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Author Topic: Class action Litigation vs. Bitcoinica Consultancy LTD & Intersango LTD  (Read 24995 times)
ninjarobot
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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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repentance
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July 14, 2012, 11:18:35 PM
 #82


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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Jointops420
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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.
lonelyminer (Peter Šurda)
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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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kiba
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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.

lonelyminer (Peter Šurda)
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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.

If you're not excited by the idea of being an early adopter 'now', then you should come back in three or four years and either tell us "Told you it'd never work!" or join what should, by then, be a much more stable and easier-to-use system. - GA
It is being worked on by smart people. -DamienBlack
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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
 

lonelyminer (Peter Šurda)
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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.

defxor
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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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