Statement about the suspect of recent Bitcoinica hack

[JoelKatz]

Bitcoinica really should have been wound up by a NZ receivership as soon as it was found to be unable to repay 100% of deposits.

There were deals on the table that would have resulted in 100% return of deposits up until the latest hack. There might even still be, though it seems much less likely now.

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[repentance]

http://www.echinacities.com/expat-corner/illogical-or-tactical-lies-in-chinese-culture.html

Really says it all 

I'm half expecting to read that Chen can't start transferring the funds until he's received a Western Union payment .  Modalities are important!

Given that Chen was keeping tabs on Zhou enough to make a 100 BTC donation when Zhou was distributing the 5000 BTC, I consider it highly unlikely that he's not reading this thread in which he's the starring character.  

[kentrolla]

It's my personal freedom to create an account with reused password right? And did I harm anyone?

Chen Jianhai could simply register another email and steal all the money. And we wouldn't proceed with investigation like today. Thank god he used my account and left all the evidence there, otherwise Bitcoinica users will never see the money again!

And despite the advice of several forum posters, you're still talking here... You really aren't doing yourself a favor with comments like these. Frankly I've got nothing invested in this but my opinion of you lowers every time you open your mouth. Take some friendly advice and stop talking. You're in deep here and you need to lawyer up and stfu.

This ^

zhou, i personally believe you are innocent. You really need to "lawyer up and STFU"

[Coinoisseur]

Deals confirmed by extremely reliable 3rd parties with access to Bitcoinica's actual financial status?

Bitcoinica really should have been wound up by a NZ receivership as soon as it was found to be unable to repay 100% of deposits.

There were deals on the table that would have resulted in 100% return of deposits up until the latest hack. There might even still be, though it seems much less likely now.

[JoelKatz]

Deals confirmed by extremely reliable 3rd parties with access to Bitcoinica's actual financial status?

I'm not sure what you mean by "confirmed". The offers were made and I know of no reason those deals would not have worked out. It is possible that Bitcoinica's actual financial status was nothing like it was believed to be, in which case the deals would likely not have worked out. That would require everyone at Bitcoinica to have been lying, which though possible, doesn't seem particularly likely to me.

zhou, i personally believe you are innocent. You really need to "lawyer up and STFU"

This assumes that Zhou is more concerned about possible criminal charges or the like than he is concerned about his reputation in the industry. I think he's more concerned about the latter, and that's part of the reason I also think the Bitcoinica situation is more or less as reported. Everyone involved intends to have a future once they get past this mess.

[Coinoisseur]

As in they were allowed to "look at the books" and the deal was just waiting for final agreement between parties? Doesn't sound like it.

[Phinnaeus Gage]

http://www.echinacities.com/expat-corner/illogical-or-tactical-lies-in-chinese-culture.html

Really says it all 

Now that was an interesting read. I have one question. How can a jurist tell when somebody is lying or telling the truth on the witness stand?

[repentance]

This assumes that Zhou is more concerned about possible criminal charges or the like than he is concerned about his reputation in the industry. I think he's more concerned about the latter, and that's part of the reason I also think the Bitcoinica situation is more or less as reported. Everyone involved intends to have a future once they get past this mess.

Written 5 days ago.

I don't really care about my reputation now even. If I start a bank or investment firm in my 30s, I think not many people will still mind putting their money on my hand. And I'm not going to build anything Bitcoin-related in the foreseeable future. I'll simply go back to my SaaS business.

The big problem is the criminal charge. Bitcoin is a big unknown in the legal world and anything can happen if the police touches this case (unlicensed market operation? terrorism? money laundering?). It makes possible things like migration in the future way harder than they should be.

https://bitcointalk.org/index.php?topic=93074.msg1050141#msg1050141

[defxor]

Hey Zhou, does this ring any bells?

• kid hacks together a flaky leveraged trading platform
• everyone on HN tells him to pack it up now before lots of people lose lots of money, he doesn't listen
• site is losing money, the kid is in way over his head
• kid keeps losses secret, perhaps covers with his own money hoping he can make it work
• foolish buyer appears - the kid happily dumps the mess he's made
• no longer feeling responsible, he trivially fakes a hack (those annoying forum critics were predicting it so let them have it!) and sets himself up with a nice stash of bitcoins
• kid's attempt to just walk away fail as new owners start questioning the lack of promised profits
• time for another hack (it worked so well the first time!) but this time the goal is getting rid of the database that most likely contradicted lies told to the new owner
• the poor suckers left holding the bag flail around trying to figure out who to give the remaining money
• emboldened by prior success, the kid sees yet another opportunity to loot the steaming rubble of his handiwork
• this time he gets careless and gets caught with his hand in the cookie jar, concocts a story less believable than the plot of Prometheus

Enough with the lies. I am sympathetic to the story of an ambitious kid who got in too deep and can't figure a way out but a window for claiming this story is rapidly closing. If you stick with your current course you are embracing your new identity of a boldfaced liar and a thief.

You probably still believe you can fix this and come out relatively unscathed but you are deluding yourself. It's time to tell the truth - all of it. It will free you and trust me - the consequences won't be anywhere near as severe as the alternative.

That's the most likely turn of events. Add the following to understand Zhou's behavior. At all points in time he's just been trying to avoid facing the cognitive dissonance of having to admit it to himself.

http://en.wikipedia.org/wiki/Pseudologia_fantastica

 

[kentrolla]

Deals confirmed by extremely reliable 3rd parties with access to Bitcoinica's actual financial status?

I'm not sure what you mean by "confirmed". The offers were made and I know of no reason those deals would not have worked out. It is possible that Bitcoinica's actual financial status was nothing like it was believed to be, in which case the deals would likely not have worked out. That would require everyone at Bitcoinica to have been lying, which though possible, doesn't seem particularly likely to me.

zhou, i personally believe you are innocent. You really need to "lawyer up and STFU"

This assumes that Zhou is more concerned about possible criminal charges or the like than he is concerned about his reputation in the industry. I think he's more concerned about the latter, and that's part of the reason I also think the Bitcoinica situation is more or less as reported. Everyone involved intends to have a future once they get past this mess.

reputation and criminal charges go hand in hand. There are plenty of ways to "prove" and innocent person is guilty, especially if he talks a lot.
Getting a lawyer would help you with both criminal charges and reputation when all is said and done.
there is a common misconception that only guilty people need lawyers. I would go as far to say that innocent people need lawyers even more, especially in a situation this complex.

[JoelKatz]

As in they were allowed to "look at the books" and the deal was just waiting for final agreement between parties? Doesn't sound like it.

That is correct. I believe the negotiations were tanked by the last theft which left insufficient resources to make 100% restitution and the deal just couldn't work any other way. Though it's also possible that due diligence would have revealed some reason the deal could not have worked, such as Bitcoinica's assets and obligations not being as represented. At this point, I'll leave it for those involved to say more if they wish to.

[BitLucky]

And despite the advice of several forum posters, you're still talking here... You really aren't doing yourself a favor with comments like these. Frankly I've got nothing invested in this but my opinion of you lowers every time you open your mouth. Take some friendly advice and stop talking. You're in deep here and you need to lawyer up and stfu.

This ^

zhou, i personally believe you are innocent. You really need to "lawyer up and STFU"

If Zhou was innocent, he certainly would "lawyer up and STFU", but he is not.

[kentrolla]

And despite the advice of several forum posters, you're still talking here... You really aren't doing yourself a favor with comments like these. Frankly I've got nothing invested in this but my opinion of you lowers every time you open your mouth. Take some friendly advice and stop talking. You're in deep here and you need to lawyer up and stfu.

This ^

zhou, i personally believe you are innocent. You really need to "lawyer up and STFU"

If Zhou was innocent, he certainly would "lawyer up and STFU", but he is not.

I don't understand what you're basing the assumption of  "he would only need a lawyer if he was innocent"  of off.  You would still want to lawyer up and STFU if you're guilty.

[repentance]

Getting a lawyer would help you with both criminal charges and reputation when all is said and done.
there is a common misconception that only guilty people need lawyers. I would go as far to say that innocent people need lawyers even more, especially in a situation this complex.

People have been telling Zhou that since the AurumXchange thread was first posted.  He chose to ignore that advice.  The wisdom of that choice will probably become apparent sooner rather than later.  Obviously the return of funds in no way guarantees that there'll be no criminal investigation of the MtGox breach and the attempt to launder the proceeds of it and any such investigation would look for evidence which validates or refutes Zhou's claims story.

Everyone associated with Bitcoinica should have sought legal advice following the MtGox breach because common sense should have told them that the method of intrusion meant that they were all under suspicion.

[Rarity]

And despite the advice of several forum posters, you're still talking here... You really aren't doing yourself a favor with comments like these. Frankly I've got nothing invested in this but my opinion of you lowers every time you open your mouth. Take some friendly advice and stop talking. You're in deep here and you need to lawyer up and stfu.

This ^

zhou, i personally believe you are innocent. You really need to "lawyer up and STFU"

If Zhou was innocent, he certainly would "lawyer up and STFU", but he is not.

Only guilty people fear the law.  Did you declare OJ innocent when he hired a defense attorney?  Zhou Tong has nothing to fear from the law, and has single handedly caught a hacker and made some restitution possible.  I'm not sure how you can't respect how much he cares about this community to put himself on the line like this.  A true hero.

[zhoutong]

I have sent 15,000 BTC to an address provided by Patrick Murck.

He or one of his clients will later confirm the receipt of the funds and also the escrow/representation relationship.

[BitLucky]

And despite the advice of several forum posters, you're still talking here... You really aren't doing yourself a favor with comments like these. Frankly I've got nothing invested in this but my opinion of you lowers every time you open your mouth. Take some friendly advice and stop talking. You're in deep here and you need to lawyer up and stfu.

This ^

zhou, i personally believe you are innocent. You really need to "lawyer up and STFU"

If Zhou was innocent, he certainly would "lawyer up and STFU", but he is not.

I don't understand what you're basing the assumption of  "he would only need a lawyer if he was innocent"  of off.  You would still want to lawyer up and STFU if you're guilty.

Why? His plan is to pay back the money and then hope everyone pipes down (which they inevitably will). He can't do that behind closed doors.

[BitLucky]

A true CUNT.

FYP

[ninjarobot]

I have sent 15,000 BTC to an address provided by Patrick Murck.

He or one of his clients will later confirm the receipt of the funds and also the escrow/representation relationship.

Thanks Zhou. It is a far cry from the 40K BTC / 40K USD stolen, but it is a start. Can you please share the transaction id?

[zhoutong]

I have sent 15,000 BTC to an address provided by Patrick Murck.

He or one of his clients will later confirm the receipt of the funds and also the escrow/representation relationship.

Thanks Zhou. It is a far cry from the 40K BTC / 40K USD stolen, but it is a start. Can you please share the transaction id?

Status: 4/unconfirmed, broadcast through 8 nodes
Date: 29/07/12 19:54
To: 1FqqBZnemCrcCDbz57Nk7LHLCN42hCHXEV
Debit: -15000.00 BTC
Net amount: -15000.00 BTC
Transaction ID: b87922d693b3d3b66da385592a07147cf0b8f31f78057ebb212eb60745b58cf9

Currently I can recover at most 20,000 BTC and $140,000 from Chen Jianhai.

If AurumXchange can reimburse the laundering fees for the Mt. Gox code (about $2,320.31) then it will be even better.

AFAIK he used Blockchain's mixing service, but we don't expect the fees to be returned because it's impossible to identify the funds anyway. (Also Blockchain has offered a 0.5% bonus for those people who facilitated the laundering.)

The average price he sold at should be around $7.2, including the exchanging fees. At this price point we are short $42,000. I'll see if it's possible to get this from Chen Jianhai, but quite unlikely. I doubt the effectiveness of Chinese police as well, because he's very likely to have "Guanxi" to deal with his financial activities (which I can't decide whether legal or not). In any case, he has been acting in a very naive way and I assume he still has freedom today because of his guanxi, not technical sophistication.

I'm not sure about Bitcoinica's real solvency before the hack at the moment. The information is insufficient for me to give a definitive answer.

My 5,000 BTC is entirely separate from the hack, but it more or less covers a large part of the shortfall.

I'm trying to squeeze funds to see if I can compensate more personally, but I'm not in a very good financial condition. If NameTerrific is profitable in the future, I will be happy to contribute more personal funds to help Bitcoinica customers.