[Payout Updates] Bitcoinica site is taken offline for security investigation

[iamapi]

A 17 year old boy's behavior is much better than current Bitcoinica team.

Dear Bitcoinica team,

Please stop using my name "Ryan" for any outbound emails. It's my de facto Christian name.

Also, stop mentioning my "plan". I have received no contact from you for almost two month and it's simply wrong for you to judge my involvement in Bitcoinica either morally or legally.

I'll resign immediately when 50% of funds have been paid back, or upon receiving your instruction, whichever is earlier.

I reserve the right to protect my reputation.

[thest0ckman]

thanks to everyone who posted they got 50 percent of coins back but has anyone else got any us dollars back, pounds or any currency other than btc??

thx

[Phinnaeus Gage]

Amir has clarified that the first name is a random one due to Gmail's naming policy.

The image above, also now covers the post below.

I will be making a post tomorrow.. This is more fucked up than most could even think...

[ninjarobot]

Membership in a DRS is mandatory for FSPs who provide a service to retail clients, because it provides consumers with an avenue for redress when a dispute arises with their financial service provider. Membership in a scheme is a pre-requisite for registration as an FSP.

Why did Bitcoinica LP not sign up with a Dispute Resolution Scheme?

FSPs who are unsure as to whether they need to join a dispute resolution scheme should seek legal advice.

Did Bitcoinica seek legal advice in this matter, if so what was the outcome?

I haven't done much research, but to my best knowledge, DRS only applies to NZ residents.

Over 99% of Bitcoinica customers are not NZ residents so they are not classified as "retail clients". I believe that the company had plans to amend the Terms of Service to mention the illegibility of NZ non-accredited/non-institutional investors for Bitcoinica service.

FYI: Today I got a reply from FSPR Compliance regarding my question whether the mandatory Dispute Resolution Scheme for FSPs applies to non-NZ retail clients (most of Bitcoinica customers):

From: FSPR Compliance compliance@fspr.govt.nz

Dear Sir

I refer to your query below.

All financial service providers must be a member of a dispute resolution scheme in respect of a financial service provided to a retail client.  A retail client is defined in section 49 of the Financial Service Providers (Registration and Dispute Resolution) Act 2008 as any person who is not a wholesale client.  There is no requirement that retail clients be New Zealand customers.

There is no offence provision where a FSP is not a member of a dispute resolution scheme.  The Registrar will inform the Financial Markets Authority of your complaint.

So there you have it. Bitcoinica does not meet the requirements for financial service providers in NZ and also seems to be in violation of it's own ToS by not offering this service as an option to their customers:

[21] Governing Law; Arbitration and Court Jurisdiction

Binding Arbitration: For any Claim (excluding Claims for injunctive or other equitable relief) where the total amount of the award sought is less than $10,000, you or Bitcoinica may elect to resolve the dispute through binding arbitration conducted in person, on-line or based solely upon written submissions where no in-person appearance is required. In such cases, the arbitration shall be administered in accordance with New Zealand law or any other established Alternative Dispute Resolution provider mutually agreed upon by the parties. Any judgment on the award rendered by the arbitrator may be entered, exclusively, in any court located within New Zealand. Exclusive Court Jurisdiction: Alternatively, you agree to submit to the personal and exclusive jurisdiction of the courts located within New Zealand to settle any dispute, which may arise in relation thereto.

[ashleyconnor]

This is crazy... What is intersangos motivation for dealing with this anyway? I wish we knew their motivation. If we did we might understand this craziness. They should know better.

As I have made painfully clear before Intersango IS NOT INVOLVED IN BITCOINICA IN ANYWAY.

Anybody saying Intersango LTD is a partner in Bitcoinica LP IS LYING.

My personal motivation here is to help people get back most of their funds, really the only chance you all have of getting your funds back is me.

So how about some fucking respect.

I could have easily passed this all off onto zhou and I'm sure he would have paid only the larger claims before running out of funds.

Does that sound fair?

You think you and your team are owed respect for the way you have dealt with this? That might be were the problems started...

I do not care what the Intersango team wants to call bitconica now. We know who is claiming to be in control.


As for your quote "100% of my time and effort is donation."

Then quit and let the people who are legally responsible deal with it, at this point it can't get worse.

Just say this, Sorry bitcoin public but it has been two months and we just now realized we are not complainant enough to deal with the problem we took on. Since it is not our responsibility and it is only destroying our personal reputation and the reputation of Intersango we will give back all of the money to the real owners of Bitcoinica.

However I'm pretty sure you can't do this, too bad for you and us really. There is no way you guys can walk out of this with your heads up and there is no customer (other than the friends of Intersango team who got back 100% so far) who can be happy with your actions.

There is no win here for anyone, even if you were to return 100% of the coin to everyone tomorrow this will not be forgotten.

Good luck.

I've quoted this so you guys can read it again. This is some of the best advice on this thread.

Your reputation as developers, business owners and in general is going down the shitter for a problem that you aren't responsible for (or at least claim so).

[lassdas]

So, let me get this straight.

You asked me to open a claim and i did.
You asked me to "verify my claim", which i tried (a few times actually),
it didnt work and i told you so, it just tells me to "..contact verify@bitcoinica.com to request manual verification", but any mail i ever sent to verify@bitcoinica.com has been ignored.
You asked me to add payment instructions to my claim and i did (and i'm just asking to send my bitcoins back to the very same address they came from, what else do you need for "verification"?).

Actually all questions i ever asked, all emails i ever sent have just been ignored.

And now you tell me to show you some respect?
Are you serious?

How about you showing your customers some respect?

I'm really wondering that Intersango (or any other Bitcoin Consultancy service) still has any customers,
hope they'll wake up soon, you should treat them well as long as it lasts.

[teek]

I have some more info from the intersango team and I will post it as soon as I get get a fair summery of it. It seems that they are responsible for it (however they seem/claim to have been tricked into accepting that responsibility). More soon...

the plot thickens?

[PatrickHarnett]

for what it worth

http://en.wikipedia.org/wiki/Piercing_the_corporate_veil
http://www.legalserviceindia.com/articles/corporate.htm
http://answers.yahoo.com/question/index?qid=20080212143458AARBFa0

from answers:

Okay - here's where "piercing the corporate veil" comes in. Sometimes, when investors are also officers who run the company, they run it really really badly. Stupidly. Irresponsibly. Maybe even illegally. When that happens, the law says that the corporate form shouldn't protect those particular investor-officers.

Let's say you and I are investors in a company, each in for 20%. But let's say that I am also the CEO, and you are just someone who owns 20% but doesn't actually run the business. You are kept apprised of what's going on periodically, but you don't make the decisions.

Now, let's say I take some of the corporation's money to Vegas and lose it, and the corp can't pay its electric bill. Now, under the general rule I discussed above, since you and I are 20% investors then we are each liable for 20% of the electric bill. But that isn't fair, is it? It isn't fair that you should be on the hook for 20% of that electric bill when the bill wasn't paid because I did something unlawful.

Since I personally did this bad thing, the law makes an exception to the general rule. It says that I personally should be liable to the electric company. It says that the electric company should be able to "lift" or "pierce the corporate veil" that would otherwise protect me as an investor, and reach out and get me, personally, to pay for the entire electric bill.

So that's what piercing the corporate veil is: it's an exception that allows for investor's to be held entirely responsible (the old-fashioned way they used to) for debts of the corporation. But it usually only applies when the investor has done something bad in running the company that he should not have done. Usually something illegal or unlawful.

Just came by to browse this thread as I haven't been here for a while.  I notice the above extract about "piercing the corporate veil" and thanks to Vladimir for pulling it up.  I would just like to point out it is not very accurate, but it's not a bad attempt from answers.com.

Generally, the company structure provides clear warning to people that they are contracting with an entity with limited liability.  For shareholders with fully paid shares, they owe no duties to any third party.  So in the above, if I was the other 20% shareholder, the power-company has no grounds to ask me for money.

If I was an officer/director of the company and the company traded recklessly or insolvent, then I may be personally liable for the debts/liabilities incurred during that period.
 
Piercing the corporate veil is a rare circumstance.  It needs to be proven an officer/director of the company is using funds/resources as if it was their own.  Therefore, it would need to be proven that another officer/director should be held individually responsible rather than all directors jointly.

So, if Bitcoinica is operating as a limited liability company, the course of action is against the directors from the point in time they became insolvent.  Until then, claims are limited to their available assets as paid capital might be near zero (say $10).

(as an aside, I noticed today the Financial Markets Authority is on the floor below mine)

[repentance]

tl;dr   Tihan and friends, Intersango and Zhou are not working well together (or at all) and are not communicating well. They all seem to be protecting their own interests with legal BS and half-truths.

However after talking with X I think they are trying to deal with a shit situation. I would not have done it the way they have but at least I know why they have done it the way they have. Communication is helpful.

Any information about the mysterious Wendon?

To be honest, it's always seemed odd that the Intersango guys were called in by Tihan to do a security audit in March and only a month later the announcement was made that they would be operating Bitcoinica.  I can well believe that they jumped into that deal without fully understanding its implications - even now, it's not easy to determine who was legally operating Bitcoinica at the time the last intrusion occurred as we've been told that not all the paperwork had been completed.

[imsaguy]

So how about some fucking respect.

THIS will never get you any.

[bremer-btc-user]

I would be more patiently if I knew that my claim will be refunded some day...
I gave all Inormations I could deliver, but no progress is reported to me not by mail nor on my claim-page.
This is frustrating.
Last ask for status report some days ago wasn't answered yet tough I sent it to verify@bitcoinica.com and in cc to bitcoinica.reimburse@gmail.com

It's "only" 64.01 btc but they matter much to me!

If only someone in charge would make a statement that refund process will be done at a fixed date in the middleterm future...

this thread is also not really helpful concerning nothing reliable comes from the actors who processing the claims...

It's a pity that this mess lasts for so long, and that my earlier heroes of Bitcoin Economy/Community burn their reputation to zero within this process.

Patric Strateman , Donald Norman ,  Amir Taaki  you probaly will suffer from this more than everybody else...

Responsable for the origins of this desaster or not your names will be tied to this for a long time. I hope you will be able to fix it soon!

[proudhon]

Nothing for me yet either.  I'm so determined to get those coins back I started speculating on LTC.  What?

[dancingnancy]

Nothing for me yet either.  I'm so determined to get those coins back I started speculating on LTC.  What?

Ha, almost did the same thing.  Decided to lose money at sealswithclubs instead

[proudhon]

Nothing for me yet either.  I'm so determined to get those coins back I started speculating on LTC.  What?

Ha, almost did the same thing.  Decided to lose money at sealswithclubs instead

I have been doing pretty well with LTC

I'm going to have to double down if I have any change of getting out of the LTC hole I've dug myself in.  LOL.  You win some, you lose some, and then lose some more. 

[dancingnancy]

Nothing for me yet either.  I'm so determined to get those coins back I started speculating on LTC.  What?

Ha, almost did the same thing.  Decided to lose money at sealswithclubs instead

I have been doing pretty well with LTC

I'm going to have to double down if I have any change of getting out of the LTC hole I've dug myself in.  LOL.  You win some, you lose some, and then lose some more. 

Yeah, I put in a limit order to buy like 10,000 around .0012 or .00012, whichever it was, it never got hit, then I got bored with it quickly.  Poker is much more my game as I am closer to a degenerate than anything.

[guruvan]

I found it interesting the other day when, on IRC, phantomcircuit requested that I remove the rating I've made for him on the OTC  Web of Trust. (with a "lol" suggesting he thought the rating to be a joke - It is NOT. I find it unfunny I haven't received a dime from these people)

I asked him if he'd sent me any money yet. I was ignored. I asked if he had any intention of sending any funds any time soon. I was ignored.

Seriously? WTF? When are we getting the money? Or did you guys decide to steal it after all?

AFAICT, Bitcoinica is refusing to return funds. That would be theft.

Phantomcircuit - the only reason the rating you have from me will stay is because I cannot lower it below -10. I would be happy to change it once I receive my funds. It is unlikely that it would ever become positive. I don't trust anyone in your organizations.

[proudhon]

Nothing for me yet either.  I'm so determined to get those coins back I started speculating on LTC.  What?

Ha, almost did the same thing.  Decided to lose money at sealswithclubs instead

I have been doing pretty well with LTC

I'm going to have to double down if I have any change of getting out of the LTC hole I've dug myself in.  LOL.  You win some, you lose some, and then lose some more. 

Where you the guy who made it jump to .01? If so, I'm sorry cuz I sold about 150,000 LTC after that to kill that. I'm still buying (but lower), hope to get 500K or 1M in the next 6 months

No.  I bought at 0.0075 or so.  I've got some orders on the book that if hit will significantly lower my average price.  We'll see.

[Al the Alpaca]

I was giving them such a hard time because my accurate account status was not paid in a month and that was just uncalled for. However now that is see that my account is no longer accurate and they want time to double check it, it is a whole different game.

My account has been marked accurate for about the same time, but nothing yet.

You should have them see if it is "formatted correctly" and if it is, ask why the delay. Also if it is a large account there will also be delay. I only have 700 BTC and they find this to be a large amount. :/

My guess is that all players involved in this transaction are being held up, yours among them, Goat: http://blockchain.info/tx-index/5416502/7a22917744aa9ed740faf3068a2f895424ed816ed1a04012b47df7a493f056e8

But what do I know? I'm only an alpaca.

~Bruno~

[epetroel]

thanks to everyone who posted they got 50 percent of coins back but has anyone else got any us dollars back, pounds or any currency other than btc??

thx

Yes, I did, got back half of my BTC and half of my USD (both were as gox codes)

[makomk]

Core Credit LTD is a New Zealand Limited Company and the General Partner of Bitcoinica LP.

Ah this is new info. On 2012/06/07 Amir claimed that Core Credit Limited is Tihan's Parent company (the Limited Partner). See: https://bitcointalk.org/index.php?topic=84042.msg946751#msg946751  

Core Credit LTD was renamed to Bitcoinica Consultancy LTD significantly after the events occurred.

Yes it happened on 2012/05/30 and it was never explained why this happened despite me asking repeatedly. Nevertheless the legal incorporation date for Bitcoinica Consultancy is 2012/01/30 according to the NZ documentation.

Look at the documents posted up on the New Zealand Companies House website for the company you just linked: here. If you look through it, the company was registered as Core Credit Limited on the 30th of January 2010 and it was renamed to Bitcoinica Consultancy LTD on the 30th of May. Your own references show that phantomcircuit is right and you're lying through your teeth. This isn't new information either, someone noticed it and brought it up ages ago.

May I remind you that:

• On 2012/01/30 Bitcoin Consultancy became Bitcoinica Consultancy Ltd. (*1)

[...snip...]

References:
1) http://www.business.govt.nz/companies/app/ui/pages/companies/3715077

There is no way you could possibly have interpreted the linked reference to mean what you say it does.