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Author Topic: Class action Litigation vs. Bitcoinica Consultancy LTD & Intersango LTD  (Read 26628 times)
BadBitcoin (James Sutton)
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July 13, 2012, 03:11:54 PM
 #1

This will be the offical thread for the potential upcoming litigation proceedings against the Bitcoinica Parties.


If you have been adversely affected by bitcoinica due to their potentially criminal negligence, please post here and email me any information you can provide, I will be going to see my

lawyer about our case tomorrow and I could use all the information regarding our legal position for a case.

(for reference, I lost 5000 USD from bitcoinica, so   I have considerable stake in this case).


EDIT: If you would be interested in jioning the bitconica litigation skype meeting, please email/pm your skype name.
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lonelyminer (Peter Šurda)
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July 13, 2012, 03:14:45 PM
 #2

I already contacted a lawyer and am waiting for a reply, I recommend we pool our resources.
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July 13, 2012, 03:17:18 PM
 #3

I guess the third time's the charm.

I wish you all the very best of luck!

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July 13, 2012, 03:23:57 PM
 #4

Lawyers are going to be very expensive and what if the "investors" don't have any money to make you whole?

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July 13, 2012, 03:25:31 PM
 #5

Lawyers are going to be very expensive and what if the "investors" don't have any money to make you whole?

Thats what I plan to find out, and to find who can be considered criminally liable for the latest hack.
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July 13, 2012, 03:26:48 PM
 #6

I have 24,841BTC on deposit with Bitcoinica.
I would like it back. 

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July 13, 2012, 03:42:31 PM
 #7

I only had $500 plus my position, but I would like to see these people brought to justice before they strike again.

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July 13, 2012, 03:44:22 PM
 #8

Lawyers are going to be very expensive and what if the "investors" don't have any money to make you whole?

Thats what I plan to find out, and to find who can be considered criminally liable for the latest hack.

The tragedy of this route is that on the one hand it's the only active route that bitcoinica users can pursue at this point, but on the other hand I think it reduces the odds of anyone getting anything back.
BadBitcoin (James Sutton)
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July 13, 2012, 04:06:27 PM
 #9

Lawyers are going to be very expensive and what if the "investors" don't have any money to make you whole?

Thats what I plan to find out, and to find who can be considered criminally liable for the latest hack.

The tragedy of this route is that on the one hand it's the only active route that bitcoinica users can pursue at this point, but on the other hand I think it reduces the odds of anyone getting anything back.

its quite unfortunate and you're correct, but at this point I have absolutely 0 faith in the bitcoinica consultancy, I hate lawyers too but I at least respect that they can sometimes get things done.
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July 13, 2012, 04:13:00 PM
 #10

Lawyers are going to be very expensive and what if the "investors" don't have any money to make you whole?

Thats what I plan to find out, and to find who can be considered criminally liable for the latest hack.

The tragedy of this route is that on the one hand it's the only active route that bitcoinica users can pursue at this point, but on the other hand I think it reduces the odds of anyone getting anything back.

its quite unfortunate and you're correct, but at this point I have absolutely 0 faith in the bitcoinica consultancy, I hate lawyers too but I at least respect that they can sometimes get things done.
Genjix stated multiple times, that Patrick and/or Donald where the one that did constantly delay the payout. Maybe this process can now be faster, since at least Patrick is gone. So hopefully genjix assumes that he is now authorized to do the actual payouts and does it without further delay.
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July 13, 2012, 04:17:19 PM
 #11

Lawyers are going to be very expensive and what if the "investors" don't have any money to make you whole?

Thats what I plan to find out, and to find who can be considered criminally liable for the latest hack.

The tragedy of this route is that on the one hand it's the only active route that bitcoinica users can pursue at this point, but on the other hand I think it reduces the odds of anyone getting anything back.

its quite unfortunate and you're correct, but at this point I have absolutely 0 faith in the bitcoinica consultancy, I hate lawyers too but I at least respect that they can sometimes get things done.
Genjix stated multiple times, that Patrick and/or Donald where the one that did constantly delay the payout. Maybe this process can now be faster, since at least Patrick is gone. So hopefully genjix assumes that he is now authorized to do the actual payouts and does it without further delay.

Tihan and Zhou both specifically told Patrick and Donald to refund my 24,841 bitcoins,  but Donald and Patrick both refused.
One day after legal action was threatened,  they announced this hack.
Cause,  or coincidence?

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July 13, 2012, 04:19:11 PM
 #12

Quote

Tihan and Zhou both specifically told Patrick and Donald to refund my 24,841 bitcoins,  but Donald and Patrick both refused.
One day after legal action was threatened,  they announced this hack.
Cause,  or coincidence?

this ^^


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BadBitcoin (James Sutton)
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July 13, 2012, 04:22:18 PM
 #13

Lawyers are going to be very expensive and what if the "investors" don't have any money to make you whole?

Thats what I plan to find out, and to find who can be considered criminally liable for the latest hack.

The tragedy of this route is that on the one hand it's the only active route that bitcoinica users can pursue at this point, but on the other hand I think it reduces the odds of anyone getting anything back.

its quite unfortunate and you're correct, but at this point I have absolutely 0 faith in the bitcoinica consultancy, I hate lawyers too but I at least respect that they can sometimes get things done.
Genjix stated multiple times, that Patrick and/or Donald where the one that did constantly delay the payout. Maybe this process can now be faster, since at least Patrick is gone. So hopefully genjix assumes that he is now authorized to do the actual payouts and does it without further delay.

Tihan and Zhou both specifically told Patrick and Donald to refund my 24,841 bitcoins,  but Donald and Patrick both refused.
One day after legal action was threatened,  they announced this hack.
Cause,  or coincidence?

Zhou is the only one of my knowledge that is absolved of responsibility due to his sale of the site, everyone else will be a target as well as the compnay they are a member of, I am antipicating personal and corporate bankraupcy by all parties if we continue.
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July 13, 2012, 04:32:59 PM
 #14

I'm in. My deposit value is $38,626 (BTC+USD combined). Willing to contribute to legal fees.
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July 13, 2012, 04:39:00 PM
 #15

I'm in...no questions asked.

If anyone is in NYC and wants to discuss this, feel free to come by the Bitinstant office on 23rd and Broadway

Bitcoin pioneer. An apostle of Satoshi Nakamoto. A crusader for a new, better, tech-driven society. A dreamer.

More about me: http://CharlieShrem.com
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July 13, 2012, 04:43:23 PM
 #16

I'm in...no questions asked.

If anyone is in NYC and wants to discuss this, feel free to come by the Bitinstant office on 23rd and Broadway

btw: sweet office saw the pictures on twitter!  Grin


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██
██
██
██
██
██
██
██
██     
██
██
▬▬ THE LARGEST & MOST TRUSTED ▬▬
      BITCOIN SPORTSBOOK     
   ▄▄
██
██
██
██
██
██
██
██
██
██     
██
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   24 hour Customer Support   

▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀
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July 13, 2012, 04:44:22 PM
 #17

poll about scammer tag: https://bitcointalk.org/index.php?topic=93119.0 , please vote.

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July 13, 2012, 04:45:46 PM
 #18

I'm in. Missing approx $8000 and BTC500. Was using bitcoinica to earn interest on USD only.
casascius
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July 13, 2012, 04:51:14 PM
 #19

I have 24,841BTC on deposit with Bitcoinica.
I would like it back. 

Holy shit!  That was painful to even just read!

Companies claiming they got hacked and lost your coins sounds like fraud so perfect it could be called fashionable.  I never believe them.  If I ever experience the misfortune of a real intrusion, I declare I have been honest about the way I have managed the keys in Casascius Coins.  I maintain no ability to recover or reproduce the keys, not even under limitless duress or total intrusion.  Remember that trusting strangers with your coins without any recourse is, as a matter of principle, not a best practice.  Don't keep coins online. Use paper or hardware wallets instead.
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July 13, 2012, 04:51:52 PM
 #20

some of us have interesting things that might be of use but we don't want to pass it out to people who are not lawyers representing us.
THIS

Mining Rig Extraordinaire - the Trenton BPX6806 18-slot PCIe backplane [PICS] Dead project is dead, all hail the coming of the mighty ASIC!
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July 13, 2012, 04:59:15 PM
 #21

Hello,

my lawyer told me that they probably wouldn't take it unless the sum is at least half a million (pounds, presumably, I forgot to ask) and that it's possible we won't be able to get back more than the half of it.

edit: The summary of claims that was originally here was removed and is being continued privately.
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July 13, 2012, 05:00:04 PM
 #22

In the US, an officer of a corporation is required to do whatever is necessary to safeguard the assets of said corporation.

I'm not a lawyer, but I believe Genjix *purposely* refusing to call the police will make him criminally liable, and for this fact alone he could face jail time.  Make sure you pursue this with the lawyer.  I don't have enough invested to make this worth my while, but I wish you the best of luck.

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July 13, 2012, 05:04:45 PM
 #23

I'm in...no questions asked.

If anyone is in NYC and wants to discuss this, feel free to come by the Bitinstant office on 23rd and Broadway

Excellent stance Charlie.. 

I applaud this..    Smiley

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July 13, 2012, 05:06:51 PM
 #24

I only had 50btc there to collect interest. It isn't much but I'd like it back.
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July 13, 2012, 05:12:31 PM
 #25

In the US, an officer of a corporation is required to do whatever is necessary to safeguard the assets of said corporation.

I'm not a lawyer, but I believe Genjix *purposely* refusing to call the police will make him criminally liable, and for this fact alone he could face jail time.  Make sure you pursue this with the lawyer.  I don't have enough invested to make this worth my while, but I wish you the best of luck.
I still think you are barking the wrong tree, genjix is "only" their workhorse, while Patrick and Donald where the C-something-Os, that made all those bad decisions that eventually led to the current mess.
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July 13, 2012, 05:21:04 PM
 #26

I have around 300btc in bitcoinica, and a 500btc long.
I'm not a big fish, but i'm obv in if possible

1BestioLC7YBVh8Q5LfH6RYURD6MrpP8y6
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July 13, 2012, 05:24:43 PM
 #27

I'm in. 1k BTC and 900 USD.
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July 13, 2012, 05:42:03 PM
 #28

In the US, an officer of a corporation is required to do whatever is necessary to safeguard the assets of said corporation.

I'm not a lawyer, but I believe Genjix *purposely* refusing to call the police will make him criminally liable, and for this fact alone he could face jail time.  Make sure you pursue this with the lawyer.  I don't have enough invested to make this worth my while, but I wish you the best of luck.

This situation is horrible.  At the very least a bunch of people where extremely negligent, and I also don't think the possibility of something more nefarious can be discounted.  That being said, I'm beginning to feel very uneasy about the growing witch-hunt mentality.  I don't know what the solution is for those of you with large losses.  I don't want to come off as minimizing the impact some of the losses have on some of you, but I also would hate to see somebody's life ruined by jail time because of negligence.  If something nefarious has been going on, then that's a different matter, and though I think things look suspicious, I think we ought to be careful about the charges we levy against people.
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July 13, 2012, 05:47:33 PM
 #29

Class action litigation involving these sums of money can be paid with percentage fee if case is won.

This is a much better approach than just losing all the money by doing nothing so I am sure you would find a competent lawyer who would take on this case free of charge until money is claimed.

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

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July 13, 2012, 05:49:36 PM
 #30

In the US, an officer of a corporation is required to do whatever is necessary to safeguard the assets of said corporation.

I'm not a lawyer, but I believe Genjix *purposely* refusing to call the police will make him criminally liable, and for this fact alone he could face jail time.  Make sure you pursue this with the lawyer.  I don't have enough invested to make this worth my while, but I wish you the best of luck.

This situation is horrible.  At the very least a bunch of people where extremely negligent, and I also don't think the possibility of something more nefarious can be discounted.  That being said, I'm beginning to feel very uneasy about the growing witch-hunt mentality.  I don't know what the solution is for those of you with large losses.  I don't want to come off as minimizing the impact some of the losses have on some of you, but I also would hate to see somebody's life ruined by jail time because of negligence.  If something nefarious has been going on, then that's a different matter, and though I think things look suspicious, I think we ought to be careful about the charges we levy against people.

This is the real world, real money, real people.

Those in charge were prepared to make the profits one way or another thus their liable on the flip side is just as important, if this ruins the people in charge perhaps they will think longer next time around before trying to stick their heads in a cave where it doesnt belong from the start.

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July 13, 2012, 05:51:22 PM
 #31

Hello,

my lawyer told me that they probably wouldn't take it unless the sum is at least half a million (pounds, presumably, I forgot to ask) and that it's possible we won't be able to get back more than the half of it.

I will update this post based on the claims posted here. If it is not enough, she promised to recommend a different one that might be a better match.

whoBTCUSDTotal @5Total @7.75
BadBitcoin0500050005000
lonelyminer476602383035745
MemoryDealers248410124205192517.75
guruvan5000500500
ninjarobot??3862638626
Yankee (BitInstant)????
xjin50080001050011875
dizzy1500250387.5
total202911284651.25

Goat are you in? I remember the Tygrr bot has 700 BTC in Bitcoinica, should I put it in?

PS I'm typing this while in a bus so making a table is cumbersome, but will create a google docs sheet later.

goat is in, he has been PMing me since my first post, he has 700 BTC in the blender (5425 USD according to your price)
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July 13, 2012, 05:58:59 PM
 #32

In the US, an officer of a corporation is required to do whatever is necessary to safeguard the assets of said corporation.

I'm not a lawyer, but I believe Genjix *purposely* refusing to call the police will make him criminally liable, and for this fact alone he could face jail time.  Make sure you pursue this with the lawyer.  I don't have enough invested to make this worth my while, but I wish you the best of luck.

This situation is horrible.  At the very least a bunch of people where extremely negligent, and I also don't think the possibility of something more nefarious can be discounted.  That being said, I'm beginning to feel very uneasy about the growing witch-hunt mentality.  I don't know what the solution is for those of you with large losses.  I don't want to come off as minimizing the impact some of the losses have on some of you, but I also would hate to see somebody's life ruined by jail time because of negligence.  If something nefarious has been going on, then that's a different matter, and though I think things look suspicious, I think we ought to be careful about the charges we levy against people.

This is the real world, real money, real people.

Those in charge were prepared to make the profits one way or another thus their liable on the flip side is just as important, if this ruins the people in charge perhaps they will think longer next time around before trying to stick their heads in a cave where it doesnt belong from the start.

I understand that.  I really don't have anything else to say.  I guess the lawyers are going to have to sort it out from here.
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July 13, 2012, 06:01:21 PM
 #33

I am in
5021 bitcoins. Got nothing back so far. I cant really contribute to legal fees right now however.

I am willing to "drop" any charges if I were reimbursed at any point.

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July 13, 2012, 06:02:30 PM
 #34

Not in as I had nothing in there, but good luck.

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July 13, 2012, 06:08:15 PM
 #35

I'm working today, but I will make some emails has OneMiner has to my local lawyer to see if he can point us to the proper person to take our case.

This I think will be the first bitcoin related lawsuit in history, should be fun.
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July 13, 2012, 06:18:47 PM
 #36

I'm working today, but I will make some emails has OneMiner has to my local lawyer to see if he can point us to the proper person to take our case.

This I think will be the first bitcoin related lawsuit in history, should be fun.

I would never use "Should be fun" in the case of serious money at stake and law suits.

This is a serious NOT FUN matter and those who are liable should know that this isnt FUN and GAMES.

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July 13, 2012, 06:21:14 PM
 #37

I'm working today, but I will make some emails has OneMiner has to my local lawyer to see if he can point us to the proper person to take our case.

This I think will be the first bitcoin related lawsuit in history, should be fun.

I would never use "Should be fun" in the case of serious money at stake and law suits.

This is a serious NOT FUN matter and those who are liable should know that this isnt FUN and GAMES.

There was some extreme sarcasm in that comment, and I've lost a considerable amount of my money in this, For future reference I never say "should be fun" when something is going to be fun, quite the opposite.
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July 13, 2012, 06:31:12 PM
 #38

I'm working today, but I will make some emails has OneMiner has to my local lawyer to see if he can point us to the proper person to take our case.

This I think will be the first bitcoin related lawsuit in history, should be fun.

I would never use "Should be fun" in the case of serious money at stake and law suits.

This is a serious NOT FUN matter and those who are liable should know that this isnt FUN and GAMES.

There was some extreme sarcasm in that comment, and I've lost a considerable amount of my money in this, For future reference I never say "should be fun" when something is going to be fun, quite the opposite.

Just checking Smiley

I hope those liable get whats coming their way, hopefully this will end up setting a much needed example for what will happen if you handle other peoples money like shit.

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July 13, 2012, 06:37:49 PM
 #39

I understand Bitcoinica Consultancy LTD, but what does Intersango LTD have to do with this?

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July 13, 2012, 07:15:18 PM
 #40

I have 589 BTC deposited and roughly a unrealized 2800 position @ 5.40

Bitcoinica still has not given me 50% of my claim of 600 BTC
INTERSANGO can go down with bitcoinica for abandoning customers
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July 13, 2012, 07:22:59 PM
 #41

I don't want to come off as minimizing the impact some of the losses have on some of you, but I also would hate to see somebody's life ruined by jail time because of negligence. 

You don't think a million dollars is worth time in jail?  The directors on that board continue even now to act against the best interests by not calling the police.  They deserve jail time!

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July 13, 2012, 07:26:04 PM
 #42

I have 24,841BTC on deposit with Bitcoinica.
I would like it back. 

brother why on earth did you have so much on that site?
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July 13, 2012, 07:26:56 PM
 #43

again if you have bitcoins or USD tied up in bitcoinica and want to join the litigation suit, please pm me your skype name and I will add you to our conference, thanks.
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July 13, 2012, 07:41:12 PM
 #44

i was just randomly thinking: "maybe the price of 40btc, was not bad for a few months of good entertainment, its better then the movies!"

"The whole problem with the world is that fools and fanatics are always so certain of themselves and wiser people so full of doubts." -Bertrand Russell
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July 13, 2012, 07:46:23 PM
 #45

I have 24,841BTC on deposit with Bitcoinica.
I would like it back. 
brother why on earth did you have so much on that site?
I was attracted by the high interest rates and the money I thought I could earn by depositing bitcoins with them.
I never made a single trade on Bitcoinica.
I simply held a balance and collected interest.

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July 13, 2012, 11:23:38 PM
 #46

if you need money I suggest you to open a wallet for donations. I had almost nothing but I'd partecipate with some of my BTCs, and I think others would do that.
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July 14, 2012, 12:01:33 AM
 #47

I understand Bitcoinica Consultancy LTD, but what does Intersango LTD have to do with this?

this

Bitcoin is the future !
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July 14, 2012, 12:05:20 AM
 #48

I understand Bitcoinica Consultancy LTD, but what does Intersango LTD have to do with this?

this

Same company.

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July 14, 2012, 12:07:57 AM
 #49

I understand Bitcoinica Consultancy LTD, but what does Intersango LTD have to do with this?

this

Same company.
Having the same people involved doesn't make it the same company.

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July 14, 2012, 12:38:15 AM
 #50

I understand Bitcoinica Consultancy LTD, but what does Intersango LTD have to do with this?

this

Same company.
Having the same people involved doesn't make it the same company.

Because corporations are people too, didn't you know?!  Roll Eyes

My personality type: INTJ - please forgive my weaknesses (Not naturally in tune with others feelings; may be insensitive at times, tend to respond to conflict with logic and reason, tend to believe I'm always right)

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July 14, 2012, 12:42:05 AM
 #51

I understand Bitcoinica Consultancy LTD, but what does Intersango LTD have to do with this?

this

Same company.
Having the same people involved doesn't make it the same company.


Wouldnt Intersango be considered an asset and liable to seizure if the same people own it ?

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July 14, 2012, 12:44:00 AM
 #52

I understand Bitcoinica Consultancy LTD, but what does Intersango LTD have to do with this?

this

Same company.
Having the same people involved doesn't make it the same company.


Wouldnt Intersango be considered an asset and liable to seizure if the same people own it ?

It would to rational human beings but not to the state and their rules, to them these are two different persons, completely separate.

My personality type: INTJ - please forgive my weaknesses (Not naturally in tune with others feelings; may be insensitive at times, tend to respond to conflict with logic and reason, tend to believe I'm always right)

If however you enjoyed my post: 15j781DjuJeVsZgYbDVt2NZsGrWKRWFHpp
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July 14, 2012, 12:46:10 AM
 #53

I understand Bitcoinica Consultancy LTD, but what does Intersango LTD have to do with this?

this

Same company.
Having the same people involved doesn't make it the same company.


Wouldnt Intersango be considered an asset and liable to seizure if the same people own it ?

It would to rational human beings but not to the state and their rules, to them these are two different persons, completely separate.
Yes, they are completely separate.

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July 14, 2012, 12:47:05 AM
 #54

I understand Bitcoinica Consultancy LTD, but what does Intersango LTD have to do with this?

this

Same company.
Having the same people involved doesn't make it the same company.


Wouldnt Intersango be considered an asset and liable to seizure if the same people own it ?

It would to rational human beings but not to the state and their rules, to them these are two different persons, completely separate.

Having no responsibility is the essence of government Smiley

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July 14, 2012, 01:06:04 AM
 #55

I understand Bitcoinica Consultancy LTD, but what does Intersango LTD have to do with this?

this

Same company.
Having the same people involved doesn't make it the same company.


Wouldnt Intersango be considered an asset and liable to seizure if the same people own it ?

It would to rational human beings but not to the state and their rules, to them these are two different persons, completely separate.
Yes, they are completely separate.

http://en.wikipedia.org/wiki/LTD
http://en.wikipedia.org/wiki/Limited_company

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July 14, 2012, 01:12:02 AM
 #56

You setup a company protected by the government then  when it comes time to call the cops when a break in happens you claim "we dont believe in government interference"  Huh

Please tell me how that makes sense.

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July 14, 2012, 01:29:33 AM
 #57

BadBitcoin contacted me today on Skype regarding this as I am based in Wellington, New Zealand and may be in a useful position to brief a local lawyer I know who is good at commercial law, and is also ex-New York so he might be useful for the US based aspects of this.

(I also know I have the worst first name for this thread.)
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July 14, 2012, 02:10:05 AM
 #58

You wont get your BTC, but you may be able to get USD.... But I highly doubt it. These people are already broke... Patrick and others have already started this.... Once they go bankrupt, you aint getting shiiiiiit....

Remember tho, you wont get the value of btc today or in the future...You'll prolly get the same value of btc when it was hacked, which was around $4.30 if I remember correctly.

Good luck!  Wink
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July 14, 2012, 02:19:10 AM
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You wont get your BTC, but you may be able to get USD.... But I highly doubt it. These people are already broke... Patrick and others have already started this.... Once they go bankrupt, you aint getting shiiiiiit....

Remember tho, you wont get the value of btc today or in the future...You'll prolly get the same value of btc when it was hacked, which was around $4.30 if I remember correctly.

Good luck!  Wink

Its better than nothing.
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July 14, 2012, 02:22:37 AM
 #60

You wont get your BTC, but you may be able to get USD.... But I highly doubt it. These people are already broke... Patrick and others have already started this.... Once they go bankrupt, you aint getting shiiiiiit....

Remember tho, you wont get the value of btc today or in the future...You'll prolly get the same value of btc when it was hacked, which was around $4.30 if I remember correctly.

Good luck!  Wink

If they file for bankruptcy you wont even be able to contact them. The laws on this are very strict in both NZ and Australia.

This would include PM's on the forum I imagine.

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July 14, 2012, 02:34:06 AM
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Lawyers are going to be very expensive and what if the "investors" don't have any money to make you whole?

You need at least 3 elements for a class/representative action.  A court to certify that there's a cause of action; a court to certify the plaintiffs as a class (you need a minimum number of plaintiffs for this); and a defendant with deep enough pockets to pay the award being sought.  In this particular instance, you're also going to need a court to accept jurisdiction.  You will need to hire local litigation lawyers in each jurisdiction where an action is bring brought and you will need a means of funding that litigation.  

You also need to make absolutely certain that you are suing the right defendant/s. You need to be aware that exemplary damages are awarded very rarely in some jurisdictions and that any such awards tend to be very low.  It's highly possible that you would ultimately receive less money pursuing a representative action than you would taking action to have a liquidator appointed or seeking payment through conventional means.

Quote
If they file for bankruptcy you wont even be able to contact them. The laws on this are very strict in both NZ and Australia.

This is mostly true but at that point they would no longer control any of the funds/assets.  Those would be under the control of the liquidator/administrator, who has the power to reverse any transactions which took place during the lookback period preceding the insolvency and force disgorgement of funds from anyone who received inappropriate financial preference or who transferred assets during that period.

All I can say is that this is Bitcoin. I don't believe it until I see six confirmations.
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July 14, 2012, 04:06:09 PM
 #62

You wont get your BTC, but you may be able to get USD.... But I highly doubt it. These people are already broke... Patrick and others have already started this.... Once they go bankrupt, you aint getting shiiiiiit....

Remember tho, you wont get the value of btc today or in the future...You'll prolly get the same value of btc when it was hacked, which was around $4.30 if I remember correctly.

Good luck!  Wink

All the more reason to sue.

Right now they are broke because the coins and cash have been moved internally and announced as theft/hacks.  The first thing a lawyer will do is get a police investigation going, which will lead to criminal charges and the recovery of said coins/cash.

Don't believe for a second this wasn't an inside job.  The lack of police involvement pretty well proves it.

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July 14, 2012, 04:14:33 PM
 #63

Quote
All the more reason to sue.

Right now they are broke because the coins and cash have been moved internally and announced as theft/hacks.  The first thing a lawyer will do is get a police investigation going, which will lead to criminal charges and the recovery of said coins/cash.

Don't believe for a second this wasn't an inside job.  The lack of police involvement pretty well proves it.

does it though?

i'm trying to imagine going to the police about something like this. can you imagine trying to explain to them what bitcoin is, how it works, how you were "hacked" and lost money, etc etc.

would introduce nightmarish bureaucratic hell to one's life and wouldn't exactly help "solve the case"

makes no sense to me whatsoever.
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July 14, 2012, 04:23:15 PM
 #64

Quote
All the more reason to sue.

Right now they are broke because the coins and cash have been moved internally and announced as theft/hacks.  The first thing a lawyer will do is get a police investigation going, which will lead to criminal charges and the recovery of said coins/cash.

Don't believe for a second this wasn't an inside job.  The lack of police involvement pretty well proves it.

does it though?

i'm trying to imagine going to the police about something like this. can you imagine trying to explain to them what bitcoin is, how it works, how you were "hacked" and lost money, etc etc.

would introduce nightmarish bureaucratic hell to one's life and wouldn't exactly help "solve the case"

makes no sense to me whatsoever.

Really?  Then have the police tell me they don't understand it, not you. Using this an excuse for lack of police involvement is nonsense.  The police have not become involved because they could get IP logs from ISPs and trace them right back to the inside job.

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July 14, 2012, 05:21:33 PM
 #65

Get MemoryDealers in on the lawsuit, and I think the stack of money would be high enough for the lawyers to care.
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July 14, 2012, 05:28:24 PM
 #66

You wont get your BTC, but you may be able to get USD.... But I highly doubt it. These people are already broke... Patrick and others have already started this.... Once they go bankrupt, you aint getting shiiiiiit....

Remember tho, you wont get the value of btc today or in the future...You'll prolly get the same value of btc when it was hacked, which was around $4.30 if I remember correctly.

Good luck!  Wink

Its better than nothing.

Didn't they say that they still have 70%? "Only" 30% stolen?
Once you drag them to court and they have to file bankruptcy I am sure we will get nothing, or in any case way less than 70%.
So how is that better?

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July 14, 2012, 06:28:33 PM
 #67

Lawyers are going to be very expensive and what if the "investors" don't have any money to make you whole?

You need at least 3 elements for a class/representative action.  A court to certify that there's a cause of action; a court to certify the plaintiffs as a class (you need a minimum number of plaintiffs for this); and a defendant with deep enough pockets to pay the award being sought.  In this particular instance, you're also going to need a court to accept jurisdiction.  You will need to hire local litigation lawyers in each jurisdiction where an action is bring brought and you will need a means of funding that litigation.  

You also need to make absolutely certain that you are suing the right defendant/s. You need to be aware that exemplary damages are awarded very rarely in some jurisdictions and that any such awards tend to be very low.  It's highly possible that you would ultimately receive less money pursuing a representative action than you would taking action to have a liquidator appointed or seeking payment through conventional means.

Quote
If they file for bankruptcy you wont even be able to contact them. The laws on this are very strict in both NZ and Australia.

This is mostly true but at that point they would no longer control any of the funds/assets.  Those would be under the control of the liquidator/administrator, who has the power to reverse any transactions which took place during the lookback period preceding the insolvency and force disgorgement of funds from anyone who received inappropriate financial preference or who transferred assets during that period.


Here's the sad part: All the key concerns are highly aware of all the above, hence them that fretting the lost YOUR money, now there's.

~Bruno~
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July 14, 2012, 07:47:41 PM
 #68

I lost nearly $150,000 one day. Pretty much everything. Nothing to do with Bitcoin. The guy went to jail but I was never completely sure if we had the whole truth. I took it on the chin.

Intersango has been a useful service and Amir has done a lot for me and us.

I do think action should go ahead as there is a case for it and it should change attitudes. But I also acknowledge it will be a shame to see the back of Intersango as they've:
- taken risks on my behalf by running the exchange in the grey area of is-it-forex (initially for no fee),
- developing the exchange software,
- working on the Bitcoin code and also
- campaigning in person at events like Occupy

I'm not defending them. I'm just saying it's a shame. These will be the next in a line of public figures with Bitcoin where the community has turned against. A sample size of 2 is a bit early for a worrying trend but divided we are and so easily.

It took a lot more work than this to turn me against the guy who was slated as spending my life savings. For a long time I felt there must have been mitigating circumstances because they were shutdown by an agency with active interests in doing so. I could see a conspiracy theory. To this day I'm not completely sure but I've decided not to break the guys legs even though he's been convicted and done his jail time. The hard thing is it's hard for me to know.  

What is suing going to achieve other than finally show people a precedent that this is a serious matter and things are real.

That was me saying it in a light fashion to save egos. Perhaps I should be blunt. I could say "Screw you. Get off these guys. Let me carry on using my favorite exchange. Let me continue to receive their contributions to the code base and exchange software. Let me enjoy their work at Occupy. Forgive them and shut the crap up just like I did with my life savings."

I feel very qualified to say so because I have gone through the experience and it has changed my entire life. If I hadn't lost that cash I wouldn't be in this damn job, I wouldn't be in the country and I'd be with my girlfriend! But I know burning down the guys house isn't going to change anything.

Now, if suing does change things and get people to take security more seriously then do it, you are doing it from a good place.
But if you look in your heart and you're doing it for vengeance then I suggest step back because that in my experience usually backfires. If necessarily, find a way to do it right.

I've gone out on a limb to say this for you, bear that in mind.

edit:

There might not be any chillingeffect though. Thoughts?

Crypto supporter!
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July 14, 2012, 07:50:24 PM
 #69

I lost nearly $150,000 one day. Pretty much everything. Nothing to do with Bitcoin. The guy went to jail but I was never completely sure if we had the whole truth. I took it on the chin.

Intersango has been a useful service and Amir has done a lot for me and us.

I do think action should go ahead as there is a case for it and it should change attitudes. But I also acknowledge it will be a shame to see the back of Intersango as they've:
- taken risks on my behalf by running the exchange in the grey area of is-it-forex (initially for no fee),
- developing the exchange software,
- working on the Bitcoin code and also
- campaigning in person at events like Occupy

I'm not defending them. I'm just saying it's a shame. These will be the next in a line of public figures with Bitcoin where the community has turned against. A sample size of 2 is a bit early for a worrying trend but divided we are and so easily.

It took a lot more work than this to turn me against the guy who was slated as spending my life savings. For a long time I felt there must have been mitigating circumstances because they were shutdown by an agency with active interests in doing so. I could see a conspiracy theory. To this day I'm not completely sure but I've decided not to break the guys legs even though he's been convicted and done his jail time. The hard thing is it's hard for me to know. 

What is suing going to achieve other than finally show people a precedent that this is a serious matter and things are real.

That was me saying it in a light fashion to save egos. Perhaps I should be blunt. I could say "Screw you. Get off these guys. Let me carry on using my favorite exchange. Let me continue to receive their contributions to the code base and exchange software. Let me enjoy their work at Occupy. Forgive them and shut the crap up just like I did with my life savings."

I feel very qualified to say so because I have gone through the experience and it has changed my entire life. If I hadn't lost that cash I wouldn't be in this damn job, I wouldn't be in the country and I'd be with my girlfriend! But I know burning down the guys house isn't going to change anything.

Now, if suing does change things and get people to take security more seriously then do it, you are doing it from a good place.
But if you look in your heart and you're doing it for vengeance then I suggest step back because that in my experience usually backfires. If necessarily, find a way to do it right.

I've gone out on a limb to say this for you, bear that in mind.

I want my money.
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July 14, 2012, 07:56:37 PM
 #70

You wont get your BTC, but you may be able to get USD.... But I highly doubt it. These people are already broke... Patrick and others have already started this.... Once they go bankrupt, you aint getting shiiiiiit....

Remember tho, you wont get the value of btc today or in the future...You'll prolly get the same value of btc when it was hacked, which was around $4.30 if I remember correctly.

Good luck!  Wink

Its better than nothing.

Didn't they say that they still have 70%? "Only" 30% stolen?
Once you drag them to court and they have to file bankruptcy I am sure we will get nothing, or in any case way less than 70%.
So how is that better?



They probably aren't gonna be using client funds for legal defense against said clients, that would land them in an even bigger pile of shit and open the door for a criminal investigation.
 


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July 14, 2012, 08:07:16 PM
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I lost nearly $150,000 one day. Pretty much everything. Nothing to do with Bitcoin. The guy went to jail but I was never completely sure if we had the whole truth. I took it on the chin.

Intersango has been a useful service and Amir has done a lot for me and us.

I do think action should go ahead as there is a case for it and it should change attitudes. But I also acknowledge it will be a shame to see the back of Intersango as they've:
- taken risks on my behalf by running the exchange in the grey area of is-it-forex (initially for no fee),
- developing the exchange software,
- working on the Bitcoin code and also
- campaigning in person at events like Occupy

I'm not defending them. I'm just saying it's a shame. These will be the next in a line of public figures with Bitcoin where the community has turned against. A sample size of 2 is a bit early for a worrying trend but divided we are and so easily.

It took a lot more work than this to turn me against the guy who was slated as spending my life savings. For a long time I felt there must have been mitigating circumstances because they were shutdown by an agency with active interests in doing so. I could see a conspiracy theory. To this day I'm not completely sure but I've decided not to break the guys legs even though he's been convicted and done his jail time. The hard thing is it's hard for me to know.  

What is suing going to achieve other than finally show people a precedent that this is a serious matter and things are real.

That was me saying it in a light fashion to save egos. Perhaps I should be blunt. I could say "Screw you. Get off these guys. Let me carry on using my favorite exchange. Let me continue to receive their contributions to the code base and exchange software. Let me enjoy their work at Occupy. Forgive them and shut the crap up just like I did with my life savings."

I feel very qualified to say so because I have gone through the experience and it has changed my entire life. If I hadn't lost that cash I wouldn't be in this damn job, I wouldn't be in the country and I'd be with my girlfriend! But I know burning down the guys house isn't going to change anything.

Now, if suing does change things and get people to take security more seriously then do it, you are doing it from a good place.
But if you look in your heart and you're doing it for vengeance then I suggest step back because that in my experience usually backfires. If necessarily, find a way to do it right.

I've gone out on a limb to say this for you, bear that in mind.

edit:

There might not be any chillingeffect though. Thoughts?

Im with you on this one. Ive lost substantial amounts of money, not quite as much as yoursel but the term "shit happens" springs to mind. Its all relative, leaving massive amounts of funds in a place like this is obviously risky as hackers see the reward as monumental when they know fine well fools will try and make easy money.

I honestly think this is a waste of time. If for instance this was an inside job do people honestly think they wouldnt be smart enough to cover there tracks? Its what we do. Police wouldnt have a hope of uncovering anything.. Never mind proving anything.
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July 14, 2012, 08:10:22 PM
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I lost nearly $150,000 one day. Pretty much everything. Nothing to do with Bitcoin. The guy went to jail but I was never completely sure if we had the whole truth. I took it on the chin.

Intersango has been a useful service and Amir has done a lot for me and us.

I do think action should go ahead as there is a case for it and it should change attitudes. But I also acknowledge it will be a shame to see the back of Intersango as they've:
- taken risks on my behalf by running the exchange in the grey area of is-it-forex (initially for no fee),
- developing the exchange software,
- working on the Bitcoin code and also
- campaigning in person at events like Occupy

I'm not defending them. I'm just saying it's a shame. These will be the next in a line of public figures with Bitcoin where the community has turned against. A sample size of 2 is a bit early for a worrying trend but divided we are and so easily.

It took a lot more work than this to turn me against the guy who was slated as spending my life savings. For a long time I felt there must have been mitigating circumstances because they were shutdown by an agency with active interests in doing so. I could see a conspiracy theory. To this day I'm not completely sure but I've decided not to break the guys legs even though he's been convicted and done his jail time. The hard thing is it's hard for me to know.  

What is suing going to achieve other than finally show people a precedent that this is a serious matter and things are real.

That was me saying it in a light fashion to save egos. Perhaps I should be blunt. I could say "Screw you. Get off these guys. Let me carry on using my favorite exchange. Let me continue to receive their contributions to the code base and exchange software. Let me enjoy their work at Occupy. Forgive them and shut the crap up just like I did with my life savings."

I feel very qualified to say so because I have gone through the experience and it has changed my entire life. If I hadn't lost that cash I wouldn't be in this damn job, I wouldn't be in the country and I'd be with my girlfriend! But I know burning down the guys house isn't going to change anything.

Now, if suing does change things and get people to take security more seriously then do it, you are doing it from a good place.
But if you look in your heart and you're doing it for vengeance then I suggest step back because that in my experience usually backfires. If necessarily, find a way to do it right.

I've gone out on a limb to say this for you, bear that in mind.

edit:

There might not be any chillingeffect though. Thoughts?

Thanks for your report. I can feel your pain as I am in the same place that you were.

Mainly, I want my money. I mean once I'll have my money I wont have any grief toward anyone.

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July 14, 2012, 08:47:45 PM
 #73

Tihan said their fund will already be pursuing legal action against the consultancy. And the consultancy aren't the owners and don't have assets anyway.

Legal action is needed against Tihan and "wendon" (the mysterious owner, Tihan is supposedly a middle-man according to patrick). Both the venture capital fund and the bitcoinica legal entity in new zealand should be the focus, ultimately it was their responsibility which they psssed on to the consultancy. And, they actually have the assets to cover the losses (they also invested $500k in coinLabs).

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July 14, 2012, 09:51:05 PM
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The dollars and Bitcoins owed by Bitcoinica to their depositors were not destroyed nor squandered. They still exist, merely their possessors are illegitimate. This means that it is possible to repossess them. Until they are returned, the rights of the depositors are being violated, even though it is unclear who is to what extent responsible for it. Even if I personally did not care whether my money is returned, I still want to live in a world where property rights are respected. This requires enforcement.

There exists a perception of uncertainty about the ability of the legal system to enforce property rights with respect to Bitcoin, and this discourages people from using Bitcoin, thinking that fiat currencies like dollars or the euro are "safer". While I don't think that's true, based on my research it appears to be a very common perception. A legal precedent can be beneficial for the future of Bitcoin. If we don't do it now with Bitcoinica, eventually someone else will do it in some other case in the future, when someone else is a victim. But making a precedent now can make it easier for this future victim, or even prevent them from becoming victims in the first place.

I personally as an anarchocapitalist think that the prison system is retarded. The victims are required to pay, via taxes, for the food and lodgings of the people that harmed them, while the perpetrators cannot work to repay the debt. However, whether people go to prison or not is to a large extent determined by the state, not by the victims. The victims and witnesses are often required to participate in criminal proceedings whether they want or not.

However, putting people into prison is an entirely different issue than enforcement of property rights. I want the latter but not the former. Not only for me, not only for Bitcoin users, but for everyone.
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July 14, 2012, 09:59:16 PM
 #75

Tihan said their fund will already be pursuing legal action against the consultancy. And the consultancy aren't the owners and don't have assets anyway.

Legal action is needed against Tihan and "wendon" (the mysterious owner, Tihan is supposedly a middle-man according to patrick). Both the venture capital fund and the bitcoinica legal entity in new zealand should be the focus, ultimately it was their responsibility which they psssed on to the consultancy. And, they actually have the assets to cover the losses (they also invested $500k in coinLabs).

It's actually not clear that $500,000 investment in CoinLab by Draper Associates and others intersects with Bitcoinica in any way.  In fact, there's a post somewhere (I'll try to find it) which says that Bitcoinica approached CoinLab for help after the Linode hack and they were unable to assist, which suggests that the investment group which is the limited partner in Bitcoinica is another group for which Tihan finds investments (this isn't at all uncommon in the world of VC).

While in the US you can "sue anyone for anything", that's not universally true elsewhere.  It's absolutely vital that if people want to litigate this they consult experienced litigation lawyers in the appropriate jurisdictions.  It's not simply a matter of "pick a defendant, any defendant".  It's also important to take into account that costs awards in some countries are only a proportion of the actual costs spent on litigation - you can still be out of pocket financially even if you prevail in court.  The cost of suing multiple defendants across multiple jurisdictions will not be small and the process will not be a rapid one.

Quote
They still exist, merely their possessors are illegitimate. This means that it is possible to repossess them. Until they are returned, the rights of the depositors are being violated, even though it is unclear who is to what extent responsible for it. Even if I personally did not care whether my money is returned, I still want to live in a world where property rights are respected. This requires enforcement.

I think that one of the reasons people have been willing to write off losses in the past is a desire to avoid their transactions coming under legal scrutiny.  Making a legally enforceable claim involves identifying yourself, and some people would rather forfeit their funds than do that.

All I can say is that this is Bitcoin. I don't believe it until I see six confirmations.
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July 14, 2012, 10:14:56 PM
 #76

Intersango has been a useful service and Amir has done a lot for me and us.

I do think action should go ahead as there is a case for it and it should change attitudes. But I also acknowledge it will be a shame to see the back of Intersango as they've:
- taken risks on my behalf by running the exchange in the grey area of is-it-forex (initially for no fee),
- developing the exchange software,
- working on the Bitcoin code and also
- campaigning in person at events like Occupy

I'm not defending them. I'm just saying it's a shame. These will be the next in a line of public figures with Bitcoin where the community has turned against. A sample size of 2 is a bit early for a worrying trend but divided we are and so easily.

This is a great post.

Right now I'm sitting on the sidelines - I have nothing at stake in Bitcoinica, but do use Intersango on a regular basis. Right now, what Bitcoin needs to grow and succeed is a) people willing to put effort and wisdom into making Bitcoin usable and trusted, and b) people willing to take that trust and build on it. Yes, there's "real money" at stake, but at the same time that "real money" is based on a platform of openness and accountability.

IMHO, underscoring Bitcoin with lawsuits *will* increase accountability (why wasn't Bitcoinica open sourced? why is info on most sites' security practices and legal statuses still so hard to find?), but it's going to require some *very* dedicated and passionate people to step up to that. The question is where are they going to come from?

My own opinion is that 'shit happens'. I wish BC hadn't bothered taking on such a risk (as, I guess, do they), but that's the shit Bitcoin is in.

What does it mean for the future of Bitcoin? I have no idea - but I'm certainly more wary about telling other people how great it is. Relying on  a small number of decent services is a dangerous position to be in.

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July 14, 2012, 10:23:37 PM
 #77

Lawyers are going to be very expensive and what if the "investors" don't have any money to make you whole?

Thats what I plan to find out, and to find who can be considered criminally liable for the latest hack.

The tragedy of this route is that on the one hand it's the only active route that bitcoinica users can pursue at this point, but on the other hand I think it reduces the odds of anyone getting anything back.

Also reduces the odds anyone will ever make a competitor to Mt.Gox if there is a history of them being sued into destitution.
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July 14, 2012, 10:33:52 PM
 #78

While in the US you can "sue anyone for anything", that's not universally true elsewhere.  It's absolutely vital that if people want to litigate this they consult experienced litigation lawyers in the appropriate jurisdictions.  It's not simply a matter of "pick a defendant, any defendant".  It's also important to take into account that costs awards in some countries are only a proportion of the actual costs spent on litigation - you can still be out of pocket financially even if you prevail in court.  The cost of suing multiple defendants across multiple jurisdictions will not be small and the process will not be a rapid one.
The lawyer I contacted works for an internationally established company with offices all around the world and experience with dealing with financial / banking lawsuits.

I think that one of the reasons people have been willing to write off losses in the past is a desire to avoid their transactions coming under legal scrutiny.  Making a legally enforceable claim involves identifying yourself, and some people would rather forfeit their funds than do that.
That's all fine. Those people can still use other ways of attempting to enforce their claims if they believe it is worth it. But eventually there will be a sufficient demand for more "official" enforcement methods.
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July 14, 2012, 10:45:58 PM
 #79

Quote
...but I'm certainly more wary about telling other people how great it is.

Exactly!

Quote
I think that one of the reasons people have been willing to write off losses in the past is a desire to avoid their transactions coming under legal scrutiny.  Making a legally enforceable claim involves identifying yourself, and some people would rather forfeit their funds than do that.

And the next scammers/hackers know it! And the ones that follow them. And then the ones that follow them. Ad infinitum.

Quote
It's also important to take into account that costs awards in some countries are only a proportion of the actual costs spent on litigation - you can still be out of pocket financially even if you prevail in court.  The cost of suing multiple defendants across multiple jurisdictions will not be small and the process will not be a rapid one.

The above being true, makes the below that much more not worth it.

Quote
Tihan said their fund will already be pursuing legal action against the consultancy. And the consultancy aren't the owners and don't have assets anyway.

Thus, once again, only the lawyers will prevail, whether they're paid in dollars, euros, bitcoins or alpaca socks.

~Bruno~
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July 14, 2012, 10:48:34 PM
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Quote
...but I'm certainly more wary about telling other people how great it is.

Exactly!

Quote
I think that one of the reasons people have been willing to write off losses in the past is a desire to avoid their transactions coming under legal scrutiny.  Making a legally enforceable claim involves identifying yourself, and some people would rather forfeit their funds than do that.

And the next scammers/hackers know it! And the ones that follow them. And then the ones that follow them. Ad infinitum.

Quote
It's also important to take into account that costs awards in some countries are only a proportion of the actual costs spent on litigation - you can still be out of pocket financially even if you prevail in court.  The cost of suing multiple defendants across multiple jurisdictions will not be small and the process will not be a rapid one.

The above being true, makes the below that much more not worth it.

Quote
Tihan said their fund will already be pursuing legal action against the consultancy. And the consultancy aren't the owners and don't have assets anyway.

Thus, once again, only the lawyers will prevail, whether they're paid in dollars, euros, bitcoins or alpaca socks.

~Bruno~


alpaca socks would be nice, although dollars would be preferred.
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July 14, 2012, 11:02:28 PM
 #81

It's actually not clear that $500,000 investment in CoinLab by Draper Associates and others intersects with Bitcoinica in any way.  In fact, there's a post somewhere (I'll try to find it) which says that Bitcoinica approached CoinLab for help after the Linode hack and they were unable to assist, which suggests that the investment group which is the limited partner in Bitcoinica is another group for which Tihan finds investments (this isn't at all uncommon in the world of VC).

I think this is the post you are referring to:

Consider that it 2 months of legal negotiation with Bitcoinica as to our role we would be taking, and when the hack happened, we we still completing the ownership transfer:

Quote
20:42 <phantomcircuit> tihan isn't like an employee
20:43 <phantomcircuit> he's a middleman
20:43 <phantomcircuit> a finder
20:43 <phantomcircuit> im guessing this huge mess is why he wont be working with him anymore
20:45 <genjix> however you dealt more with tihan, so you know more about everything
20:46 <genjix> i really haven't followed the events, nor read much of the email exchange between donald and tihan
20:48 <phantomcircuit> afaict this is effectively a series of decisions that were made in good faith which were unfortunately poorly thought out
20:48 <phantomcircuit> wendon bought bitcoinica in like october and knew immediately that there were problems
20:48 <phantomcircuit> they went to the coinlabs people but they weren't able to help or reneged on the deal or something i dont know the specifics
20:49 <phantomcircuit> when we got involved in what was it like march? they had been operating for months without a major overhaul
20:50 <phantomcircuit> the paperwork was wrong and tihan was rushing because i think he realized how fucked the situation really was
20:50 <phantomcircuit> then at the worst possible moment the hack happened

The email address I have for Tihan mentions splashlab.com - so this could possibly be related to the fund (I am merely speculating here)

Also Bitcoinica Consultancy suggested that there are more than one Limited Partners. Stating Tihan's fund as the 'Majority Limited Partner'. See: https://bitcointalk.org/index.php?topic=81045.msg902253#msg902253

Quote
Bitcoinica LP is a New Zealand Limited Partnership which is wholly operated by Bitcoinica Consultancy LTD a New Zealand registered company.

Mr. Heaslip is an accounting professional who assisted us with registrations and company formation. He has his own business interests in New Zealand which are otherwise unrelated.

The majority limited partner in Bitcoinica Limited Partnership is an investment fund which specializes in technology start-up investments. Mr. Seale is a facilitator for this fund and was instrumental in bringing investment into Bitcoinica LP to support it's operation and growth. He has also helped bring investment to CoinLab and other bitcoin businesses. CoinLab and Bitcoinica are otherwise unrelated. Additionally, Mr. Seale is an advisor or investor with dozens of companies outside the bitcoin space. Bitcoinica LP and those companies are also unrelated.

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July 14, 2012, 11:18:35 PM
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I think this is the post you are referring to:

Consider that it 2 months of legal negotiation with Bitcoinica as to our role we would be taking, and when the hack happened, we we still completing the ownership transfer:

Quote
20:42 <phantomcircuit> tihan isn't like an employee
20:43 <phantomcircuit> he's a middleman
20:43 <phantomcircuit> a finder
20:43 <phantomcircuit> im guessing this huge mess is why he wont be working with him anymore
20:45 <genjix> however you dealt more with tihan, so you know more about everything
20:46 <genjix> i really haven't followed the events, nor read much of the email exchange between donald and tihan
20:48 <phantomcircuit> afaict this is effectively a series of decisions that were made in good faith which were unfortunately poorly thought out
20:48 <phantomcircuit> wendon bought bitcoinica in like october and knew immediately that there were problems
20:48 <phantomcircuit> they went to the coinlabs people but they weren't able to help or reneged on the deal or something i dont know the specifics
20:49 <phantomcircuit> when we got involved in what was it like march? they had been operating for months without a major overhaul
20:50 <phantomcircuit> the paperwork was wrong and tihan was rushing because i think he realized how fucked the situation really was
20:50 <phantomcircuit> then at the worst possible moment the hack happened

The email address I have for Tihan mentions splashlab.com - so this could possibly be related to the fund (I am merely speculating here)

Also Bitcoinica Consultancy suggested that there are more than one Limited Partners. Stating Tihan's fund as the 'Majority Limited Partner'. See: https://bitcointalk.org/index.php?topic=81045.msg902253#msg902253

Quote
Bitcoinica LP is a New Zealand Limited Partnership which is wholly operated by Bitcoinica Consultancy LTD a New Zealand registered company.

Mr. Heaslip is an accounting professional who assisted us with registrations and company formation. He has his own business interests in New Zealand which are otherwise unrelated.

The majority limited partner in Bitcoinica Limited Partnership is an investment fund which specializes in technology start-up investments. Mr. Seale is a facilitator for this fund and was instrumental in bringing investment into Bitcoinica LP to support it's operation and growth. He has also helped bring investment to CoinLab and other bitcoin businesses. CoinLab and Bitcoinica are otherwise unrelated. Additionally, Mr. Seale is an advisor or investor with dozens of companies outside the bitcoin space. Bitcoinica LP and those companies are also unrelated.



Thanks.  That is the exchange I was referring to.  I knew that Amir knew little of the details, but I previously missed the part where he mentioned the email exchanges between Tihan and Donald.  It sounds like Amir - and maybe even Patrick - may have just gone along with whatever Tihan and Donald decided both prior to and after the hack.

I still really, really want to know who Wendon is and at what point Tihan became involved with Bitcoinica (we know it was before March - some of Zhou's posts suggest that it may have been January).  Obviously it's a trivial matter for Tihan to prove that he injected funds into Bitcoinica after the Linode and Rackspace hacks, as Zhou has stated in the past.

All I can say is that this is Bitcoin. I don't believe it until I see six confirmations.
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July 14, 2012, 11:41:11 PM
 #83

IMHO, underscoring Bitcoin with lawsuits *will* increase accountability (why wasn't Bitcoinica open sourced? why is info on most sites' security practices and legal statuses still so hard to find?), but it's going to require some *very* dedicated and passionate people to step up to that. The question is where are they going to come from?

At this early stage, lawsuits will have a chilling effect on trying to bring new people into the community, especially new businesses.

It seems unlikely that lawsuits will recover funds or successfully locate the thieves.


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July 14, 2012, 11:42:51 PM
 #84

I only have $100 in bitcoinica so its pointless for me to be involved in suing.
It would be good to get lawyers who are already into bitcoin to take this on imo so any precedent set is for the good of bitcoin overall, having some lawyers who are not versed with the bigger bitcoin picture could end up being detrimental overall even if this case is won, to the point of having pollies etc. rallying to have it banned in various jurisdictions, so tread lightly and carry a big stick kind of thing.
Another thing to consider is that if the complaint is lost then there could be damages awarded to the bitcoinica side.
To may people have lost to much for this to be swept under the carpet again and already to much time has gone by in this overall debacle, whatever happened by who and how it still stinks of so much shit behind the scene, the very least there has been negligence involved on the management and control of customer assets.
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July 15, 2012, 12:23:31 AM
 #85

IMHO, underscoring Bitcoin with lawsuits *will* increase accountability (why wasn't Bitcoinica open sourced? why is info on most sites' security practices and legal statuses still so hard to find?), but it's going to require some *very* dedicated and passionate people to step up to that. The question is where are they going to come from?

At this early stage, lawsuits will have a chilling effect on trying to bring new people into the community, especially new businesses.

It seems unlikely that lawsuits will recover funds or successfully locate the thieves.

As it sounds like there are going to be cross-suits - users suing Bitcoinica Consultancy and Tihan's fund also suing the Consultancy - it's not clear that representative action would bring the desired result. 

Users do need to accept that the majority of small businesses fail, and Bitcoin offers no magical protection against that.  Bitcoin businesses also need to accept that they have legally enforceable responsibilities to their customers and Bitcoin offers no magical protection against that.

While I agree that lawsuits may deter some people from starting Bitcoin ventures, that may actually be desirable given the "wing and a prayer" approach which past failed ventures have taken.  While users need to fully acknowledge the inherent risk when dealing with Bitcoin businesses, users also shouldn't be expected to go on just swallowing repeated losses while those responsible for those losses remain unaccountable.  That lack of accountability will also have a chilling effect on bringing new people into the community.

All I can say is that this is Bitcoin. I don't believe it until I see six confirmations.
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July 15, 2012, 01:15:15 AM
 #86

After all of this it would be amazing a movie portrayal of Bitcoinica rise and fall  Smiley

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July 15, 2012, 01:18:45 AM
 #87

After all of this it would be amazing a movie portrayal of Bitcoinica rise and fall  Smiley

I think there's plenty of intrigue left to be revealed before the final chapter is written on this saga.  Maybe a trilogy is in order.

All I can say is that this is Bitcoin. I don't believe it until I see six confirmations.
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July 15, 2012, 09:20:59 AM
 #88

At this early stage, lawsuits will have a chilling effect on trying to bring new people into the community, especially new businesses.
Jeff, I disagree completely. There have been plenty of cases in the past where bitcoins were stolen or deposits unrefunded, yet I am unaware of a single attempt to fix this. How can an attempt to resolve this issue discourage people from using Bitcoin?

It seems unlikely that lawsuits will recover funds or successfully locate the thieves.
Bitcoinica still has some funds, yet at the moment noone appears to be trying to refund the depositors. This makes it more likely that an attempt to enforce refunds will succeed than if this was only a theft where the perpetrator is unknown.
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July 15, 2012, 04:06:09 PM
 #89

At this early stage, lawsuits will have a chilling effect on trying to bring new people into the community, especially new businesses.
Jeff, I disagree completely. There have been plenty of cases in the past where bitcoins were stolen or deposits unrefunded, yet I am unaware of a single attempt to fix this. How can an attempt to resolve this issue discourage people from using Bitcoin?

Make sure all relevant law enforcement authorities, in all jurisdictions, have all available evidence required to chase the thieves responsible.  This includes Bitcoinica involved parties, assisting with all their available data, one hopes.


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July 15, 2012, 04:07:47 PM
 #90

It seems unlikely that lawsuits will recover funds or successfully locate the thieves.

Only lawyers will win. Everyone simply lose.

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July 15, 2012, 04:41:51 PM
 #91

Make sure all relevant law enforcement authorities, in all jurisdictions, have all available evidence required to chase the thieves responsible.  This includes Bitcoinica involved parties, assisting with all their available data, one hopes.
Jeff, there are two separate issues. Bitcoinica can, and should, still refund outstanding depositors proportionally to their "unstolen" money. But they are not doing that either! There is at this moment, no known acting representative or Bitcoinica doing anything to refund anybody. They need to be forced to get their shit together.
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July 15, 2012, 06:00:37 PM
 #92

Make sure all relevant law enforcement authorities, in all jurisdictions, have all available evidence required to chase the thieves responsible.  This includes Bitcoinica involved parties, assisting with all their available data, one hopes.
Jeff, there are two separate issues. Bitcoinica can, and should, still refund outstanding depositors proportionally to their "unstolen" money. But they are not doing that either! There is at this moment, no known acting representative or Bitcoinica doing anything to refund anybody. They need to be forced to get their shit together.
From what I read on this forum, genjix was already paying back the funds. He did pause this process because of the recent theft. As Patrick is now apparently gone, genjix should be able to pay back even faster. I think you guys starting to sue him will actually prevent this. Now we all will have to wait longer, if we ever receive anything. So suing now was most probably not the smartest move.
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July 15, 2012, 06:07:50 PM
 #93

Where the fuck is genjix now? I hope he isn't dead.

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July 15, 2012, 06:18:36 PM
 #94

Zhou Tong, can you check your github private repo if it was indeed genjix who cloned it on May 31, or there isn't a log that you can get that info from?
I'm assuming there is an access log because it's a private repo, but I may be wrong, ofcourse.

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July 15, 2012, 06:25:33 PM
 #95

Zhou Tong, can you check your github private repo if it was indeed genjix who cloned it on May 31, or there isn't a log that you can get that info from?
I'm assuming there is an access log because it's a private repo, but I may be wrong, ofcourse.

^this I'd like to know as well.

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July 15, 2012, 06:31:37 PM
 #96

Zhou Tong, can you check your github private repo if it was indeed genjix who cloned it on May 31, or there isn't a log that you can get that info from?
I'm assuming there is an access log because it's a private repo, but I may be wrong, ofcourse.

^this I'd like to know as well.

It may help the ones that pursuit litigation on finding the person who was responsible for the last theft.

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July 15, 2012, 06:47:41 PM
 #97

At this early stage, lawsuits will have a chilling effect on trying to bring new people into the community, especially new businesses.
Jeff, I disagree completely. There have been plenty of cases in the past where bitcoins were stolen or deposits unrefunded, yet I am unaware of a single attempt to fix this. How can an attempt to resolve this issue discourage people from using Bitcoin?
+1 Is there a standing bounty for the identity and whereabouts of Tom Williams of MyBitcoin?

If not, then this so called "community" has already set a giant precedent that it can be ripped off any way that works, and all it will do is just crawl away to be ripped off the next time...

IMHO, MyBitcoin is who did the most chilling and damage to Bitcoin, and the latter still survived.

I agree that Amir and Co. did a great deal for "the community", and got slammed by Murphy's Law, or whatever it's called in English. (In Russia, we call it the Law of the Sandwich.  Smiley )

As an observer, seems to me that Zhou Tong bears most of the responsibility for hacking together and making available that miserable contraption, without much regard for security...

Amir & Co. just got caught in the wrong place at the wrong time, and didn't back out, or take Bitcoinica offline and fix it, when it was wisest to do so.

It's hard to do the best thing in such complex circumstances...

Nevertheless, seems the only way for them to clear their name completely is to go through an external law suit, which will involve a police investigation.  Sad
 

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July 15, 2012, 06:49:51 PM
 #98

From what I read on this forum, genjix was already paying back the funds. He did pause this process because of the recent theft. As Patrick is now apparently gone, genjix should be able to pay back even faster. I think you guys starting to sue him will actually prevent this. Now we all will have to wait longer, if we ever receive anything. So suing now was most probably not the smartest move.
I would like a reference, if I may ask. I must have missed this. I do not want to contact Genjix directly, as now that we're evaluating legal action it might not be advisable.
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July 15, 2012, 06:52:39 PM
 #99

I am more interested in having people who are victim of this made whole so that we can fucking move on and get on the business of building the bitcoin economy.

The best thing for the investors to do is to get someone start processing claim and refunding everyone as quick as possible. As soon somebody got paid(doesn't matter who!), the better.

The fact that nobody from bitcoinica is even talking is beyond stupid.

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July 15, 2012, 07:03:46 PM
 #100

Zhou Tong, can you check your github private repo if it was indeed genjix who cloned it on May 31, or there isn't a log that you can get that info from?
I'm assuming there is an access log because it's a private repo, but I may be wrong, ofcourse.

It seems Zhou heard the same, instead of checking logs:

Quote from: zhoutong
Agreed. But one of the team members explicitly released the source code and that caused the hacker to correctly guess LastPass account. (At least this is the most "right" version of the story I've heard.)

http://news.ycombinator.com/item?id=4242713
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July 15, 2012, 07:12:19 PM
 #101

From what I read on this forum, genjix was already paying back the funds. He did pause this process because of the recent theft. As Patrick is now apparently gone, genjix should be able to pay back even faster. I think you guys starting to sue him will actually prevent this. Now we all will have to wait longer, if we ever receive anything. So suing now was most probably not the smartest move.


Amir has stated all along that the refund process was being handled by Patrick and Donald and that he had little to do with it.  Patrick also openly said on here that people were dependent on him to get their money.  Amir says that Patrick has now "walked away" but nobody is certain whether that means he's walked away from handling the claims process or whether he's walked away from Bitcoinica altogether.

It's not fair to Amir to say that he should be able to pay back even faster when we know he had little involvement in the claims process before and that Donald was one of the people who delayed the initial refunds.  It's not like Amir is now the only one in control of Bitcoinica records and funds and can do whatever the hell he wants.  Whoever assumes responsibility for the refund process now is taking a huge legal risk.  The Intersango guys are not accountants or auditors, and they probably shouldn't even attempt to continue handling the refund process themselves at this point.

All I can say is that this is Bitcoin. I don't believe it until I see six confirmations.
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July 15, 2012, 07:18:49 PM
 #102

From what I read on this forum, genjix was already paying back the funds. He did pause this process because of the recent theft. As Patrick is now apparently gone, genjix should be able to pay back even faster. I think you guys starting to sue him will actually prevent this. Now we all will have to wait longer, if we ever receive anything. So suing now was most probably not the smartest move.


Amir has stated all along that the refund process was being handled by Patrick and Donald and that he had little to do with it.  Patrick also openly said on here that people were dependent on him to get their money.  Amir says that Patrick has now "walked away" but nobody is certain whether that means he's walked away from handling the claims process or whether he's walked away from Bitcoinica altogether.

It's not fair to Amir to say that he should be able to pay back even faster when we know he had little involvement in the claims process before and that Donald was one of the people who delayed the initial refunds.  It's not like Amir is now the only one in control of Bitcoinica records and funds and can do whatever the hell he wants.  Whoever assumes responsibility for the refund process now is taking a huge legal risk.  The Intersango guys are not accountants or auditors, and they probably shouldn't even attempt to continue handling the refund process themselves at this point.

a huge +1

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July 15, 2012, 10:23:38 PM
 #103

As an observer, seems to me that Zhou Tong bears most of the responsibility for hacking together and making available that miserable contraption, without much regard for security...

Amir & Co. just got caught in the wrong place at the wrong time, and didn't back out, or take Bitcoinica offline and fix it, when it was wisest to do so.
The first hack was caused directly by negligence, because a server that was open to some members of the public was given access to Patrick's private mail server. My understanding if I recall correctly is that this oversight/error was caused by genjix.

The second hack was either caused by the hacker pwning genjix's box and releasing the source under his name, OR genjix releasing the source himself without first scrubbing out stored passwords/API keys.

Take that for what it's worth.

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July 16, 2012, 12:46:00 AM
 #104

As an observer, seems to me that Zhou Tong bears most of the responsibility for hacking together and making available that miserable contraption, without much regard for security...

Amir & Co. just got caught in the wrong place at the wrong time, and didn't back out, or take Bitcoinica offline and fix it, when it was wisest to do so.

The first hack was caused directly by negligence, because a server that was open to some members of the public was given access to Patrick's private mail server. My understanding if I recall correctly is that this oversight/error was caused by genjix.

The second hack was either caused by the hacker pwning genjix's box and releasing the source under his name, OR genjix releasing the source himself without first scrubbing out stored passwords/API keys.

Thats correct, as far as we got informed.

But please put it back into context.
  • Patricks mailserver became the weak spot, because it was common practice in the existing Bitcoinica team to send root password reset mails to a mailing list; and it was possible to add further addresses just as one sees fit.
  • the second hacker could only extract sensible access information from the source code, because it was in there (where it doesn't belong), and because someone used the API username as password in the central password exchange service, and someone else failed to consolidate the password management

Hey, you guys should really try to come back to a rational assessment of facts. You're absolutely turned on into witch hunt mode.

Not that I approve what happened, but all I can see is about 6 folks working on the typical average level of (dis)organisation you find in every everyday's office. We all know that this isn't sufficient for securing a money processing system, but we also all know that the only way to get average people to work more reliably is to install procedures - procedures - procedures and yet more procedures.

Just that kind of stuff everyone is quick to blame as "red tape" and "dinosaur economy"


If the goal is to start legal action, you guys should learn first to switch off all personal emotions, and put together a list of objective failures, which can be proven to have led to causing the bitcoinica customers the finnancial losses we're suffering.

We need facts and proves, not guesses, "conspiracy smells" and "impressions".
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July 16, 2012, 02:07:37 AM
 #105

You need at least 3 elements for a class/representative action.  A court to certify that there's a cause of action; a court to certify the plaintiffs as a class (you need a minimum number of plaintiffs for this); and a defendant with deep enough pockets to pay the award being sought.  In this particular instance, you're also going to need a court to accept jurisdiction.  You will need to hire local litigation lawyers in each jurisdiction where an action is bring brought and you will need a means of funding that litigation.

[...]

One of the few rational posts in this thread.

Only lawyers will win. Everyone simply lose.

This.  I find it astonishing that anyone who has balances with Bitcoinica would even consider litigation as an option.  There isn't a capable firm in any of the potential jurisdictions that will take a case like this on a contingency basis.  Can you say "retainers"?  Talk about throwing good money after bad.
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July 16, 2012, 02:18:47 AM
 #106


What exactly shall be the goal to be reached by legal action?
Please clarify!

  • (1) we want to destroy Intersango exchange
  • (2) we want to ruin Core credit finnancially
  • (3) we want to destroy the reputation of Zhoutong, Tihan, Donald, Patrick and Amir and turn them into "persona non grata"
  • (4) we want to destroy the economical existence of above mentioned people
  • (5) we want to force those folks to collaborate with the police to chase the hacker(s) and put them in jail
  • (6) we want to construct a case of precedence, so that in future no 17-year old entrepreneur without proper business education and governmental approvement can start a hightly profitable business.
  • (7) we want to get our money back

Just decide on what the real goal should be.
Then decide what strategy could lead us to that goal,
and if it is feasible and likely to reach that goal.

Plesase, folks, really do that, instead of
guessing
guessing
guessing
guessing
guessing
guessing
guessing
guessing
guessing
guessing
guessing
guessing
guessing
guessing
guessing
guessing
guessing
...one hundred further pages in this forum....
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July 16, 2012, 02:20:54 AM
 #107


What exactly shall be the goal to be reached by legal action?
Please clarify!

  • (1) we want to destroy Intersango exchange
  • (2) we want to ruin Core credit finnancially
  • (3) we want to destroy the reputation of Zhoutong, Tihan, Donald, Patrick and Amir and turn them into "persona non grata"
  • (4) we want to destroy the economical existence of above mentioned people
  • (5) we want to force those folks to collaborate with the police to chase the hacker(s) and put them in jail
  • (6) we want to construct a case of precedence, so that in future no 17-year old entrepreneur without proper business education and governmental approvement can start a hightly profitable business.
  • (7) we want to get our money back

We want to make it clear we won't stand for the business owners to steal from us, directly or indirectly?

How many of these cons do you want the community to endure before we take a stand?  The money is already gone -make those responsible for losing it pay.

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July 16, 2012, 02:30:22 AM
 #108


What exactly shall be the goal to be reached by legal action?
Please clarify!

  • (1) we want to destroy Intersango exchange
  • (2) we want to ruin Core credit finnancially
  • (3) we want to destroy the reputation of Zhoutong, Tihan, Donald, Patrick and Amir and turn them into "persona non grata"
  • (4) we want to destroy the economical existence of above mentioned people
  • (5) we want to force those folks to collaborate with the police to chase the hacker(s) and put them in jail
  • (6) we want to construct a case of precedence, so that in future no 17-year old entrepreneur without proper business education and governmental approvement can start a hightly profitable business.
  • (7) we want to get our money back

We want to make it clear we won't stand for the business owners to steal from us, directly or indirectly?

How many of these cons do you want the community to endure before we take a stand?  The money is already gone -make those responsible for losing it pay.




Amen brother..

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July 16, 2012, 02:36:06 AM
 #109

We want to make it clear we won't stand for the business owners to steal from us, directly or indirectly?

How many of these cons do you want the community to endure before we take a stand?  The money is already gone -make those responsible for losing it pay.

Do you have any proof of the fact that they're stealing from you? If not, the most you can do is "gross negligence" as to be practically criminal. Anything beyond that is just tinhattery.  Remember, stupidity on an epic scale is really indistinguishable from malice.

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July 16, 2012, 02:56:11 AM
 #110

We want to make it clear we won't stand for the business owners to steal from us, directly or indirectly?

How many of these cons do you want the community to endure before we take a stand?  The money is already gone -make those responsible for losing it pay.

So for you, it isn't really about recovering your funds...it's about attempting to exact a pound of flesh from the operators of Bitcoinica.  Nice. 

I'm curious, how much MORE are you willing to come out of pocket to try to make your point?  As repentance pointed out, international litigation doesn't come cheap.
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July 16, 2012, 04:27:07 AM
 #111


What exactly shall be the goal to be reached by legal action?
Please clarify!

  • (1) we want to destroy Intersango exchange
  • (2) we want to ruin Core credit finnancially
  • (3) we want to destroy the reputation of Zhoutong, Tihan, Donald, Patrick and Amir and turn them into "persona non grata"
  • (4) we want to destroy the economical existence of above mentioned people
  • (5) we want to force those folks to collaborate with the police to chase the hacker(s) and put them in jail
  • (6) we want to construct a case of precedence, so that in future no 17-year old entrepreneur without proper business education and governmental approvement can start a hightly profitable business.
  • (7) we want to get our money back

Just decide on what the real goal should be.
Then decide what strategy could lead us to that goal,
and if it is feasible and likely to reach that goal.

Plesase, folks, really do that, instead of
guessing
guessing
guessing
guessing
guessing
guessing
guessing
guessing
guessing
guessing
guessing
guessing
guessing
guessing
guessing
guessing
guessing
...one hundred further pages in this forum....



7, we are all for 7, we couldn't care less about anything else.
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July 16, 2012, 04:35:42 AM
 #112

I just want my bitcoins back, but if they plan on keeping them, then we have a problem

Bitcoinica still has not given me 50% of my claim of 600 BTC
INTERSANGO can go down with bitcoinica for abandoning customers
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July 16, 2012, 04:58:36 AM
 #113

I just want my bitcoins back, but if they plan on keeping them, then we have a problem

There's been no official statement to date about what their intention is regarding resuming the processing of refunds.  Amir said he thought there'd be a forced reduction of 30% in refunds but obviously that isn't a decision Amir is able to make alone and if Patrick has walked away then who knows when Donald and Amir will be able to agree on a plan.

I do think that it's time Donald stepped up to the plate and brought some clarity to the situation.  It's unfair for Amir to always be placed in the position of delivering messages regarding the refunds when he's had minimal involvement in the process.


All I can say is that this is Bitcoin. I don't believe it until I see six confirmations.
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July 16, 2012, 05:34:40 AM
 #114



I think anyone that was expecting to get their money back after the hack and this terrible processing of refunds was a bit naive, litigation should have been started at day 1.  Of course they should pay back, but someone bought Bitcoinica for its brand.  With the right investment the buyers of Bitcoinica could have opened a new bitcoin exchange, but they would have to compete with Bitcoinica.  Now after 2 months of a delay in processing refunds with no real oversight on how or to who they pay back first (I wonder if those associated with Bitconica got their money out), the Bitcoinica brand is dead.  If the Bitcoinica owners actually solved this mess, would anyone actually use a service called Bitcoinica?  Of course not.

Now that the investor's money is dead and they have to start from scratch they have one solution: delay.  The longer they delay the less likely people request their money back.  First say the clients will get 50% back and see if they come back for more.  For the rest take a very long time in refunds and make recovery efforts cumbersome.  By delaying the investor's loss is not so bad.

Introducing constraints to the economy only serves to limit what can be economical.
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July 16, 2012, 05:40:57 AM
 #115

I just want my bitcoins back, but if they plan on keeping them, then we have a problem

I havent heard anything that would say they intend to hand them back since the latest hack. None of them have posted anything wrt to doing that.

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July 16, 2012, 05:57:50 AM
 #116

I just want my bitcoins back, but if they plan on keeping them, then we have a problem

I havent heard anything that would say they intend to hand them back since the latest hack. None of them have posted anything wrt to doing that.

Their personal lawyers are probably horrified by the statements which have been made to date and and told them to STFU and not make any further comments without legal advice.

All I can say is that this is Bitcoin. I don't believe it until I see six confirmations.
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July 16, 2012, 06:11:11 AM
 #117

I just want my bitcoins back, but if they plan on keeping them, then we have a problem

I havent heard anything that would say they intend to hand them back since the latest hack. None of them have posted anything wrt to doing that.

Tihan hinted at legal action, don't count on any updates and resuming refunds until dust settles internally within those involved/responsible. Bitcoinica Consultancy most likely is seeking legal advise/defense at this point
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July 16, 2012, 08:07:31 AM
 #118

While I do not have anything invested or did not have anything invested in bitcoinica, I do have an interested in the outcome.
Two very big exchanges are wrapped up in this and it massively effects our community both the more business side as well as from the side of the miners.

The exchange was clearly run in a way that was negligent in how lax they took their security, their is multiple examples of this expressed in this thread.
From single point of authorisation, where double is becoming the norm. As well as passwords being found in source code available in the public domain and not changed for the live site.

Quiet frankly they made it as easy for the hacker, as hiding 1 key under the doormat and let him walk in unlocking the single lock on the door. Nothing stopping him afterwards from just going around and stealing anything he wanted after that.

I'm no expert in this, but in the insurance business I do know this, if the criminal managed to gain access because you left your doors open or left the keys available to him, they will blame you and you get no compensation. Very few small business have insurance for the same style of thing in the digital business, but the blame game works the same way.
Their lack of security were entirely at blame, the same applies here, the hacker was just a opportunist who did his act, with so little effort, the blame is entirely upon the person(s) responsible for placing passwords into the public domain and to a smaller (but still important) whom should of put in place double authorisation for accessing the sites "main vault".

The sounds like the both of these issues, can be laid upon the original guys.
But the "new" owners are also responsible for not fixing these glaring issues, if they had access and rights to do so.

I wish everyone the best of luck getting your bitcoin and/or fiat currency

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July 16, 2012, 08:14:27 AM
 #119

What exactly shall be the goal to be reached by legal action?
Please clarify!
For people who do have deposits with Bitconica, to get their money back.

People who do not have deposits with Bitcoinica, yet are potential future victims of theft, fraud or contract violations related to Bitcoin, can still benefit indirectly, because it could help them avoid or ameliorate these.

EDIT: What I mean is that even people who do not have unrefunded deposits with Bitcoinica have a reason to support our effort.
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July 16, 2012, 10:00:35 AM
 #120

I had a loss in this $ 4260.16 , BTC 562.93 , have open position, I am pleased to join the process, but unfortunately I`ll could`t personally present at the process. I can provide proof of information. And ready to provide any help what I can.

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July 16, 2012, 12:15:53 PM
 #121

My balance there was 98.19023272 BTC. No USD and no positions. Not really much money to contribute to this effort, but I'll help however I can.
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July 16, 2012, 01:06:31 PM
 #122

We want to make it clear we won't stand for the business owners to steal from us, directly or indirectly?

How many of these cons do you want the community to endure before we take a stand?  The money is already gone -make those responsible for losing it pay.

Do you have any proof of the fact that they're stealing from you? If not, the most you can do is "gross negligence" as to be practically criminal. Anything beyond that is just tinhattery.  Remember, stupidity on an epic scale is really indistinguishable from malice.

Every day they don't contact the police is gross negligence.  As officers of a corporation, they are required to protect the corporation.  Not calling the police is a derelict of duty, and they will be held responsible, civilly at least.

As for the proof, it is coming together.  For example, they had two factor authentication turned on for their MTGox account, then for some reason they turned it off before the "theft" occurred. 

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July 16, 2012, 01:12:19 PM
 #123

naima53: I put you on the list and send you the details later today
DrFred: Your claim is probably too low to be included in the process, but I'll ask the others

Anyone: If you have a significant claim and are interested in resolving the issue, please contact me. We represent a significant proportion of the deposits owed by Bitcoinica and are attempting to pool our resources for a single action.
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July 16, 2012, 02:23:02 PM
 #124

naima53: I put you on the list ...
Thank you, I sincerely hope to still get my money back. Owners have left too many traces. I think their place is better now to think about the consequences. And to return all lost.

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July 16, 2012, 02:53:55 PM
 #125

Lawyers are going to be very expensive and what if the "investors" don't have any money to make you whole?

Thats what I plan to find out, and to find who can be considered criminally liable for the latest hack.

The tragedy of this route is that on the one hand it's the only active route that bitcoinica users can pursue at this point, but on the other hand I think it reduces the odds of anyone getting anything back.

its quite unfortunate and you're correct, but at this point I have absolutely 0 faith in the bitcoinica consultancy, I hate lawyers too but I at least respect that they can sometimes get things done.
Genjix stated multiple times, that Patrick and/or Donald where the one that did constantly delay the payout. Maybe this process can now be faster, since at least Patrick is gone. So hopefully genjix assumes that he is now authorized to do the actual payouts and does it without further delay.

Tihan and Zhou both specifically told Patrick and Donald to refund my 24,841 bitcoins,  but Donald and Patrick both refused.
One day after legal action was threatened,  they announced this hack.
Cause,  or coincidence?

Mate... 24,841. My thoughts are with you.

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July 16, 2012, 03:42:28 PM
 #126

As for the proof, it is coming together.  For example, they had two factor authentication turned on for their MTGox account, then for some reason they turned it off before the "theft" occurred.  

Doesn't matter. Grand epic stupidity is still the default scenario here, unless you got the smoking gun that there is an inside job.

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July 16, 2012, 03:48:40 PM
 #127

well i had $1205 and 205BTC in there and no payout, i am no longer hopeful that it will progress any further either.

I cannot contribute any money to this effort just though i should share

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July 16, 2012, 03:55:46 PM
 #128

I wrote here a few times that "to buy" for all clients' money. Maybe later, but they did. Just speculate. This is bad from an ethical point of view, but it could well solve the problem (and is still in force)

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July 17, 2012, 12:37:12 PM
 #129

My balance there was a little more than 150 BTC. I'll help if I can.

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July 18, 2012, 09:54:36 AM
 #130

My balance was 450 BTC, no open positions. All deposits made by mtgox codes. I'm interested in joining the process too.
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July 18, 2012, 10:55:38 AM
 #131

Hi,

Sorry for the hiatus, but I had to take a break to preserve my mental sanity. Here's the update:

Quote
Update: here's the facts from my point of view:

- Patrick quit.
- Zhou quit.
- Tihan was fired, and no longer acting on behalf of Bitcoinica LP.
- Bitcoinica Consultancy were the new operators coming onboard, and the company was formed after the compromise to facilitate payments out.
- Bitcoinica LP is the owner.

The payments process is at a deadlock. Technically when a company is in debt, and cannot pay off its debtors in full, it hands the process to the government (called receivership). Bitcoinica LP would have to make a police report, and hand over the payments process as the owners.

That's it basically. Just a standstill.

Let me know if you have any suggestions.
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July 18, 2012, 10:59:22 AM
 #132

Let me know if you have any suggestions.
I suggest making sure you're not solvent Smiley

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July 18, 2012, 10:59:33 AM
 #133

Hi,

Sorry for the hiatus, but I had to take a break to preserve my mental sanity. Here's the update:

Quote
Update: here's the facts from my point of view:

- Patrick quit.
- Zhou quit.
- Tihan was fired, and no longer acting on behalf of Bitcoinica LP.
- Bitcoinica Consultancy were the new operators coming onboard, and the company was formed after the compromise to facilitate payments out.
- Bitcoinica LP is the owner.

The payments process is at a deadlock. Technically when a company is in debt, and cannot pay off its debtors in full, it hands the process to the government (called receivership). Bitcoinica LP would have to make a police report, and hand over the payments process as the owners.

That's it basically. Just a standstill.

Let me know if you have any suggestions.
Sane question before the trolls come in: Is Bitcoinica LP is heading for a receivership?

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July 18, 2012, 11:05:17 AM
 #134

Was Patrick handling the claims process by himself ?


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July 18, 2012, 11:19:15 AM
 #135

Sane question before the trolls come in: Is Bitcoinica LP is heading for a receivership?

I don't have the contact of anyone from Bitcoinica LP to ask them...

Also what's up with Donald?

We don't think it's a good idea now to touch the funds from Bitcoinica. We probably shouldn't have even taken on the claims process in the first place, but the pressure was immense and we wanted people to get paid back.

Was Patrick handling the claims process by himself ?

No, multiple people had access to the claims process (including me). However, I believe it was Patrick and Tihan who had access to the funds. I'm don't think Tihan actually sent any payments. I think Patrick did all the MtGox USD payments, whereas BTC was done by many people (due to how bitcoins work).
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July 18, 2012, 11:24:05 AM
 #136

Who owns Bitcoinica LP  Huh

Im confused since no one seems to be taking ownership of it.

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July 18, 2012, 12:34:47 PM
 #137

Who owns Bitcoinica LP  Huh

Im confused since no one seems to be taking ownership of it.

Do you think any involved want to be left holding this hot potato?
No, of course not. Everyone is trying to run, if they they can, before that hot potato is thrown in their direction.

From what genjix said, I think he means the original team, own it right now, but they all quit or was fired...

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July 18, 2012, 04:38:20 PM
 #138

All the people know the fact that lastpass master key=API key should explain when the hack happened, what was they doing and who was they hanging out with.

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July 18, 2012, 04:42:53 PM
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All the people know the fact that lastpass master key=API key should explain when the hack happened, what was they doing and who was they hang out with.

At the very least they could post the log from LastPass that should show someone other than the owner logged into it....

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July 18, 2012, 05:28:54 PM
 #140


What exactly shall be the goal to be reached by legal action?
Please clarify!

  • (1) we want to destroy Intersango exchange
  • (2) we want to ruin Core credit finnancially
  • (3) we want to destroy the reputation of Zhoutong, Tihan, Donald, Patrick and Amir and turn them into "persona non grata"
  • (4) we want to destroy the economical existence of above mentioned people
  • (5) we want to force those folks to collaborate with the police to chase the hacker(s) and put them in jail
  • (6) we want to construct a case of precedence, so that in future no 17-year old entrepreneur without proper business education and governmental approvement can start a hightly profitable business.
  • (7) we want to get our money back

Just decide on what the real goal should be.
Then decide what strategy could lead us to that goal,
and if it is feasible and likely to reach that goal.

Plesase, folks, really do that, instead of
guessing
guessing
guessing
guessing
guessing
guessing
guessing
guessing
guessing
guessing
guessing
guessing
guessing
guessing
guessing
guessing
guessing
...one hundred further pages in this forum....



7, we are all for 7, we couldn't care less about anything else.

LOL. At this point, there isn't really going to be any money to be returned, so I have no idea how you guys think that is a viable goal of a lawsuit.

IMO, the real goal should be preventing these people from losing (or more likely stealing) customer funds again. IMO, the correct way to prevent this is incarceration of the guilty parties

When someone has a criminal proceeding started, I'll be much more interested. Until then, I suspect this is a massive waste of time - there's no one left to sue.

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July 18, 2012, 05:37:31 PM
 #141

I don't have the contact of anyone from Bitcoinica LP to ask them...

Easy questions:

Who is Bitcoinica LP?  Who are the officers?  Who owns it?  How can you possibly have been taking over/working for/whatever a company and not know who they are?

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July 18, 2012, 10:28:57 PM
 #142

I don't have the contact of anyone from Bitcoinica LP to ask them...

Easy questions:

Who is Bitcoinica LP?  Who are the officers?  Who owns it?  How can you possibly have been taking over/working for/whatever a company and not know who they are?

I think Amir means that he doesn't know how to contact any of the limited partners (according to what's been posted in the past, the majority limited partner is an investment fund which Tihan was representing).

Bitcoinica LP is a Limited Partnership, not a company.  It would not have directors - it has a general partner and at least one limited partner (Tihan implied that there was more than one).  The General Partner - Bitcoinica Consultancy Limited - does have directors (by law, it must have at least one director and one shareholder - these can be the same person). 

Amir, the identity of the limited partners should be in the partnership agreement.  It will likely be a company or a trust of some kind, but there will be some kind of public record of that entity in the jurisdiction where it was created.  That public record will include an official contact and registered address.  It will likely be an accountant or a lawyer but the important thing is that it's the official point of contact and that communication through that point of contact is deemed to have been made with the company/trust.  You need to get your lawyer to follow this up if you have no contact details for the limited partner/s.  You need to understand that the limited partners will sure as hell be consulting their lawyers at the moment and that they may not be willing to talk to you except through lawyers.

Whether the principals of Bitcoinica Consultancy Ltd are in agreement on how to proceed or not, you need to keep talking to each other and try to reach agreement about the next step.  You should involve a lawyer in this process as the terms of the partnership agreement as well as laws regulating NZ companies need to be considered.


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July 18, 2012, 10:58:37 PM
 #143

I don't have the contact of anyone from Bitcoinica LP to ask them...

Easy questions:

Who is Bitcoinica LP?  Who are the officers?  Who owns it?  How can you possibly have been taking over/working for/whatever a company and not know who they are?

I think Amir means that he doesn't know how to contact any of the limited partners (according to what's been posted in the past, the majority limited partner is an investment fund which Tihan was representing).

Bitcoinica LP is a Limited Partnership, not a company.  It would not have directors - it has a general partner and at least one limited partner (Tihan implied that there was more than one).  The General Partner - Bitcoinica Consultancy Limited - does have directors (by law, it must have at least one director and one shareholder - these can be the same person). 

Amir, the identity of the limited partners should be in the partnership agreement.  It will likely be a company or a trust of some kind, but there will be some kind of public record of that entity in the jurisdiction where it was created.  That public record will include an official contact and registered address.  It will likely be an accountant or a lawyer but the important thing is that it's the official point of contact and that communication through that point of contact is deemed to have been made with the company/trust.  You need to get your lawyer to follow this up if you have no contact details for the limited partner/s.  You need to understand that the limited partners will sure as hell be consulting their lawyers at the moment and that they may not be willing to talk to you except through lawyers.

Whether the principals of Bitcoinica Consultancy Ltd are in agreement on how to proceed or not, you need to keep talking to each other and try to reach agreement about the next step.  You should involve a lawyer in this process as the terms of the partnership agreement as well as laws regulating NZ companies need to be considered.



+1

And here's a suggestion from me: https://bitcointalk.org/index.php?topic=93074.msg1039536#msg1039536

Also guys, I understand this is a shitty situation, and there's a lot of accusations thrown at the BC guys, and we really don't know the truth at this point. So BC guys, seek help, get assistance, I'm sure many trusted members on the forum would be happy to help. Ignoring the problems will not make them go away..
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July 19, 2012, 02:05:27 AM
 #144

i'm having a hard time grokking the rest of my emails, but those are the first ones i think. the second part (where bitcoinica consultancy is formed) moves to yahoo and happens much later (after 2 weeks or so)

Thanks Amir.  I thought I knew what Tihan had been talking about in his previous posts with regard to the general partnership and who was liable at the time of the Rackspace intrusion and what you just posted confirms it. 

I'll probably have more to add when I've read it in more depth.

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, 02:26:32 AM
 #145

There's tons of this stuff, and it's frankly all rather petty. Hope it helps clarify the situation anyway. How complicated the situation is and stuff.

Anything else is probably irrelevant to the main issues and would probably confuse people even more.  While I think those communications contained some information which users may not like, they make clear that the parties concerned were acting in good faith to address the issues.  While I'm sure the manner in which it was delivered might have stung, the majority of the advice Tihan gave you in those communications was sound, just in case you're wondering.

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, 02:31:50 AM
 #146

I thought the emails were published on this thread? I did a refresh and the emails were gone.  Angry

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July 19, 2012, 02:32:57 AM
 #147

Did I imagine it or did a heap of posts just disappear ?

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July 19, 2012, 02:35:54 AM
 #148

I thought the emails were published on this thread? I did a refresh and the emails were gone.  Angry

Amir was almost certainly breaching the NDA by posting them.  It's possible that they were removed for legal reasons. Wish I'd screen-capped them now, not to post them but to digest them more fully - I only did a quick read through of the most important points.  Wish I'd clicked on the links to the pdfs too.

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July 19, 2012, 02:36:15 AM
 #149

Did I imagine it or did a heap of posts just disappear ?

Nope.. I just finished reading them, and their gone.

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July 19, 2012, 02:38:22 AM
 #150

I thought the emails were published on this thread? I did a refresh and the emails were gone.  Angry

Amir was almost certainly breaching the NDA by posting them.  It's possible that they were removed for legal reasons. Wish I'd scxreen-capped them now, not to post them but to digest them more fully - I only did a quick read through of the most important points.

The question is did genjix remove them or a mod ?

That leads to which mod would do so and why Smiley

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July 19, 2012, 02:46:05 AM
 #151

Well at this point Id say keep posting NDA information atleast then someone in charge will come out of the shadows to sue you then everyone can sue that person.

As things go right now, no one is being held accountable.

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July 19, 2012, 02:51:35 AM
 #152

Well at this point Id say keep posting NDA information atleast then someone in charge will come out of the shadows to sue you then everyone can sue that person.

As things go right now, no one is being held accountable.

Reminds me of mybitcoin.

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July 19, 2012, 02:52:29 AM
 #153

that was an odd post
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July 19, 2012, 02:57:36 AM
 #154

got at least the files. if this post vanishes without notice, it was the moderator.

https://rapidshare.com/files/2525580989/sign-7-once-on-24th-once-on-29th.doc
https://rapidshare.com/files/2543142282/jason-rev.docx


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July 19, 2012, 03:20:16 AM
 #155

If you're still reading this Amir, you really need to organise legal advice for yourself, Patrick and Donald today as a matter of urgency.

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, 03:23:51 AM
 #156


I wanted to quote the stuff but was too late. Anyway I've read through the bulk of it.
I think it was genjix himself who deleted it as normally the admins don't delete such stuff...

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July 19, 2012, 03:26:30 AM
 #157

I thought the emails were published on this thread? I did a refresh and the emails were gone.  Angry

Amir was almost certainly breaching the NDA by posting them.  It's possible that they were removed for legal reasons. Wish I'd screen-capped them now, not to post them but to digest them more fully - I only did a quick read through of the most important points.  Wish I'd clicked on the links to the pdfs too.

He states that he have removed the NDA and sensitive stuff from the emails already. I wonder why they still got deleted...

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July 19, 2012, 03:31:14 AM
 #158

He states that he have removed the NDA and sensitive stuff from the emails already. I wonder why they still got deleted...

There was some stuff in them which could be regarded as sensitive. 

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, 03:38:04 AM
 #159

still have everything Smiley should I repost?

Bitcoinica still has not given me 50% of my claim of 600 BTC
INTERSANGO can go down with bitcoinica for abandoning customers
Alberto Armandi is a SCAMMER
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July 19, 2012, 03:53:02 AM
 #160

OK, here's everything. Instead of me looking through, and making mistakes, I'll just dump what I have:

Quote
Donald 30/04/12 09:11:
INSTRUCTIONS:

For the file Jason Rev.... simply sign page 7 and scan it

For sign page 7 once on 24th and once on 29... simply print sign and
scan.... THEN change in the TWO places it says 24 change the date to 29 and
print sign and scan


YOU SHOULD HAVE.... 3 signed scans... one of Jason rev and 2 of the
other.... (one unchanged and dated the 24th and one dated the 29th)

this way I shouldn't have to ask you to do anything else. Sorry about all
the hassle
http://188.165.73.224/jason-rev.docx
http://188.165.73.224/sign-7-once-on-24th-once-on-29th.doc

Some notes:

- nefario was working for us, but he wasn't able to keep up with duties because his time was devoted to GLBSE.
- mizery/necrodearia was someone I pushed to hire because the guy made a cool site (witcoin.com) but sadly he had mental problems.
- when he talks about Bitcoin Media, I am a creative person and get sudden bursts of inspiration where I write suddenly a huge amount. Donald was saying that flooding articles all at once is not good, I should release them steadily to give people time to digest them.
- the last point is because I think Silk Road is super cool, but as an owner of an exchange, I now have a responsibility to self censor myself and be a nerd because it's not just me, but our customer's funds riding on my shoulders.

Quote
Donald 02/05/12 07:57:
So, I've talked with you about these plans a bunch but I'll spell them out
a little more

It seems that we've solved our banking and investment/money problems. Also
we've plugged our biggest leak which is PR (many people think Intersango is
a new exchange) although I think Nefario really dropped the ball in that
court and I'm going to be picking it up.

The bitcoinica plan is that patrick rewrite this site and i help you with
the logic for the hedging bot. That's waiting on you looking at the code.
The speed of this is crucial because not only does it help both Intersango
and bitcoinica but at the same time it takes volume from mtgox. Tripple
whammy

Once this console is up obv I can do payments and do pretty much all the
support for intersango. Despite having nefario on support, I've pretty much
done his support job for the last two weeks. I'm also going to be taking
over the site PR from nefario too as I don't think he's doing too good a
job on it. He's slowly improving bitcoin media though very slowly.

[snipped - secret/personal]

For a few things, in terms of financial planning we are waiting on the
accounting. I am still dipping into my savings for my own person costs
despite living like crap (although crap in Serbia isn't bad) because it's
hard to know how much money we're making with Intersango. Once the
accounting comes up it'll be really easy. [snipped - private info]

The question is then, after we do our accounting and make reasonable cost
based plans (so we don't end up flame-throwing money like in poland). Then
we need to factor a bunch of stuff and it's better to wait until we're at
that point even if it's just a few days away. The things we need to factor
in is whether I should go around opening bank accounts for local options
after working on this book and hedging bot together or not. Also, is Berlin
the best place for us to be? The friction of moving and setting up is great
and so is the cost. I've said this many times before. We're making good
money now also means that we should plan well. This should be a long
termish set up, not 2 months. Get nice computers and have enough space to
work comfortably and productively. If we were to look for a place like I
did in Poland with such little time, we're going to be incredibly limited.
I found 2 suitable places in such a short time in poland and one ended up
backing out on me. If the other one hadn't, we'd have had to be in hotels
longer. The amount of bullshit we've seen hasn't just been with banks so
let's plan for the worst and stop paying the poor tax.

As for employing someone else, 2 days ago I had a really long talk with
Mitchell about hiring people and he explained what went wrong with nefario.
The next person we hire might also be a bust but nefario was way better
than necro who I warned you strongly about before he even buying the plane
ticket (the names necro and misery should have been enough) and just like
investment and banks, a good person to do even menial shit is fucking hard
as hell to find so be patient.

Another thing is that, once our operations in bitcoinica have become more
concrete I'm going to talk to tihan further about bitcoin.com. We touched
the issue with Patrick in New York and it's only natural that we'll very
likely be able to do something with bitcoin.com. But it's too early to
approach Tihan about that now. If you don't understand why intuitively we
can talk about this more.

As with the content of BitcoinMedia, I have had many conversations with you
about improving it. Having 8 articles in a row that you have written is a
huge detriment to the site, esp if you can put other authors in between
them. Otherwise it really is just your blog. Putting those 2 that the
Asteroids guy did is a disservice to that guy. Having ready made articles
set up for times when bitcoin news is slow is also smart.

I've also had like more than a handful of conversations with you about [snipped - personal]
gives us only risk and no benefit whatsoever. Still, I have had to stress
out and have many conversations with you to not [snipped]. Many times I have to go through the same
story about why not to invite trouble. That [snipped] is a dramatic
example of something that happens every week. We're living in a world were
people do get discriminated against (especially us), where people do
falsely get accused and go to jail, and where people do get sued (and
usually for less stuff then insulting a Senator across 17 radio
frequencies). You are the only person that I know who has run away from
security guards and fleed when the cops were called. It is smart for us to
be careful about how we act publicly until bitcoin becomes more accepted.

Quote
Donald 03/05/12 10:59:
---------- Forwarded message ----------
From: Zhou Tong <>
Date: Thu, May 3, 2012 at 5:54 AM
Subject: Re: I want to deposit money on Bitcoinica
To: Tihan Seale <>
Cc: Donald Norman <>, "
<>, "
<was send to wrong email of mine, so donald is cc'ing me back in>


 Hi,

I'll look into the problem too. To my surprise (and maybe yours), it seems
that we bought some Bitcoins at too high prices. This might be an
explanation for the drop in equity for recent week.

I'll take these actions to try to rectify the problems:

- Increase the confidence level to 2500. Since the increase in guaranteed
liquidity, our percentage hedge has increased a lot. It makes sense to
"play big" since the market is more mature and much less volatile. We can
always revise this decision if anything changes.

- I don't really want to increase the spread, but I can keep adjusting it
based on my observations. If you permit, I will adjust between the range of
1.003 to 1.008. If our Mt. Gox fee is 0.25%, we can at least "break even"
with such settings.

We actually made a lot of money from position liquidations (except for the
huge and forced ones), because they often take place at relatively
unfavourable prices for the trading range. We have a huge open interest
right now (about 180K BTC for both sides) so our potential profit is high.
The biggest problem right now is that the market doesn't move. We did make
some profits when the price rose to $5.5 last time, but we lost them again
due to the bad investment decision.

Also, I propose a new feature to increase our revenue:

- Secured loans. We don't have to "settle" for our customers. We can allow
them to settle themselves at the prices they like. However, we are going to
charge the Sell interest when they have negative balances. A
forced-settlement system will be implemented instead.

They can borrow USD against their BTC balance, and vice versa. We may
require 200% mortgage (borrow up to $1 against $2 worth of BTC), and a
default reserve of 10% (if I borrowed $100 against 40 BTC at BTC/USD=5, the
default rate will be BTC/USD = 100 * 1.1 / 40 = 2.75).

The benefit of this system is to make the money flow faster within the
Bitcoin economy and we can rely on Mt. Gox less. It's like the bank's
overdraft facility that charges insane interests. But Bitcoin needs this.

Lastly, I have lowered the spread for the Exchange feature in a previous
git commit. The next thing I'm going to do is to limit the number of
exchange transactions each minute to prevent abuse, and then make the
spread more reflective of actual market liquidity. Then, we can offer the
Exchange feature to the mass audience because they can pay less to exchange
money on Bitcoinica. Exchange transactions will move the "surplus". They
are always some nice small market orders that generate profits for us.

Summary: strategies to make more profits:

- Less hedge.
- Faster money flow.
- More volume.
- More trades within the boundary (surplus is between -confidence_level to
+confidence_level).
- More open interest and more deposits (the interest differentials can
generate $1000+ revenue every month currently).

I can make a living without the salary, so skipping a few months before
resolving the problem completely isn't really the problem. Anyway, I'll try
to squeeze some time to implement these changes as soon as possible.

PS. I've traded almost A$20,000 with BitPiggy now. (And if it's
unprofitable for them, they shouldn't continue dealing with me.) They're
legit and what they are doing is viable. BitPiggy has much more starfish
than us, but this makes them look legit.


Best Regards,
Zhou Tong

On Thursday, 3 May 2012 at 12:51 PM, Tihan Seale wrote:

Ok. I'll look out for it.

If UserXXX is legit, we should consider hiring the
founder<http://www.linkedin.com/in/matholroyd> once
we're cash-flowing again. (He does contract work in Patrick's town and he
knows Rails and bitcoin.)

Speaking of that, Zhou I wanted your thoughts on the financial situation.
As you know, Bitcoinica went from cranking out 6-figure profit one month to
a flatline the next. I covered most of the deficit from the hack on the
assumption Bitcoinica profits would quickly fill in the rest. What's
happened instead is a consistent equity leak that has remained unresolved
for two months. We've gone from being short 40k to now being short 88k.

The Bitcoin Consultancy guys are aware of the problem and will be making
this their top priority as soon as they're up to speed on daily operation.
In the meantime, any company expense would be coming directly from user
deposits. We all feel this would be wrong.

Patrick, Donald and Amir have agreed not to take any salary until the
deficit is filled. We'd like to ask if you would consider doing the same.

On May 2, 2012, at 4:12 PM, Zhou Tong wrote:

Hi,

I've done the transfer. See what will happen then.

UserXXX offer good rates because they are more Aussies who are willing to
pay even more for Bitcoins. So basically everything is just more expensive
in Australia. (I can make a similar site too, but it's not worth the
chargeback risk.)


Best Regards,
Zhou Tong

Sent from my iPad

On 03/05/2012, at 6:55 AM, Tihan Seale <> wrote:

haha. Sure

I wonder how long UserXXX will last if they're selling at bad prices. Then
again, someone is probably doing the same thing to us. (It would explain
owner equity decline.)

I've pasted the wire transfer details for Bitcoinica's new account at Core
Credit. (Core Credit is a separate FSP that we created with upstream
banking at ASB Bank of New Zealand).

If this works well, we can use these wire deposit details going forward on
Bitcoinica's user deposit page. (The reference message is mandatory. The
first part is Bitcoinica's account number with Core Credit and the part
after the dash is the Bitcoinica user_id.)

Let me know when it's been sent and we'll keep an eye out for it. Copying
Donald and friends too so they're aware.

*SWIFT Field 32A (Currency, Amount)*
Amount: USD 20,000.00
*SWIFT Field 57a (Beneficiary Bank)*
SWIFT / BIC: ASBBNZ2A
Name: ASB Bank Limited
Address: 135 Albert Street
Location: Auckland 1010
Country: New Zealand
*SWIFT Field 59 (Beneficiary Customer)*
Name: Core Credit Limited
Address: Auckland, New Zealand
Account Number: 26821351-USD-37
*SWIFT Field 70 (Information)*
Reference Message: Bitcoinica 4103161-1



On May 2, 2012, at 8:04 AM, Zhou Tong wrote:

 Hi Tihan,

I have been using UserXXX for some time, and it seems that they are always
selling Bitcoins at above-market prices. For example:

The Mt. Gox price is about $5.12 now, and they are buying at A$5.07 (=
$5.22 USD).

I almost emptied my Bitcoinica balance dealing with them. I still have
about $20,000 remaining in Citibank Singapore (from previous wire
deposits), I think it will be great if I can send the money to Bitcoinica's
bank account, or whatever to reduce our Mt. Gox USD risk.

The scalability is actually not bad. I can sell between $2000 to $4000
worth of Bitcoins as frequently as twice a week.

I want to deposit $20,000 on Bitcoinica, LOL...


Best Regards,
Zhou Tong


Quote
Tihan 03/05/12 19:59:

Got em! Waiting on one more signature from Chris (director for the former GP) then I'll send the full set out to all.


On May 3, 2012, at 1:28 AM, Patrick Strateman wrote:

>
> <contract.zip>

(this would go back and forth on skype several times as we keep finding mistakes)

Quote
My reply:
For proof of address are you fine with either a letter from Lloyds TSB
saying my business bank account has been re-enabled or a hospital
appointment letter? Neither of these were sufficient for the bank.

Otherwise it might take me longer to find it.

Quote
Tihan 03/05/12 20:10:



The NZ Companies office requirements are attached. (see their item #2).  It's not clear if it would work, but I'd go ahead and try with what you have. That way if they reject it at least they'd probably extend the deadline.





On May 3, 2012, at 11:04 AM, genjix wrote:

> For proof of address are you fine with either a letter from Lloyds TSB
> saying my business bank account has been re-enabled or a hospital
> appointment letter? Neither of these were sufficient for the bank.
>
> Otherwise it might take me longer to find it.
>


(hack happens)

Quote
Tihan 25/05/12 22:27:



Zhou knows the answer to this. Does anyone else?

On May 25, 2012, at 12:50 PM, genjix@riseup.net wrote:

> Hi XXX,
>
> I forwarded it to Donald and Tihan who will hopefully know how better to
> handle this.
>
> ---------------------------- Original Message ----------------------------
> Subject: Re bitcoinica
> From:    XXX
> Date:    Fri, May 25, 2012 9:27 am
> To:      genjix@riseup.net
> --------------------------------------------------------------------------
>
> Hi Amir,
> I just read that you guys have no backup of the DB. Unfortunately for
> me I had around $--- on deposit with you guys. It was all in USD. I
> was just keeping it there since mtgox was having all these withdraw
> problems. I never did any trading. I was just keeping it there to
> collect the interest. I can tell you all the mtgox codes in and out.
> Which you should be able to check in your own mtgox history.
> I'd really appreciate if you guys took care of this soon.
> username: xxx
> email: xxxxx
> Thanks,
> X.
>
>

At this point things become very formal. I'm censored under the NDA from speaking about what is happening.

Quote
Tihan 26/05/12 02:22:

By posting those facts you are inviting another posting of  facts which could include, among other things:

- It is fully within the power of Donald Norman, Patrick Strateman, and Amir Taaki to preserve the formation of Bitcoinica Consultancy Ltd by submitting valid documentation to the New Zealand companies office.

- Donald Norman, Patrick Strateman, and Amir Taaki entered into a legally binding contract as directors of Bitcoinica Consultancy Ltd. If in fact Bitconica Consultancy Ltd is determined to "not exist", those individuals would have fraudulently misrepresented that it did by signing the contract as such. 

- Irrespective of whether Bitcoinica Consultancy Ltd is determined to exist or remain valid, there is overwhelming evidence to support that Donald Norman, Patrick Strateman, and Amir Taaki were the operators of Bitcoinica LP at the time of the hack. This evidence includes their own public press release and signed documents accepting this responsibility.

- To the extent that Donald Norman, Patrick Strateman, and Amir Taaki were not acting on behalf of Bitcoinica Consultancy Ltd in operating Bitcoinica, they were acting as individuals and are liable as such.

- The Bitcoinica security breach was a direct result of the hacker's exploitation of insecure systems operated exclusively by the members of Bitcoinica Consultancy.

- The access of password-reset emails to these insecure systems was known to at least one member of Bitcoinica Consultancy, several days before the hack, by nature of the fact that they requested and received a password reset email, thereby demonstrating the  vulnerability which they did not correct.

- Several other high-priority safety issues were identified to the Bitcoinica Consultancy team members at the time they took over operations.  For example a github issue tracker shows these items remained unaddressed: "Gox credentials are easy to steal (!)",   " Wallet.dat not being backed up (!)"  It was these types of security risks that Bitcoinica Consultancy was specifically brought in to address.


I hope you can see what's happening here. A "statement of facts" is just another way to play the blame game. My strong feeling is we shouldn't play that game at all and we certainly shouldn't do it in public.

It's much better to focus on the SOLUTION of getting people's money back. If we do that successfully all will be forgiven.

Anything else is disaster.



On May 25, 2012, at 4:41 PM, Patrick Strateman wrote:

> The attachment was not included in the previous email.
>
> On 05/25/2012 04:37 PM, Patrick Strateman wrote:
>> At this point I do not believe keeping secret the failure to backup
>> properly has any advantage.
>>
>> Many people have already correctly surmised that the database and all
>> backups were destroyed.
>>
>> That being said I believe a statement of facts is in order.
>>
>> I will be publishing this statement myself personally at 10pm PDT
>> 2012-05-25.
>>
>> If you wish to correct factual errors (of which I do not believe there
>> are any) you will need to email me the revisions before 9pm.
>>
>> I genuinely hope that all parties involved (especially users) will come
>> away from this situation satisfied with the resolution.
>>
>> Patrick Strateman
>>
> <statement of fact.pdf>


I get a little pissed here.

Quote
My message 26/05/12 04:45:



Could I not be included in this list? I have nothing to add, and I'm
trying to focus on work now my help isn't needed.

Thanks. Hope you all manage to create a proper and amicable document.
Donald is free to speak on my behalf.

Tihan:
> This is a very one-sided account of what Zhou did wrong. (I don't think
> you would disagree.)
>
> He could make an equally damning list of facts about what you and I did
> wrong and it would be no less true. I'm guessing that's what will happen
> if you post this.
>
> Rather than each of you pointing out what the other did wrong, why doesn't
> everybody point out what they (themselves) did wrong. I have already
> posted mine. I should have found help for Zhou sooner.
>
> If we each make a "statement of facts" about our own regrets and post it
> together, maybe this can be process of healing instead of unproductive
> conflict. I guarantee that approach would improve reputations in the
> community. The alternative will only make them worse.
>
>
> On May 25, 2012, at 7:26 PM, Patrick Strateman wrote:
>
>> I have updated the statement to make this point ambiguous.
>>
>> On 05/25/2012 06:49 PM, Zhou Tong wrote:
>>> Just one factual error:
>>>
>>> We have backups in Cloud Files, scheduled daily and weekly.
>>>
>>> It's just that the hacker deleted the Cloud Files backup as well.
>>>
>>>
>>> Sent from my iPhone
>>>
>>> On 26/05/2012, at 11:29 AM, Patrick Strateman
>>> <patrick.strateman@gmail.com> wrote:
>>>
>>>> Attached is a revision of the statement of fact
>>>>
>>>> I have removed information which Tihan has expressed he does not agree
>>>> is factually correct.  Doing so does not constitute agreement.
>>>>
>>>> On 05/25/2012 04:41 PM, Patrick Strateman wrote:
>>>>> The attachment was not included in the previous email.
>>>>>
>>>>> On 05/25/2012 04:37 PM, Patrick Strateman wrote:
>>>>>> At this point I do not believe keeping secret the failure to backup
>>>>>> properly has any advantage.
>>>>>>
>>>>>> Many people have already correctly surmised that the database and
>>>>>> all
>>>>>> backups were destroyed.
>>>>>>
>>>>>> That being said I believe a statement of facts is in order.
>>>>>>
>>>>>> I will be publishing this statement myself personally at 10pm PDT
>>>>>> 2012-05-25.
>>>>>>
>>>>>> If you wish to correct factual errors (of which I do not believe
>>>>>> there
>>>>>> are any) you will need to email me the revisions before 9pm.
>>>>>>
>>>>>> I genuinely hope that all parties involved (especially users) will
>>>>>> come
>>>>>> away from this situation satisfied with the resolution.
>>>>>>
>>>>>> Patrick Strateman
>>>>>>
>> <statement of fact.pdf>
>
>



Tihan apologises:

Quote
Tihan 26/05/12 13:54:



I apologize for the hostile tone of my email below. It'd been a long day and I was disheartened by what I saw as an attempt to evade responsibility by the very people I had placed my faith in to be responsible.

From here I'll try to focus on the solution for getting people's money back, per my own advice.

On May 25, 2012, at 5:22 PM, Tihan Seale wrote:

> By posting those facts you are inviting another posting of  facts which could include, among other things:
>
> - It is fully within the power of Donald Norman, Patrick Strateman, and Amir Taaki to preserve the formation of Bitcoinica Consultancy Ltd by submitting valid documentation to the New Zealand companies office.
>
> - Donald Norman, Patrick Strateman, and Amir Taaki entered into a legally binding contract as directors of Bitcoinica Consultancy Ltd. If in fact Bitconica Consultancy Ltd is determined to "not exist", those individuals would have fraudulently misrepresented that it did by signing the contract as such. 
>
> - Irrespective of whether Bitcoinica Consultancy Ltd is determined to exist or remain valid, there is overwhelming evidence to support that Donald Norman, Patrick Strateman, and Amir Taaki were the operators of Bitcoinica LP at the time of the hack. This evidence includes their own public press release and signed documents accepting this responsibility.
>
> - To the extent that Donald Norman, Patrick Strateman, and Amir Taaki were not acting on behalf of Bitcoinica Consultancy Ltd in operating Bitcoinica, they were acting as individuals and are liable as such.
>
> - The Bitcoinica security breach was a direct result of the hacker's exploitation of insecure systems operated exclusively by the members of Bitcoinica Consultancy.
>
> - The access of password-reset emails to these insecure systems was known to at least one member of Bitcoinica Consultancy, several days before the hack, by nature of the fact that they requested and received a password reset email, thereby demonstrating the  vulnerability which they did not correct.
>
> - Several other high-priority safety issues were identified to the Bitcoinica Consultancy team members at the time they took over operations.  For example a github issue tracker shows these items remained unaddressed: "Gox credentials are easy to steal (!)",   " Wallet.dat not being backed up (!)"  It was these types of security risks that Bitcoinica Consultancy was specifically brought in to address.
>
>
> I hope you can see what's happening here. A "statement of facts" is just another way to play the blame game. My strong feeling is we shouldn't play that game at all and we certainly shouldn't do it in public.
>
> It's much better to focus on the SOLUTION of getting people's money back. If we do that successfully all will be forgiven.
>
> Anything else is disaster.
>
>
>
> On May 25, 2012, at 4:41 PM, Patrick Strateman wrote:
>
>> The attachment was not included in the previous email.
>>
>> On 05/25/2012 04:37 PM, Patrick Strateman wrote:
>>> At this point I do not believe keeping secret the failure to backup
>>> properly has any advantage.
>>>
>>> Many people have already correctly surmised that the database and all
>>> backups were destroyed.
>>>
>>> That being said I believe a statement of facts is in order.
>>>
>>> I will be publishing this statement myself personally at 10pm PDT
>>> 2012-05-25.
>>>
>>> If you wish to correct factual errors (of which I do not believe there
>>> are any) you will need to email me the revisions before 9pm.
>>>
>>> I genuinely hope that all parties involved (especially users) will come
>>> away from this situation satisfied with the resolution.
>>>
>>> Patrick Strateman
>>>
>> <statement of fact.pdf>
>


I'm assured everything is under control. I ask to make a new thread to post updates:

https://bitcointalk.org/index.php?topic=81045.msg921159#msg921159

But I'm again told not to.

Quote
From Patrick to Tihan, Zhou, Donald, Me  27/05/12 18:51:

Accurate means simply that the claim appears reasonable given the
information provided

Fake means the claim appears to be a forgery

Settled means the user has accepted the sum as settling their claim.

partial payment means the user has been paid in part.

Bitcoinica still has not given me 50% of my claim of 600 BTC
INTERSANGO can go down with bitcoinica for abandoning customers
Alberto Armandi is a SCAMMER
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July 19, 2012, 04:02:49 AM
 #161

Duplicated to pastebin: http://pastebin.com/Ya6iN8RT
 Edit: included the documents.

My BTC Tip Jar: 1Pgvfy19uwtYe5o9dg3zZsAjgCPt3XZqz9 , GPG ID: B3AAEEB0 ,OTC ID: johnthedong
Escrow service is available on a case by case basis! (PM Me to verify I'm the escrow!)

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July 19, 2012, 05:49:31 AM
 #162

I appreciate the transparency, even if it was removed after (probably by request).
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July 19, 2012, 10:32:09 AM
 #163

I appreciate the transparency, even if it was removed after (probably by request).

I got a tip, and it's still available in full as posted previously on bitcointalk.org:
https://anonfiles.com/file/13fa1d766f3df9eb6485aa900ae6dd0e
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July 19, 2012, 10:44:10 AM
 #164

I appreciate the transparency, even if it was removed after (probably by request).
And thanks to Herodes, the complete version is available at http://pastebin.com/Ya6iN8RT (including the second post with emails)

My BTC Tip Jar: 1Pgvfy19uwtYe5o9dg3zZsAjgCPt3XZqz9 , GPG ID: B3AAEEB0 ,OTC ID: johnthedong
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July 19, 2012, 11:50:17 AM
 #165

Glad to see they got saved, interesting reading. Glad to see some things clarified.

I thought the emails were published on this thread? I did a refresh and the emails were gone.  Angry

Amir was almost certainly breaching the NDA by posting them.  It's possible that they were removed for legal reasons. Wish I'd scxreen-capped them now, not to post them but to digest them more fully - I only did a quick read through of the most important points.

The question is did genjix remove them or a mod ?

That leads to which mod would do so and why Smiley


Must have been Genjix, I certainly wouldn't and I can't imagine any of the others would, there's no justification for that.

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July 19, 2012, 02:02:41 PM
 #166

Amir, you did a brave thing and I think many people feel better for having some clarity about what was going on behind the scenes from the time of the Linode hack onwards.  I hope your associates aren't being too harsh on you because I think many people just wanted to know what the hell had been going on rather than being left to speculate.  People had already guessed a lot of this stuff anyway, for the most part it was only specific details which were lacking.  Things make a lot more sense with some of those details filled in and some of the "but why can't they do X" questions have been answered.  People might not like those answers, but they now have 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 19, 2012, 02:07:38 PM
 #167

If genjix posted those mails, can they be trusted?
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July 19, 2012, 02:29:07 PM
 #168

If genjix posted those mails, can they be trusted?

I have roughly read the posts and they are consistent with my understanding of the events.

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July 19, 2012, 03:15:36 PM
 #169

If genjix posted those mails, can they be trusted?

They fit with what was being posted in the threads here as stuff unfolded following the Rackspace intrusion.  They also confirm a lot of things which people had assumed which had never been explicitly verified.  For me, the documents confirm that they may not have realised the magnitude of what they were taking on - I said in another thread that a month wasn't sufficient time to perform adequate due diligence and I wonder if they did really, fully, understand what they were getting into.

Someone posted a little while back that Amir, Patrick and Donald had been fed a shit sandwich.  Having seen the dox, I'm not sure that I disagree with that statement.

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, 03:36:25 PM
 #170

If genjix posted those mails, can they be trusted?

Obviously we can't tell for sure.

IMHO it would be verry challenging even to compile such a bunch of quoted emails without
making serious mistakes and obvious contradictions. Add to this the fact that those informations
fit perfectly with the partial knowledge we inferred together on those forum threads.
It fill in just some missing parts.

Thus I'm rather geared towards trusting those mails
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July 19, 2012, 03:39:56 PM
 #171

Quote
I have been using UserXXX for some time, and it seems that they are always
selling Bitcoins at above-market prices. For example:

The Mt. Gox price is about $5.12 now, and they are buying at A$5.07 (=
$5.22 USD).

I almost emptied my Bitcoinica balance dealing with them. I still have
about $20,000 remaining in Citibank Singapore (from previous wire
deposits), I think it will be great if I can send the money to Bitcoinica's
bank account, or whatever to reduce our Mt. Gox USD risk.

The scalability is actually not bad. I can sell between $2000 to $4000
worth of Bitcoins as frequently as twice a week.

I want to deposit $20,000 on Bitcoinica, LOL...


Best Regards,
Zhou Tong

Is Zhou saying he used insider and company information of their users to personally profit from them?

Introducing constraints to the economy only serves to limit what can be economical.
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July 19, 2012, 03:47:00 PM
 #172

Quote
I have been using UserXXX for some time, and it seems that they are always
selling Bitcoins at above-market prices. For example:

The Mt. Gox price is about $5.12 now, and they are buying at A$5.07 (=
$5.22 USD).

I almost emptied my Bitcoinica balance dealing with them. I still have
about $20,000 remaining in Citibank Singapore (from previous wire
deposits), I think it will be great if I can send the money to Bitcoinica's
bank account, or whatever to reduce our Mt. Gox USD risk.

The scalability is actually not bad. I can sell between $2000 to $4000
worth of Bitcoins as frequently as twice a week.

I want to deposit $20,000 on Bitcoinica, LOL...


Best Regards,
Zhou Tong

Is Zhou saying he used insider and company information of their users to personally profit from them?

That's not the way I'm reading it.  I'm reading it as him putting his personal funds into Bitcoinica so the LP can use it to reduce its MtGox/USD risk.  I read the last line as a joke (the funny part being him depositing funds with the business he used to own).

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, 04:16:56 PM
 #173

Before wasting money on damn lawyers, it might be  a good idea to compile the claims and send a letter to Bitcoinica GP with a clear explanation of your position, what money are claimed and what it would take to prevent any legal action (repayment of claims presumably).

I, for example, would definitely first seek an amicable settlement of the matter and only then get serious about legal action.



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July 19, 2012, 04:23:04 PM
 #174

With the new admitted loss of claim funds the odds of getting any non-lawyer driven satisfactory conclusion is slim to none. Continuing to spend money of an insolvent company is a very poor decision, really they should be voluntarily contacting the relevant NZ bodies to wind down the company.



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lonelyminer (Peter Šurda)
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July 19, 2012, 04:28:24 PM
 #175

Before wasting money on damn lawyers, it might be  a good idea to compile the claims and send a letter to Bitcoinica GP with a clear explanation of your position, what money are claimed and what it would take to prevent any legal action (repayment of claims presumably).

I, for example, would definitely first seek an amicable settlement of the matter and only then get serious about legal action.
Vladimir,

this is a reasonable advice, however it appears that someone screwed up the legal framework for Bitcoinica (in addition to the well publicised security problems). The information available is conflicting, and the records at the New Zealand company registry appear to have not been updated yet to reflect the takeover (which might end up being even more damaging to the people involved). Don't worry though, we are investigating everything.
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July 19, 2012, 04:28:42 PM
 #176

Before wasting money on damn lawyers, it might be  a good idea to compile the claims and send a letter to Bitcoinica GP with a clear explanation of your position, what money are claimed and what it would take to prevent any legal action (repayment of claims presumably).

I, for example, would definitely first seek an amicable settlement of the matter and only then get serious about legal action.

+1

From my cursory reading of the pastebin, it seems that everyone was acting in good faith to try to get money back to customers in a reasonable way.  Seems the biggest problem was that there was simply no leadership so the whole claims process turned into a "decision by committee" disaster.
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July 19, 2012, 04:35:49 PM
 #177

Before wasting money on damn lawyers, it might be  a good idea to compile the claims and send a letter to Bitcoinica GP with a clear explanation of your position, what money are claimed and what it would take to prevent any legal action (repayment of claims presumably).

I, for example, would definitely first seek an amicable settlement of the matter and only then get serious about legal action.
Vladimir,

this is a reasonable advice, however it appears that someone screwed up the legal framework for Bitcoinica (in addition to the well publicised security problems). The information available is conflicting, and the records at the New Zealand company registry appear to have not been updated yet to reflect the takeover (which might end up being even more damaging to the people involved). Don't worry though, we are investigating everything.

All the more reasons they have to play nice.

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July 19, 2012, 04:38:18 PM
 #178

From my cursory reading of the pastebin, it seems that everyone was acting in good faith to try to get money back to customers in a reasonable way.  Seems the biggest problem was that there was simply no leadership so the whole claims process turned into a "decision by committee" disaster.

Which was then compounded by the MtGox intrusion after which everyone pretty much didn't know what to do.  And that's about where things still stand today.

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, 09:37:42 PM
 #179

Before wasting money on damn lawyers, it might be  a good idea to compile the claims and send a letter to Bitcoinica GP with a clear explanation of your position, what money are claimed and what it would take to prevent any legal action (repayment of claims presumably).

I, for example, would definitely first seek an amicable settlement of the matter and only then get serious about legal action.

+1

From my cursory reading of the pastebin, it seems that everyone was acting in good faith to try to get money back to customers in a reasonable way.  Seems the biggest problem was that there was simply no leadership so the whole claims process turned into a "decision by committee" disaster.

"good faith" might be a significant overstatement. There are comments to the effect that Tihan was preying on the BC crew - and there are comments to suggest that someone was purposefully delaying return of customer funds.

And then someone stole another big pile of funds.

And then more people walked away.

Just sayin'


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July 20, 2012, 11:40:04 PM
 #180

With the new admitted loss of claim funds the odds of getting any non-lawyer driven satisfactory conclusion is slim to none. Continuing to spend money of an insolvent company is a very poor decision, really they should be voluntarily contacting the relevant NZ bodies to wind down the company.

+1

Where some person or entity may have obligations to tens or hundreds or thousands of people, it's unlikely that it's in their best interest to settle those obligations/disputes one at a time; and it's also probably not in the best interests of the creditors, except for the people who get paid first.

That's why we have the bankruptcy process - it provides an orderly resolution of all of the outstanding issues simultaneously, and creditors are repaid in a predictable fashion determined in advance, so it reduces the opportunity for pushy people to jump ahead in line and get more money, or get paid faster.

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July 20, 2012, 11:52:24 PM
 #181

With the new admitted loss of claim funds the odds of getting any non-lawyer driven satisfactory conclusion is slim to none. Continuing to spend money of an insolvent company is a very poor decision, really they should be voluntarily contacting the relevant NZ bodies to wind down the company.

This should have been done even before the latest hack, but this community was vocally against turning the refund process over to an independent third party and the principals involved were also reluctant to take that path.

One way or another, this company will end up being liquidated.  Whether it's by the Official Assignee or by a private liquidator depends on who moves first.  The opportunity for it to be placed under administration and trade out has long passed.  

While it's hard to imagine the Bitcoinica domain having any value now, the IP may still have some value.  Depending on who actually owns those assets (it might not be Bitcoinica LP), the may be available for liquidation and someone might make an offer for them.

It would be better for this community as a whole and especially for Bitcoinica users if the limited partner and the general partners could at least put aside their other disputes for 5 minutes and agree on a course of action so this process can be started as soon as possible rather than forcing users into the position of having to take court action to initiate an insolvency.  

The partnership coming together on this one issue won't prejudice any other causes of action which may exist, and - quite frankly - it is petulant bordering on the irresponsible for this next step to be delayed because of other conflict between the parties.  Just grow the fuck up and do it now so that the formal process can begin.  Users have already been disadvantaged enough and should not be further disadvantaged by having to has funds to take this to court when you guys know damned well that you can initiate the process yourselves.  The sooner this is turned over to a third party, the sooner users will have some kind of certainty, Intersango can concentrate on its core business, Wendon can do whatever the hell they're going to do, and everybody can step back a bit and take a more dispassionate look at the lessons to be learned from this series of events.

All I can say is that this is Bitcoin. I don't believe it until I see six confirmations.
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July 21, 2012, 01:13:45 AM
 #182

Theory....

If Bitcoinica was taken over by a bankruptcy court/judge they would liquidate the assets (BTC and anything else) then distribute the proceeds to people who were owed currency only as they would not recognize BTC debt.  Not that I think it will ever get that far.

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July 21, 2012, 01:19:00 AM
 #183

Theory....

If Bitcoinica was taken over by a bankruptcy court/judge they would liquidate the assets (BTC and anything else) then distribute the proceeds to people who were owed currency only as they would not recognize BTC debt.  Not that I think it will ever get that far.

The moment they even think about converting BTC to fiat, it's recognized as a valuable asset. Every court would have to be very careful in proceeding on this fact alone. But for sake of argument, lets do it your way. There is no way that they could possible convert a half a million dollars (or whatever large amount it is) worth of BTC to fiat in a short time frame without actually watching the rate fall while doing it.

~Bruno~
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July 21, 2012, 01:21:51 AM
 #184

Theory....

If Bitcoinica was taken over by a bankruptcy court/judge they would liquidate the assets (BTC and anything else) then distribute the proceeds to people who were owed currency only as they would not recognize BTC debt.  Not that I think it will ever get that far.

The moment they even think about converting BTC to fiat, it's recognized as a valuable asset. Every court would have to be very careful in proceeding on this fact alone. But for sake of argument, lets do it your way. There is no way that they could possible convert a half a million dollars (or whatever large amount it is) worth of BTC to fiat in a short time frame without actually watching the rate fall while doing it.

~Bruno~


It would be interesting what would happen if they sold all the coins off and crashed the market to < $2 per btc. I hope they tell us first so we can have cash ready  Cheesy

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July 21, 2012, 01:26:32 AM
 #185

Theory....

If Bitcoinica was taken over by a bankruptcy court/judge they would liquidate the assets (BTC and anything else) then distribute the proceeds to people who were owed currency only as they would not recognize BTC debt.  Not that I think it will ever get that far.

One way or another it is going to get that far.  The Limited Partnership is not going to continue which means it will be terminated.  Whether it's the general partner, the limited partner or the creditors who initiate this process (the GP and LP can agree to place the partnership in voluntary liquidation without petitioning the court), the LP will be wound up in insolvency.

It's not possible to know how a liquidator would regard Bitcoin debt, but one shouldn't assume they will regard it as having no value.  They may treat it as a commodity, they may simply assess it in terms of its $ value, they may look to how Bitcoinica LP was regarding that debt in their refund process (personally, I think this is the approach they would take as a liquidator cannot deal with disputed debt).

Quote
There is no way that they could possible convert a half a million dollars (or whatever large amount it is) worth of BTC to fiat in a short time frame without actually watching the rate fall while doing it.

That's true but remember that the original claims process valued BTC at around $5 each.  I'm not sure that even a large amount of Bitcoins coming on the market would move the price from its current level back down to $5 (although obviously buyers would be looking for a bargain).

It's also important to remember that in a New Zealand Limited Partnership, the limited partners are (literally) the equivalent shareholders and if the entity is liquidated then any uncalled shares are one of the assets which can be used for the benefit of creditors.  None of us know the exact nature of Wendon's holdings in Bitcoinica LP or whether their capital is paid up (if indeed their investment was in the form of money).

As I said to someone privately earlier today, I feel like locking everyone involved in this in a room and saying "none of you fuckers are going home until you reach a decision about how to break this deadlock".

All I can say is that this is Bitcoin. I don't believe it until I see six confirmations.
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July 21, 2012, 01:58:49 AM
 #186

Theory....

If Bitcoinica was taken over by a bankruptcy court/judge they would liquidate the assets (BTC and anything else) then distribute the proceeds to people who were owed currency only as they would not recognize BTC debt.  Not that I think it will ever get that far.

One way or another it is going to get that far.  The Limited Partnership is not going to continue which means it will be terminated.  Whether it's the general partner, the limited partner or the creditors who initiate this process (the GP and LP can agree to place the partnership in voluntary liquidation without petitioning the court), the LP will be wound up in insolvency.

It's not possible to know how a liquidator would regard Bitcoin debt, but one shouldn't assume they will regard it as having no value.  They may treat it as a commodity, they may simply assess it in terms of its $ value, they may look to how Bitcoinica LP was regarding that debt in their refund process (personally, I think this is the approach they would take as a liquidator cannot deal with disputed debt).

Quote
There is no way that they could possible convert a half a million dollars (or whatever large amount it is) worth of BTC to fiat in a short time frame without actually watching the rate fall while doing it.

That's true but remember that the original claims process valued BTC at around $5 each.  I'm not sure that even a large amount of Bitcoins coming on the market would move the price from its current level back down to $5 (although obviously buyers would be looking for a bargain).

Then again, the courts don't necessarily have/need to convert the coins. Just treat them as a commodity. Let's pretend for a moment some exchange traded and stored bushels of corn. Thousands of clients had ten's of thousands of bushels of corn on account. But a fire destroyed the main office with all the records. Luckily, one of the owners remembers most of the transactions... Moving forward. The corn exchange goes into receivership (or whatever term is applicable) and courts aare now involved to return the corn to their rightful owners. All because 1/3 of the corn is now missing, doesn't mean the courts have to convert the corn to fiat so that everybody involved gets the fair return, in this case 2/3. Further imagine, that nobody in the courts knows a damn thing about corn, but they do know that there's a corn expect that can act as the liaison between all concerns.

~Bruno~
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July 21, 2012, 02:39:38 AM
 #187

Theory....

If Bitcoinica was taken over by a bankruptcy court/judge they would liquidate the assets (BTC and anything else) then distribute the proceeds to people who were owed currency only as they would not recognize BTC debt.  Not that I think it will ever get that far.

One way or another it is going to get that far.  The Limited Partnership is not going to continue which means it will be terminated.  Whether it's the general partner, the limited partner or the creditors who initiate this process (the GP and LP can agree to place the partnership in voluntary liquidation without petitioning the court), the LP will be wound up in insolvency.

It's not possible to know how a liquidator would regard Bitcoin debt, but one shouldn't assume they will regard it as having no value.  They may treat it as a commodity, they may simply assess it in terms of its $ value, they may look to how Bitcoinica LP was regarding that debt in their refund process (personally, I think this is the approach they would take as a liquidator cannot deal with disputed debt).

Quote
There is no way that they could possible convert a half a million dollars (or whatever large amount it is) worth of BTC to fiat in a short time frame without actually watching the rate fall while doing it.

That's true but remember that the original claims process valued BTC at around $5 each.  I'm not sure that even a large amount of Bitcoins coming on the market would move the price from its current level back down to $5 (although obviously buyers would be looking for a bargain).

Then again, the courts don't necessarily have/need to convert the coins. Just treat them as a commodity. Let's pretend for a moment some exchange traded and stored bushels of corn. Thousands of clients had ten's of thousands of bushels of corn on account. But a fire destroyed the main office with all the records. Luckily, one of the owners remembers most of the transactions... Moving forward. The corn exchange goes into receivership (or whatever term is applicable) and courts aare now involved to return the corn to their rightful owners. All because 1/3 of the corn is now missing, doesn't mean the courts have to convert the corn to fiat so that everybody involved gets the fair return, in this case 2/3. Further imagine, that nobody in the courts knows a damn thing about corn, but they do know that there's a corn expect that can act as the liaison between all concerns.

~Bruno~


While your suggestion is reasonable, I still think that is not what would happen.

The court would sell the BTC as expected but when it came to tally the debt, they would not recognize BTC debt.  I am not saying this is right, but this is what they would do.   Selling assets (even unusual ones) is not unusual for a court.  Recognizing the owed BTC would be a first though and I do not think that would happen.  The assets would be divided up by people who could prove they transferred USD to bitcoinica either through MTGOX or a bank wire. 

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July 21, 2012, 03:08:28 AM
 #188

Quote
While your suggestion is reasonable, I still think that is not what would happen.

The court would sell the BTC as expected but when it came to tally the debt, they would not recognize BTC debt.  I am not saying this is right, but this is what they would do.   Selling assets (even unusual ones) is not unusual for a court.  Recognizing the owed BTC would be a first though and I do not think that would happen.  The assets would be divided up by people who could prove they transferred USD to bitcoinica either through MTGOX or a bank wire.

Wow! What a quagmire a future judge will be in. Surely it won't be like this http://www.youtube.com/watch?v=jrLvtoKZfxY (wait till you see what's in the can at the end of the video)
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July 21, 2012, 03:16:38 AM
 #189


While your suggestion is reasonable, I still think that is not what would happen.

The court would sell the BTC as expected but when it came to tally the debt, they would not recognize BTC debt.  I am not saying this is right, but this is what they would do.   Selling assets (even unusual ones) is not unusual for a court.  Recognizing the owed BTC would be a first though and I do not think that would happen.  The assets would be divided up by people who could prove they transferred USD to bitcoinica either through MTGOX or a bank wire. 

The reason I don't think it would happen the way you think it would is because then the unsatisfied creditors would have a cause of action against the liquidator (and then the matter would have to be determined by a court).  Bitcoinica Consultancy has already accepted the Bitcoin claims as valid and a liquidator can't simply ignore that.

Even though the manner in which a liquidator must disburse proceeds is laid down by law, creditors can petition the court if they are unsatisfied with that process and even have the liquidator removed - and as the liquidator must make regular reports to creditors they are well aware of his intentions before disbursements are made and have time to take action to dispute those intentions.

All I can say is that this is Bitcoin. I don't believe it until I see six confirmations.
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April 16, 2013, 10:31:40 PM
 #190

Wow theres some serious amounts of bitcoins been lost. Put my 30btc in the shade a bit
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April 17, 2013, 06:13:37 AM
 #191

as an outsider looking in w/ no stake; wouldn't the web hosting party be partly responsible also....maybe they should be listed as counterparty as well since they didn't secure the  cloud structure they were hosting on behalf of others not to mention the bad securing of bitcoinica by not using some two tier authentication... just a thought since they may not have been maintaining their own servers and were out on the cloud

Once was a man his name was Jed..had a lot of hair but it wasn't on his head !
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April 17, 2013, 06:41:06 AM
 #192

as an outsider looking in w/ no stake; wouldn't the web hosting party be partly responsible also....maybe they should be listed as counterparty as well since they didn't secure the  cloud structure they were hosting on behalf of others not to mention the bad securing of bitcoinica by not using some two tier authentication... just a thought since they may not have been maintaining their own servers and were out on the cloud

The hosting company would probably have a limitation on liability in their contract. If they didn't, they'd be on the hook for theoretically unlimited damages if someone goes and stores something ridiculously valuable on their servers... Hosting would cost a lot more if the hosting cos were liable for all losses resulting from their neglicence.

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November 10, 2013, 02:27:53 AM
 #193


Really?  Then have the police tell me they don't understand it, not you. Using this an excuse for lack of police involvement is nonsense.  The police have not become involved because they could get IP logs from ISPs and trace them right back to the inside job.


Ah. Thank you Vod! That was even better than my theory which was Zhou caught them attempting to steal and forced them to share. Whatever went on, Zhou knew no police were being called. Well they are being called now.

I can't get my bitcoins out of Intersango. I could be wrong, but I think it is because they aren't there. I think they might have been spent on trips to Las Vegas. Or on lawyers. He locked me out of my account and won't let me back in.

I emailed Strateman's local police station, putting out feelers to see about officially filing a complaint, seeing as it is a potential high-tech crime I want to report, and I'll take it from there, requesting seizure and forfeiture of all stolen goodies, including those taken from Bitcoinica customers. I would rather do that as, unlike suing and liquidation, the forfeiture laws make provision for the return of actual goods to their owners, rather than fiat.

I see this as a win-win. If my coins are there, I get them back. If they are not, I get to see Strateman go to jail. If a judge orders seizure and Strateman refuses to hand over the passwords to various wallets, I see him rotting in jail for quite a while for contempt of court. I don't see a 5th amendment defense as viable for him - as the existence of the coins is well-known - so giving out the passwords could not therefore be regarded as self-incrimination.

I mentioned in my email, in passing, that there appears to be about $50,000,000 worth not returned to customers from his previous venture. As the state gets to keep unclaimed forfeited goods, $50M should be enough for someone in the police department to take an interest.

Another problem with civil suits is who exactly to sue? In how many countries? Once this is viewed in the correct light - a criminal matter, it seems to me that Strateman locking someone away from the bitcoins she needs to treat a very sick dog is the latest in a pattern of such behavior.

Is anyone here on good terms with Zhou? He mentioned something that caught my attention, something Strateman denied. If he could prove it, I'd be interested.

ISP logs, huh? Do ISPs keep logs this long?




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November 10, 2013, 02:52:23 AM
 #194


As for the proof, it is coming together.  For example, they had two factor authentication turned on for their MTGox account, then for some reason they turned it off before the "theft" occurred.  

What ? ? ?

And there's Amir, emailing me about how poor he is. When I never asked.

Anyone have a source and a date for this?

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