Bitcoinica MtGox account compromised

[imsaguy]

Next up, Intersango balances will be cleared if not gone allready.

I love these business strategies, divide and conquer at its finest hour.

what about intersango? is it not legit now?

Do you really want to wait around to find out?

[1714001186]

1714001186

[1714001186]

1714001186

[1714001186]

1714001186

[norulezapply]

So... bad time to sell my coins on intersango then

Someone needs to make another GBP exchange.

I have a choice between intersango or mtgox... Just trying to decide now which is the bigger evil...

[ErebusBat]

So... bad time to sell my coins on intersango then

Someone needs to make another GBP exchange.

I have a choice between intersango or mtgox... Just trying to decide now which is the bigger evil...

Could always do OTC

[norulezapply]

So... bad time to sell my coins on intersango then

Someone needs to make another GBP exchange.

I have a choice between intersango or mtgox... Just trying to decide now which is the bigger evil...

Could always do OTC

My impressions from that were that not many people use it, assuming you mean sites like www.localbitcoins.com? Or do you mean just hanging out in #bitcoin-otc and asking people occasionally if they want to buy coins?

[aq]

So... bad time to sell my coins on intersango then

Someone needs to make another GBP exchange.

Seems to be another on in a few weeks:
https://bitcointalk.org/index.php?topic=93592.0

[dogisland]

So... bad time to sell my coins on intersango then

Someone needs to make another GBP exchange.

I have a choice between intersango or mtgox... Just trying to decide now which is the bigger evil...

Or you could try person to person ? https://www.bitcoinary.com/

[norulezapply]

So... bad time to sell my coins on intersango then

Someone needs to make another GBP exchange.

I have a choice between intersango or mtgox... Just trying to decide now which is the bigger evil...

Or you could try person to person ? https://www.bitcoinary.com/

No-one seems to use those types of sites in my area I'll try it though I guess...

[ErebusBat]

So... bad time to sell my coins on intersango then

Someone needs to make another GBP exchange.

I have a choice between intersango or mtgox... Just trying to decide now which is the bigger evil...

Could always do OTC

My impressions from that were that not many people use it, assuming you mean sites like www.localbitcoins.com? Or do you mean just hanging out in #bitcoin-otc and asking people occasionally if they want to buy coins?

I was referring to #bitcoin-otc  No need to hang around... there is an order book

[Phinnaeus Gage]

I'm still appalled by the fact that I turned a guy onto Bitcoin here in my hometown who would have recognized a 100-200% on his investment, but instead is looking at zilch. And there's no way now that that Albanian restaurant owner I was convincing is going to ever accept Bitcoin as a payment option, nor any other business here in Sandwich, IL, for a long time. Although I'm sure there's no financial hardship associated with Jerry's investment, it's a shame that opportunities will be miss here, as well as, I'm sure, other places globally due to this fiasco.

I'm so sad!

~Bruno~

[Mushoz]

Let's stay completely silent again, without any outgoing payments. Great job guys, great job!

[jgarzik]

Let's stay completely silent again, without any outgoing payments. Great job guys, great job!

What's the first thing a lawyer will do?  Advise their client to stop talking, and stop messing with bank accounts (or the Bitcoin equivalent thereof) associated with disputed funds.

The beginning of a lawsuit might even mandate a freezing of funds by court order -- a temporary restraining order -- outside Bitcoinica's control.

[sadpandatech]

Let's stay completely silent again, without any outgoing payments. Great job guys, great job!

What's the first thing a lawyer will do?  Advise their client to stop talking, and stop messing with bank accounts (or the Bitcoin equivalent thereof) associated with disputed funds.

The beginning of a lawsuit might even mandate a freezing of funds by court order -- a temporary restraining order -- outside Bitcoinica's control.

Until the point that one of said parties actually is served papers there is ZERO reason for them not to process claims!!  And just the idea that there is 'potential' for a judge to end up looking at a case it would be even prudent that it can be shown that they were making payments....

The last thing they need is more excuses to not move their fucking asses.

[ninjarobot]

The initial confusion was over who is responsible as the GP - the part time owner devoting maybe 5 hours a week? The new owners who had no experience operating the site? The middleman who acts on behalf of the owner and has no technical knowledge? That's why payments were initially complicated and delayed.

So it seems that internal wrangling over who would be responsible as a GP directly caused the delay in customer reimbursements (and by extension the more recent theft of 350.000 USD from customer deposits)?

For those who doubt we were not the GP, you can run 'git log' in the sourcecode. We had no responsibility to take on payments, but we did (and finalised the formation of Bitcoinica Consultancy to do so).  

So you guys finalized the formation of Bitcoinica Consultancy, but not as the GP? Then as what? A charitable organization?

It would appear that a lot of misinformation has circulated since the date of my last post. Considering the many inconsistencies, I will assume astute readers here have already discounted the versions of facts presented by the Consultancy.

The Consultancy members accepted that responsibility on April 24 as operators and General Partners of Bitcoinica LP. There is ample written documentation to confirm this.  

The statements of Genjix and Tihan seem to conflict here. So we still don't know who the GP is and customers continue to suffer due to corporate infighting. Or maybe it is just me that is clueless?

[rebuilder]

It would appear that a lot of misinformation has circulated since the date of my last post. Considering the many inconsistencies, I will assume astute readers here have already discounted the versions of facts presented by the Consultancy.

The Consultancy members accepted that responsibility on April 24 as operators and General Partners of Bitcoinica LP. There is ample written documentation to confirm this.  

The statements of Genjix and Tihan seem to conflict here. So we still don't know who the GP is and customers continue to suffer due to corporate infighting. Or maybe it is just me that is clueless?

Which Consultancy is Tihan referring to, Bitcoin Consultancy or Bitcoinica Consultancy? Should that be obvious from reading his post?

Edit: Also, who is the "we" Genjix is referring to in his OP?

[ErebusBat]

I see there is no update from Genjix

[ninjarobot]

Which Consultancy is Tihan referring to, Bitcoin Consultancy or Bitcoinica Consultancy? Should that be obvious from reading his post?

Good question. I know Bitcoin Consultancy signed a contract before April 24. Donald wrote about that here: http://bitcoinmedia.com/first-licensed-advanced-trading-platform-for-bitcoin/

This platform announced today, a new contract signed with the Bitcoin Consultancy Ltd. Bitcoin Consultancy will be taking a dominant role in the operations of Bitcoinica, ushering forward its continued safety and stable operation.

I assume this contract was the the Bitcoinica Limited Partnership agreement that genjix mentioned earlier:

Quoting from the Bitcoinica limited partnership agreement...

"
4.1 Management
(a) The General Partner has exclusive responsibility for the management and control of the business and affairs of the Limited Partnership
...
4.2 Authority and Powers
Subject to and without prejudice to the generality of clause 4.1, in respect of the Business, the General Partner and its agents and delegates and their respective delegates have the full powers and the authority of the Limited Partnership and the power to bind the Limited Partnership without prior consulation with any of the Limited Partners
...

In the same post genjix mentioned that Tihan would consider it an abandonment of their legal obligations if the Bitcoin Consultancy guys would not state that they were acting as directors for the Bitcoinica LP general partner:

This is what I need from each of you today:

1) A sign of life that the claims processing has begun -- an announcement to that effect and/or actually paying people back

2) An email reply that you are acting as directors for the Bitcoinica LP general partner.

3) An email reply that you will supply the NZ Companies office with valid docs to reflect your director status at your earliest opportunity

I must consider anything less to be an abandonment of your legal obligations.

Donald, since you are the only one not in favor of moving forward, I will look for you to respond first.

So I guess that after June 10 this is exactly what happened.

Edit: Also, who is the "we" Genjix is referring to in his OP?

I think that refers to the Bitcoin Consultancy guys (Donald, Patrick, Amir)

[Coinoisseur]

You can't ToS away core responsibilities. Especially if you register as a financial service provider.

http://www.business.govt.nz/fsp/app/ui/fsp/record/liveSearchFsp.do?q=bitcoinica

Once the people who had big money and bitcoins lose hope of receiving any substantial payouts, like after another 'hack' loss as in this OP, then the lashing out begins. Seems like lawyers and LEO are starting to be engaged, so just a matter of time before the NZ regulators have to start trying to make sense of this mess.

No, this is not the users' fault. Why should the bitcoinica users eat all the loss?

+1

It makes no sense to make us eat the loss. That is their own fault. They need to all stop taking a paycheck like Zhou did and/or start eating muesli with even cheaper milk and cough up the money out of pocket.

Some of us have undeniable proof and we want our money back.

Actually they need to honor their terms of use their clients agreed to and if they didn't make any guarantees about security they're off the hook and it's the client's fault for putting money someplace where such guarantees weren't made.

From the Bitcoinica ToS:

[12] Limitation of Liability

IN NO EVENT SHALL BITCOINICA, ITS OFFICERS, DIRECTORS OR EMPLOYEES BE LIABLE FOR LOST PROFITS OR ANY SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES ARISING OUT OF OR IN CONNECTION WITH OUR WEB SITE, OUR SERVICES OR THIS AGREEMENT (HOWEVER ARISING, INCLUDING NEGLIGENCE) EXCEPT AS STATED IN THIS AGREEMENT. THE LIABILITY OF BITCOINICA, ITS OFFICERS, DIRECTORS OR EMPLOYEES, TO YOU OR ANY THIRD PARTIES IN ANY PROVEN CIRCUMSTANCE IS LIMITED TO THE AMOUNT OF MONEY YOU TRANSFERRED OR DEPOSITED IN YOUR ACCOUNT AT BITCOINICA IN RELATION TO THE TRANSACTION GIVING RISE TO SUCH LIABILITY. In the case where you make funds available for trading via a voucher, "coupon code", or similar from another financial service, banking institution or exchange, you acknolwedge that you are providing Bitcoinica access to those funds for trading purposes only and that the originating financial institution is the holder of such deposits. Bitcoinica is not liable for any loss if such institutions fail in honoring withdrawal of customer funds.

Shouldn't you have put this part in bold:

IN NO EVENT SHALL BITCOINICA, ITS OFFICERS, DIRECTORS OR EMPLOYEES BE LIABLE FOR LOST PROFITS OR ANY SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES ARISING OUT OF OR IN CONNECTION WITH OUR WEB SITE, OUR SERVICES OR THIS AGREEMENT (HOWEVER ARISING, INCLUDING NEGLIGENCE)

Face it people. You agreed to use a service without even a promise that they'll be liable to you if they are negligent. So if you're looking for the guilty you need only look in the mirror.

This.  Can we just move on from this, please?  But this whole thing has been an absolute blight on this project for most of this year.  Let's move on, accept our losses, and agree not to use flashy looking bitcoin websites designed by 17 years olds.  The silver lining out of this is that a bunch of people, myself included, have been reminded of one of the most valuable things about bitcoin - that you can secure it yourself and make stealing it over the internet practically impossible.  Of course, that that can be done fairly simply highlights those working at bitcoinica's negligence.

[repentance]

The initial confusion was over who is responsible as the GP - the part time owner devoting maybe 5 hours a week? The new owners who had no experience operating the site? The middleman who acts on behalf of the owner and has no technical knowledge? That's why payments were initially complicated and delayed.

So it seems that internal wrangling over who would be responsible as a GP directly caused the delay in customer reimbursements (and by extension the more recent theft of 350.000 USD from customer deposits)?

For those who doubt we were not the GP, you can run 'git log' in the sourcecode. We had no responsibility to take on payments, but we did (and finalised the formation of Bitcoinica Consultancy to do so).  

So you guys finalized the formation of Bitcoinica Consultancy, but not as the GP? Then as what? A charitable organization?

It would appear that a lot of misinformation has circulated since the date of my last post. Considering the many inconsistencies, I will assume astute readers here have already discounted the versions of facts presented by the Consultancy.

The Consultancy members accepted that responsibility on April 24 as operators and General Partners of Bitcoinica LP. There is ample written documentation to confirm this.  

The statements of Genjix and Tihan seem to conflict here. So we still don't know who the GP is and customers continue to suffer due to corporate infighting. Or maybe it is just me that is clueless?

I think that the position of the Intersango guys was that weren't technically general partners at the time of the Rackspace intrusion because the paperwork for establishing Bitcoinica Consultancy hadn't been completed and that therefore they had neither any liability for the intrusion nor any authority to initiate the claims process.  Tihan's position was that they did have both liability and authority and that not completing the paperwork would be regarded as an attempt to avoid that liability.

While you're always liable if you're on the corporate documents, whether or not you're actively participating in the business, not being on the corporate documents doesn't necessarily protect you from liability if you've been essentially acting as a director.  The announcement had already been made that Bitcoinica Consultancy would be acting as general partner and operating the business from 24 April and as far as we know they were actually doing that when the Rackspace intrusion occurred - which may mean they would be found to have been acting as directors of the  general partner whether or not the paperwork had been signed.

The Intersango guys are essentially saying "we did everyone a favour by signing the paperwork to create Bitcoinica Consultancy so we could handle the claims process - and we weren't legally obliged to do that".  In fact, much discussion has gone on about what people weren't legally obliged to do - Tihan covering the Rackspace losses, Zhou helping rebuild records after the Rackspace intrusion, the Intersango handling the claims process.  There's been much less discussion of how each of the parties intends to proceed now and that probably won't be known until they've received legal advice on where they each stand in terms of liability, not just to users but also to each other.

[JoelKatz]

Let's stay completely silent again, without any outgoing payments. Great job guys, great job!

What's the first thing a lawyer will do?  Advise their client to stop talking, and stop messing with bank accounts (or the Bitcoin equivalent thereof) associated with disputed funds.

I can't imagine a lawyer would advise a company that holds other people's money not to give any of it back. I could see that if it was combined with advising them to make a public statement of how much money they held, how much they owed, and where the money was being held.

The beginning of a lawsuit might even mandate a freezing of funds by court order -- a temporary restraining order -- outside Bitcoinica's control.

That would be very different from Bitcoinica doing that unilaterally without any assurance that the funds were secure or, for that matter, actually exist.

If this was an inside job, the longer Bitcoinica holds the money without locking it down, the more risk there is that depositors will get an even lower recovery. Frankly, the funds should have been locked down securely *before* this last theft. If they were holding my money, I'd be really angry that they're not disclosing how much money they have, how much they owe, where that money is, and who is responsible for the shortfall and who is responsible for the disbursement of the remaining funds.

[repentance]

I can't imagine a lawyer would advise a company that holds other people's money not to give any of it back. I could see that if it was combined with advising them to make a public statement of how much money they held, how much they owed, and where the money was being held.

Bitcoinica LP is now undeniably insolvent and that's a game changer.  It's extremely unlikely that any lawyer would advise an insolvent entity to try to handle the claims process themselves - the risk of them fucking it up in some way is just too great.  

Funds on hand aren't the only thing in play now.  All assets and all liabilities need to be taken into account.  Someone owns the Bitcoinica domain and the IP, but the question is who.  If those things are an asset of Bitcoinica LP (which would be a stupid way to set things up, but there's been no shortage of stupid in this saga), then they need to be liquidated (not that they'd have much value now).  Creditors other than users also need to be considered.  We don't know whether there were any conditions attached to the funds Tihan injected after the Rackspace intrusion.  It may well have been a loan.

Frustrating as it is for users, Bitcoinica needs to not make any public statements other than "we're consulting our legal advisers" right now.  "What next" is something which absolutely should not be decided without extensive consultation with their legal and financial advisors - deciding to "do it themselves" last time around rather than involve professionals in the refund process is partly responsible for the latest calamity.

Also, Amir's probably not the best person to take over handling the claims.

Hi,
I feel like a bit of an arse, but I'm suffering from password atrophy - too many passwords and I'm forgetting all of them.
I don't feel like bothering theymos by poking his personal email (feels impolite). Is there a generic contact method for the bitcointalk forum?

Thanks, but the reason I don't use keepass is two-fold:
a) I'm very scatter brained and prone to losing data through reinstalls, cleanups and formatting. It's one more piece of data I must hold onto.
b) I'm heavily dependent on the clipboard during my workflow (I love clipboard managers like ClipIt or parcellite), and that would be a big loss if I couldn't use them.

http://www.reddit.com/r/Bitcoin/comments/wbmxi/lost_bitcointalk_account_password_mod_contact/

Guess he thought using the password reset option for his forum account was too risky after what happened with Rackspace.