Statement about the suspect of recent Bitcoinica hack

[sarpar]

Public clarification #1

"Transfer for a friend" is not "third-party transfer" and is not "money laundering".

I was not merely doing a simple transfer, I was doing a business with this friend by giving him preferential foreign exchange rates compared to his banks, for a return of a small commission.

The supposed procedure:

Friend's LR                ->   My LR (my revenue to perform the service)
My LR                      ->   My USD bank account (my own exchange activity through AurumXchange, et al.)
My USD bank account ->   X (my own exchange activity for forex)
X                            ->   My SGD bank account (my own withdrawal in another currency)
My SGD bank account ->   Friend's SGD bank account (my cost to perform the service)

Only the first and last part are related to both my friend and me. It's a common business procedure for all kinds of legitimate trades, and the procedure itself is completely legal.

The suspicion comes from a Bitcoinica hack which happens to involve an email address that I used for testing purpose on mtgox.com, and a transfer on AurumXchange at similar timeframe with an amount of similar order of magnitude. However, "third-party transfer" is strictly defined to be using an exchange service as an intermediary between two different accounts not controlled by the same person.

For example,

My LR -> AurumXchange
AurumXchange -> Friend's bank account

This is third party transfer, and it should trigger an AML investigation immediately.

A common use of third-party transfer is scamming:

Trader A: I want to buy some Bitcoins
Trader B: Sure, send the funds to *** (AurumXchange's bank account), and make sure you have transaction reference XXX
Trader A: Done
Trader B gets a Mt. Gox code from AurumXchange, and deposits into an unverified Mt. Gox account, and cash out Bitcoins.
Trader B never pays Trader A anything.
Trader A: You are a scammer! I'm reporting to the police with your bank account.
AurumXchange will be investigated, and Trader B may never appear again.

This IS the real (third-party transfer == money laundering) you're talking about.

EDIT:

I only post public clarification when too many people are questioning the same thing when I deem to be factually wrong and worth a public clarification. You should continue contacting me at bitcoin@zhoutong.com for other clarifications or explanations. You shouldn't expect me to read/reply every single post in this thread.

Laundering = conceal the origin of funds. this is exactly what you try to do by covering your "friend"
(I can understand that you protect him from the public but with AurumXchange you should put your cards on the table)
After you stated publicly that you are acting for a third party in this transaction ergo not acting on your behalf, AurumXchange was responsible to prove that everything is legitimate. Your friend could have used an unknown source to hand the funds over to you, just to receive them in his own account. In this scenario you would have been an intermediary of money laundering. The sole thing you have to do is provide all information concerning this transaction to AurumXchange to prove it is legitimate. If you are doing your best you should provide this information quickly.

Your scenario:
If you run an exchange business you would probably need a licence in which case you as intermediary are responsible of supervising  AML-regulations. I doubt you have this kind of business and guess it is a theoretical construction to serve your cause.

[sarpar]

By the way, a freezing order by court in Dominica is only effective for 7 days unless a money laundering crime is charged within 7 days. Also divulging any information about an ongoing AML investigation is a criminal offence, punishable with up to $250,000 in fines and 10 years of inprisonment. (The inprisonment for money laundering itself is up to 7 years.)

Reference: Dominican Money Laundering Prevention Act (2000)

This means that AurumXchange must have received an order by a more superior party than court to have frozen the funds for more than 7 days, and/or an AML investigation has not formally taken place.

If you have nothing to fear and tell the truth, why are you fighting so strongly against providing this little AML compliance info?
Do your best and send it to them! -> Problem solved!

[zhoutong]

Public clarification #1

"Transfer for a friend" is not "third-party transfer" and is not "money laundering".

I was not merely doing a simple transfer, I was doing a business with this friend by giving him preferential foreign exchange rates compared to his banks, for a return of a small commission.

The supposed procedure:

Friend's LR                ->   My LR (my revenue to perform the service)
My LR                      ->   My USD bank account (my own exchange activity through AurumXchange, et al.)
My USD bank account ->   X (my own exchange activity for forex)
X                            ->   My SGD bank account (my own withdrawal in another currency)
My SGD bank account ->   Friend's SGD bank account (my cost to perform the service)

Only the first and last part are related to both my friend and me. It's a common business procedure for all kinds of legitimate trades, and the procedure itself is completely legal.

The suspicion comes from a Bitcoinica hack which happens to involve an email address that I used for testing purpose on mtgox.com, and a transfer on AurumXchange at similar timeframe with an amount of similar order of magnitude. However, "third-party transfer" is strictly defined to be using an exchange service as an intermediary between two different accounts not controlled by the same person.

For example,

My LR -> AurumXchange
AurumXchange -> Friend's bank account

This is third party transfer, and it should trigger an AML investigation immediately.

A common use of third-party transfer is scamming:

Trader A: I want to buy some Bitcoins
Trader B: Sure, send the funds to *** (AurumXchange's bank account), and make sure you have transaction reference XXX
Trader A: Done
Trader B gets a Mt. Gox code from AurumXchange, and deposits into an unverified Mt. Gox account, and cash out Bitcoins.
Trader B never pays Trader A anything.
Trader A: You are a scammer! I'm reporting to the police with your bank account.
AurumXchange will be investigated, and Trader B may never appear again.

This IS the real (third-party transfer == money laundering) you're talking about.

EDIT:

I only post public clarification when too many people are questioning the same thing when I deem to be factually wrong and worth a public clarification. You should continue contacting me at bitcoin@zhoutong.com for other clarifications or explanations. You shouldn't expect me to read/reply every single post in this thread.

Laundering = conceal the origin of funds. this is exactly what you try to do by covering your "friend"
(I can understand that you protect him from the public but with AurumXchange you should put your cards on the table)
After you stated publicly that you are acting for a third party in this transaction ergo not acting on your behalf, AurumXchange was responsible to prove that everything is legitimate. Your friend could have used an unknown source to hand the funds over to you, just to receive them in his own account. In this scenario you would have been an intermediary of money laundering. The sole thing you have to do is provide all information concerning this transaction to AurumXchange to prove it is legitimate. If you are doing your best you should provide this information quickly.

Your scenario:
If you run an exchange business you would probably need a licence in which case you as intermediary are responsible of supervising  AML-regulations. I doubt you have this kind of business and guess it is a theoretical construction to serve your cause.

I'm not acting for a third party. AurumXchange has no legal obligation to send the money to my friend.

I was stating that the source of funds is my friend, and I have no knowledge of any money laundering activity. I'm not wilfully protecting a criminal from money laundering because his business activity is legitimate.

AurumXchange has the obligation to report to authority if they believe the transaction is suspicious. At the same time, they can release the funds either to source account or destination account because criminal liability will be waived (they can legally proceed with the business so that no information about AML is divulged, and they are not subject to accomplice crime, according to Dominican laws).

[zhoutong]

By the way, a freezing order by court in Dominica is only effective for 7 days unless a money laundering crime is charged within 7 days. Also divulging any information about an ongoing AML investigation is a criminal offence, punishable with up to $250,000 in fines and 10 years of inprisonment. (The inprisonment for money laundering itself is up to 7 years.)

Reference: Dominican Money Laundering Prevention Act (2000)

This means that AurumXchange must have received an order by a more superior party than court to have frozen the funds for more than 7 days, and/or an AML investigation has not formally taken place.

If you have nothing to fear and tell the truth, why are you fighting so strongly against providing this little AML compliance info?
Do your best and send it to them! -> Problem solved!

It's not a little. It's the entire trace of financial transactions and confidential identifications of all known involved parties, all certified!

And they have to be sent to a "company" without registration number, telephone or address. And according to AurumXchange, this is the first time they blocked funds!

I have provided Mt. Gox with my identification documents, but I'm not willing to do the same for AurumXchange due to their shady business activities. I'm more willing to file a lawsuit against Roberto personally (because there's no company registration details).

[zhoutong]

Public clarification #2

Chen Jianhai has attempted to cash out $5,000 of LR exchanged from stolen Bitcoins owned by Bitcoinica. However the funds have been blocked by AurumXchange.

There is solid evidence that the $5,000 was Bitcoinica's stolen properties, because the email and LR account matched the hacker's identity. The bank account was purchased from the black market though.

AurumXchange is possessing $5,000 of Bitcoinica's stolen funds at the moment. Also the total income from other Chen Jianhai's money laundering transactions is estimated to be about $2,200, calculated from the data provided by AurumXchange.

[sarpar]

By the way, a freezing order by court in Dominica is only effective for 7 days unless a money laundering crime is charged within 7 days. Also divulging any information about an ongoing AML investigation is a criminal offence, punishable with up to $250,000 in fines and 10 years of inprisonment. (The inprisonment for money laundering itself is up to 7 years.)

Reference: Dominican Money Laundering Prevention Act (2000)

This means that AurumXchange must have received an order by a more superior party than court to have frozen the funds for more than 7 days, and/or an AML investigation has not formally taken place.

If you have nothing to fear and tell the truth, why are you fighting so strongly against providing this little AML compliance info?
Do your best and send it to them! -> Problem solved!

It's not a little. It's the entire trace of financial transactions and confidential identifications of all known involved parties, all certified!

And they have to be sent to a "company" without registration number, telephone or address. And according to AurumXchange, this is the first time they blocked funds!

I have provided Mt. Gox with my identification documents, but I'm not willing to do the same for AurumXchange due to their shady business activities. I'm more willing to file a lawsuit against Roberto personally (because there's no company registration details).

In my opinion no big hindrance for such an amount of money. I am also confident that AurumXchange will provide you with contact information since it is obviously in their interest to solve this issue as quickly as possible. So far they act very constructive and supportive.

This business wasn't so shady when you exchanged your funds - so you will have to bear the consequences!

[bittenbob]

Public clarification #2

Chen Jianhai has attempted to cash out $5,000 of LR exchanged from stolen Bitcoins owned by Bitcoinica. However the funds have been blocked by AurumXchange.

There is solid evidence that the $5,000 was Bitcoinica's stolen properties, because the email and LR account matched the hacker's identity. The bank account was purchased from the black market though.

AurumXchange is possessing $5,000 of Bitcoinica's stolen funds at the moment. Also the total income from other Chen Jianhai's money laundering transactions is estimated to be about $2,200, calculated from the data provided by AurumXchange.

You seem to know an aweful lot about everything in a conveniently short period of time. Why does it matter what order the funds are sent in? They need to be returned without delay, regardless of consequence.

[Vod]

Hi Zhou,

I think there was one question that you didn't answer from one of my earlier emails. You said you could recover 20k BTC and to date have recovered 15k BTC. Are you still able to recover the other 5k BTC?

Yes. I'm recovering the first 15k BTC to show "good faith" and "co-operation". The remaining will be recovered after all the fiat has been recovered. The fiat money is the most legally sensitive part of this deal, and it should have taken place before Bitcoin.

Hey asshole - send the remaining 25k BTC NOW.  We all know the fiat money is locked up until you identify yourself, and it's clear you are not going to do that.

STOP PLAYING YOUR CHILDISH GAMES.

[bittenbob]

By the way, a freezing order by court in Dominica is only effective for 7 days unless a money laundering crime is charged within 7 days. Also divulging any information about an ongoing AML investigation is a criminal offence, punishable with up to $250,000 in fines and 10 years of inprisonment. (The inprisonment for money laundering itself is up to 7 years.)

Reference: Dominican Money Laundering Prevention Act (2000)

This means that AurumXchange must have received an order by a more superior party than court to have frozen the funds for more than 7 days, and/or an AML investigation has not formally taken place.

If you have nothing to fear and tell the truth, why are you fighting so strongly against providing this little AML compliance info?
Do your best and send it to them! -> Problem solved!

It's not a little. It's the entire trace of financial transactions and confidential identifications of all known involved parties, all certified!

And they have to be sent to a "company" without registration number, telephone or address. And according to AurumXchange, this is the first time they blocked funds!

I have provided Mt. Gox with my identification documents, but I'm not willing to do the same for AurumXchange due to their shady business activities. I'm more willing to file a lawsuit against Roberto personally (because there's no company registration details).

I think asking for registration is something you should have done BEFORE you deposited funds there. Your refusal to provide AML documents to them means they have no choice to seize the funds and you are acting in bad faith at this point.

[Coinoisseur]

Roberto claims to have been trying to interact with Zhou through legal channels, https://bitcointalk.org/index.php?topic=84042.msg1061816#msg1061816

No reason to doubt this, especially if continuing to give Zhou the benefit of the doubt.

How's your child Korean model doing? I've not followed the story...

My model? I don't own any models, maybe an RC plane. If you're asking about the 17 1/2 year old Korean model whom I think is awesome for supporting Bitcoin, I guess she's doing fine. Why don't you ask her yourself on her facebook at http://www.facebook.com/yoonyeonghwa . Last I talked to her, she was interested in promoting mining in Korea too. I told her she could buy contracts from people like you too if she wanted, but I couldn't rightfully suggest a shady operation that pays false figures and then crashes out. I think I'll recommend she buy a Jalapeno.

@Zhou Tong: I would also concur that Roberto, if he has not received an order from the government to do so (which would seem quite bizarre since no government would ask such a thing), posting your private information on the threads accusing you of being a scammer is not only against the law for AML purposes but a breach of your privacy agreement with him. Please consult with an attorney.

@Roberto: Please post your business registration/contact information in this thread for informational purposes so that Zhou's attorney can have it to address you officially.

[bittenbob]

Hi Zhou,

I think there was one question that you didn't answer from one of my earlier emails. You said you could recover 20k BTC and to date have recovered 15k BTC. Are you still able to recover the other 5k BTC?

Yes. I'm recovering the first 15k BTC to show "good faith" and "co-operation". The remaining will be recovered after all the fiat has been recovered. The fiat money is the most legally sensitive part of this deal, and it should have taken place before Bitcoin.

Hey asshole - send the remaining 25k BTC NOW.  We all know the fiat money is locked up until you identify yourself, and it's clear you are not going to do that.

STOP PLAYING YOUR CHILDISH GAMES.

I'm also trying to figure out if this mounts to extortion. So far, many of the statements from Zhou have been of extortion nature. Promising to have the funds released if no legal action is taken is a prime example. Its time to just send the funds Zhou. Too many people have suffered too long because of this fiasco.

[zhoutong]

By the way, a freezing order by court in Dominica is only effective for 7 days unless a money laundering crime is charged within 7 days. Also divulging any information about an ongoing AML investigation is a criminal offence, punishable with up to $250,000 in fines and 10 years of inprisonment. (The inprisonment for money laundering itself is up to 7 years.)

Reference: Dominican Money Laundering Prevention Act (2000)

This means that AurumXchange must have received an order by a more superior party than court to have frozen the funds for more than 7 days, and/or an AML investigation has not formally taken place.

If you have nothing to fear and tell the truth, why are you fighting so strongly against providing this little AML compliance info?
Do your best and send it to them! -> Problem solved!

It's not a little. It's the entire trace of financial transactions and confidential identifications of all known involved parties, all certified!

And they have to be sent to a "company" without registration number, telephone or address. And according to AurumXchange, this is the first time they blocked funds!

I have provided Mt. Gox with my identification documents, but I'm not willing to do the same for AurumXchange due to their shady business activities. I'm more willing to file a lawsuit against Roberto personally (because there's no company registration details).

In my opinion no big hindrance for such an amount of money. I am also confident that AurumXchange will provide you with contact information since it is obviously in their interest to solve this issue as quickly as possible. So far they act very constructive and supportive.

This business wasn't so shady when you exchanged your funds - so you will have to bear the consequences!

They didn't provide me any contact information. Their "repeated requests" are lies.

I have not received a single email from AurumXchange and all communication from them is the support ticket. You can go and check the ticket yourself, and compare with their public posts (compare the private "sorry I can't share any information with you." and the public "look, ZT is the thief!"). It's highly obvious that they only want to let the public know their "heroic" acts and they have no interest in solving this matter with involved individuals.

The business is shady as always, like any unincorporated Bitcoin business. But I trusted Roberto personally because he has been very co-operative in Bitcoinica integration, and we gave each other $10,000 of mutual line of credit in that deal.

[zhoutong]

Hi Zhou,

I think there was one question that you didn't answer from one of my earlier emails. You said you could recover 20k BTC and to date have recovered 15k BTC. Are you still able to recover the other 5k BTC?

Yes. I'm recovering the first 15k BTC to show "good faith" and "co-operation". The remaining will be recovered after all the fiat has been recovered. The fiat money is the most legally sensitive part of this deal, and it should have taken place before Bitcoin.

Hey asshole - send the remaining 25k BTC NOW.  We all know the fiat money is locked up until you identify yourself, and it's clear you are not going to do that.

STOP PLAYING YOUR CHILDISH GAMES.

I'm also trying to figure out if this mounts to extortion. So far, many of the statements from Zhou have been of extortion nature. Promising to have the funds released if no legal action is taken is a prime example. Its time to just send the funds Zhou. Too many people have suffered too long because of this fiasco.

Send to who? Send to satoshi? Send to Red Cross?

I'm trying to resolve this problem for Bitcoinica customers, not just for myself.

I'm waiting, not delaying.

[Rarity]

At this point we don't even know who you are because you continue to systematically refuse to provide KYC information. Feel free to sue me, or the company. No further statements from me regarding this issue.

Right, he should just give all his information to you so you can post it publicly for your lynch mob here, you aren't as clever as you think.

[Vod]

https://bitcointalk.org/index.php?topic=97099.0

I hope that thread will last long enough to have people contact me.  I'm done playing games with Zhou and the people on his stolen payroll.

[bittenbob]

Hi Zhou,

I think there was one question that you didn't answer from one of my earlier emails. You said you could recover 20k BTC and to date have recovered 15k BTC. Are you still able to recover the other 5k BTC?

Yes. I'm recovering the first 15k BTC to show "good faith" and "co-operation". The remaining will be recovered after all the fiat has been recovered. The fiat money is the most legally sensitive part of this deal, and it should have taken place before Bitcoin.

Hey asshole - send the remaining 25k BTC NOW.  We all know the fiat money is locked up until you identify yourself, and it's clear you are not going to do that.

STOP PLAYING YOUR CHILDISH GAMES.

I'm also trying to figure out if this mounts to extortion. So far, many of the statements from Zhou have been of extortion nature. Promising to have the funds released if no legal action is taken is a prime example. Its time to just send the funds Zhou. Too many people have suffered too long because of this fiasco.

Send to who? Send to satoshi? Send to Red Cross?

I'm trying to resolve this problem for Bitcoinica customers, not just for myself.

I'm waiting, not delaying.

Send it Patrick Muirk as you sent the first 15k BTC. You could ague that you are waiting for bank account information for the fiat (which may or may not be true) but you can't argue that for the 5k BTC. We already know there is an address you can send that to.

[Matthew N. Wright]

I have not received a single email from AurumXchange and all communication from them is the support ticket.

Sounds about right.

It's highly obvious that they only want to let the public know their "heroic" acts and they have no interest in solving this matter with involved individuals.

I get this feeling as well. No sane exchange would actively libel against their customer. Even CryptoXChange has the common sense to not talk shit about people who are even PROVEN to scam and steal bank accounts and attempt to launder through them etc, because the law prohibits discussing active cases. It's clear they are only -beginning- to make this an 'actual' case after they realized their mistake and are probably not even a registered company by the looks of the continued refusal to provide basic contact information. Charlie wouldn't flinch to provide contact information. Neither would Mark Karples. If Aurumxchange is legit, why aren't they giving contact information?

we gave each other $10,000 of mutual line of credit in that deal.

That also makes perfect sense since this entire thread seemed like an -emotional- response to you directly more than anything logical. Even the people here who  believe you're a thief were taken back by their unprofessionalism in even starting this libelous, privacy agreement breaking thread.

https://bitcointalk.org/index.php?topic=97099.0

I hope that thread will last long enough to have people contact me.  I'm done playing games with Zhou and the people on his stolen payroll.

I smell a permaban.

[zhoutong]

Public clarification #2
There is solid evidence that the $5,000 was Bitcoinica's stolen properties, because the email and LR account matched the hacker's identity. The bank account was purchased from the black market though.

It is interesting that you consider the fact that the email matched the one used to perform the hack "solid evidence". The only solid evidence we have so far (as per your own admission) is that the email used to launder the proceedings of Bitcoinica was created by you, and was under your control, at least at some point in time. We also have an exchange order using that email requesting funds to be wired to a stolen chinese bank account purchased in the black market (as per your own admission). Do you follow? You still think we are not legally obligated to hold your funds?

We have sent you the address where to elevate claims, along with a request from KYC information, which we are well within our rights to request. We have also sent you our company address as well, contrary to your statements on this forum. You are refusing to provide KYC information under the basis that we are a "shady" company, completely ignoring the fact that we have no public track record of wrong doing, that we have been operating since 2007, and that you considered us trustworthy enough to make us funding partners in Bitcoinica AND to use us to exchange $40k USD on behalf of a friend.

In any case, this conversation is an exercise in futility. At this point we don't even know who you are because you continue to systematically refuse to provide KYC information. Feel free to sue me, or the company. No further statements from me regarding this issue.

Roberto

Please provide proof of the "sent" information.

I haven't received any email from you and no other emails from AurumXchange was identified as spam.

I didn't expect you to lie at all, and I always thought you are following legal instructions carefully in your country.

[zhoutong]

Hi Zhou,

I think there was one question that you didn't answer from one of my earlier emails. You said you could recover 20k BTC and to date have recovered 15k BTC. Are you still able to recover the other 5k BTC?

Yes. I'm recovering the first 15k BTC to show "good faith" and "co-operation". The remaining will be recovered after all the fiat has been recovered. The fiat money is the most legally sensitive part of this deal, and it should have taken place before Bitcoin.

Hey asshole - send the remaining 25k BTC NOW.  We all know the fiat money is locked up until you identify yourself, and it's clear you are not going to do that.

STOP PLAYING YOUR CHILDISH GAMES.

I'm also trying to figure out if this mounts to extortion. So far, many of the statements from Zhou have been of extortion nature. Promising to have the funds released if no legal action is taken is a prime example. Its time to just send the funds Zhou. Too many people have suffered too long because of this fiasco.

Send to who? Send to satoshi? Send to Red Cross?

I'm trying to resolve this problem for Bitcoinica customers, not just for myself.

I'm waiting, not delaying.

Send it Patrick Muirk as you sent the first 15k BTC. You could ague that you are waiting for bank account information for the fiat (which may or may not be true) but you can't argue that for the 5k BTC. We already know there is an address you can send that to.

To my best knowledge, he is holding this case at the moment to obtain instruction from Bitcoinica regarding a minor aspect of his representation.

You can email him personally to request that. He's very responsive and he acts in interest of Bitcoinica clients, and I have no problem of following his instructions. Just do that and I'll follow his instruction within reasonable timeframe.

Thanks for understanding!

[Coinoisseur]

Permaban for engaging private investigators, really?

I have not received a single email from AurumXchange and all communication from them is the support ticket.

Sounds about right.

It's highly obvious that they only want to let the public know their "heroic" acts and they have no interest in solving this matter with involved individuals.

I get this feeling as well. No sane exchange would actively libel against their customer. Even CryptoXChange has the common sense to not talk shit about people who are even PROVEN to scam and steal bank accounts and attempt to launder through them etc, because the law prohibits discussing active cases. It's clear they are only -beginning- to make this an 'actual' case after they realized their mistake and are probably not even a registered company by the looks of the continued refusal to provide basic contact information. Charlie wouldn't flinch to provide contact information. Neither would Mark Karples. If Aurumxchange is legit, why aren't they giving contact information?

we gave each other $10,000 of mutual line of credit in that deal.

That also makes perfect sense since this entire thread seemed like an -emotional- response to you directly more than anything logical. Even the people here who  believe you're a thief were taken back by their unprofessionalism in even starting this libelous, privacy agreement breaking thread.

https://bitcointalk.org/index.php?topic=97099.0

I hope that thread will last long enough to have people contact me.  I'm done playing games with Zhou and the people on his stolen payroll.

I smell a permaban.