World's First Bitcoin Lawsuit - Cartmell v. Bitcoinica

[btcx]

https://docs.google.com/open?id=0B_ECG6JRZs-7dTZ5QS0xcUkxQjQ

Filed August 6th in the Superior Court of California, County of San Francisco: http://webaccess.sftc.org/Scripts/Magic94/mgrqispi94.dll?APPNAME=IJS&PRGNAME=ROA22&ARGUMENTS=-ACGC12522983

CONTRACT/WARRANTY, COMPLAINT FILED BY PLAINTIFF CARTMELL, BRIAN MCCALEB, JED POWELL, JESSE VER, ROGER AS TO DEFENDANT BITCOINICA LP, ALSO KNOWN AS BITCOINICA BITCOINICA CONSULTANCY LTD INTERSANGO LTD. NORMAN, DONALD STRATEMAN, PATRICK TAAKI, AMIR DOES 1 THRU 100, INCL. SUMMONS ISSUED, JUDICIAL COUNCIL CIVIL CASE COVER SHEET FILED CASE MANAGEMENT CONFERENCE SCHEDULED FOR JAN-09-2013 PROOF OF SERVICE DUE ON OCT-05-2012 CASE MANAGEMENT STATEMENT DUE ON DEC-26-2012


Other discussions:  http://www.reddit.com/r/Bitcoin/comments/xv9rb/worlds_first_bitcoin_lawsuit_cartmell_v_bitcoinica/

EDIT:
It should be known that the four plaintiffs had previously attempted to expedite the claims process and proposed a settlement agreement with Bitcoinica that would have granted a limited period of time to complete the claims, a much larger margin for error, and immunity: https://docs.google.com/open?id=0B_ECG6JRZs-7SXFtdG1QXy1uSnM

Discussions began at the end of June, and while Tihan and Zhou were very cooperative and seemed to genuinely want what was in the best interest of the Bitcoinica users, Donald, Patrick and Amir were not taking the situation seriously.  Soon, those three stopped responding to communications altogether and on July 9th, 2012, we presented them with the settlement offer.  Tihan and Zhou (unfortunately, powerless) were again keen to take the offer, however, Donald Patrick and Amir declined.

Whether it's relevant or not, I don't know:
July 7th - Amir released the Bitcoinica source code
July 11th - Amir announces Mt.Gox account theft.

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[Vladimir]

Based on cursory reading, they are going after Bitcoinica, Intersango, an Intersango trio personally.  Alleging consipracy, breach of contract, negligence and conversion. It does appear that the lawsuit has merit. I would guess defendants will not be able to defend it effectively. Expect some company liquidations and personal BKs to be result of this legal action. Whether all money will be recovered by claimants is not that clear yet.

[Matthew N. Wright]

Wasn't Tradehill sueing Dwolla a while back?

[Maged]

Wasn't Tradehill sueing Dwolla a while back?

Yeah, but that didn't directly involve bitcoins, like this one does.

[repentance]

I assume this is the Brian Cartmell who owns Bitcoin Ltd, ZiptBit Ltd and BitPal Ltd.

http://www.cartmell.co.nz/

It was inevitable that someone would go after Intersango as there is no reason to believe that Bitcoinica Consultancy Ltd has any assets.  As Wendon is a shareholder in Intersango (from the Company House documents which were linked the other day, Amir appears to be Intersango's only director) and is also likely to file an action against the Consultancy and the Consultancy directors as individuals, this could get interesting.  I notice that while Intersango is named as a defendant, Bitcoin Consultancy is not.

[wheeler]

I'm sure appropriate lawyers have already answered this, but would the Californian courts hold any jurisdiction over a UK incorporated company (and/or directors) and the NZ main entity?  What action could this court realistically impose on the company?

[btcx]

I'm sure appropriate lawyers have already answered this, but would the Californian courts hold any jurisdiction over a UK incorporated company (and/or directors) and the NZ main entity?  What action could this court realistically impose on the company?

Sure, you can be sued wherever you have contacts.  In this case, Bitcoinica has both customers and employees in San Francisco.

[repentance]

I'm sure appropriate lawyers have already answered this, but would the Californian courts hold any jurisdiction over a UK incorporated company (and/or directors) and the NZ main entity?  What action could this court realistically impose on the company?

Assuming the defendants get legal representation, lack of jurisdiction will be one of the first arguments made by the defendants.  Bitcoinica LP will likely have been liquidated by early 2013.  This is about setting the stage to go after individuals and their assets.  Also, obtaining a judgement and enforcing a judgement are two very different things, especially if enforcement requires an order to be domesticated by a foreign court (hell, it can even be problematic getting judgements made in one US state enforced in another).

[Yuhfhrh]

This is good.

[adamstgBit]

This is good.

what will be even better is seeing how the courts handle this

will their be a live feed of the trial?

this is epic  

this really sucks for BITCOINICA they buy the site, get hacked left and right and now this Lawsuit, crazy.

[Phinnaeus Gage]

I'm sure appropriate lawyers have already answered this, but would the Californian courts hold any jurisdiction over a UK incorporated company (and/or directors) and the NZ main entity?  What action could this court realistically impose on the company?

xWaylab is incorporated in the US.

[btcprophet]

This is good.

this is epic  

this really sucks for BITCOINICA they buy the site, get hacked left and right and now this Lawsuit, crazy.

Here, I fixed it for you: they buy the site, get hacked left and right, abandon their customers and now this Lawsuit, crazy.


Epic indeed. I've said goodbye to my 50btc but I would like to see some justice. Now if only the police would get interested in Zhou's little thieving scheme, the Bitcoinica story would go straight to r/justiceporn

[repentance]

This is good.

what will be even better is seeing how the courts handle this

will their be a live feed of the trial?

this is epic  

this really sucks for BITCOINICA they buy the site, get hacked left and right and now this Lawsuit, crazy.

It's generally not in the interests of either party for the matter to go to trial, especially when the defendants don't have deep pockets.

The Notice to Plaintiff states that participation in some kind of alternative dispute resolution process is required before the matter can proceed to trial.

[mem]

I'm sure appropriate lawyers have already answered this, but would the Californian courts hold any jurisdiction over a UK incorporated company (and/or directors) and the NZ main entity?  What action could this court realistically impose on the company?

Its AU/NZ, our governments bend over goatse style for America. 
Now if only we were talking about downloaded mp3s or movies - FBI with NZ police would have already raided these guys. 

[Rarity]

This is excellent news.  Trying to handle this matter as individuals and self-interested businesses was never going to work, it just turned into a mob going after innocent people.  Only the government can fix this Bitcoinica situation and set everything right for us so the Bitcoin community can get back on track.  I only hope this is a sign of things to come and soon the governments of the world will play an even larger role in regulating the Bitcoin economy.


v @btcx, It seems a tremendous shame Zhou isn't in charge, he has handled this entire situation with the utmost professionalism and candor despite some really off base personal attacks pointed in his direction.

 Soon, those three stopped responding to communications altogether

A very wise man said, “Communication is the universal solvent” and this lawsuit will mean they are finnaly gonna have to start communicating.  It's about time.

[btcx]

It's generally not in the interests of either party for the matter to go to trial, especially when the defendants don't have deep pockets.

The Notice to Plaintiff states that participation in some kind of alternative dispute resolution process is required before the matter can proceed to trial.

Added this to the OP:

It should be known that the four plaintiffs had previously attempted to expedite the claims process and proposed a settlement agreement with Bitcoinica that would have granted a limited period of time to complete the claims, a much larger margin for error, and immunity: https://docs.google.com/open?id=0B_ECG6JRZs-7SXFtdG1QXy1uSnM

Discussions began at the end of June, and while Tihan and Zhou were very cooperative and seemed to genuinely want what was in the best interest of the Bitcoinica users, Donald, Patrick and Amir were not taking the situation seriously.  Soon, those three stopped responding to communications altogether and on July 9th, 2012, we presented them with the settlement offer.  Tihan and Zhou (unfortunately, powerless) were again keen to take the offer, however, Donald Patrick and Amir declined.

Whether it's relevant or not, I don't know:
July 7th - Amir released the Bitcoinica source code
July 11th - Amir announces Mt.Gox account theft.

[repentance]

I'm sure appropriate lawyers have already answered this, but would the Californian courts hold any jurisdiction over a UK incorporated company (and/or directors) and the NZ main entity?  What action could this court realistically impose on the company?

Its AU/NZ, our governments bend over goatse style for America.  
Now if only we were talking about downloaded mp3s or movies - FBI with NZ police would have already raided these guys.  

None of "these guys" are in NZ - there's literally nothing for the NZ police to raid.  Nor will any US legal action have any material effect on the liquidation of an NZ company.  This is all about being able to pursue remedies which may allow them to recover amounts above and beyond those which they might receive in any pro-rata distribution of Bitcoinica funds (whether informally through the previous refund process or through liquidation).  Their complaint specifically states that they never agreed to a pro-rata refund.  (They were somewhat willing to accept a pro-rata refund under the proposed settlement agreement if certain conditions were met, but the agreement was never ratified by Bitcoinica LP so there was no agreement to accept less than 100%).

Ironically, it's possible that the NZ liquidator will find that the actions of those involved in Bitcoinica LP give rise to personal liability - which would bolster the US case.

The complaint has not been filed as a "complex case" under California Rules, which means that they're not seeking to raise difficult/novel issues such as the nature of Bitcoin and whether or not it has value.

[Shadow383]

It seems a tremendous shame Zhou isn't in charge, he has handled this entire situation with the utmost professionalism and candor despite some really off base personal attacks pointed in his direction.

What, you mean when it became clear that he was responsible for the recent MtGox theft and he came up with some bullshit excuse involving some mysterious chinese crook?

[Phinnaeus Gage]

It seems a tremendous shame Zhou isn't in charge, he has handled this entire situation with the utmost professionalism and candor despite some really off base personal attacks pointed in his direction.

What, you mean when it became clear that he was responsible for the recent MtGox theft and he came up with some bullshit excuse involving some mysterious chinese crook?

Wait till you find out which Bitcoiner is into Chinese archaeology (read relics).

~Bruno~

[repentance]

At least Zhou's comments about secret documents and Patrick walking away from the refund process make sense now.

[kwukduck]

Oh that's  great, so now instead of bitcoinica victims a few guys have decided to take all Intersango customers down the drain with them? Sharing is caring?

[Bitcoin Oz]

Oh that's  great, so now instead of bitcoinica victims a few guys have decided to take all Intersango customers down the drain with them? Sharing is caring?

Its a race to see who can clean them out first and get hold of the chinese relics.

[repentance]

Oh that's  great, so now instead of bitcoinica victims a few guys have decided to take all Intersango customers down the drain with them? Sharing is caring?

Intersango customers can pull their funds out and use another exchange while this plays out.  It's Intersango itself which might end up being the sacrifice offered to appease the angry gods.  Intersango was always going to get dragged into this.  The only question up until now has been when and by whom.

[kwukduck]

Oh that's  great, so now instead of bitcoinica victims a few guys have decided to take all Intersango customers down the drain with them? Sharing is caring?

Intersango customers can pull their funds out and use another exchange while this plays out.  It's Intersango itself which might end up being the sacrifice offered to appease the angry gods.  Intersango was always going to get dragged into this.  The only question up until now has been when and by whom.

Yea i suppose so, but since there seem to be a lot of people complaining about funds being stuck in intersango i have the feeling they will never get it back now that this is going on.
Just hoping it won't cause many more people losses.

[Bitcoin Oz]

If the wendon group owns shares in intersango does that make them liable ?

[btcx]

Oh that's  great, so now instead of bitcoinica victims a few guys have decided to take all Intersango customers down the drain with them? Sharing is caring?

I can only assume the 'few guys' you're referring to are Donald, Patrick and Amir.  Let's not forget who is actually responsible for this situation.  What they've done is criminal and anyone who continues to use Intersango is taking a piss on all of Bitcoinica's victims.

Hate to say it but after the latest debacle with Bitcoinica's Mt. Gox account, any sane person with money in the possession of Intersango should have made a mad dash to get that money back.  You clearly can't trust them to take even minimal measures of security to protect your money, and they've shown that if your money does get stolen, they won't be there to help.  In fact, if things get slightly uncomfortable, they're likely to walk away and leave you to wait months for someone to sue for receivership to return it.

Get your money out now or get in line behind the ranks of Bitcoinica victims.

If the wendon group owns shares in intersango does that make them liable ?

Not simply by virtue of owning shares.  DOEs are named in the complaint to cover additional parties who may be found to be liable after all the facts have been revealed.  This could include Zhou, Tihan, Wendon, xWayLab, Bitcoin Consultancy, other unknowns. 

[Bitcoin Oz]

Oh that's  great, so now instead of bitcoinica victims a few guys have decided to take all Intersango customers down the drain with them? Sharing is caring?

Intersango customers can pull their funds out and use another exchange while this plays out.  It's Intersango itself which might end up being the sacrifice offered to appease the angry gods.  Intersango was always going to get dragged into this.  The only question up until now has been when and by whom.

People have been complaining that its impossible to withdraw there via bank accounts and the price of bitcoin on their exchange is becoming too high to cash out that way.

[repentance]

I'm surprised that people aren't commenting on the fact that the plaintiffs tried to negotiate a settlement which gave them an advantage over other creditors and were intentionally trying to prevent involvement of other Bitcoin depositors, courts, criminal and civil authorities.  Had they been paid 100% of their claim in priority over other creditors, that fact would only have come to light in other legal proceedings (whether litigation or insolvency proceedings).  Bitcoinica would have been prohibited by the terms of the settlement from disclosing that information, even though it would have meant there were less funds available with which to refund other users.  

Tihan and Zhou (unfortunately, powerless) were again keen to take the offer, however, Donald Patrick and Amir declined.

This actually confirms what was said by either Amir or Patrick regarding discussion about paying those most likely to sue first.

Should the plaintiffs prevail in the lawsuit, it would wipe out all known assets of Bitcoinica and then some - leaving nothing else for other creditors.  It is likely, however, that Bitcoinica will have been liquidated by that time.  I assume that some of the DOE defendants are expected to have deep pockets.

While I fully understand why the plaintiffs made the settlement proposal they did, I also understand why it was rejected by the Bitcoinica Consultancy guys - it's the kind of preferential payment to a creditor which makes liquidators have fits.

[Bitcoin Oz]

If nothing else it might establish a legal precedent regarding the status of bitcoin.

[repentance]

If nothing else it might establish a legal precedent regarding the status of bitcoin.

Unless the defendants are going to mount a very expensive legal battle which seeks to prove that Bitcoin isn't a thing of value and seek to have this heard as a complex matter under California rules, the nature/status of Bitcoin isn't going to be an issue in the case.  Although successful business people, I doubt that the plaintiffs have unlimited funds at their disposal with which to litigate this matter either - no-one is going to want to be paying expert witnesses to explain derivatives, contracts for difference and why Bitcoin should or should not be regarded as an underlying security.

[btcx]

I'm surprised that people aren't commenting on the fact that the plaintiffs tried to negotiate a settlement which gave them an advantage over other creditors and were intentionally trying to prevent involvement of other Bitcoin depositors, courts, criminal and civil authorities.  Had they been paid 100% of their claim in priority over other creditors, that fact would only have come to light in other legal proceedings (whether litigation or insolvency proceedings).  Bitcoinica would have been prohibited by the terms of the settlement from disclosing that information, even though it would have meant there were less funds available with which to refund other users.

Our first offer was to accept back 80% of our claims immediately, and we'd simply forfeit the rest as an additional buffer to the rest of the claimants.  This was proposed in response to Patrick's statement about having no margin for error, not being able to pay out any claims beyond 50% until all claims had come in, yet not being ever able to close the claims process.  20% of our claims should have been enough of a buffer to speed up the return of 100% of everyone else's claims.  We'd still face the risk of clawback during receivership if it ever got to that but we were hoping our settlement offer would allow them to avoid that entirely.

The settlement offer that I posted was our final offer after all communication had broken down.  At this point we had no trust at all in Bitcoinica/Intersango and we simply wanted to get as much money back under our control as we could before anything else stupid happened (like more funds being stolen).  Again, if they went in to receivership, we could be forced to return any overpaid share of the money but at least it'd be safe with us during the process.  We'd hoped that our offer would both push Bitcoinica to resolve the claims faster, and give them more room for error.  If they resolved all the claims within 6 months and paid us an equal pro rata share, they'd have immunity from us.  Coincidentally, the amount of funds stolen only 2 days after this offer was made was nearly 100% of what we were owed at the time.

The confidentiality provision in the document was there to protect Bitcoinica, who expressed concern over public perception of 'unfair' treatment.  To us, it made more sense to pay back people who you were 100% sure of, and then take the time sorting out everyone else, especially if you intended to return 100% of all claims.  Why take the extra risk holding on to all that extra money?  All terms were negotiable but they weren't interested at all in anything other than their mission to spend the next 10 years returning small percentages of claims.  We definitely weren't trying to get away with a larger cut of the total claims.. we were willing to sacrifice a huge chunk of money but we didn't want to wait forever.

  

Tihan and Zhou (unfortunately, powerless) were again keen to take the offer, however, Donald Patrick and Amir declined.

This actually confirms what was said by either Amir or Patrick regarding discussion about paying those most likely to sue first.

Should the plaintiffs prevail in the lawsuit, it would wipe out all known assets of Bitcoinica and then some - leaving nothing else for other creditors.  It is likely, however, that Bitcoinica will have been liquidated by that time.  I assume that some of the DOE defendants are expected to have deep pockets.

Bitcoinica has no assets to speak of.  The only things possibly of value--the brand and the source code--were destroyed and given away.  We can't win other customers' deposits.  It's our expectation that a receiver will take over and distribute the claims and we'll get our cut of that, and anything we're short will have to come from the people found responsible.

[Bitcoin Oz]

Coincidentally, the amount of funds stolen only 2 days after this offer was made was nearly 100% of what we were owed at the time.

Funny that.

[repentance]

Bitcoinica has no assets to speak of.  The only things possibly of value--the brand and the source code--were destroyed and given away.  We can't win other customers' deposits.  It's our expectation that a receiver will take over and distribute the claims and we'll get our cut of that, and anything we're short will have to come from the people found responsible.

Maybe you can pursue the mysterious Chen for some of the deficiency.   

[btcx]

Bitcoinica has no assets to speak of.  The only things possibly of value--the brand and the source code--were destroyed and given away.  We can't win other customers' deposits.  It's our expectation that a receiver will take over and distribute the claims and we'll get our cut of that, and anything we're short will have to come from the people found responsible.

Maybe you can pursue the mysterious Chen for some of the deficiency.   

hah!  Unfortunately, Chen doesn't owe me anything.  If the defendants don't want to come out of pocket for the missing money, they oughta pursue him.

[repentance]

Maybe you can pursue the mysterious Chen for some of the deficiency.   

hah!  Unfortunately, Chen doesn't owe me anything.  If the defendants don't want to come out of pocket for the missing money, they oughta pursue him.

He's allegedly responsible for some of the shortfall you'll suffer and he allegedly has deep pockets - looks a lot like a DOE to me (but then so do Linode and Rackspace).

[apetersson]

why is the document talking about DOES 1-20 and sometimes 60 ? who are they referring to?

[MagicalTux]

hah!  Unfortunately, Chen doesn't owe me anything.  If the defendants don't want to come out of pocket for the missing money, they oughta pursue him.

He's allegedly responsible for some of the shortfall you'll suffer and he allegedly has deep pockets - looks a lot like a DOE to me (but then so do Linode and Rackspace).

Actually, btcx points the fact that as far as they (as Bitcoinica customers) are concerned, they are only in contact with Bitcoinica.

If funds were stolen from Bitcoinica, then it's up to Bitcoinica to initiate the appropriate legal actions, which seems to have not happened (most likely because of the fact the Bitcoinica structure in NZ was still in transfer process - transfer process which has been on hold since Bitcoinica was taken offline - resulting in most of the involved people to be unsure as to if they are actually in charge or not, while hoping they are not), resulting in the current situation.

It's difficult for any of us to know exactly who's in charge in there, however hopefully bringing the issue to a court will shed light on this issue. Note that if because of inaction from the people in charge funds were lost, the court is likely going to require from those in charge to cover for the lost parts.


(NB: this is my personal opinion based on the documents and information posted here, I'm not a lawyer and what I write here has no legal value, it's just a point of view)

[Vladimir]

Oh that's  great, so now instead of bitcoinica victims a few guys have decided to take all Intersango customers down the drain with them? Sharing is caring?

Intersango customers can pull their funds out and use another exchange while this plays out.  It's Intersango itself which might end up being the sacrifice offered to appease the angry gods.  Intersango was always going to get dragged into this.  The only question up until now has been when and by whom.

As advised long ago. Intersango is not safe to use due to significant legal risks and uncertainty it faces. Whoever continues to use it given all the known facts... well... do not come here to cry later.

Edit: Uncertanity and risks due to it being run by the same team that is allegedly responsible for Bitconica's fiasco and because they were going to be sued (now are). It is well above usual "bitcoin exchange" risks and these risks have escalated AFTER bitcoinica went down.

[lonelyminer (Peter Šurda)]

As advised long ago. Intersango is not safe to use due to significant legal risks and uncertainty it faces. Whoever continues to use it given all the known facts... well... do not come here to cry later.

I withdrew my Intersango funds. To Bitcoinica. Feel free to have a laugh at my expense.

[Fiyasko]

Im gonna watch this...

[proudhon]

I knew my odds of getting any of the 150+ bitcoins I had in bitcoinica (just sitting there, not in any position) were always low and ever decreasing, but I'm assuming this lawsuit means that the chances of me getting any of that back have dropped to essentially zero.  That was a lot easier to shrug off when they were trading for $4.something a pop.

[ninjarobot]

This is what the plaintiffs are asking for:

1) for the return of all monies in the accounts of Plaintiffs;
2) for all other general, special, incidental and consequential damages;
3) for attorney's fees, as alleged int the causes of action above;
4) for exemplary and punitive damages, as alleged int the causes of action above;
5) for prejudgment and post-judgement interest to the full extend permitted by law;
6) for costs of suit incurred by Plaintiffs herein; and
7) for such other and further relief as the Court may deem just and proper

So basically 100% reimbursement + reimbursement of all legal costs + interest + damages + other relief

Since the plaintiffs represent only 4 out of the approx. 5000 Customers. How will this affect the other claimants if they are successful?

We can't win other customers' deposits.  It's our expectation that a receiver will take over and distribute the claims and we'll get our cut of that, and anything we're short will have to come from the people found responsible.

So this lawsuit should not affect the pro-rata reimbursement of depositors? I certainly hope so, as I am really starting to feel like a financial rape victim here.

[proudhon]

This is what the plaintiffs are asking for:

1) for the return of all monies in the accounts of Plaintiffs;
2) for all other general, special, incidental and consequential damages;
3) for attorney's fees, as alleged int the causes of action above;
4) for exemplary and punitive damages, as alleged int the causes of action above;
5) for prejudgment and post-judgement interest to the full extend permitted by law;
6) for costs of suit incurred by Plaintiffs herein; and
7) for such other and further relief as the Court may deem just and proper

So basically 100% reimbursement + reimbursement of all legal costs + interest + damages + other relief

Since the plaintiffs represent only 4 out of the approx. 5000 Customers. How will this affect the other claimants if they are successful?

Basically, if you're not one of these 4, and you haven't already gotten something back, then you're not going to get anything back, ever.  The good news is that this is closure for everyone else waiting around for their bitcoins/USD.

[ElectricMucus]

The OP topic makes this sound like an achievement this one is better.

[vampire]

July 7th - Amir released the Bitcoinica source code
July 11th - Amir announces Mt.Gox account theft.

Amir announced on 13th, and theft was on 12th?

BTW any proof that it was Amir who released the source code. (Aside from the GIT logs in the .tar?)

[nibor]

$460k law suit! Even if that is split evenly 4 ways and you pro-rata to BTC/USD of 5 that is still at least $52k each.

Who would be so stupid to have had that much cash stored in the trust of a company/people they did not know?

This shows an amazing level of lack of due diligence that seems to be normal in the bitcoin world!

edit - added details to keep someone happy who complained for some reason.

[Littleshop]

This is what the plaintiffs are asking for:

1) for the return of all monies in the accounts of Plaintiffs;
2) for all other general, special, incidental and consequential damages;
3) for attorney's fees, as alleged int the causes of action above;
4) for exemplary and punitive damages, as alleged int the causes of action above;
5) for prejudgment and post-judgement interest to the full extend permitted by law;
6) for costs of suit incurred by Plaintiffs herein; and
7) for such other and further relief as the Court may deem just and proper

So basically 100% reimbursement + reimbursement of all legal costs + interest + damages + other relief

Since the plaintiffs represent only 4 out of the approx. 5000 Customers. How will this affect the other claimants if they are successful?

Basically, if you're not one of these 4, and you haven't already gotten something back, then you're not going to get anything back, ever.  The good news is that this is closure for everyone else waiting around for their bitcoins/USD.

I disagree.  This lawsuit might suck up all of the US assets but if people in other countries file as well they might see something. 

[repentance]

I disagree.  This lawsuit might suck up all of the US assets but if people in other countries file as well they might see something. 

It depends who they file against.  It's likely that a cascade of insolvencies is going to happen in the not too distant future.  Even if those involved have personal assets, not all jurisdictions recognise the claims of overseas creditors in the case of personal insolvency.  The issue of disputed debt also complicates some potential remedies (especially low cost ones).

[ninjarobot]

From the Summons:

NOTICE! You have been sued. The court may decide against you without your being heard unless you respond within 30 days. Read the information below.

You have 30 CALENDAR DAYS after the summons and legal papers are served on you to file a written response at this court and have a copy served on the plaintiff. A letter or phone call will not protect you.

 Is there a chance the Intersango guys might not respond within 30 days? If so, what would happen in this case?

[repentance]

From the Summons:

NOTICE! You have been sued. The court may decide against you without your being heard unless you respond within 30 days. Read the information below.

You have 30 CALENDAR DAYS after the summons and legal papers are served on you to file a written response at this court and have a copy served on the plaintiff. A letter or phone call will not protect you.

 Is there a chance the Intersango guys might not respond within 30 days? If so, what would happen in this case?

The plaintiffs would likely seek default judgement.

It depends on whether the defendants take other action, though.  From what I've read, it's absurdly easy for foreign entities to seek bankruptcy protection in the US and such protection goes way beyond what is common in many other nations.

[tgmarks]

From the Summons:

NOTICE! You have been sued. The court may decide against you without your being heard unless you respond within 30 days. Read the information below.

You have 30 CALENDAR DAYS after the summons and legal papers are served on you to file a written response at this court and have a copy served on the plaintiff. A letter or phone call will not protect you.

 Is there a chance the Intersango guys might not respond within 30 days? If so, what would happen in this case?

I can't image that they would do nothing.  Like he said, bankruptcy can go a long way, but that is just one of several possible reactions that could occur.

[Philj]

From the Summons:

NOTICE! You have been sued. The court may decide against you without your being heard unless you respond within 30 days. Read the information below.

You have 30 CALENDAR DAYS after the summons and legal papers are served on you to file a written response at this court and have a copy served on the plaintiff. A letter or phone call will not protect you.

 Is there a chance the Intersango guys might not respond within 30 days? If so, what would happen in this case?

Clearly that notice isn't showing them any fucking respect, so its doubtful they will respond.

[teflone]

From the Summons:

NOTICE! You have been sued. The court may decide against you without your being heard unless you respond within 30 days. Read the information below.

You have 30 CALENDAR DAYS after the summons and legal papers are served on you to file a written response at this court and have a copy served on the plaintiff. A letter or phone call will not protect you.

 Is there a chance the Intersango guys might not respond within 30 days? If so, what would happen in this case?

Clearly that notice isn't showing them any fucking respect, so its doubtful they will respond.

lmfao!

[MPOE-PR]

We'd hoped that our offer would both push Bitcoinica to resolve the claims faster, and give them more room for error.  If they resolved all the claims within 6 months and paid us an equal pro rata share, they'd have immunity from us.  Coincidentally, the amount of funds stolen only 2 days after this offer was made was nearly 100% of what we were owed at the time.

This would seem to be veering towards criminal. A DA might even prosecute ex officio.

[P_Shep]

Made the BBC:

http://www.bbc.com/news/technology-19244210

[dopamine]

Just read it and they got at least 50% of there claim, I'm still sitting on a fat 0 on my claim.

[repentance]

Made the BBC:

http://www.bbc.com/news/technology-19244210

It's a pity they picked it up from Arstechnica, which ran a story based on an Verge article which had substantial inaccuracies.

[Vod]

I hope the lawsuit will eventually lead to criminal charges against the officers of the corporation.  They did not file a police report, even after the hacker was identified.

[makomk]

I hope the lawsuit will eventually lead to criminal charges against the officers of the corporation.  They did not file a police report, even after the hacker was identified.

Zhou Tong isn't even named as a defendant in the lawsuit despite being the only person who claims to know the hacker's identity, and despite claiming to have promised the hacker that Bitcoinica LP would not start a police investigation into him. Also, who are the actual officers of the corporation in the first place? Zhou's certainly acting a lot like one, but...

[Vod]

I hope the lawsuit will eventually lead to criminal charges against the officers of the corporation.  They did not file a police report, even after the hacker was identified.

Zhou Tong isn't even named as a defendant in the lawsuit despite being the only person who claims to know the hacker's identity, and despite claiming to have promised the hacker that Bitcoinica LP would not start a police investigation into him. Also, who are the actual officers of the corporation in the first place? Zhou's certainly acting a lot like one, but...

I believe the officers of the corporation feel they are untouchable because the corporation is a separate legal entity.  In Canada at least (a commonwealth country), a director of a corporation is REQUIRED to do whatever is necessary to protect the assets of said corporation.  So while they cannot be held financially responsible for Bitcoinica's debts, they can be held criminally (and hence civilly) liable for failing to do anything about the crime that was committed against their public business.  Basically, they did nothing while the money was taken.  I'm sure they paid themselves handsomely, however, out of what was left.

All they had to do was pick up the phone and call the police.  The fact they did not do this leads me to believe they profited from the hack.

[repentance]

I hope the lawsuit will eventually lead to criminal charges against the officers of the corporation.  They did not file a police report, even after the hacker was identified.

Zhou Tong isn't even named as a defendant in the lawsuit despite being the only person who claims to know the hacker's identity, and despite claiming to have promised the hacker that Bitcoinica LP would not start a police investigation into him. Also, who are the actual officers of the corporation in the first place? Zhou's certainly acting a lot like one, but...

I believe the officers of the corporation feel they are untouchable because the corporation is a separate legal entity.  In Canada at least (a commonwealth country), a director of a corporation is REQUIRED to do whatever is necessary to protect the assets of said corporation.  So while they cannot be held financially responsible for Bitcoinica's debts, they can be held criminally (and hence civilly) liable for failing to do anything about the crime that was committed against their public business.  Basically, they did nothing while the money was taken.  I'm sure they paid themselves handsomely, however, out of what was left.

All they had to do was pick up the phone and call the police.  The fact they did not do this leads me to believe they profited from the hack.

In many places - including Australia and New Zealand - someone who is carrying out the duties of a director will have the same legal liability as a director whether they're named as such on the corporate papers or not.  Directors can be held personally liable for the debts of a company under certain circumstances, including - but not limited to - reckless, negligent or insolvent trading.

Bitcoinica LP is a limited partnership.  Quite literally, in the case of LPs NZ law treats the limited partner/s (Wendon) as shareholders and the general partner/s (Bitcoinica Consultancy Ltd) as directors.  The limited partner can only be held legally liable for the actions of the partnership if they've had a role in managing the company which goes beyond "safe harbour" activities which are specified in the Companies Act.

There is no doubt that "the Intersango guys" - either individually or as directors of Bitcoinica Consultancy Ltd - are legally on the hook in respect of Bitcoinica LP.  It seems unlikely, though, given the totality of the circumstances regarding the failure of Bitcoinica that they alone would be found liable if an investigation into the failure of Bitcoinica was undertaken.  A liquidator is required to establish why a company failed, but they rely heavily on information provided by the principals of the business and by creditors.  A liquidator is obliged to establish whether directors (de jure or de facto) have any personal liability and to report any criminal misconduct to the appropriate authorities.

Anyone could make a criminal complaint regarding Bitcoinica right now.  It's not essential to wait until the partnership has been liquidated or the US lawsuit has been heard.  

Regardless of whether or not any criminal investigation arises in respect of Bitcoinica, Zhou's continued role in the business after its sale will come under scrutiny in any insolvency or civil action and that will include scrutiny of his transactions following the MtGox breach as well as his dealings with the alleged hacker.  No court or liquidator is going to accept Zhou's statements regarding the AurumXchange transactions or the mysterious Chinese relic collector at face value, but we have no way of knowing whether Zhou would comply with requests from a US court or an NZ liquidator for information.

[ninjarobot]

FYI - IEEE Spectrum now also posted an article on this topic:

http://spectrum.ieee.org/tech-talk/computing/networks/first-bitcoin-lawsuit-filed-in-san-francisco

A recent theft at Bitcoinica, one of the largest Bitcoin exchanges, resulted last week in a debut for the currency in the California court system. Four prominent members of the Bitcoin community, including Jed McCaleb—the original developer of Mt. Gox, the largest Bitcoin exchange and a competitor to Bitcoinica—filed a lawsuit on 6 August  against the company, seeking reimbursement for US $460 457 in lost funds.

While there have been multiple hacking incidents since the cryptocurrency went online in 2009, this is the first time members of the community, have taken legal action.

The whole affair started in March when hackers skimmed over 46 000 BTC from the exchange with an attack aimed at the Webhost, Linode. Three months later, Bitcoinica Consultancy, which has supposedly been handling the exchange since this April, announced that it lost another 4 ,000 BTC (about $350 at the time) through an unauthorized withdrawal from a Mt. Gox account that the company had set up while disbursing refunds to its customers.  

Amir Taaki, speaking for Bitcoinica Consultancy, explained that after the initial breach, Bitcoinica failed to change some of its passwords. One of those was a duplicate of the password they were using for their Mt. Gox API key. On June 12th, someone tried using this password to gain access to Bitcoinica's Mt Gox wallet, and it worked.

The announcement ignited a backlash of accusations from victims who now suspect that the theft was an inside job. While waiting for satisfaction, their losses have only increased. At the end of the July, Bitcoin was trading below $7. Today, it hit $12 for the first time since 2011.

The situation has been especially complicated by the fact that no one seems to really know who is responsible. Zhou Tong, the 18-year old Chinese developer who originally started Bitcoinic claims to have sold the company right after the March theft to the British Bitcoin exchange, Intersango. He now also claims to know who broke into the Mt. Gox account and to have squeezed a confession from a Chinese Multi-millionaire named Chen Jianhai, a story which many victims quickly interpreted as cover for his own involvement. Meanwhile, the Bitcoinica Consultancy is thought to have control over Bitcoin's legal operations, but in emails, they have declined to confirm this role, and have reportedly stopped responding to disgruntled customers.

And so, it seems that those who want to help have no power. And those who have the power aren't talking.

Under these circumstances, it will be very interesting to see what happens when many of those involved convene next month at the Bitcoin Conference in London.

[jago25_98]

Could this be the quiet beginning of the end of the golden age of bitcoin through the first establishment of legal precedent? Or is it addressing $USD separately?

[repentance]

FYI - IEEE Spectrum now also posted an article on this topic:

http://spectrum.ieee.org/tech-talk/computing/networks/first-bitcoin-lawsuit-filed-in-san-francisco

One day somebody might actually write an accurate report on this...but not today, apparently.  These reports consistently get the number of hacks and the amounts involved wrong.  They also consistently state that Zhou sold Bitcoinica after the Linode hack, which is not the case, and that he sold it to Intersango (also not the case).

It is good, however, to see that the Chen aspect of this story is finally getting some media exposure.

Could this be the quiet beginning of the end of the golden age of bitcoin through the first establishment of legal precedent? Or is it addressing $USD separately?

It's a pretty straight forward breach of contract action.  There's not really anything regarding Bitcoin itself which needs to be determined - the plaintiffs are seeking compensation in USD.  There'll probably be some argument about the value at which the claim should be liquidated - ie, for the purposes of compensation should the value of Bitcoins be established at their average price on the date Bitcoinica ceased trading or at their price when the lawsuit is heard.

[tvbcof]

Heh.  Among the engineering feats (purportedly) of Zhou is the ability to convert Libertarians into Socialists.  It's OK.  I don't mind if some of my tax dollars go toward helping seek recompense for any member of society who was wronged...even given the questionable judgement of entrusting half a million $$$ to a minor in Asia and/or a handful of bozos living under the British crown.

[repentance]

Heh.  Among the engineering feats (purportedly) of Zhou is the ability to convert Libertarians into Socialists.  It's OK.  I don't mind if some of my tax dollars go toward helping seek recompense for any member of society who was wronged...even given the questionable judgement of entrusting half a million $$$ to a minor in Asia and/or a handful of bozos living under the British crown.

Your first mistake is assuming that most of the people who placed money/BTC" with Bitcoinica are libertarians.

[tvbcof]

Heh.  Among the engineering feats (purportedly) of Zhou is the ability to convert Libertarians into Socialists.  It's OK.  I don't mind if some of my tax dollars go toward helping seek recompense for any member of society who was wronged...even given the questionable judgement of entrusting half a million $$$ to a minor in Asia and/or a handful of bozos living under the British crown.

Your first mistake is assuming that most of the people who placed money/BTC" with Bitcoinica are libertarians.

At least 33% of the plaintiffs in this case are fairly vocal in their advocacy of that line of political philosophy.  That caught my attention...and provoked a chuckle.

[Rarity]

Yeah, but the silent majority of Bitcoiners are leftists/socialists. Satoshi, most likely, is one of them. It's not at all shocking we are beginning the process of having government regulate Bitcoin, as a currency it was designed for this to happen.

[dree12]

Heh.  Among the engineering feats (purportedly) of Zhou is the ability to convert Libertarians into Socialists.  It's OK.  I don't mind if some of my tax dollars go toward helping seek recompense for any member of society who was wronged...even given the questionable judgement of entrusting half a million $$$ to a minor in Asia and/or a handful of bozos living under the British crown.

Not believing in the current system doesn't mean not using it.

[tvbcof]

Heh.  Among the engineering feats (purportedly) of Zhou is the ability to convert Libertarians into Socialists.  It's OK.  I don't mind if some of my tax dollars go toward helping seek recompense for any member of society who was wronged...even given the questionable judgement of entrusting half a million $$$ to a minor in Asia and/or a handful of bozos living under the British crown.

Not believing in the current system doesn't mean not using it.

Very true.  I myself am not above exploiting the shit out of things I have no belief in or fondness for.  Like unemployment insurance when I'm lucky enough to arrange a lack of work.  I suspect that Roger has paid plenty of taxes and probably a lot more than me so he's more than entitled to use the system if he can.  Although I'd personally be on the fence about doing so in the case of Bitcoin related issue (in spite of my pinko leanings) since a refreshing thing about Bitcoin is that it's independence from TPTB (which are rotten to the core and in particular Holder's justice department,) I'd probably do it.  Especially for that kind of money.  I prefer and advocate the approach I actually took; don't drop your pants and bend over in front of someone who is likely to fuck you.  I lost the amount of BTC I expected I like would to Bitcoinica...2 or 3 iirc.

[davout]

This will be interesting

[repentance]

This will be interesting

Maybe not.  A majority of lawsuits are either dropped or settled on undisclosed terms.

[repentance]

Posting this link for accuracy. It looks like Amir did respond to contact by the plaintiffs and was willing to consider the idea of them taking over Bitcoinica and the claims process.

That sounds like a good plan. I also would be willing to help you verify and vet claims.

However the problem is that now Patrick and Donald have said they're done. They feel like we had no legal responsibility to take on the claims, and that we took it on so people's payments would simply get done. Now that they've walked away, they aren't dealing with this mess. They are also unlikely to hand over the funds to any third party.

http://privatepaste.com/0c4b934417

[Explodicle]

Is it possible to run an exchange where users must opt out of any/all legal recourse? I'd rather risk losing everything I've invested in a site than have to indirectly pay for liability, just because of the inefficiency of the legal system. It's not like the settlement money comes out of thin air - all similar business will now need to pass this cost onto consumers.

Either way we pay for risk, let me cut out the middleman if I want.

[dree12]

Is it possible to run an exchange where users must opt out of any/all legal recourse? I'd rather risk losing everything I've invested in a site than have to indirectly pay for liability, just because of the inefficiency of the legal system. It's not like the settlement money comes out of thin air - all similar business will now need to pass this cost onto consumers.

Either way we pay for risk, let me cut out the middleman if I want.

IANAL, but a short TOS will probably do in most states:

Code:

By participating in Exchange, you agree to surrender any assets transferred and hold harmless Exchange regardless of any damages.

[Vladimir]

Is it possible to run an exchange where users must opt out of any/all legal recourse? I'd rather risk losing everything I've invested in a site than have to indirectly pay for liability, just because of the inefficiency of the legal system. It's not like the settlement money comes out of thin air - all similar business will now need to pass this cost onto consumers.

Either way we pay for risk, let me cut out the middleman if I want.

IANAL, but a short TOS will probably do in most states:

Code:

By participating in Exchange, you agree to surrender any assets transferred and hold harmless Exchange regardless of any damages.

IANAL, but idiots naive kids put all kinds of BS into their T&C and think that it would hold any water in court.

[repentance]

Is it possible to run an exchange where users must opt out of any/all legal recourse? I'd rather risk losing everything I've invested in a site than have to indirectly pay for liability, just because of the inefficiency of the legal system. It's not like the settlement money comes out of thin air - all similar business will now need to pass this cost onto consumers.

Either way we pay for risk, let me cut out the middleman if I want.

You'd have to establish it in a country which allows people to contract away statutory rights.  Even if you did that, people may still have recourse under the laws of their home country if the exchange is "doing business in" that nation.  There's no way that criminal liability can be contracted away because the state isn't a party to any contracts between a user and an exchange.

While you, personally, might be happy to do business with an exchange you have no recourse against, such a venture wouldn't be profitable for the operators unless a lot of other people were willing to take that same risk.

[btcx]

UPDATE 25/Jan/2013:

Defendant Intersango escapes.  

Other Defendants' motion to dismiss for lack of personal jurisdiction is denied.  Case allowed to proceed against Bitcoinica, Patrick Strateman, Amir Taaki and Donald Norman in California.

"Moving Defendants have failed to show that New Zealand is a suitable forum."

"The language of the Terms and Conditions allegedly on the website, even if it is enforceable, states only that 'you [meaning a customer] agree to submit to settle any dispute,' not that customers could not file actions against Bitcoinica outside New Zealand."

"In addition, the fact of a liquidation proceeding against Bitcoinica in New Zealand is not sufficient grounds to stay this action."

https://docs.google.com/file/d/0B_ECG6JRZs-7SDBhU2ducWM5eEU/edit

[cbeast]

Thank you so much for the updates on this case. So apparently the fact that people gave money to a child have less culpability than the folks that tried to clean up the child's mess. Personally, I would be ashamed to go to court to sue a child, but that's just me. I am only a parent. If I missed any major points to this, please point me to the wiki or FAQ.

Irrespective of the motive or the outcome of this decision, it will be advertising for Bitcoin paid for by the plaintiffs.

[Herodes]

It's flabbergasting that people deposited serious amounts of money on a website, created by a teen in 4 days.

[MemoryDealers]

It's flabbergasting that Patrick, Amir, and Donald of Interstango refused to even lift a finger to help everyone get part of their money back.
Instead they have actively worked to block the easiest solutions for everyone involved.
They should be ashamed. 

[iCEBREAKER]

Feel free to have a laugh at my expense.

OK, how's this?  

[Monster Tent]

It's flabbergasting that people deposited serious amounts of money on a website, created by a teen in 4 days.

No more flabbergasting than people handing over millions to some guy offering 7% a week or some company promising to deliver a machine that mines unicorns.

[Herodes]

It's flabbergasting that Patrick, Amir, and Donald of Interstango refused to even lift a finger to help everyone get part of their money back.
Instead they have actively worked to block the easiest solutions for everyone involved.
They should be ashamed.  

Yes, that's flabbergasting as well. But as we've all realized by now, some people have no shame at all.

It's flabbergasting that people deposited serious amounts of money on a website, created by a teen in 4 days.

No more flabbergasting than people handing over millions to some guy offering 7% a week or some company promising to deliver a machine that mines unicorns.

Agreed.

[jgarzik]

It's flabbergasting that people deposited serious amounts of money on a website, created by a teen in 4 days.

+1000

Well, first, it is amazing that high profile bitcoin luminaries would keep any amount of serious money on a remote website.  When bitcoinica first appeared, pretty much 100% of bitcoin web wallets had been hacked and most had been DDoS'd as well.  Your own encrypted, decentralized, backed up computer is far more secure than (at that time) that proven track record.

And, as you say, who would trust that much money to a teen running a fly-by-night website, who had no experience in the area of finance in question?  Especially given HK's reputation it seemed likely that Bitcoinica was a bucket shop or possibly associated with organized crime in some way.

[tvbcof]

It's flabbergasting that people deposited serious amounts of money on a website, created by a teen in 4 days.

+1000

Well, first, it is amazing that high profile bitcoin luminaries would keep any amount of serious money on a remote website.  When bitcoinica first appeared, pretty much 100% of bitcoin web wallets had been hacked and most had been DDoS'd as well.  Your own encrypted, decentralized, backed up computer is far more secure than (at that time) that proven track record.

And, as you say, who would trust that much money to a teen running a fly-by-night website, who had no experience in the area of finance in question?  Especially given HK's reputation it seemed likely that Bitcoinica was a bucket shop or possibly associated with organized crime in some way.

Agree, and put my money where my mouth was (withdrew all that I had won but a token amount), but I'll produce a couple of counter-arguments for the fun of it.

1) A forex-style market such as Bitcoinica probably did have some legitimate and valuable uses to those wishing to undertake certain financial activities in the nascent Bitcoin economy.  I think I remember a few people at least claiming to use the service in this way...amid the thousand using it as a simple gaming platform.

2) The site was surprisingly functional for some time, and Mr. Tong showed an impressive aptitude for fairness and professionalism over a decent amount of time.

My defenses aside, I was also a bit taken aback at the amount of money that people trusted (and lost) to the platform.

[MemoryDealers]

Had Patrick, Amir and Donald cooperated, not a single penny would have been lost by Bitcoinica customers.
Instead everyone except the lawyers will loose.
Shame on the Intersango trio of Patrick, Amir and Donald.

[Herodes]

Had Patrick, Amir and Donald cooperated, not a single penny would have been lost by Bitcoinica customers.
Instead everyone except the lawyers will loose.
Shame on the Intersango trio of Patrick, Amir and Donald.

For some people, unless they can physically feel that what they did have consequences, they're just psycopaths that doesn't care about others. Not saying any of the 3 are, but at the same time not ruling out the possibility.

[smoothie]

It's flabbergasting that people deposited serious amounts of money on a website, created by a teen in 4 days.

I know right? Sound a lot like how people threw millions of $ at BFL and still no product. "TAKE MY MONEY!" lol

[smoothie]

It's flabbergasting that Patrick, Amir, and Donald of Interstango refused to even lift a finger to help everyone get part of their money back.
Instead they have actively worked to block the easiest solutions for everyone involved.
They should be ashamed. 

I would be ashamed if I sent 25,000 BTC to some guys that just put up a website and promised me a % interest on my deposit.

Isn't it enough that bitcoins have been appreciating like crazy in $ terms? Yet you had to try to get a % gain on your initial capital?

Perhaps you should publicly admit that it was a bad idea and that you are also partly at fault for your losses.

No one made you send them that much BTC.

[Herodes]

Perhaps you should publicly admit that it was a bad idea and that you are also partly at fault for your losses.

It was not the best idea by MemoryDealers, but the responsibility for  Bitcoinica fiasco was not on his hands. I doubt he'd repeat this with a new similar site though.

The outlook one must have is basically to be very sceptical, and don't put more money on the table than you can stand to lose entirely.

[bg002h]

It's flabbergasting that people deposited serious amounts of money on a website, created by a teen in 4 days.

No more flabbergasting than people handing over millions to some guy offering 7% a week or some company promising to deliver a machine that mines unicorns.

+1
These examples make teen investing sound wise...

[Transisto]

Teen ? More money was lost after the website was handed over to intersango and Tihan than prior. Anyway I don't see how trying to set the blame on investors at this time help in any way.

[dancingnancy]

Anyway I don't see how trying to set the blame on investors at this time help in any way.

It helps if it prevents people from making the same mistakes in the future.

If you can't protect it, you don't actually own it. It's unfortunate it has to be this way, but it's a fact of life.

You could say that about a lot of things.  In the end, you will probably end up sleeping with all your cash and btc tucked under your mattress at night.

[hardcore-fs]

It's flabbergasting that people deposited serious amounts of money on a website, created by a teen in 4 days.

+1000

Well, first, it is amazing that high profile bitcoin luminaries would keep any amount of serious money on a remote website.  When bitcoinica first appeared, pretty much 100% of bitcoin web wallets had been hacked and most had been DDoS'd as well.  Your own encrypted, decentralized, backed up computer is far more secure than (at that time) that proven track record.

And, as you say, who would trust that much money to a teen running a fly-by-night website, who had no experience in the area of finance in question?  Especially given HK's reputation it seemed likely that Bitcoinica was a bucket shop or possibly associated with organized crime in some way.

Actually HK has a GOOD reputation for bringing people to court and preventing web fraud/scams, BUT only If you contact the Cyber enforcement team in the HK police force.
Don't think for a moment that a scammer is safe in HK, However be clear that *many*  HK scammers are actually mainlanders using a dummy address in HK.

[ninjarobot]

It's flabbergasting that people deposited serious amounts of money on a website, created by a teen in 4 days.

Actually I was under the impression that I deposited my money at a registered financial services provider in NZ, backed by reputable VC and operated by the respected Bitcoin Community that performed a thorough security audit beforehand. I also waited until they had a reasonable TOS in place.

http://webcache.googleusercontent.com/search?q=cache:http://bitcoinmedia.com/first-licensed-advanced-trading-platform-for-bitcoin/&hl=en&tbo=d&strip=1

Clearly I was wrong, so I give you that.

I also assumed that:

* Good user-facing security (enforcing strong passwords + OTP) suggested good security in the backend. Another mistake. They did not even bother making backups.

* Businesses care about their customers. Wrong again.

Needless to say, I learned a few lessons since then. Now I keep my coins in a paper wallet. Not too happy about that, but it will be some time before I trust my coins to any 3rd party again.

[Herodes]

It's flabbergasting that people deposited serious amounts of money on a website, created by a teen in 4 days.

Actually I was under the impression that I deposited my money at a registered financial services provider in NZ, backed by reputable VC and operated by the respected Bitcoin Community that performed a thorough security audit beforehand. I also waited until they had a reasonable TOS in place.

http://webcache.googleusercontent.com/search?q=cache:http://bitcoinmedia.com/first-licensed-advanced-trading-platform-for-bitcoin/&hl=en&tbo=d&strip=1

Clearly I was wrong, so I give you that.

I also assumed that:

* Good user-facing security (enforcing strong passwords + OTP) suggested good security in the backend. Another mistake. They did not even bother making backups.

* Businesses care about their customers. Wrong again.

Needless to say, I learned a few lessons since then. Now I keep my coins in a paper wallet. Not too happy about that, but it will be some time before I trust my coins to any 3rd party again.

I'm sorry for any losses you may have had. I guess you also learned a lesson. It was quite apparent that there was a lot of questionable stuff going on at the time. Personally I followed it on the sideline, and  when I heard that Bitcoin Consultancy was going to be involved, then I knew it was going to go pear shaped. Certainly, never believe all that you read, and do you own research. A legitimate company is always interested in talking to prospective customers that have hard questions. Yes, you're right that they received funding, and the entire business were going to be handed over to a new party, and that's when all the mess happened. Clearly it's an inside job.

[bbit]

Coinjar?

[legitnick]

I knew my odds of getting any of the 150+ bitcoins I had in bitcoinica (just sitting there, not in any position) were always low and ever decreasing, but I'm assuming this lawsuit means that the chances of me getting any of that back have dropped to essentially zero.  That was a lot easier to shrug off when they were trading for $4.something a pop.

[ninjarobot]

Does anyone know what the current status on this is?

The link to the case stopped working since the website has undergone renovation...

[MelMan2002]

http://webaccess.sftc.org/Scripts/Magic94/mgrqispi94.dll?APPNAME=WEB&PRGNAME=ValidateCaseNumber&ARGUMENTS=-ACGC12522983

[MelMan2002]

Looks like bitcoinica hasn't responded so they are asking for a default judgement.

[YuTü.Co.in]

Looks like bitcoinica hasn't responded so they are asking for a default judgement.

Are Bitcoinica's coins still tied up in the Mt Gox fiasco?

[MemoryDealers]

Are Bitcoinica's coins still tied up in the Mt Gox fiasco?

Yes.   

[YuTü.Co.in]

Are Bitcoinica's coins still tied up in the Mt Gox fiasco?

Yes.   

Hey, bud. (Bruno Kucinskas here) I merely had a wild hair up my ass wanting to bump some very old thread and this one won. Hope all is well in your ventures, Roger.