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.docxhttp://188.165.73.224/sign-7-once-on-24th-once-on-29th.docSome 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#msg921159But 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.
