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Author Topic: Bitcoinica MtGox account compromised  (Read 145699 times)
naima53
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July 19, 2012, 05:16:51 PM
 #621

Update 19th July: payments are still stuck at 38%. Considering that those are 50% payouts, that means a good 76% of the claims. That's not 76% of claimants, but 76% of the total funds.

However given that nobody is doing anything, I've been talking with some of the people with large claims. They've proposed helping take over the process with me. I suppose we need to get written consent that Bitcoinica Consultancy doesn't exist or that if it does that the members resign. This allows Bitcoinica LP to take over and hand the payouts process to us. Technically Bitcoinica LP owns the assets.

It's true! Finally it! In the ass business ethics, just take it and do as they want users (affected customers)! This is a new world, and we here write their own laws. Do as you think prudent \ rational.

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July 19, 2012, 05:24:42 PM
 #622

Update 19th July: payments are still stuck at 38%. Considering that those are 50% payouts, that means a good 76% of the claims. That's not 76% of claimants, but 76% of the total funds.

However given that nobody is doing anything, I've been talking with some of the people with large claims. They've proposed helping take over the process with me. I suppose we need to get written consent that Bitcoinica Consultancy doesn't exist or that if it does that the members resign. This allows Bitcoinica LP to take over and hand the payouts process to us. Technically Bitcoinica LP owns the assets.

--------

repentance: what do you mean get a lawyer? I don't have the ability to do that. I have no savings you know. I don't really take a wage (so there's more money for projects). Many of the Bitcoin developers are not in this for money... Bitcoin is something really special, interesting and quite new.

I am part in this group

This is what I suggest (and I am not suggesting "officialy" it on behalf on this group, just my own opinion) :

The group of larg holder (which I am part of ) take over the claims & process.

- The claims should be reviewed by all parties (with help from zhou, review by what's left of bitcoinica LP, etc.) for correctness. We dont need more scam and thiefs at this point.

- Once all parties agree onto the payments, all payment are done at once by MTGOX which all parties should agree we can use as a trusted executor.
No one else should have access to the accunt and it should stay frozen until then.

That doesnt mean that all issues are settled afterwards as there is still ~30% something owned but that would be a first clean great step for everyone involved in my opinion.

Again, only my opinion, but let me know what you think.

speculate on the mtgox price - http://www.btcoracle.com/
buy Mastercoin - http://masterxchange.com
repentance
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July 19, 2012, 05:31:23 PM
 #623


Thats an interesting and challenging question, at least for us as bystanders and/or customers of Bitcoinica, possibly bearing the losses :-/

Business is often comprised of "acting to the rules" while at the same time a lot is going on "in between the lines".
Often, some view, which, legally and by the rules is not 100% correc, is announced and repreated with great vehemence, thus putting the oposing side under pressure. It is difficult to judge the actual balance of powers from the outside. Also the personalities of the people involved do play some role (and we, as bystanders, don't know anyone of those actors in person).

Who is in the stronger position? Who was at the end of May, which seems to be the period where the further route of events basically was determined? Personally, from his insiting on the legal situation and also his urging to proceed with the payouts, it looks that Tihan was in the slightly weaker position (but not much weaker).

Tihan was technically right.  I checked the other day on whether NZ law is the same as Australian law on this and it is.  From the time the partnership agreement was signed (or the starting date specified in the agreement) Amir, Patrick and Donald were liable as general partners whether or not the paperwork had been completed for the formation of Bitcoinica Consultancy Ltd.  This is because 1) there is a filing period for the paperwork, and 2) because even if someone is not named as a director of a company on the paperwork if they have been performing the duties of a director they are liable in the same way as a named director (I'll bet Chris Heaslip is super-pissed that this all went down while he was the only named director).

Tihan's argument was that if they didn't follow through with the formation of the company and take responsibility for the payout process, they would have abandoned their legal responsibility.  The implicit threat in that it that they could then be personally sued by just about everyone but especially the limited partner (who already had shares in Intersango, remember) - completing the formation of the company would limit their liability.

It was a carrot and a stick approach.  If I had to guess, I suspect that the threats weren't idle.  While VCs are obviously prepared for businesses to fail, this one fell at the starting gate.  I'm quite sure that the limited partner would have negotiated a harsh agreement in order to remove litigation from the table.  We'll never know for certain because even more calamity intervened.

Quote
This allows Bitcoinica LP to take over and hand the payouts process to us. Technically Bitcoinica LP owns the assets.

You guys are the general partner of Bitcoinica LP - whatever you do binds the partnership.  If the limited partner wishes to prevent you from continuing the payout process, they can file an injunction to stop it happening.  What is important is that you, Donald and Patrick hold a formal meeting (effectively a director's meeting) and record your decision.  Please, PLEASE talk to you lawyer about this.  There are things the limited partner could do to interfere with this but your lawyer is the best person to assess the possibilities.

All I can say is that this is Bitcoin. I don't believe it until I see six confirmations.
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July 19, 2012, 05:40:35 PM
 #624

Well, the compromise of funds before finalization of the agreement would help get the Consultancy guys off the hook assuming they hadn't taken over day to day operations when it occurred. I have the impression though that they had a strong enough belief that they could recover from the incident going forward. Otherwise it would have been better to deal with the legal hassles of a failed ownership change than to take on the business.

Although, if Tihan's control of Intersango shares was of a nature to allow him to stymie development of that project, it would have been an effective stick.
repentance
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July 19, 2012, 05:54:26 PM
 #625


- Once all parties agree onto the payments, all payment are done at once by MTGOX which all parties should agree we can use as a trusted executor.
No one else should have access to the accunt and it should stay frozen until then.


Mark might be willing to have his lawyers look over this idea as the distribution would be done by MtGox and they're going to want to make sure there'll be no legal blowback for them.

I want to emphasise that whoever takes control of this process will have legal liability.  You need to take into account all of Bitcoinica's assets and all of it's liabilities.  The users cannot be paid at the expense of other creditors without the express permission of those creditors.  If you're going to do this yourselves, you need to follow as closely as possible the procedure which an accountant/lawyer would follow if they were overseeing the payout process.

Amir, did you guys get independent legal advice before you signed the partnership agreement and shares/interest exchange document (this could actually be important down the track) or does Intersango not have a lawyer for business stuff?  If Intersango doesn't have a lawyer, do you guys have an accountant?

Do you guys have sole control of the bank account at this point in time?

I think you have to presume that the limited partner will be made aware of anything you post here.  

Quote
Well, the compromise of funds before finalization of the agreement would help get the Consultancy guys off the hook assuming they hadn't taken over day to day operations when it occurred.

They publicly announced on their own website that they were taking over day to day operations of Bitcoinica on 24 April - a couple of weeks before the hack.  I have a feeling one of them even gave an interview about it (might have been a press release).  It's kind of hard to retract that, and they apparently have no funds for a lawyer to even try to get them off the hook (I'm pretty sure the limited partner would have funds for a lawyer).
Also, getting them off the hook in terms of the formation of Bitcoinica Consultancy Ltd might not be a good thing.  Without the protection of the company, they might be held personally liable and if Intersango is the only asset each them has, that's what anyone getting sue-happy will go after (and the limited partner already holds share in Intersango).

All I can say is that this is Bitcoin. I don't believe it until I see six confirmations.
Phinnaeus Gage
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July 19, 2012, 06:09:13 PM
 #626

If you look at the transaction history you'll see that there's one incoming tx for each outgoing payout. The address never held more at once than what was being processed. It looks like some kind of public ledger for their BTC payouts. It also shows that the last payout was performed today. The question is if these are real payouts, or if they're just trying to make the impression that they're still processing claims. Anyhow, I beg you to please, please turn off your random post generator, Phinnaeus. It's all just white noise.

To badly paraphrase Melville, "Call me confused." It was your post that prompted my post, driving your post home. Yet, my post is considered "white noise" while you come across as a white knight, now on two (post) counts.

Coins have begun passing through the payout address again. Anyone received anything today? I hope we'll get our share before it's donated to the lawyers.
repentance
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July 19, 2012, 09:36:17 PM
 #627

And this is why I've been urging Amir not to take any action without legal advice.

Quote from: Tihan
It's "Wendon Group" with a "d".

You can continue this if it entertains you, but it will all be a matter of public record upon court action against the Consultancy. The investment fund has nothing to hide. Nor do I.

https://bitcointalk.org/index.php?topic=94098.msg1041641#msg1041641

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July 19, 2012, 10:24:03 PM
 #628

However given that nobody is doing anything, I've been talking with some of the people with large claims. They've proposed helping take over the process with me. I suppose we need to get written consent that Bitcoinica Consultancy doesn't exist or that if it does that the members resign. This allows Bitcoinica LP to take over and hand the payouts process to us. Technically Bitcoinica LP owns the assets.

Have you called the police yet?
 

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dimitry765
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July 19, 2012, 11:18:35 PM
 #629

I have more than 3000btc in the bitcoinica account.
Let's start legal process.
repentance
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July 19, 2012, 11:37:49 PM
 #630

I have more than 3000btc in the bitcoinica account.
Let's start legal process.


You'll need to retain a NZ lawyer in order to do that.

All I can say is that this is Bitcoin. I don't believe it until I see six confirmations.
Phinnaeus Gage
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July 20, 2012, 01:54:50 AM
 #631

However given that nobody is doing anything, I've been talking with some of the people with large claims. They've proposed helping take over the process with me. I suppose we need to get written consent that Bitcoinica Consultancy doesn't exist or that if it does that the members resign. This allows Bitcoinica LP to take over and hand the payouts process to us. Technically Bitcoinica LP owns the assets.

Have you called the police yet?
 

I'm not sure if this applies in this case, but... http://www.wiwd.uscourts.gov/opinions/pdfs/2003-2005/05-C-368-C-11-04-05.PDF

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It is well established that neither the officers nor directors of a corporation are personally liable to third parties merely because they are officers or directors
Bitcoin Oz
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July 20, 2012, 02:23:34 AM
 #632

Looks like Tihan's lawyers are going to own intersango going forward.

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July 20, 2012, 02:52:28 AM
 #633

Reading through the pastebin of all their discussions it really seems like Tihan tried to be on the side of the bitcoinica customers the most.

The intersango guys just seem lost and incoherent.

...In the land of the stale, the man with one share is king... >> Clipse

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Phinnaeus Gage
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July 20, 2012, 02:54:08 AM
 #634

Looks like Tihan's lawyers are going to own intersango going forward.

And a mighty fine lawyer he has: http://webcache.googleusercontent.com/search?q=cache:ps6Bzjep2zMJ:www.gwpco.com.bb/attorney_profile.cfm%3FID%3D3+&cd=1&hl=en&ct=clnk&gl=us
repentance
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July 20, 2012, 02:54:36 AM
 #635

Looks like Tihan's lawyers are going to own intersango going forward.

And who would step up to run Intersango for them - they had enough trouble finding someone to run Bitcoinica for them and the emails make it clear that Intersango isn't exactly raking in profit hand over fist.  Sure, they could inject capital into it and try to grow it but that's one of the most dangerous times for any business.  They could try to sell it, but then you'd be looking for a buyer who was either willing to buy it just to put a competitor out of business or who was willing to absorb its operations - who could do that within jeopardising their own planned growth?

The first filings will make clear what they actually want.  We know nothing about the partnership agreement itself and I'm sure that its terms will come into play.  These people are venture capitalists.  They're not going to make decisions based on emotion.  The choices they make will be pragmatic ones.  They're not out to win a popularity contest.  They're also not carrying out a personal vendetta.  This is business to them.

All I can say is that this is Bitcoin. I don't believe it until I see six confirmations.
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July 20, 2012, 12:39:31 PM
 #636

Genjix, Asking again:

What is the status of my USD? My claim is for $981.18 -- no Bitcoins, no open positions. Just USD that was being held for me by Bitcoinica. This should have been handled before any Bitcoin issues or MtGox theft or anything. It's completely cut and dry. I provided my bank information, you guys already had my passport on file.

unclescrooge
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July 20, 2012, 12:59:46 PM
 #637

Hey, I don't know if it's been posted already so I'll leave it there:

Might be of interest Smiley

http://pastebin.com/Ya6iN8RT

Bitcoin Oz
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July 20, 2012, 01:05:35 PM
 #638

So Tihan owns bitcoin.com ?

Ichthyo
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July 20, 2012, 08:34:57 PM
 #639

These people are venture capitalists.  They're not going to make decisions based on emotion.  The choices they make will be pragmatic ones.  They're not out to win a popularity contest.  They're also not carrying out a personal vendetta.  This is business to them.

+1000
Phinnaeus Gage
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July 21, 2012, 02:05:39 AM
 #640

So Tihan owns bitcoin.com ?

Yep! Since last year. Remember Tradehill? At the moment, I put myself on my paper (a southern phrase), therefore I'll refrain from connecting further dots.

~Bruno~
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