hours at the most).  Finding the right CPA to handle the receivership/liquidation will take more time than lodging the paperwork to put Bitcoinica LP into receivership.

All I can say is that this is Bitcoin. I don't believe it until I see six confirmations.
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August 23, 2012, 01:19:55 AM
 #1600


It will take time in any case.

The return of funds will take time.  Going into receivership/liquidation is a matter of filing paperwork - that part of the process takes very little time (hours at the most).  Finding the right CPA to handle the receivership/liquidation will take more time than lodging the paperwork to put Bitcoinica LP into receivership.

Yep well, he asked "where is my money?". That will take time for sure.

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