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

[N12]

Bitcoinica did not listen.

They should have done this at day #1 or #2 of the hack to ensure an unforged database. Now it is too late to guarantee that.

And since they came out with the db loss before the claims were finished, the process is likely to be wholly fucked up with indistinguishable fake claims.

I for one will be very surprised if they manage to get out of this solvent:

a) People suing Bitcoinica because they claim not to have been reimbursed properly, or their position was liquidated
b) Bitcoinica paying out more than it actually owes since they cannot verify ownership to 100%
c) Price possibly getting more volatile so that the range they will liquidate people at will be greater

[Raoul Duke]

......the guy had a prophecy...

Epiphany ?

Or that. Too much red wine. Can't think straight on my own language, much less in english

[disclaimer201]

I was worried they'd payout the ones they fear most legal trouble from and use the rest of the money for those they get in actual trouble with. Now, it seems my fears are unjustified. They don't pay out anyone. Actually, it could be they never intended to return anyone's deposits. All we see are stalling techniques.

Honestly, I begin to lose hope to ever see the coins again. Unbelievable Intersango is still in business. Really, I can't believe it.

[bitlane]

Too much red wine.....Can't think straight....

Just wait for the hangover

Back on topic....
I find it difficult to believe that a single BTC has not been repayed as of yet.
What I find even more bizzare, is them still holding back USD, as it was a BTC theft and had nothing to do with other user's USD...
(or whatever currency they had at the time in their accounts).

I have a feeling this is going to get legally messy, resulting in the community's first legal precedent set after a confusing court battle.

[ninjarobot]

02 June 2012 21:26: The process is at an impasse because of some legal wrangling.

Great. How does this affect the refund process? Will depositors get their money back or will Bitcoinica be tapping into these deposits to cover legal expenses?

[isis]

At this point my only question is why hasn't the whole Bitcoinica crew been given a scammer tag?
Seems like it's very appropriate considering...

#1 - They claim to have the database, but to the best of my knowledge not 1 single person has received a refund.
#2 - After the supposed break in (yes I'm convinced that they weren't really broken into), they did not bother notifying authorities.
#3 - They originally claimed that the hot wallet had very few funds in it as a percentage portion of assets and yet there have been "company" reps saying the supposed silent investor has had to chip in because this rendered them insolvent?  Too many conflicting claims about their status.
#4 - A few days after the break in, the supposed hacker appeared in IRC and was tossing the stolen bitcoins left and right.
#5 - The "silence is golden" non-responses we've been given are not indicative of people acting on the up and up.

I'm convinced at this point that it's a line of BS and I just don't buy it anymore.

What I believe is the insolvency happened first (I never saw a cent in purported interest and the "break in" corresponded with the day I emailed them about it).  
There are very good odds that the break in was probably staged, the things they are claiming, such as a compromised email led to stolen coins and deletion of all customer data, really are too big a "screw up" especially after the last one.

They ought to get the scammer tag until every last cent has been returned.

As for the refund process, I've heard absolutely NOTHING from them relevant to my refund except an email asking me to verify my address which I did.
Has anyone else heard anything more?

Because of this I nominate everyone associated with Bitcoinica's spectacular crash & burn for a scammer tag.

*Message to Bitcoinica*
At this point Bitcoinica and everyone associated with their refund process, you have 5 days until I bring civil and criminal charges against you.  I'm sure others will join me, you will pay fines, you will go to jail if you don't start refunding now.  The corporate veil you are trying to hide behind does not protect you against criminal charges such as malfeasance, breach of fiduciary duty and embezzlement.  Look it up, you'll find I'm correct.  30 days without access to my funds and no word on your part except vague promises on a forum not related to your company, indicates all of those and is enough for any attorney to begin pressing charges.

I filed a claim the same day the claims form opened up.
You had my AML details already including a scan of my Drivers License, my account was Isis101, my wallet ID was 1PSQ4tWY4pTcAbgKozPXAWB9B8Cg4JCVMP
At the time of the alleged break in there was 21 BTC in my account, and $2.30USD.
Since the account was funded primarily with funds from mtgox, here is relevant mtgox history.

2012/05/02 22:08:09    Withdraw       5.04000000 BTC    0.00050275 BTC
Bitcoin withdraw to 1PSQ4tWY4pTcAbgKozPXAWB9B8Cg4JCVMP
2012/04/24 21:06:36    Withdraw       8.00000000 BTC    0.98840275 BTC
Bitcoin withdraw to 1PSQ4tWY4pTcAbgKozPXAWB9B8Cg4JCVMP
2012/04/24 21:06:02    Withdraw       8.00000000 BTC    8.98840275 BTC
Bitcoin withdraw to 1PSQ4tWY4pTcAbgKozPXAWB9B8Cg4JCVMP

This can also be verified by looking at blockchain explorer.

I request you return my BTC funds to the sending account 1K3xHb8R8E72i22Y8TqknXiey8zBa2JzLr
You can send certified funds for the $2.30 USD to the address on my Drivers License.

I know it sounds petty because It's not a lot of money, it's the principal of the thing.

***
I have edited this post to remove accusations against Zhou, after further research I determined that I was incorrect and he appears to just be caught up in something bigger than himself.  I apologize.  See https://bitcointalk.org/index.php?topic=84042.msg952523 for specifics.  
***

[guruvan]

Is the claims process actually trying to recreate lost account info first based on the claims people file?

Yup, that's why this sucks. They have the money, but they don't know who it belongs to.

Got physical proof they have the money? ALL of the money?

Show us. Until then, it's just a story that keeps dragging out, and with every market shift, gets worse for the customers, and becomes more unlikely that they'll get anything back at all.

[Phinnaeus Gage]

#4 - A few days after the break in, the supposed hacker appeared in IRC and was tossing the stolen bitcoins left and right. If you compare the "hacker's" chat log with Zhou's posting style there are striking similarities.

For the record, I would like to see/read all those "hacker" logs published on this forum by whomever desires to take on that task.

30 days without access to my funds and no word on your part except vague promises on a forum not related to your company, indicates all of those and is enough for any attorney to begin pressing charges.

This aspect (in bold above) strikes me as rather odd, for there's been plenty of time to put up a website/spash-page (Wordpress even comes to mind) offering up daily posts, no matter if most postings would come across as vague, so that all their clients who do not frequent this forum are informed unless, of course, over 90% of their client base were members on this forum. In the past, there were many times that eBay went down, but I was able to get updates via some site they've own, opposed to heading on over to the most popular eBay forum.

I'm still on record for being on Zhou's side, but I do find this aspect unacceptable.

~Bruno~

[disclaimer201]

At this point my only question is why hasn't the whole Bitcoinica crew been given a scammer tag?
Seems like it's very appropriate considering...


I'm convinced at this point that it's a line of BS and I just don't buy it anymore.

What I believe is the insolvency happened first (I never saw a cent in purported interest and the "break in" corresponded with the day I emailed them about it).  
There are very good odds that the break in was probably staged, the things they are claiming, such as a compromised email led to stolen coins and deletion of all customer data, really are too big a "screw up" especially after the last one.

They ought to get the scammer tag until every last cent has been returned.

As for the refund process, I've heard absolutely NOTHING from them relevant to my refund except an email asking me to verify my address which I did.
Has anyone else heard anything more?

Because of this I nominate Zhou and everyone associated with Bitcoinica's spectacular crash & burn for a scammer tag.

[...] [...]

I request you return my BTC funds to the sending account 1K3xHb8R8E72i22Y8TqknXiey8zBa2JzLr
You can send certified funds for the $2.30 USD to the address on my Drivers License.

I know it sounds petty because It's not a lot of money, it's the principal of the thing.

They don't care about your 21 Bitcoins, nor about my 101 BTC, nor the next guys' 1000. Issuing warnings isn't good enough anymore at this point, we need to pull through and do something. Not sure if the Scammer Tag is the way to proceed, but given the liquidity problems particularly in the week before the hack, a staged heist isn't unthinkable. How else would you end an operation like Bitcoinica if you find out it doesn't work out? Certainly not announcing something like: "Dear customers, due to general shortcomings of the system we have to close our doors for good. We are very sorry for your loss."

[isis]

I almost forgot to mention, I know people who work at rackspace and I've talked to them.  Your logs & database being deleted is effectively a non-issue, it's a pain to recover but you can bet that they have the capability of recovering every last byte of missing information.  However to the best of my knowledge no one associated with this process has created or escalated the issue.  You can bet your last dollar that if the Feds become involved, not only would the records get completely recovered, they would become public information as evidence in a criminal case against you.  That would happen both as an entity and there is a good possibility of piercing the veil and making you severally (individually) liable.

Forget "legal wrangling" and other excuses, you've been caught in a lie, just refund the money now by sending it directly back to the originators, unwind your accounts and deal with the losses.  Your brand is becoming damaged by the minute.  If you really do have a silent investor as you claim, his/her investment is becoming worthless because your brand is being damaged by your actions.

I've now given all the warning I'm going to give.  My next post about this topic will either be thanking you for a refund, or explaining to the others where to go for a legal remedy.

[S3052]

I almost forgot to mention, I know people who work at rackspace and I've talked to them.  Your logs & database being deleted is effectively a non-issue, it's a pain to recover but you can bet that they have the capability of recovering every last byte of missing information.  However to the best of my knowledge no one associated with this process has created or escalated the issue.  You can bet your last dollar that if the Feds become involved, not only would the records get completely recovered, they would become public information as evidence in a criminal case against you.  That would happen both as an entity and there is a good possibility of piercing the veil and making you severally (individually) liable.

Forget "legal wrangling" and other excuses, you've been caught in a lie, just refund the money now by sending it directly back to the originators, unwind your accounts and deal with the losses.  Your brand is becoming damaged by the minute.  If you really do have a silent investor as you claim, his/her investment is becoming worthless because your brand is being damaged by your actions.

I've now given all the warning I'm going to give.  My next post about this topic will either be thanking you for a refund, or explaining to the others where to go for a legal remedy.

I agree. I still believe that genjix is a good guy and wants to do this properly, but I am now at a point where I need to see results (= refunds starting). And if not, I will join the legal process as you mentioned above

[ninjarobot]

And if not, I will join the legal process as you mentioned above

So will I.

We need to draw a line in the sand somewhere and 30 days without access to funds is where I draw it (2012/06/11). After that the time for passively sitting around and waiting is officially over as far as I am concerned.

[koin]

I almost forgot to mention, I know people who work at rackspace and I've talked to them.  Your logs & database being deleted is effectively a non-issue, it's a pain to recover but you can bet that they have the capability of recovering every last byte of missing information.  However to the best of my knowledge no one associated with this process has created or escalated the issue.  You can bet your last dollar that if the Feds become involved, not only would the records get completely recovered, they would become public information as evidence in a criminal case against you.  That would happen both as an entity and there is a good possibility of piercing the veil and making you severally (individually) liable.

even if that were true there is probably a retention period after which those bits are no longer retrievable.  i would assume the data is stored to maintain service availability and not to protect against deleted instances, and as a result 24 hours or a few days after might be the longest they are kept.

[Transisto]

Please don't comment if your post doesn't bring anything new.

Like : "AT THIS POINT there is no hope left" and "I will sue you to death"

 I'm watching this thread closely and am tired of people with little to loose making irrational threats.

This situation is beyond ridiculous and we all know it already.

I agree to go ahead with legal actions but please lets do so respectfully.

[repentance]

Y'all might want to investigate how things work in NZ before you contemplate legal action.  The NZ Disputes Tribunal (small claims - <$15,000) can't hear undisputed cases and it can't be used for debt recovery - nor can either party have legal representation at their hearings.  Group litigation is also difficult to pursue in Commonwealth countries and it's not especially attractive to lawyers as awards of exemplary damages tend to be very low and costs are only awarded in part to successful litigants.  Unless a litigation funder can be found to underwrite the cost of bringing the action (and typically they cannot in low value cases), the plaintiffs risk significant individual costs if they do not prevail in the action.

As in many other jurisdictions, group litigation requires a court certifying both a cause of action and a "class" or group before an action can even proceed.  Bear in mind that any money spent by Bitcoinica in defending legal actions will come out of the company's remaining assets, too.

Were they to wind up the business in insolvency - which is an option open to them - then liquidator's fees would be deducted from the estate before final distributions were made to creditors and the distributions would be made according to established legal procedures.

[dancingnancy]

It looks as though someone has made ZT bite his lip over the past week+.  I have no idea who "genjix" is except for this thread.

To the poster that said they received a EMAIL from Bitcoinica asking to confirm their address, when did you get this?  I have never received a reply from Bitcoinica after my original submission, additionally I have never received a response after 2 of my EMAILS to verify@Bitcoinica.com.

I am still willing to give these guys the benefit of the doubt.  I have a hard time believing that bitcoinica went under in one of the lowest volatility periods of bitcoin trading history.  I also have to say that for some reason I trust ZT, and I really doubt this guy went back and screwed this company over which would obviously drag his own name through the mud as well.  He is young, smart and financially well off for someone of his age.  Why ruin all that?

Although I am only a handful or so years older than ZT, I feel that he (tried) to handle this situation with a maturity greater than most of the adults posting on this website.  I understand many of us are out a lot of money right now.  I am personally out over 250+ coins ( and $25 cash :/ ), which represents ( unfortunately ) about 90% of my net worth...

All I am asking now is just a reply to one of my E-Mails to verify@bitcoinica.com and just to please return the money back as soon as possible.

[sturle]

I almost forgot to mention, I know people who work at rackspace and I've talked to them.  Your logs & database being deleted is effectively a non-issue, it's a pain to recover but you can bet that they have the capability of recovering every last byte of missing information.

This has bugged me as well.  Until this episode I had the impression that Rackspace was a serious hosting provider.  Not some garage with a couple of racks on UPS and a fat ADSL line.  A serious hosting provider keep multiple backups of customer data off-site, because losing a lot of customer data due to some catastrophic event means losing their business.  Unlinking it from a web page just makes the data a bit more inconvenient to get to.  Impossible for the customer, but in no way impossible for Rackspace.  The data may be older than current, but I find it hard to believe that off-site backups were instantly deleted along with the servers.  Backup systems just aren't built for easy deletion.

Perhaps someone from Bitoinica can comment on how they have worked with Rackspace to rescue data?

[repentance]

I almost forgot to mention, I know people who work at rackspace and I've talked to them.  Your logs & database being deleted is effectively a non-issue, it's a pain to recover but you can bet that they have the capability of recovering every last byte of missing information.

This has bugged me as well.  Until this episode I had the impression that Rackspace was a serious hosting provider.  Not some garage with a couple of racks on UPS and a fat ADSL line.  A serious hosting provider keep multiple backups of customer data off-site, because losing a lot of customer data due to some catastrophic event means losing their business.  Unlinking it from a web page just makes the data a bit more inconvenient to get to.  Impossible for the customer, but in no way impossible for Rackspace.  The data may be older than current, but I find it hard to believe that off-site backups were instantly deleted along with the servers.  Backup systems just aren't built for easy deletion.

Perhaps someone from Bitoinica can comment on how they have worked with Rackspace to rescue data?

Rackspace offers lots of different hosting options with varying levels of security and varying cost.  At least on some plans, scheduled and on-demand backups are an optional service for which Rackspace charges.

Rackspace Cloud Servers include both Scheduled and On-Demand snapshots.  This is an optional service that will incur storage and bandwidth charges on Cloud Files, but the convenience of easily restoring from saved images is extremely valuable.

Does Rackspace back up my Cloud Server?
No, your Cloud Server does not get backed up until you configure and schedule backups. To learn how, please visit the knowledge center article here.

The entire Cloud Sites FTP structure is backed up every four hours, which totals six daily backups. Those backups are rolled into a nightly backup, which are retained for two days. However, these backups are for disaster recovery on the server side. If for any reason a storage node on our side were to crash, our backups will be there to replace any lost data.

That said, we recommend that you make periodic backups of your site and data to your local computer since we are unable to extract an individual site's data from the nightly backups.

And yes, Rackspace does offer fully managed backup and recovery services - at a price.

http://www.rackspace.com/managed_hosting/services/proservices/disasterrecovery/

http://www.rackspace.com/managed_hosting/services/storage/managedbackup/

[proudhon]

Doesn't look like this is going well...

[Phinnaeus Gage]

The entire Cloud Sites FTP structure is backed up every four hours, which totals six daily backups. Those backups are rolled into a nightly backup, which are retained for two days. However, these backups are for disaster recovery on the server side. If for any reason a storage node on our side were to crash, our backups will be there to replace any lost data.

That said, we recommend that you make periodic backups of your site and data to your local computer since we are unable to extract an individual site's data from the nightly backups.

Was it, or was it not, possible to recover lost data from Rackspaces servers during that first 48 hour window? I don't understand how Rackspace is able to recover data from their servers following a "disaster" yet unable to after a phone call is made to them about data being erased by other means.

I'm puzzled!

~Bruno~