[ANN] Bitcoinica Consultancy abandons customers. Bitcoinica to enter Liquidation

[Bitcoin Oz]

It still doesnt explain why all of their coins and fiat was sitting at mt gox because at least the bitcoins can be payed out from a cold wallet....there is 0 reason for them to be deposited with a third party

[1713980641]

1713980641

[repentance]

It still doesnt explain why all of their coins and fiat was sitting at mt gox because at least the bitcoins can be payed out from a cold wallet....there is 0 reason for them to be deposited with a third party

After the Linode hack people were screaming at them for not having their Bitcoins on MtGox because MtGox was perceived to be safer.  I suspect that during the claims process a lot of people used their MtGox history to verify their claim and it was simply easier to make refunds of both USD and BTC from the MtGox account (and have an independent record of those refunds).  There's no reason to believe that other important credentials weren't stored on LastPass, including the keys to hot and cold wallets.  Too many people had access to LastPass and - by extension - the accounts for which it held credentials.

[lonelyminer (Peter Šurda)]

The problem arises because of the legal requirement to treat all creditors of the same class - in this case, all unsecured creditors - equally.  Everyone could be paid back in Bitcoins as long as the proportion of their total claim which each person received was the same (it's not going to happen because it's not practical), but the value of the claim would still need to be determined in dollars even if the refunds were made in Bitcoins.

Purely logically, ensuring equal payouts this does not require that all the funds are converted to NZD. If more BTC than USD are missing, there is no technical obstacle in using a proportion of the USD to buy BTC at spot price, which would also determine the settlement ratios and with respect to that, everyone would be treated equally. The problem of fluctuating rates causing temporal inequalities occurs irrespective of how the payouts are organised, since the exchange rates of all the involved currencies fluctuate, so a particular spot exchange rate would need to be chosen anyway.

Since Bitcoinica only accepted USD and BTC, I suppose many of the creditors would object to being returned NZD. And once the liquidator abandons the idea of NZD-denominated refunds, I don't see him being legally obligated to use USD in preference to BTC. None of these are legal tender in New Zealand.

[coinft]

You cant tell the difference from one bitcoin to the other but you can with art.

Not true. Bitcoins have a unique generation and spending history stored in the block chain.

Although I can't imagine someone refusing refunded bitcoins because they are not "his".

[Bitcoin Oz]

You cant tell the difference from one bitcoin to the other but you can with art.

Not true. Bitcoins have a unique generation and spending history stored in the block chain.

Although I can't imagine someone refusing refunded bitcoins because they are not "his".

I meant you cant tell who the owner of any bitcoin is unless you encoded a dna string into the coinbase somehow 

[coinft]

You cant tell the difference from one bitcoin to the other but you can with art.

Not true. Bitcoins have a unique generation and spending history stored in the block chain.

Although I can't imagine someone refusing refunded bitcoins because they are not "his".

I meant you cant tell who the owner of any bitcoin is unless you encoded a dna string into the coinbase somehow 

I don't want to know how you "encode" your DNA on your "picture collection".

[Bitcoin Oz]

You cant tell the difference from one bitcoin to the other but you can with art.

Not true. Bitcoins have a unique generation and spending history stored in the block chain.

Although I can't imagine someone refusing refunded bitcoins because they are not "his".

I meant you cant tell who the owner of any bitcoin is unless you encoded a dna string into the coinbase somehow 

I don't want to know how you "encode" your DNA on your "picture collection".

They see me mining...

[proudhon]

With all the pirate stuff going on it's easy to forget that the Bitcoinica/Bitcoinica Consultancy/Bitcoin Consultancy/Intersango crew are also responsible for tens of thousands of bitcoin and USD losses to people around here.  I'm sure they're loving the break pirate is giving them.

[repentance]

It's really time for an update on this.  It shouldn't have taken this long to progress to receivership.

Patrick/Tihan, what's the current anticipated timeline for receivership and liquidation?

[tseale]

I too hoped things would be further along by now. The lawyers are looking at skipping receivership and proceeding directly to liquidation. This is intended to save time but nothing in the legal world is fast by bitcoin standards. With luck, the Court will approve a liquidator in September.

[repentance]

I too hoped things would be further along by now. The lawyers are looking at skipping receivership and proceeding directly to liquidation. This is intended to save time but nothing in the legal world is fast by bitcoin standards. With luck, the Court will approve a liquidator in September.

This is good news.  From what you've said, there's nothing to be gained by going through receivership if Wendon is intending to make its recovered entitlements available to all creditors.  It's ridiculous that you've been forced into the situation of requiring court approval for liquidation, though.  Agreement by the general partners to wind up the partnership in voluntary liquidation would have made this process a lot faster and less costly.

[proudhon]

I too hoped things would be further along by now. The lawyers are looking at skipping receivership and proceeding directly to liquidation. This is intended to save time but nothing in the legal world is fast by bitcoin standards. With luck, the Court will approve a liquidator in September.

This is good news.  From what you've said, there's nothing to be gained by going through receivership if Wendon is intending to make its recovered entitlements available to all creditors.  It's ridiculous that you've been forced into the situation of requiring court approval for liquidation, though.  Agreement by the general partners to wind up the partnership in voluntary liquidation would have made this process a lot faster and less costly.

I don't understand why they're being so obstructive.  I mean, they're almost being maliciously obstructive.  I just don't get it.  I will never trust any of those guys ever again and intend to stay as far away as possible from anything they're involved in.

[repentance]

I don't understand why they're being so obstructive.  I mean, they're almost being maliciously obstructive.  I just don't get it.  I will never trust any of those guys ever again and intend to stay as far away as possible from anything they're involved in.

It will be interesting to see whether they ignore the liquidator's requests for co-operation.  Technically, they're required by law to co-operate with the liquidator.  At a practical level, the consequences for failing to do so could be limited given that none of them reside in NZ.  I doubt any of them would be overly concerned about being banned from being directors of NZ entities in the future.  And while a liquidator could find that they have personal liability for the debts of Bitcoinica LP, there's no reason to believe that any of them have sufficient assets for such a finding to be meaningful.

It will be interesting, however, to see whether the liquidator finds any reasons to refer issues related to Bitcoinica to the Serious Fraud Office.

[proudhon]

I don't understand why they're being so obstructive.  I mean, they're almost being maliciously obstructive.  I just don't get it.  I will never trust any of those guys ever again and intend to stay as far away as possible from anything they're involved in.

It will be interesting to see whether they ignore the liquidator's requests for co-operation.  Technically, they're required by law to co-operate with the liquidator.  At a practical level, the consequences for failing to do so could be limited given that none of them reside in NZ.  I doubt any of them would be overly concerned about being banned from being directors of NZ entities in the future.  And while a liquidator could find that they have personal liability for the debts of Bitcoinica LP, there's no reason to believe that any of them have sufficient assets for such a finding to be meaningful.

It will be interesting, however, to see whether the liquidator finds any reasons to refer issues related to Bitcoinica to the Serious Fraud Office.

It will be interesting.  But, hey, in the meantime, let's all go party with them in London!

[davout]

It will be interesting.  But, hey, in the meantime, let's all go party with them in London!

word

[MemoryDealers]

Amir is too busy doing youtube interviews to be bothered with doing the right thing for all the Bitcoinica customers.
http://www.youtube.com/watch?v=2dPAAM_5Dkg

Patrick is too busy threatening me over the lawsuit to be bothered to do the right thing and actually avoid the lawsuit in the process.

[18:31:12] <phantomcircuit> ......, suggest to him strongly to drop the suit
[18:31:23] <phantomcircuit> he's going to regret it more than anything he's ever done in his entire life
[18:32:11] <phantomcircuit> that's a promise

[MelMan2002]

Amir is too busy doing youtube interviews to be bothered with doing the right thing for all the Bitcoinica customers.
http://www.youtube.com/watch?v=2dPAAM_5Dkg

Patrick is too busy threatening me over the lawsuit to be bothered to do the right thing and actually avoid the lawsuit in the process.

[18:31:12] <phantomcircuit> ......, suggest to him strongly to drop the suit
[18:31:23] <phantomcircuit> he's going to regret it more than anything he's ever done in his entire life
[18:32:11] <phantomcircuit> that's a promise

Lol @ Patrick's threat.  Doesn't he know that that could land him in even more trouble?

[flower1024]

Amir is too busy doing youtube interviews to be bothered with doing the right thing for all the Bitcoinica customers.
http://www.youtube.com/watch?v=2dPAAM_5Dkg

Patrick is too busy threatening me over the lawsuit to be bothered to do the right thing and actually avoid the lawsuit in the process.

[18:31:12] <phantomcircuit> ......, suggest to him strongly to drop the suit
[18:31:23] <phantomcircuit> he's going to regret it more than anything he's ever done in his entire life
[18:32:11] <phantomcircuit> that's a promise

Lol @ Patrick's threat.  Doesn't he know that that could land him in even more trouble?

he still thinks he is an unbeatable genius who deserves respect

[deeplink]

Amir is too busy doing youtube interviews to be bothered with doing the right thing for all the Bitcoinica customers.
http://www.youtube.com/watch?v=2dPAAM_5Dkg

Patrick is too busy threatening me over the lawsuit to be bothered to do the right thing and actually avoid the lawsuit in the process.

[18:31:12] <phantomcircuit> ......, suggest to him strongly to drop the suit
[18:31:23] <phantomcircuit> he's going to regret it more than anything he's ever done in his entire life
[18:32:11] <phantomcircuit> that's a promise

Lol @ Patrick's threat.  Doesn't he know that that could land him in even more trouble?

he still thinks he is an unbeatable genius who deserves fucking respect

FTFY

[muyuu]

[18:31:12] <phantomcircuit> ......, suggest to him strongly to drop the suit
[18:31:23] <phantomcircuit> he's going to regret it more than anything he's ever done in his entire life
[18:32:11] <phantomcircuit> that's a promise