Bringing Criminal Charges Against the Bitcoin consultancy

[DrFred]

Hi, I'm one of bitcoinica's customers and haven't seen anyone else putting this suggestion forward yet. I feel like I have been the victim of a crime perpetrated by whoever was running bitcoinica at the time, as best as I can tell this is Bitcoin Consultancy (though they are deliberately evasive). As such I have filed a report with the UK police (I am also a UK citizen though you don't need to be). If you too feel you have been the victim of a crime then I encourage you to do the same here.

http://www.actionfraud.police.uk/ (This is the official way to do it, it is an offence to knowingly give false details and you will receive a crime number.)

If enough people report this the police will have no choice but to launch a full investigation, which I admit I am very interested in happening, as in my opinion a lot of the details around this case seem suspect.

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[Herodes]

https://bitcointalk.org/index.php?topic=93109.0

[DrFred]

This is not a lawsuit. This is reporting the facts to the police and they will decide whether there is a criminal case against Bitcoin Consultancy. Completely separate from any civil litigation. I'm not sure there necessarily is a criminal case here (not a lawyer), but there certainly could be (fraud, theft, criminal negligence)

[BadBitcoin (James Sutton)]

This is not a lawsuit. This is reporting the facts to the police and they will decide whether there is a criminal case against Bitcoin Consultancy. Completely separate from any civil litigation. I'm not sure there necessarily is a criminal case here (not a lawyer), but there certainly could be (fraud, theft, criminal negligence)

If during the proceedings we discover that there was an element to the case that was deemed criminal, we will (speaking on behalf my voice alone) turn over our findings to the crown authorities for any potential criminal case that may arise.

[repentance]

This is not a lawsuit. This is reporting the facts to the police and they will decide whether there is a criminal case against Bitcoin Consultancy. Completely separate from any civil litigation. I'm not sure there necessarily is a criminal case here (not a lawyer), but there certainly could be (fraud, theft, criminal negligence)

Reports should be made regardless of whether people believe Bitcoinica is at fault.  Somebody stole those funds and that theft warrants investigation by law enforcement.  In the past, people have rightly assumed that there would be no legal consequences for stealing Bitcoins - which only encourages further attempts.  Whether or not any prosecutions result, there desperately needs to be a full, external investigation of the recent Bitcoinica losses.

[Herodes]

This is not a lawsuit. This is reporting the facts to the police and they will decide whether there is a criminal case against Bitcoin Consultancy. Completely separate from any civil litigation. I'm not sure there necessarily is a criminal case here (not a lawyer), but there certainly could be (fraud, theft, criminal negligence)

Reports should be made regardless of whether people believe Bitcoinica is at fault.  Somebody stole those funds and that theft warrants investigation by law enforcement.  In the past, people have rightly assumed that there would be no legal consequences for stealing Bitcoins - which only encourages further attempts.  Whether or not any prosecutions result, there desperately needs to be a full, external investigation of the recent Bitcoinica losses.

+1

[DrFred]

Yeah, I agree. People automatically assume there's no way law enforcement would be able to do anything. I disagree, bitcoins in regard to bitcoinica could really just be a way of money transfer, as they were used interchangeably with USD on the site. You cannot argue that nothing was stolen as someone is richer and thousands are poorer, not only that, but digital property is still property. The supposed thefts are definitely a crime in the UK under our misuse of computer act, and the bitcoin consultancy should have used this very form to report them to the police. If this ends up in court I would like to see them come up with why they didn't report over £200 000 stolen to the authorities.

[Phinnaeus Gage]

If this ends up in court I would like to see them come up with why they didn't report over £200 000 stolen to the authorities.

It wasn't their money that was stolen, it was yours. If some scum (or insider) came in their home and took a diner guess's coat, top hat, and umbrella, they probably wouldn't report that to the proper authorities either. They'll just hand their guess a week-old newspaper, instructing them on how to use while walking between the raindrops on the way to their cars. And further promise them that they'll get to the bottom of this new heist and will keep them abreast daily of further developments. Thanks for attending the party.

~Bruno~

[Littleshop]

If this ends up in court I would like to see them come up with why they didn't report over £200 000 stolen to the authorities.

It wasn't their money that was stolen, it was yours. If some scum (or insider) came in their home and took a diner guess's coat, top hat, and umbrella, they probably wouldn't report that to the proper authorities either. They'll just hand their guess a week-old newspaper, instructing them on how to use while walking between the raindrops on the way to their cars. And further promise them that they'll get to the bottom of this new heist and will keep them abreast daily of further developments. Thanks for attending the party.

~Bruno~

If someone took a diner guests stuff of substantial value and it was obvious that a theft had occurred, the authorities should be called by either the homeowner or the guest.   

[repentance]

All criminals need to be prosecuted. Perhaps the authorities need a professional education on the bitcoin. Powerpoint presentation, video, whitepaper, whatever. Something to get them the understand that bitcoins are a bit more than a can of marbles kids trade, steal, buy, sell, and use.

Both the FBI in the US and the Australian Federal Police are well aware of Bitcoin as a means of exchange and stored value.  An internal FBI document regarding Bitcoin was leaked and the AFP has publicly commented on Silk Road before (and the difficulties of prosecuting people using it).

Financial intelligence agencies also regard digital currencies and stored value items as a major means for money laundering and tax evasion.

You honestly don't need to understand how a Bitcoin is created in order to address legal issues regarding its value, its possession or its theft.  I also think its wrong to assume that law enforcement is comprised of people who could never wrap their heads around Bitcoin.  It's full of young, tech-savvy people who are just as capable of understanding it as many community members.

[Bitcoin Oz]

The fact the owners of the site havent yet filed a criminal report is negligent at least.

[repentance]

The fact the owners of the site havent yet filed a criminal report is negligent at least.

I totally agree that this should have been done.  Patrick was dismissive of suggestions that it be done following the Rackspace incident - saying that the police wouldn't do anything and that an investigation meant it would just take longer for people to get their money - and it's even more insane if they don't file one now (this time around, no-one's going to replace the missing funds).  As I've said before, I suspect that many people's aversion to involving law enforcement isn't based so much on a belief that the police would do nothing as it is on concern that investigation would discover AML/KYC/tax evasion issues which could result in funds being frozen/seized and users themselves, as well as Bitcoinica, being investigated for financial offences.

[guruvan]

it seems very likely that at least some portion of the owners have committed crimes. I would very much like to see them brought to justice for this.

[Coinoisseur]

I've seen talk of lawsuits and lodging complaints with various LEO, but has anyone directly affected tried going through the NZ business regulators? Just seems like the first place to start.

[repentance]

I've seen talk of lawsuits and lodging complaints with various LEO, but has anyone directly affected tried going through the NZ business regulators? Just seems like the first place to start.

They're not part of the disputes resolution scheme and even if they were, that they owe the money is not in dispute.  The issue now is that they don't have the money to pay out all user claims (we don't actually know whether they have other creditors).  That makes it an insolvency issue, so that's the most appropriate mechanism through which people can pursue their money.  Nobody wanted to do that last time around because they believed that Tihan would make up the losses and insolvency proceedings cost money.  Bitcoinica's line was that it would take longer and people would receive less via liquidation than if Bitcoinica itself handled the process.  There is nothing stopping users forcing the appointment of a liquidator now.

[muyuu]

This is not a lawsuit. This is reporting the facts to the police and they will decide whether there is a criminal case against Bitcoin Consultancy. Completely separate from any civil litigation. I'm not sure there necessarily is a criminal case here (not a lawyer), but there certainly could be (fraud, theft, criminal negligence)

Reports should be made regardless of whether people believe Bitcoinica is at fault.  Somebody stole those funds and that theft warrants investigation by law enforcement.  In the past, people have rightly assumed that there would be no legal consequences for stealing Bitcoins - which only encourages further attempts.  Whether or not any prosecutions result, there desperately needs to be a full, external investigation of the recent Bitcoinica losses.

In this particular instance, 40K US$ were stolen together with 40K BTC. This particular attempt would have gone ahead anyway, BTC involved or not.

They had the password, and likely a bunch of stolen ids as well.

[guruvan]

IMO, it wasn't reported to the authorities because there wasn't a real theft. Falsifying a police report is certainly a crime in the US, and i'd presume it is in UK and NZ and AU as well.

I'm almost certain that the first 18K theft was a complete fabrication to cover up previous losses of customer funds by bitcoinica (I suggested to ZT that he was having serious financial issues weeks before that theft - I maintain my position that they had suffered significant losses of customer funds, and could not survive any longer - I've suggested this to be the reason ZT was seen cashing out on the forums in $10K chunks because he couldn't move funds out of gox fast enough by himself)

Of course, the later "theft" from mtgox was "real" - but it seems like it was 100% premeditated, and allowed - therefore it probably was sent by a team member, to an account that the team could recover.

If they reported these thefts to the police, they'd probably be guilty of filing false claims with the police.

All in all - it seems like the perfect crime. (oh, and right out of the pages of the book of more traditional bank & forex scandals - textbook example even)