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

[zhoutong]

If Zhou Tong doesnt own bitcoinica wtf does he have all of the customers private information still ?
Mind=Blown.

When we started asking for IDs, no one knew that I sold the site, so as a moral practice I should be the only one with access these private documents.

After the security attack, I immediately revoked the repository access from the servers and all the keys have been replaced. Since it's just kept in archive for AML and no one find it interesting to look at them everyday, they just stay there.

I'll keep the documents for as long as the government require and promise not to use for any purpose other than AML and other government-related investigations.

If you are uncomfortable with holding your IDs with me, you can contact Bitcoinica Consultancy and send your IDs to them. After I got the confirmation that they have stored your IDs, I'll delete them from the server.

I'm not a lawyer, but I seem to recall that asking and recording fingerprint and ID information for a third party without informing about said third party, is a serious offence in the UK...

So the business wasn't yours and you continued taking and recording ID documents on its name? I'd be very surprised if that's not a serious crime in Australia, being their legal base basically the Common Law. I'd have this fixed before going there if I were you.

Troll detected.

1) Zhou was in Singapore at the time
2) Zhou was working for Bitcoinica (Please go ask Adam at MtGox if he's breaking any laws holding your records for MtGox on their servers) and had all the rights and privileges necessary to request and approve documents.

Yeah Troll detected, you put your real pic in your profile.

1) Does not matter
2) He just confessed to having falsified/concealed his position at Bitcoinica.

People sending IDs to MtGox are not sending them to some Adam, they are sending them to MtGox. There is no falsification of responsibilities there. ZT was receiving IDs under false premises ("it was secret at that point that he had sold Bitcoinica"), so people were sending IDs to ZT/Bitcoinica not knowing of this change in ownership ZT has openly admitted to have hidden consciously.

I once looked into opening a betting site and had to read lots of legislation and I'm almost positive that you'd have to inform of a change of ownership were you asking for highly sensitive data like ID scans and fingerprints. If that Adam was lying or hiding crucial information about his position at MtGox while personally asking you for your ID that would definitely be crossing some red lines.

When I sold the site, I was selling the intellectual property of the site and future profit opportunities for cash compensation. The AML requirements were set up after the acquisition and at that time, I was the main operator of Bitcoinica, which means no one else was representing Bitcoinica. The handover to Bitcoinica Consultancy is something happened after that. When the handover happened, I was not involved in negotiation or any business contracts, and by common sense, I should still have access (but not sole access) to all the customer deposits and ID documents. No one has ever contacted me about a formal handover of the accounts and ID documents.

My assumed responsibility as the main operator of Bitcoinica ceased at the time of press release. That's the public side of things. At the business side, nothing happened since then.

Yes, I secretly sold the intellectual property of the Bitcoinica website to a 3rd party without informing the community, but the handover to Bitcoinica Consultancy was a secret to me as well. I didn't even look at their contracts. The only message I got was like "Hey let's contract Intersango guys what you do you think?" I trusted the investor enough that if anything went wrong at his side, I should still bear responsibility to the community as if I never sold the site. And this absolutely ended at the time of press release of the handover. It was extremely clear that "Bitcoin Consultancy" will take "dominant role".

If you can provide a legally sound way to resolve this issue I will be glad to hear about it. As I said, there were no instructions at all therefore no actions were taken.

Anyway, these things are clear:

- It's illegal for me to delete the data without giving them to Bitcoinica Consultancy first.
- It's illegal for me give the documents to Patrick, Amir, Donald or Tihan without informing the public.
- It's illegal for me to use the data for anything else other than AML for Bitcoinica LP.

If you assumed that you were NOT giving the access to the documents to me (Zhou Tong) when you submitted the AML documents (i.e. You believed that Zhou Tong didn't have any rights to review the documents on the date of submission), please email me at ryan@bitcoinica.com, I will give your documents to Bitcoinica Consultancy and delete it from my repository immediately. (I doubt anyone would fall in this category.)

PS. I haven't even looked at or reviewed a single Photo ID after the handover.

[muyuu]

OHNOES. He wasn't clear of his position but kept business going on as the new management never instructed him to do any differently! Better call the internet police!

"Keeping business going on" is a different thing when you run some fanzine, as opposed to a financial services asking for highly sensitive information. There's a different level of regulation going on.

People sending IDs to MtGox are not sending them to some Adam

People sending IDs to Bitcoinica are not sending them to Zhou

That said I'm pretty positive Adam -is- the person receiving the IDs and processing them. Or some other individual. And they have no need to disclose to you their equity stake or management position in the company either. U mad?

But they were. ZT had claimed sole ownership and responsibility over Bitcoinica and chose not to disclose the changes. MtGox AFAIK always acted on behalf of their juridical person. You can look that up if daddy skipped this part during your "education".   Neither ZT nor "Adam" have my sensitive info so I wouldn't have any reason to be mad anyway.

ZT was receiving IDs under false premises

Prove it. What's your legal source for this anyway?

He admits to it, nothing to prove. "When we started asking for IDs, no one knew that I sold the site."

I once looked into opening a betting site

Oh you must be an expert then. Carry on.

Yeah like I claimed to be one. I pulled off precisely because I couldn't afford a legal team from the start, and the liabilities were too high. Not as high as in a margin trading shop (LOL) but still high enough so you can end with your ass in prison just because you made a mistake.

Personally I hope all parties are satisfied when this process ends, but the recklessness of the whole thing is quite amazing. I guess that's why he got to be the first in trying this kind of business in the bitcoin scene, in the first place.

[Vladimir]

The simple truth is that Zhou is just an employee at most and a former owner and 17. Those who are trying to go after him are just not seeing things clearly.

However, Bitcoinica LP, and its general and limited partners and whoever are behind those corporate shells (which could  be declared as shams considering circumstances and offshore character and extremely short timespan between those shams getting their hands on management and money vaporizing) are potentially in so much hot water legally that they really should be trying to sort this all out amicably ASAP instead of trying to scare their victims by their legal fees which supposedly will leave nothing to be paid out. They should really think more about their personal BK's and legal fees both in UK and NZ if things go real bad.

If a few mid-size  players get litigious here their lawyers will unravel this and will go after assets of beneficiaries behind the corporate shells.

Also, while you and me could find all the relevant hacking claims being fairly plausible, this will be much more difficult to sell to courts and lawyers in absence of timely police report. It is possible that this matter would be recognised as gross negligence (if not fraud) committed by bitcoinica.

[stochastic]

If Zhou Tong doesnt own bitcoinica wtf does he have all of the customers private information still ?
Mind=Blown.

When we started asking for IDs, no one knew that I sold the site, so as a moral practice I should be the only one with access these private documents.

After the security attack, I immediately revoked the repository access from the servers and all the keys have been replaced. Since it's just kept in archive for AML and no one find it interesting to look at them everyday, they just stay there.

I'll keep the documents for as long as the government require and promise not to use for any purpose other than AML and other government-related investigations.

If you are uncomfortable with holding your IDs with me, you can contact Bitcoinica Consultancy and send your IDs to them. After I got the confirmation that they have stored your IDs, I'll delete them from the server.

I'm not a lawyer, but I seem to recall that asking and recording fingerprint and ID information for a third party without informing about said third party, is a serious offence in the UK...

So the business wasn't yours and you continued taking and recording ID documents on its name? I'd be very surprised if that's not a serious crime in Australia, being their legal base basically the Common Law. I'd have this fixed before going there if I were you.

Troll detected.

1) Zhou was in Singapore at the time
2) Zhou was working for Bitcoinica (Please go ask Adam at MtGox if he's breaking any laws holding your records for MtGox on their servers) and had all the rights and privileges necessary to request and approve documents.

Yeah Troll detected, you put your real pic in your profile.

1) Does not matter
2) He just confessed to having falsified/concealed his position at Bitcoinica.

People sending IDs to MtGox are not sending them to some Adam, they are sending them to MtGox. There is no falsification of responsibilities there. ZT was receiving IDs under false premises ("it was secret at that point that he had sold Bitcoinica"), so people were sending IDs to ZT/Bitcoinica not knowing of this change in ownership ZT has openly admitted to have hidden consciously.

I once looked into opening a betting site and had to read lots of legislation and I'm almost positive that you'd have to inform of a change of ownership were you asking for highly sensitive data like ID scans and fingerprints. If that Adam was lying or hiding crucial information about his position at MtGox while personally asking you for your ID that would definitely be crossing some red lines.

When I sold the site, I was selling the intellectual property of the site and future profit opportunities for cash compensation. The AML requirements were set up after the acquisition and at that time, I was the main operator of Bitcoinica, which means no one else was representing Bitcoinica. The handover to Bitcoinica Consultancy is something happened after that. When the handover happened, I was not involved in negotiation or any business contracts, and by common sense, I should still have access (but not sole access) to all the customer deposits and ID documents. No one has ever contacted me about a formal handover of the accounts and ID documents.

My assumed responsibility as the main operator of Bitcoinica ceased at the time of press release. That's the public side of things. At the business side, nothing happened since then.

Yes, I secretly sold the intellectual property of the Bitcoinica website to a 3rd party without informing the community, but the handover to Bitcoinica Consultancy was a secret to me as well. I didn't even look at their contracts. The only message I got was like "Hey let's contract Intersango guys what you do you think?" I trusted the investor enough that if anything went wrong at his side, I should still bear responsibility to the community as if I never sold the site. And this absolutely ended at the time of press release of the handover. It was extremely clear that "Bitcoin Consultancy" will take "dominant role".

If you can provide a legally sound way to resolve this issue I will be glad to hear about it. As I said, there were no instructions at all therefore no actions were taken.

Anyway, these things are clear:

- It's illegal for me to delete the data without giving them to Bitcoinica Consultancy first.
- It's illegal for me give the documents to Patrick, Amir, Donald or Tihan without informing the public.
- It's illegal for me to use the data for anything else other than AML for Bitcoinica LP.

If you assumed that you were NOT giving the access to the documents to me (Zhou Tong) when you submitted the AML documents (i.e. You believed that Zhou Tong didn't have any rights to review the documents on the date of submission), please email me at ryan@bitcoinica.com, I will give your documents to Bitcoinica Consultancy and delete it from my repository immediately. (I doubt anyone would fall in this category.)

PS. I haven't even looked at or reviewed a single Photo ID after the handover.

You also said that some people that verify their accounts before it was required would get a reward.  Is this that reward?

[disclaimer201]

Will the 50% payouts for everyone begin within the next month?

Since I won't have much money to go on vacation this summer with now 500+ Euros missing, I'll probably have to stay in Berlin.

Having said that, I will wait until July to see how far they get with processing claims and might walk over to that Hackathon to ask genjix personally about my claim status. Sometimes it's good to see there are real people behind usernames, is all. Not to be misunderstood, I would really just go and ask why they couldn't speed up the process politely. Under 1% were paid so far, at this pace we will still ask for our money around this time next year.

Location is "In-Berlin", a local Berlin Linux ISP. Lehrter Str. 53, 10557 Berlin, When?

13.-15. July : starting on friday at 5:30pm

Also, genjix might not want to attend the hackathon if there are unfinished customer claims still by mid July. At least that's what I would do if I knew people are owed a lot of money for over 2 months at that time. I'd work my ass off before I attend anything that hasn't directly to do with paying back owed funds.

[genjix]

We can meet today if you want. Send me an email to genjix@riseup.net.

Does anyone know why we are only getting 50% and not 80, 90 or 100% ?  It seems inefficient to do this twice. (That is assuming they intend to pay pay out the other 50%)

Reducing the cost in risk * cost while we have a high uncertainty for payments. Certainty goes up as we process more payments. At the end, we have a higher certainty that we can send the remaining 50%. This is the sacrifice for having any kind of timely payments where users don't cover the cost of mistakes.

[flower1024]

We can meet today if you want. Send me an email to genjix@riseup.net.

would that help fasten up the payout process?
i dont want to drive to london... but berlin is a possible

[genjix]

We can meet today if you want. Send me an email to genjix@riseup.net.

would that help fasten up the payout process?
i dont want to drive to london... but berlin is a possible

No.

What helps is sending your information or anything usable to verify@bitcoinica.com to be attached to your ticket. Getting the numbers exactly right if you can remember them is also very useful.

What will hurt your claim is an inaccurate or falsified report. Claims not matching the records are pushed to the back of the queue.

[kokjo]

We can meet today if you want. Send me an email to genjix@riseup.net.

would that help fasten up the payout process?
i dont want to drive to london... but berlin is a possible

No.

What helps is sending your information or anything usable to verify@bitcoinica.com to be attached to your ticket. Getting the numbers exactly right if you can remember them is also very useful.

What will hurt your claim is an inaccurate or falsified report. Claims not matching the records are pushed to the back of the queue.

when will we get our money approx.? 1 hour? 2 days? weeks? (years?)

[flower1024]

We can meet today if you want. Send me an email to genjix@riseup.net.

would that help fasten up the payout process?
i dont want to drive to london... but berlin is a possible

No.

What helps is sending your information or anything usable to verify@bitcoinica.com to be attached to your ticket. Getting the numbers exactly right if you can remember them is also very useful.

What will hurt your claim is an inaccurate or falsified report. Claims not matching the records are pushed to the back of the queue.

when will we get our money approx.? 1 hour? 2 days? weeks? (years?)

genjiix said "hopefully in a month" in another thread

[disclaimer201]

We can meet today if you want. Send me an email to genjix@riseup.net.

Does anyone know why we are only getting 50% and not 80, 90 or 100% ?  It seems inefficient to do this twice. (That is assuming they intend to pay pay out the other 50%)

Reducing the cost in risk * cost while we have a high uncertainty for payments. Certainty goes up as we process more payments. At the end, we have a higher certainty that we can send the remaining 50%. This is the sacrifice for having any kind of timely payments where users don't cover the cost of mistakes.

Can you bring my 500 Euros? ;-)

Edit: You shouldn't have time to meet today. You have work to do, or at least you should.

[bitclown]

We can meet today if you want. Send me an email to genjix@riseup.net.

would that help fasten up the payout process?
i dont want to drive to london... but berlin is a possible

No.

What helps is sending your information or anything usable to verify@bitcoinica.com to be attached to your ticket. Getting the numbers exactly right if you can remember them is also very useful.

What will hurt your claim is an inaccurate or falsified report. Claims not matching the records are pushed to the back of the queue.

If I've never received any replies to my mails to verify@bitcoinica.com, does that mean that you've got all data I could possibly provide you, or that I have been silently flagged as a scammer trying to exploit the claim process? I could send another mail asking for a status update, but I don't want to waste your time or risk being considered suspicious for nagging.

[ninjarobot]

Why is Bitcoinica not working closer together with other services that have been used to deposit or withdraw funds (e.g. MtGox) as part of the claims validation process?

Yesterday I asked MtGox if they were approached by Bitcoinica regarding verification of MtGox claimcodes on Bitcoinica, but apparently this is not the case:

Thank you for contacting us. Here are the answer to your questions:

1. Only our management group can view where the Mt.Gox Redeemable codes were redeemed, but it is possible.
2. No, we have not been approached by any Bitcoinica LP or its employees.
3. We are not currently collaborating with Bitcoinica LP on this matter

I guess many customers have sent in their MtGox codes that they claim have been used to fund their Bitcoinica account. Wouldn't it make sense to run those by MtGox to confirm they have actually been redeemed with Bitcoinica and not some other service?

[rjk]

Why is Bitcoinica not working closer together with other services that have been used to deposit or withdraw funds (e.g. MtGox) as part of the claims validation process?

Yesterday I asked MtGox if they were approached by Bitcoinica regarding verification of MtGox claimcodes on Bitcoinica, but apparently this is not the case:

Thank you for contacting us. Here are the answer to your questions:

1. Only our management group can view where the Mt.Gox Redeemable codes were redeemed, but it is possible.
2. No, we have not been approached by any Bitcoinica LP or its employees.
3. We are not currently collaborating with Bitcoinica LP on this matter

I guess many customers have sent in their MtGox codes that they claim have been used to fund their Bitcoinica account. Wouldn't it make sense to run those by MtGox to confirm they have actually been redeemed with Bitcoinica and not some other service?

Bitcoinica can just pull that info from their account history on mtgox, no need to get them involved in any way.

[ninjarobot]

Bitcoinica can just pull that info from their account history on mtgox, no need to get them involved in any way.

Ah, that actually makes sense. I did not consider that. Thanks!

[Phinnaeus Gage]

How are 30 separate wallets (plural) considered a "Hot Wallet" (singular)? Please answer here: https://bitcointalk.org/index.php?topic=88289.0

~Bruno~

[WhatsHappening]

Bitcoinica can just pull that info from their account history on mtgox, no need to get them involved in any way.

Ah, that actually makes sense. I did not consider that. Thanks!

Well, on the other hand mtgox is the only authority to say that there were no withdrawals from bitcoinica to user mtgox account. Such information may lead to identify fake claims. So maybe involving them makes sense..

[elux]

I guess many customers have sent in their MtGox codes that they claim have been used to fund their Bitcoinica account.

ZT / genjix / bitcoinica consultancy: I have offered to do this, but received no reply. Is it advisable to do so?

[proudhon]

I guess many customers have sent in their MtGox codes that they claim have been used to fund their Bitcoinica account.

ZT / genjix / bitcoinica consultancy: I have offered to do this, but received no reply. Is it advisable to do so?

I did this too, but haven't heard anything in response.

[naima53]

Why is Bitcoinica not working closer together with other services that have been used to deposit or withdraw funds (e.g. MtGox) as part of the claims validation process?

Yesterday I asked MtGox if they were approached by Bitcoinica regarding verification of MtGox claimcodes on Bitcoinica, but apparently this is not the case:

Thank you for contacting us. Here are the answer to your questions:

1. Only our management group can view where the Mt.Gox Redeemable codes were redeemed, but it is possible.
2. No, we have not been approached by any Bitcoinica LP or its employees.
3. We are not currently collaborating with Bitcoinica LP on this matter

I guess many customers have sent in their MtGox codes that they claim have been used to fund their Bitcoinica account. Wouldn't it make sense to run those by MtGox to confirm they have actually been redeemed with Bitcoinica and not some other service?

Zhou, provided (has) the pressure (forces) who are either on you?
(You are forced to do anything under duress when "hacking" bitkoinika?) Why not use this method (in the quote)? This is the easiest way to identify fake claims! I immediately sent the screenshots, and it turns out, did it for nothing?