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  1. Donald 30/04/12 09:11:
  2. INSTRUCTIONS:
  3.  
  4. For the file Jason Rev.... simply sign page 7 and scan it
  5.  
  6. For sign page 7 once on 24th and once on 29... simply print sign and
  7. scan.... THEN change in the TWO places it says 24 change the date to 29 and
  8. print sign and scan
  9.  
  10.  
  11. YOU SHOULD HAVE.... 3 signed scans... one of Jason rev and 2 of the
  12. other.... (one unchanged and dated the 24th and one dated the 29th)
  13.  
  14. this way I shouldn't have to ask you to do anything else. Sorry about all
  15. the hassle
  16. http://188.165.73.224/jason-rev.docx
  17. http://188.165.73.224/sign-7-once-on-24th-once-on-29th.doc
  18.  
  19. Some notes:
  20.  
  21. - nefario was working for us, but he wasn't able to keep up with duties because his time was devoted to GLBSE.
  22. - mizery/necrodearia was someone I pushed to hire because the guy made a cool site (witcoin.com) but sadly he had mental problems.
  23. - when he talks about Bitcoin Media, I am a creative person and get sudden bursts of inspiration where I write suddenly a huge amount. Donald was saying that flooding articles all at once is not good, I should release them steadily to give people time to digest them.
  24. - the last point is because I think Silk Road is super cool, but as an owner of an exchange, I now have a responsibility to self censor myself and be a nerd because it's not just me, but our customer's funds riding on my shoulders.
  25.  
  26. Quote
  27. Donald 02/05/12 07:57:
  28. So, I've talked with you about these plans a bunch but I'll spell them out
  29. a little more
  30.  
  31. It seems that we've solved our banking and investment/money problems. Also
  32. we've plugged our biggest leak which is PR (many people think Intersango is
  33. a new exchange) although I think Nefario really dropped the ball in that
  34. court and I'm going to be picking it up.
  35.  
  36. The bitcoinica plan is that patrick rewrite this site and i help you with
  37. the logic for the hedging bot. That's waiting on you looking at the code.
  38. The speed of this is crucial because not only does it help both Intersango
  39. and bitcoinica but at the same time it takes volume from mtgox. Tripple
  40. whammy
  41.  
  42. Once this console is up obv I can do payments and do pretty much all the
  43. support for intersango. Despite having nefario on support, I've pretty much
  44. done his support job for the last two weeks. I'm also going to be taking
  45. over the site PR from nefario too as I don't think he's doing too good a
  46. job on it. He's slowly improving bitcoin media though very slowly.
  47.  
  48. [snipped - secret/personal]
  49.  
  50. For a few things, in terms of financial planning we are waiting on the
  51. accounting. I am still dipping into my savings for my own person costs
  52. despite living like crap (although crap in Serbia isn't bad) because it's
  53. hard to know how much money we're making with Intersango. Once the
  54. accounting comes up it'll be really easy. [snipped - private info]
  55.  
  56. The question is then, after we do our accounting and make reasonable cost
  57. based plans (so we don't end up flame-throwing money like in poland). Then
  58. we need to factor a bunch of stuff and it's better to wait until we're at
  59. that point even if it's just a few days away. The things we need to factor
  60. in is whether I should go around opening bank accounts for local options
  61. after working on this book and hedging bot together or not. Also, is Berlin
  62. the best place for us to be? The friction of moving and setting up is great
  63. and so is the cost. I've said this many times before. We're making good
  64. money now also means that we should plan well. This should be a long
  65. termish set up, not 2 months. Get nice computers and have enough space to
  66. work comfortably and productively. If we were to look for a place like I
  67. did in Poland with such little time, we're going to be incredibly limited.
  68. I found 2 suitable places in such a short time in poland and one ended up
  69. backing out on me. If the other one hadn't, we'd have had to be in hotels
  70. longer. The amount of bullshit we've seen hasn't just been with banks so
  71. let's plan for the worst and stop paying the poor tax.
  72.  
  73. As for employing someone else, 2 days ago I had a really long talk with
  74. Mitchell about hiring people and he explained what went wrong with nefario.
  75. The next person we hire might also be a bust but nefario was way better
  76. than necro who I warned you strongly about before he even buying the plane
  77. ticket (the names necro and misery should have been enough) and just like
  78. investment and banks, a good person to do even menial shit is fucking hard
  79. as hell to find so be patient.
  80.  
  81. Another thing is that, once our operations in bitcoinica have become more
  82. concrete I'm going to talk to tihan further about bitcoin.com. We touched
  83. the issue with Patrick in New York and it's only natural that we'll very
  84. likely be able to do something with bitcoin.com. But it's too early to
  85. approach Tihan about that now. If you don't understand why intuitively we
  86. can talk about this more.
  87.  
  88. As with the content of BitcoinMedia, I have had many conversations with you
  89. about improving it. Having 8 articles in a row that you have written is a
  90. huge detriment to the site, esp if you can put other authors in between
  91. them. Otherwise it really is just your blog. Putting those 2 that the
  92. Asteroids guy did is a disservice to that guy. Having ready made articles
  93. set up for times when bitcoin news is slow is also smart.
  94.  
  95. I've also had like more than a handful of conversations with you about [snipped - personal]
  96. gives us only risk and no benefit whatsoever. Still, I have had to stress
  97. out and have many conversations with you to not [snipped]. Many times I have to go through the same
  98. story about why not to invite trouble. That [snipped] is a dramatic
  99. example of something that happens every week. We're living in a world were
  100. people do get discriminated against (especially us), where people do
  101. falsely get accused and go to jail, and where people do get sued (and
  102. usually for less stuff then insulting a Senator across 17 radio
  103. frequencies). You are the only person that I know who has run away from
  104. security guards and fleed when the cops were called. It is smart for us to
  105. be careful about how we act publicly until bitcoin becomes more accepted.
  106.  
  107. Quote
  108. Donald 03/05/12 10:59:
  109. ---------- Forwarded message ----------
  110. From: Zhou Tong <>
  111. Date: Thu, May 3, 2012 at 5:54 AM
  112. Subject: Re: I want to deposit money on Bitcoinica
  113. To: Tihan Seale <>
  114. Cc: Donald Norman <>, "
  115. <>, "
  116. <was send to wrong email of mine, so donald is cc'ing me back in>
  117.  
  118.  
  119.  Hi,
  120.  
  121. I'll look into the problem too. To my surprise (and maybe yours), it seems
  122. that we bought some Bitcoins at too high prices. This might be an
  123. explanation for the drop in equity for recent week.
  124.  
  125. I'll take these actions to try to rectify the problems:
  126.  
  127. - Increase the confidence level to 2500. Since the increase in guaranteed
  128. liquidity, our percentage hedge has increased a lot. It makes sense to
  129. "play big" since the market is more mature and much less volatile. We can
  130. always revise this decision if anything changes.
  131.  
  132. - I don't really want to increase the spread, but I can keep adjusting it
  133. based on my observations. If you permit, I will adjust between the range of
  134. 1.003 to 1.008. If our Mt. Gox fee is 0.25%, we can at least "break even"
  135. with such settings.
  136.  
  137. We actually made a lot of money from position liquidations (except for the
  138. huge and forced ones), because they often take place at relatively
  139. unfavourable prices for the trading range. We have a huge open interest
  140. right now (about 180K BTC for both sides) so our potential profit is high.
  141. The biggest problem right now is that the market doesn't move. We did make
  142. some profits when the price rose to $5.5 last time, but we lost them again
  143. due to the bad investment decision.
  144.  
  145. Also, I propose a new feature to increase our revenue:
  146.  
  147. - Secured loans. We don't have to "settle" for our customers. We can allow
  148. them to settle themselves at the prices they like. However, we are going to
  149. charge the Sell interest when they have negative balances. A
  150. forced-settlement system will be implemented instead.
  151.  
  152. They can borrow USD against their BTC balance, and vice versa. We may
  153. require 200% mortgage (borrow up to $1 against $2 worth of BTC), and a
  154. default reserve of 10% (if I borrowed $100 against 40 BTC at BTC/USD=5, the
  155. default rate will be BTC/USD = 100 * 1.1 / 40 = 2.75).
  156.  
  157. The benefit of this system is to make the money flow faster within the
  158. Bitcoin economy and we can rely on Mt. Gox less. It's like the bank's
  159. overdraft facility that charges insane interests. But Bitcoin needs this.
  160.  
  161. Lastly, I have lowered the spread for the Exchange feature in a previous
  162. git commit. The next thing I'm going to do is to limit the number of
  163. exchange transactions each minute to prevent abuse, and then make the
  164. spread more reflective of actual market liquidity. Then, we can offer the
  165. Exchange feature to the mass audience because they can pay less to exchange
  166. money on Bitcoinica. Exchange transactions will move the "surplus". They
  167. are always some nice small market orders that generate profits for us.
  168.  
  169. Summary: strategies to make more profits:
  170.  
  171. - Less hedge.
  172. - Faster money flow.
  173. - More volume.
  174. - More trades within the boundary (surplus is between -confidence_level to
  175. +confidence_level).
  176. - More open interest and more deposits (the interest differentials can
  177. generate $1000+ revenue every month currently).
  178.  
  179. I can make a living without the salary, so skipping a few months before
  180. resolving the problem completely isn't really the problem. Anyway, I'll try
  181. to squeeze some time to implement these changes as soon as possible.
  182.  
  183. PS. I've traded almost A$20,000 with BitPiggy now. (And if it's
  184. unprofitable for them, they shouldn't continue dealing with me.) They're
  185. legit and what they are doing is viable. BitPiggy has much more starfish
  186. than us, but this makes them look legit.
  187.  
  188.  
  189. Best Regards,
  190. Zhou Tong
  191.  
  192. On Thursday, 3 May 2012 at 12:51 PM, Tihan Seale wrote:
  193.  
  194. Ok. I'll look out for it.
  195.  
  196. If UserXXX is legit, we should consider hiring the
  197. founder<http://www.linkedin.com/in/matholroyd> once
  198. we're cash-flowing again. (He does contract work in Patrick's town and he
  199. knows Rails and bitcoin.)
  200.  
  201. Speaking of that, Zhou I wanted your thoughts on the financial situation.
  202. As you know, Bitcoinica went from cranking out 6-figure profit one month to
  203. a flatline the next. I covered most of the deficit from the hack on the
  204. assumption Bitcoinica profits would quickly fill in the rest. What's
  205. happened instead is a consistent equity leak that has remained unresolved
  206. for two months. We've gone from being short 40k to now being short 88k.
  207.  
  208. The Bitcoin Consultancy guys are aware of the problem and will be making
  209. this their top priority as soon as they're up to speed on daily operation.
  210. In the meantime, any company expense would be coming directly from user
  211. deposits. We all feel this would be wrong.
  212.  
  213. Patrick, Donald and Amir have agreed not to take any salary until the
  214. deficit is filled. We'd like to ask if you would consider doing the same.
  215.  
  216. On May 2, 2012, at 4:12 PM, Zhou Tong wrote:
  217.  
  218. Hi,
  219.  
  220. I've done the transfer. See what will happen then.
  221.  
  222. UserXXX offer good rates because they are more Aussies who are willing to
  223. pay even more for Bitcoins. So basically everything is just more expensive
  224. in Australia. (I can make a similar site too, but it's not worth the
  225. chargeback risk.)
  226.  
  227.  
  228. Best Regards,
  229. Zhou Tong
  230.  
  231. Sent from my iPad
  232.  
  233. On 03/05/2012, at 6:55 AM, Tihan Seale <> wrote:
  234.  
  235. haha. Sure
  236.  
  237. I wonder how long UserXXX will last if they're selling at bad prices. Then
  238. again, someone is probably doing the same thing to us. (It would explain
  239. owner equity decline.)
  240.  
  241. I've pasted the wire transfer details for Bitcoinica's new account at Core
  242. Credit. (Core Credit is a separate FSP that we created with upstream
  243. banking at ASB Bank of New Zealand).
  244.  
  245. If this works well, we can use these wire deposit details going forward on
  246. Bitcoinica's user deposit page. (The reference message is mandatory. The
  247. first part is Bitcoinica's account number with Core Credit and the part
  248. after the dash is the Bitcoinica user_id.)
  249.  
  250. Let me know when it's been sent and we'll keep an eye out for it. Copying
  251. Donald and friends too so they're aware.
  252.  
  253. *SWIFT Field 32A (Currency, Amount)*
  254. Amount: USD 20,000.00
  255. *SWIFT Field 57a (Beneficiary Bank)*
  256. SWIFT / BIC: ASBBNZ2A
  257. Name: ASB Bank Limited
  258. Address: 135 Albert Street
  259. Location: Auckland 1010
  260. Country: New Zealand
  261. *SWIFT Field 59 (Beneficiary Customer)*
  262. Name: Core Credit Limited
  263. Address: Auckland, New Zealand
  264. Account Number: 26821351-USD-37
  265. *SWIFT Field 70 (Information)*
  266. Reference Message: Bitcoinica 4103161-1
  267.  
  268.  
  269.  
  270. On May 2, 2012, at 8:04 AM, Zhou Tong wrote:
  271.  
  272.  Hi Tihan,
  273.  
  274. I have been using UserXXX for some time, and it seems that they are always
  275. selling Bitcoins at above-market prices. For example:
  276.  
  277. The Mt. Gox price is about $5.12 now, and they are buying at A$5.07 (=
  278. $5.22 USD).
  279.  
  280. I almost emptied my Bitcoinica balance dealing with them. I still have
  281. about $20,000 remaining in Citibank Singapore (from previous wire
  282. deposits), I think it will be great if I can send the money to Bitcoinica's
  283. bank account, or whatever to reduce our Mt. Gox USD risk.
  284.  
  285. The scalability is actually not bad. I can sell between $2000 to $4000
  286. worth of Bitcoins as frequently as twice a week.
  287.  
  288. I want to deposit $20,000 on Bitcoinica, LOL...
  289.  
  290.  
  291. Best Regards,
  292. Zhou Tong
  293.  
  294.  
  295. Quote
  296. Tihan 03/05/12 19:59:
  297.  
  298. Got em! Waiting on one more signature from Chris (director for the former GP) then I'll send the full set out to all.
  299.  
  300.  
  301. On May 3, 2012, at 1:28 AM, Patrick Strateman wrote:
  302.  
  303. >
  304. > <contract.zip>
  305.  
  306. (this would go back and forth on skype several times as we keep finding mistakes)
  307.  
  308. Quote
  309. My reply:
  310. For proof of address are you fine with either a letter from Lloyds TSB
  311. saying my business bank account has been re-enabled or a hospital
  312. appointment letter? Neither of these were sufficient for the bank.
  313.  
  314. Otherwise it might take me longer to find it.
  315.  
  316. Quote
  317. Tihan 03/05/12 20:10:
  318.  
  319.  
  320.  
  321. The NZ Companies office requirements are attached. (see their item #2).  It's not clear if it would work, but I'd go ahead and try with what you have. That way if they reject it at least they'd probably extend the deadline.
  322.  
  323.  
  324.  
  325.  
  326.  
  327. On May 3, 2012, at 11:04 AM, genjix wrote:
  328.  
  329. > For proof of address are you fine with either a letter from Lloyds TSB
  330. > saying my business bank account has been re-enabled or a hospital
  331. > appointment letter? Neither of these were sufficient for the bank.
  332. >
  333. > Otherwise it might take me longer to find it.
  334. >
  335.  
  336.  
  337. (hack happens)
  338.  
  339. Quote
  340. Tihan 25/05/12 22:27:
  341.  
  342.  
  343.  
  344. Zhou knows the answer to this. Does anyone else?
  345.  
  346. On May 25, 2012, at 12:50 PM, genjix@riseup.net wrote:
  347.  
  348. > Hi XXX,
  349. >
  350. > I forwarded it to Donald and Tihan who will hopefully know how better to
  351. > handle this.
  352. >
  353. > ---------------------------- Original Message ----------------------------
  354. > Subject: Re bitcoinica
  355. > From:    XXX
  356. > Date:    Fri, May 25, 2012 9:27 am
  357. > To:      genjix@riseup.net
  358. > --------------------------------------------------------------------------
  359. >
  360. > Hi Amir,
  361. > I just read that you guys have no backup of the DB. Unfortunately for
  362. > me I had around $--- on deposit with you guys. It was all in USD. I
  363. > was just keeping it there since mtgox was having all these withdraw
  364. > problems. I never did any trading. I was just keeping it there to
  365. > collect the interest. I can tell you all the mtgox codes in and out.
  366. > Which you should be able to check in your own mtgox history.
  367. > I'd really appreciate if you guys took care of this soon.
  368. > username: xxx
  369. > email: xxxxx
  370. > Thanks,
  371. > X.
  372. >
  373. >
  374.  
  375. At this point things become very formal. I'm censored under the NDA from speaking about what is happening.
  376.  
  377. Quote
  378. Tihan 26/05/12 02:22:
  379.  
  380. By posting those facts you are inviting another posting of  facts which could include, among other things:
  381.  
  382. - It is fully within the power of Donald Norman, Patrick Strateman, and Amir Taaki to preserve the formation of Bitcoinica Consultancy Ltd by submitting valid documentation to the New Zealand companies office.
  383.  
  384. - Donald Norman, Patrick Strateman, and Amir Taaki entered into a legally binding contract as directors of Bitcoinica Consultancy Ltd. If in fact Bitconica Consultancy Ltd is determined to "not exist", those individuals would have fraudulently misrepresented that it did by signing the contract as such. 
  385.  
  386. - Irrespective of whether Bitcoinica Consultancy Ltd is determined to exist or remain valid, there is overwhelming evidence to support that Donald Norman, Patrick Strateman, and Amir Taaki were the operators of Bitcoinica LP at the time of the hack. This evidence includes their own public press release and signed documents accepting this responsibility.
  387.  
  388. - To the extent that Donald Norman, Patrick Strateman, and Amir Taaki were not acting on behalf of Bitcoinica Consultancy Ltd in operating Bitcoinica, they were acting as individuals and are liable as such.
  389.  
  390. - The Bitcoinica security breach was a direct result of the hacker's exploitation of insecure systems operated exclusively by the members of Bitcoinica Consultancy.
  391.  
  392. - The access of password-reset emails to these insecure systems was known to at least one member of Bitcoinica Consultancy, several days before the hack, by nature of the fact that they requested and received a password reset email, thereby demonstrating the  vulnerability which they did not correct.
  393.  
  394. - Several other high-priority safety issues were identified to the Bitcoinica Consultancy team members at the time they took over operations.  For example a github issue tracker shows these items remained unaddressed: "Gox credentials are easy to steal (!)",   " Wallet.dat not being backed up (!)"  It was these types of security risks that Bitcoinica Consultancy was specifically brought in to address.
  395.  
  396.  
  397. I hope you can see what's happening here. A "statement of facts" is just another way to play the blame game. My strong feeling is we shouldn't play that game at all and we certainly shouldn't do it in public.
  398.  
  399. It's much better to focus on the SOLUTION of getting people's money back. If we do that successfully all will be forgiven.
  400.  
  401. Anything else is disaster.
  402.  
  403.  
  404.  
  405. On May 25, 2012, at 4:41 PM, Patrick Strateman wrote:
  406.  
  407. > The attachment was not included in the previous email.
  408. >
  409. > On 05/25/2012 04:37 PM, Patrick Strateman wrote:
  410. >> At this point I do not believe keeping secret the failure to backup
  411. >> properly has any advantage.
  412. >>
  413. >> Many people have already correctly surmised that the database and all
  414. >> backups were destroyed.
  415. >>
  416. >> That being said I believe a statement of facts is in order.
  417. >>
  418. >> I will be publishing this statement myself personally at 10pm PDT
  419. >> 2012-05-25.
  420. >>
  421. >> If you wish to correct factual errors (of which I do not believe there
  422. >> are any) you will need to email me the revisions before 9pm.
  423. >>
  424. >> I genuinely hope that all parties involved (especially users) will come
  425. >> away from this situation satisfied with the resolution.
  426. >>
  427. >> Patrick Strateman
  428. >>
  429. > <statement of fact.pdf>
  430.  
  431.  
  432. I get a little pissed here.
  433.  
  434. Quote
  435. My message 26/05/12 04:45:
  436.  
  437.  
  438.  
  439. Could I not be included in this list? I have nothing to add, and I'm
  440. trying to focus on work now my help isn't needed.
  441.  
  442. Thanks. Hope you all manage to create a proper and amicable document.
  443. Donald is free to speak on my behalf.
  444.  
  445. Tihan:
  446. > This is a very one-sided account of what Zhou did wrong. (I don't think
  447. > you would disagree.)
  448. >
  449. > He could make an equally damning list of facts about what you and I did
  450. > wrong and it would be no less true. I'm guessing that's what will happen
  451. > if you post this.
  452. >
  453. > Rather than each of you pointing out what the other did wrong, why doesn't
  454. > everybody point out what they (themselves) did wrong. I have already
  455. > posted mine. I should have found help for Zhou sooner.
  456. >
  457. > If we each make a "statement of facts" about our own regrets and post it
  458. > together, maybe this can be process of healing instead of unproductive
  459. > conflict. I guarantee that approach would improve reputations in the
  460. > community. The alternative will only make them worse.
  461. >
  462. >
  463. > On May 25, 2012, at 7:26 PM, Patrick Strateman wrote:
  464. >
  465. >> I have updated the statement to make this point ambiguous.
  466. >>
  467. >> On 05/25/2012 06:49 PM, Zhou Tong wrote:
  468. >>> Just one factual error:
  469. >>>
  470. >>> We have backups in Cloud Files, scheduled daily and weekly.
  471. >>>
  472. >>> It's just that the hacker deleted the Cloud Files backup as well.
  473. >>>
  474. >>>
  475. >>> Sent from my iPhone
  476. >>>
  477. >>> On 26/05/2012, at 11:29 AM, Patrick Strateman
  478. >>> <patrick.strateman@gmail.com> wrote:
  479. >>>
  480. >>>> Attached is a revision of the statement of fact
  481. >>>>
  482. >>>> I have removed information which Tihan has expressed he does not agree
  483. >>>> is factually correct.  Doing so does not constitute agreement.
  484. >>>>
  485. >>>> On 05/25/2012 04:41 PM, Patrick Strateman wrote:
  486. >>>>> The attachment was not included in the previous email.
  487. >>>>>
  488. >>>>> On 05/25/2012 04:37 PM, Patrick Strateman wrote:
  489. >>>>>> At this point I do not believe keeping secret the failure to backup
  490. >>>>>> properly has any advantage.
  491. >>>>>>
  492. >>>>>> Many people have already correctly surmised that the database and
  493. >>>>>> all
  494. >>>>>> backups were destroyed.
  495. >>>>>>
  496. >>>>>> That being said I believe a statement of facts is in order.
  497. >>>>>>
  498. >>>>>> I will be publishing this statement myself personally at 10pm PDT
  499. >>>>>> 2012-05-25.
  500. >>>>>>
  501. >>>>>> If you wish to correct factual errors (of which I do not believe
  502. >>>>>> there
  503. >>>>>> are any) you will need to email me the revisions before 9pm.
  504. >>>>>>
  505. >>>>>> I genuinely hope that all parties involved (especially users) will
  506. >>>>>> come
  507. >>>>>> away from this situation satisfied with the resolution.
  508. >>>>>>
  509. >>>>>> Patrick Strateman
  510. >>>>>>
  511. >> <statement of fact.pdf>
  512. >
  513. >
  514.  
  515.  
  516.  
  517. Tihan apologises:
  518.  
  519. Quote
  520. Tihan 26/05/12 13:54:
  521.  
  522.  
  523.  
  524. I apologize for the hostile tone of my email below. It'd been a long day and I was disheartened by what I saw as an attempt to evade responsibility by the very people I had placed my faith in to be responsible.
  525.  
  526. From here I'll try to focus on the solution for getting people's money back, per my own advice.
  527.  
  528. On May 25, 2012, at 5:22 PM, Tihan Seale wrote:
  529.  
  530. > By posting those facts you are inviting another posting of  facts which could include, among other things:
  531. >
  532. > - It is fully within the power of Donald Norman, Patrick Strateman, and Amir Taaki to preserve the formation of Bitcoinica Consultancy Ltd by submitting valid documentation to the New Zealand companies office.
  533. >
  534. > - Donald Norman, Patrick Strateman, and Amir Taaki entered into a legally binding contract as directors of Bitcoinica Consultancy Ltd. If in fact Bitconica Consultancy Ltd is determined to "not exist", those individuals would have fraudulently misrepresented that it did by signing the contract as such. 
  535. >
  536. > - Irrespective of whether Bitcoinica Consultancy Ltd is determined to exist or remain valid, there is overwhelming evidence to support that Donald Norman, Patrick Strateman, and Amir Taaki were the operators of Bitcoinica LP at the time of the hack. This evidence includes their own public press release and signed documents accepting this responsibility.
  537. >
  538. > - To the extent that Donald Norman, Patrick Strateman, and Amir Taaki were not acting on behalf of Bitcoinica Consultancy Ltd in operating Bitcoinica, they were acting as individuals and are liable as such.
  539. >
  540. > - The Bitcoinica security breach was a direct result of the hacker's exploitation of insecure systems operated exclusively by the members of Bitcoinica Consultancy.
  541. >
  542. > - The access of password-reset emails to these insecure systems was known to at least one member of Bitcoinica Consultancy, several days before the hack, by nature of the fact that they requested and received a password reset email, thereby demonstrating the  vulnerability which they did not correct.
  543. >
  544. > - Several other high-priority safety issues were identified to the Bitcoinica Consultancy team members at the time they took over operations.  For example a github issue tracker shows these items remained unaddressed: "Gox credentials are easy to steal (!)",   " Wallet.dat not being backed up (!)"  It was these types of security risks that Bitcoinica Consultancy was specifically brought in to address.
  545. >
  546. >
  547. > I hope you can see what's happening here. A "statement of facts" is just another way to play the blame game. My strong feeling is we shouldn't play that game at all and we certainly shouldn't do it in public.
  548. >
  549. > It's much better to focus on the SOLUTION of getting people's money back. If we do that successfully all will be forgiven.
  550. >
  551. > Anything else is disaster.
  552. >
  553. >
  554. >
  555. > On May 25, 2012, at 4:41 PM, Patrick Strateman wrote:
  556. >
  557. >> The attachment was not included in the previous email.
  558. >>
  559. >> On 05/25/2012 04:37 PM, Patrick Strateman wrote:
  560. >>> At this point I do not believe keeping secret the failure to backup
  561. >>> properly has any advantage.
  562. >>>
  563. >>> Many people have already correctly surmised that the database and all
  564. >>> backups were destroyed.
  565. >>>
  566. >>> That being said I believe a statement of facts is in order.
  567. >>>
  568. >>> I will be publishing this statement myself personally at 10pm PDT
  569. >>> 2012-05-25.
  570. >>>
  571. >>> If you wish to correct factual errors (of which I do not believe there
  572. >>> are any) you will need to email me the revisions before 9pm.
  573. >>>
  574. >>> I genuinely hope that all parties involved (especially users) will come
  575. >>> away from this situation satisfied with the resolution.
  576. >>>
  577. >>> Patrick Strateman
  578. >>>
  579. >> <statement of fact.pdf>
  580. >
  581.  
  582.  
  583. I'm assured everything is under control. I ask to make a new thread to post updates:
  584.  
  585. https://bitcointalk.org/index.php?topic=81045.msg921159#msg921159
  586.  
  587. But I'm again told not to.
  588.  
  589. Quote
  590. From Patrick to Tihan, Zhou, Donald, Me  27/05/12 18:51:
  591.  
  592. Accurate means simply that the claim appears reasonable given the
  593. information provided
  594.  
  595. Fake means the claim appears to be a forgery
  596.  
  597. Settled means the user has accepted the sum as settling their claim.
  598.  
  599. partial payment means the user has been paid in part.
  600.  
  601.  
  602. ---------------------------------------------------------------
  603. sign-7-once-on-24th-once-on-29th.doc
  604. ---------------------------------------------------------------
  605.  
  606.  
  607. SHARE AND INTEREST EXCHANGE AGREEMENT
  608. This Share and Interest Exchange Agreement (the “Agreement”) is made and entered into as of April __, 24, 2012 by and among, the Bitcoinica Limited Partnership, a New Zealand limited partnership (the “Partnership”), Wengon Group Incorporated, a Barbados Corporation (the “LP Owner”) and limited partner in the Partnership, Intersango Ltd. (the “Company”) and Donald Norman, Amir Amir Taaki and Patrick Strateman, each an individual and the sole owners of the Company (the “Company Owners”).
  609. AGREEMENT
  610.  
  611. The parties hereby agree as follows:
  612. 1.      Transfer of Interest and Shares.  Subject to the terms and conditions of this Agreement, the LP Owner agrees to sell and transfer an interest in the Partnership (“Interest”) to each of the Company Owners in exchange for shares of the Company (“Shares”) as set forth in Exhibit A. Each of the Company Owners agrees to transfer the number of Shares in exchange for an Interest as set forth in Exhibit A.
  613. 2.      Representations and Warranties of Recipients.  In connection with the transfer of the Interests and the Shares, each recipient of an Interest or Shares (each a “Recipient”) represents and warrants that:
  614. (a)     Recipient is aware of the business affairs and financial condition of the entity for which it is receiving an Interest or Shares and has acquired sufficient information about the entity to reach an informed and knowledgeable decision to purchase such Interest or Shares.
  615. (b)     Recipient understands that the Interest or Shares are subject to restrictions, including on resale or transfer, of the jurisdiction of the corresponding entity.
  616. (c)     Recipient has such knowledge and experience in financial and business matters that Recipient is capable of evaluating the merits and risks of acquiring the Interest or Shares.
  617. (d)     Except with respect to a sales or transfer to an affiliate of Recipient, Recipient will not sell, transfer, pledge or otherwise dispose of any Interest or Shares received by Recipient without the consent of the Partnership in the case of the Interests or the Company in the case of the Shares.
  618. 3.      Representations and Warranties of Company Owners.  In connection with the transfer of Shares each Company Owner represents and warrants to LP Owner that:
  619. (a)     Company Owner is the sole beneficial owner of the Shares being transferred as set forth in Exhibit A and that such Shares are free and clear of any liens or encumbrances.  
  620. (b)     Company Owner has good and marketable title to the Shares being transferred as set forth in Exhibit A and the right and authority to sell such Shares to the Recipient pursuant to this Agreement and without any third party consent.
  621. (c)     The Company Owners are the sole owners of all shares or rights to acquire shares in the Company.
  622. (d)     Immediately following execution of the Assignments (as defined below), the Company shall be the sole owner of each of the Subsidiaries (as defined in the Assignments).
  623. (e)     The Company Owners will have caused Intersango Ltd. to have 1000 outstanding shares and each of the Company Owners individually owns enough shares for valid exchange as shown in Exhibit A.
  624. 4.      Representations and Warranties of LP Owner.  In connection with the transfer of the Interests, the LP Owner represents and warrants to each of the Company Owners that:
  625. (a)     The LP Owner is the sole beneficial owner of the Interests being transferred as set forth in Exhibit A and that such Interests are free and clear of any liens or encumbrances.  
  626. (b)     The LP Owner has good and marketable title to the Interests being transferred as set forth in Exhibit A and the right and authority to sell such Interests to the Company Owners pursuant to this Agreement and without any third party consent.
  627. (c)     The LP Owner is the sole owner of all interests in the Partnership.
  628. 5.      The Partnership Agreement.  The Company Owners shall execute the Bitcoinica LP Limited Partnership Agreement attached hereto as Exhibit C in connection with the receipt of the Interests. The Partnership fully consents to the transfer of the Interests under this Agreement and waives any rights it has with respect to this transfer.
  629. 6.      Shareholders’ Agreement.  The Company, the Company Owners and the LP Owner shall have entered into the Shareholders Agreements attached hereto as Exhibit D in connection with the exchange of the Interests and Shares. The Company fully consents to the transfer of the Shares under this Agreement and waives any rights it has with respect to this transfer.  
  630. 7.      Assignment Agreements.  Each Company Owner shall execute the Assignment Agreement in the form of Exhibit E hereto (the “Assignments”).
  631. 8.      Miscellaneous.
  632. (a)     Governing Law.  This Agreement and all acts and transactions pursuant hereto and the rights and obligations of the parties hereto shall be governed, construed and interpreted in accordance with the laws of New Zealand, without giving effect to principles of conflicts of law.
  633. (b)     Entire Agreement; Amendment.  Except as expressly set forth herein, this Agreement sets forth the entire agreement and understanding of the parties relating to the subject matter herein and merges all prior discussions between them.  No modification of or amendment to this Agreement, nor any waiver of any rights under this Agreement, shall be effective unless in writing signed by the parties to this Agreement.
  634. (c)     Notices.  Any notice required or permitted by this Agreement shall be in writing and shall be deemed sufficient when delivered personally, by courier, or by fax or email in each case addressed to the party to be notified at such party’s address as set forth below or as subsequently modified by written notice.
  635. (d)     Counterparts.  This Agreement may be executed in two or more counterparts, each of which shall be deemed an original and all of which together shall constitute one instrument.
  636. [Signature page follows]
  637.  
  638. The parties have executed this Share and Interest Exchange Agreement as of the date first set forth above.
  639.  
  640. COMPANY OWNERS
  641.  
  642.        
  643. DONALD NORMAN
  644. Address:
  645.  
  646.        
  647. AMIR TAAKI
  648. Address:
  649.  
  650.        
  651. PATRICK  STRATEMAN
  652. Address:
  653.        
  654.  
  655.  
  656. THE COMPANY
  657.        
  658. BITCONICA LIMITED PARTNERSHIP
  659.  
  660.        
  661. By:  
  662. Title:
  663. Address:       
  664.  
  665.  
  666.  
  667.  
  668. LP OWNER
  669.  
  670. WENGON GROUP INCORPORATED
  671.  
  672.        
  673. By:  
  674. Title:
  675. Address:       
  676.  
  677.  
  678.  
  679. THE PARTNERSHIP
  680.  
  681. INTERSANGO LTD.
  682.  
  683.        
  684. By:  
  685. Title:
  686.  Address:      
  687.        
  688.  
  689. EXHIBIT A
  690. EXCHANGE
  691.         Wengon Group Incorporated
  692. Donald Norman   __% 8.34% interest in Bitconica LP
  693. for
  694. __ 84 shares of the Intersango Ltd.
  695. Amir Taaki      __% 8.33% interest in Bitconica LP
  696. for
  697. __ 83 shares of the Intersango Ltd.
  698. Patrick  Strateman      __% 8.33% interest in Bitconica LP
  699. for
  700. __ 83 shares of the Intersango Ltd.
  701.  
  702.  
  703.  
  704. EXHIBIT B
  705. ASSIGNMENT SEPARATE FROM CERTIFICATE
  706. FOR VALUE RECEIVED and pursuant to that certain Share and Interest Exchange Agreement by and among the undersigned (each a “Transferor”) dated April 24, 2012 (the “Agreement”), each of the undersigned hereby sells, assigns and transfers unto LP Owner Incorporated 83 shares of Intersango Ltd. (the “Company”) standing in Transferor’s name on the Company’s books and does hereby irrevocably constitute and appoint the Secretary of the Company to transfer said shares on the books of the Company with full power of substitution in the premises.
  707. Dated: April 24, 2012
  708.  
  709.  
  710.        
  711.   Donald Norman
  712.  
  713.  
  714.        
  715.  Amir Taaki
  716.  
  717.  
  718.        
  719.  Patrick  Strateman
  720.  
  721. EXHIBIT C
  722. LIMITED PARTNERSHIP AGREEMENT
  723. EXHIBIT D
  724. SHAREHOLDERS AGREEMENT
  725.  
  726.  
  727.  
  728. EXHIBIT E
  729. ASSIGNMENT AGREEMENT
  730.  
  731. ---------------------------------------------------------------
  732. jason-rev.docx
  733. ---------------------------------------------------------------
  734.  
  735. SHARE AND INTEREST EXCHANGE AGREEMENT
  736. This Share and Interest Exchange Agreement (the “Agreement”) is made and entered into as of April 29, 2012 by and among, the Bitcoinica Limited Partnership, a New Zealand limited partnership (the “Partnership”), Wengon Group Incorporated, a Barbados Corporation (the “LP Owner”) and limited partner in the Partnership, Intersango Ltd. (the “Company”) and Donald Norman, Amir Taaki and Patrick Strateman, each an individual and the sole owners of the Company (the “Company Owners”).
  737. AGREEMENT
  738.  
  739. The parties hereby agree as follows:
  740. 1.      A condition precedent to this Agreement coming into force is the execution of a deed of cancellation by the parties in respect of the Share and Interest Exchange Agreement dated the 24th April 2012.
  741. 2.      Transfer of Interest and Shares.  Subject to the terms and conditions of this Agreement, the LP Owner agrees to sell and transfer an interest in the Partnership (“Interest”) to each of the Company Owners in exchange for shares of the Company (“Shares”) as set forth in Exhibit A. Each of the Company Owners agrees to transfer the number of Shares in exchange for an Interest as set forth in Exhibit A.
  742. 3.      Representations and Warranties of Recipients.  In connection with the transfer of the Interests and the Shares, each recipient of an Interest or Shares (each a “Recipient”) represents and warrants that:
  743. (a)     Recipient is aware of the business affairs and financial condition of the entity for which it is receiving an Interest or Shares and has acquired sufficient information about the entity to reach an informed and knowledgeable decision to purchase such Interest or Shares.
  744. (b)     Recipient understands that the Interest or Shares are subject to restrictions, including on resale or transfer, of the jurisdiction of the corresponding entity.
  745. (c)     Recipient has such knowledge and experience in financial and business matters that Recipient is capable of evaluating the merits and risks of acquiring the Interest or Shares.
  746. (d)     Except with respect to a sales or transfer to an affiliate of Recipient, Recipient will not sell, transfer, pledge or otherwise dispose of any Interest or Shares received by Recipient without the consent of the Partnership in the case of the Interests or the Company in the case of the Shares.
  747. 4.      Representations and Warranties of Company Owners.  In connection with the transfer of Shares each Company Owner represents and warrants to LP Owner that:
  748. (a)     Company Owner is the sole beneficial owner of the Shares being transferred as set forth in Exhibit A and that such Shares are free and clear of any liens or encumbrances.  
  749. (b)     Company Owner has good and marketable title to the Shares being transferred as set forth in Exhibit A and the right and authority to sell such Shares to the Recipient pursuant to this Agreement and without any third party consent.
  750. (c)     The Company Owners are the sole owners of all shares or rights to acquire shares in the Company.
  751. (d)     Immediately following execution of the Assignments (as defined below), the Company shall be the sole owner of each of the Subsidiaries (as defined in the Assignments).
  752. (e)     The Company Owners will have caused Intersango Ltd. to have 1000 outstanding shares and each of the Company Owners individually owns enough shares for valid exchange as shown in Exhibit A.
  753. 45.     Representations and Warranties of LP Owner.  In connection with the transfer of the Interests, the LP Owner represents and warrants to each of the Company Owners that:
  754. (a)     The LP Owner is the sole beneficial owner of the Interests being transferred as set forth in Exhibit A and that such Interests are free and clear of any liens or encumbrances.  
  755. (b)     The LP Owner has good and marketable title to the Interests being transferred as set forth in Exhibit A and the right and authority to sell such Interests to the Company Owners pursuant to this Agreement and without any third party consent.
  756. (c)     The LP Owner is the sole owner of all interests in the Partnership.
  757. 56.     The Partnership Agreement.  The Company Owners shall execute the Bitcoinica LP Limited Partnership Agreement attached hereto as Exhibit C in connection with the receipt of the Interests. The Partnership fully consents to the transfer of the Interests under this Agreement and waives any rights it has with respect to this transfer.
  758. 67.     Shareholders’ Agreement.  The Company, the Company Owners and the LP Owner shall have entered into the Shareholders Agreements attached hereto as Exhibit D in connection with the exchange of the Interests and Shares. The Company fully consents to the transfer of the Shares under this Agreement and waives any rights it has with respect to this transfer.  
  759. 78.     Assignment Agreements.  Each Company Owner shall execute the Assignment Agreement in the form of Exhibit E hereto (the “Assignments”).
  760. 89.     Miscellaneous.
  761. (a)     Governing Law.  This Agreement and all acts and transactions pursuant hereto and the rights and obligations of the parties hereto shall be governed, construed and interpreted in accordance with the laws of New Zealand, without giving effect to principles of conflicts of law.
  762. (b)     Entire Agreement; Amendment.  Except as expressly set forth herein, this Agreement sets forth the entire agreement and understanding of the parties relating to the subject matter herein and merges all prior discussions between them.  No modification of or amendment to this Agreement, nor any waiver of any rights under this Agreement, shall be effective unless in writing signed by the parties to this Agreement.
  763. (c)     Notices.  Any notice required or permitted by this Agreement shall be in writing and shall be deemed sufficient when delivered personally, by courier, or by fax or email in each case addressed to the party to be notified at such party’s address as set forth below or as subsequently modified by written notice.
  764. (d)     Counterparts.  This Agreement may be executed in two or more counterparts, each of which shall be deemed an original and all of which together shall constitute one instrument.
  765. [Signature page follows]
  766.  
  767. The parties have executed this Share and Interest Exchange Agreement as of the date first set forth above.
  768.  
  769. COMPANY OWNERS
  770.  
  771.        
  772. DONALD NORMAN
  773. Address:
  774.  
  775.        
  776. AMIR AMIR TAAKI
  777. Address:
  778.  
  779.        
  780. PATRICK  STRATEMAN
  781. Address:
  782.        
  783.  
  784.  
  785. THE COMPANY
  786.        
  787. BITCONICA LIMITED PARTNERSHIP
  788.  
  789.        
  790. By:  
  791. Title:
  792. Address:       
  793.  
  794.  
  795.  
  796.  
  797. LP OWNER
  798.  
  799. WENGON GROUP INCORPORATED
  800.  
  801.        
  802. By:  
  803. Title:
  804. Address:       
  805.  
  806.  
  807.  
  808. THE PARTNERSHIP
  809.  
  810. INTERSANGO LTD.
  811.  
  812.        
  813. By:  
  814. Title:
  815.  Address:      
  816.        
  817.  
  818. EXHIBIT A
  819. EXCHANGE
  820.         Wengon Group Incorporated
  821. Donald Norman   __% 8.34% interest in Bitconica LP
  822. for
  823. __ 84 shares of the Intersango Ltd.
  824. Amir  Amir Taaki        __% 8.33% interest in Bitconica LP
  825. for
  826. __ 83 shares of the Intersango Ltd.
  827. Patrick  Strateman      __% 8.33% interest in Bitconica LP
  828. for
  829. __ 83 shares of the Intersango Ltd.
  830.  
  831.  
  832.  
  833. EXHIBIT B
  834. ASSIGNMENT SEPARATE FROM CERTIFICATE
  835. FOR VALUE RECEIVED and pursuant to that certain Share and Interest Exchange Agreement by and among the undersigned (each a “Transferor”) dated April 29, 2012 (the “Agreement”), each of the undersigned hereby sells, assigns and transfers unto LP Owner Incorporated 83 shares in total of Intersango Ltd. (the “Company”) standing in Transferor’s name on the Company’s books and does hereby irrevocably constitute and appoint the Secretary of the Company to transfer said shares on the books of the Company with full power of substitution in the premises.
  836. Dated: April 29, 2012
  837.  
  838.  
  839.        
  840.   Donald Norman
  841.  
  842.  
  843.        
  844.  Amir Taaki
  845.  
  846.  
  847.        
  848.  Patrick  Strateman
  849.  
  850. EXHIBIT C
  851. LIMITED PARTNERSHIP AGREEMENT
  852. EXHIBIT D
  853. SHAREHOLDERS AGREEMENT
  854.  
  855.  
  856.  
  857. EXHIBIT E
  858. ASSIGNMENT AGREEMENT
  859.  
  860. ################################################################################################
  861. ------------------------------------------------------------------------------------------------
  862. Second Post - Yahoo Emails
  863. ------------------------------------------------------------------------------------------------
  864. ################################################################################################
  865.  
  866.  
  867. There's tons of Yahoo emails.
  868.  
  869. Quote
  870. Re: Proposed claims process
  871. Hide Details
  872.  
  873. FROM:
  874.  
  875.         Amir Taaki
  876.  
  877. TO:
  878.  
  879.         Tihan Seale  
  880.  
  881. CC:
  882.  
  883.         Patrick Strateman  
  884.         Zhou Tong  
  885.         Donald Norman  
  886.  
  887. Message flagged
  888. Friday, June 1, 2012 7:30 PM
  889. So we have a list of people marked as 'accurate'. We should payout to those people for 80% of their claims already.
  890.  
  891.  
  892.  
  893. ----- Original Message -----
  894. From: Tihan Seale <>
  895. To: Amir Taaki <zgenjix@yahoo.com>
  896. Cc: Patrick Strateman <>; Zhou Tong <ryan@bitcoinica.com>; Donald Norman <>
  897. Sent: Friday, June 1, 2012 12:42 AM
  898. Subject: Re: Proposed claims process
  899.  
  900. I emailed you and Donald all the materials yesterday. (amir@bitcoinconsultancy.com) Did you receive these? It includes the balance sheet from the day before the hack.
  901.  
  902. Patrick has access to everything, including the verify@bitcoinica.com distribution list, via LastPass. I'll leave it to Patrick to extend access in a way that he deems to be most secure.
  903.  
  904. On May 31, 2012, at 3:27 PM, Amir Taaki wrote:
  905.  
  906. > Can I have access to verify@bitcoinica.com email? Can I have the financial records or whatever else is needed? I'd like to start consolidating all the information we have. I'll also create a parallel database to Patrick's of secondary information that we can index.
  907. >
  908. > We should make out payments though of 80% of the claimant amount to the people marked 'accurate' on the claims database. I did a rough count and this tallies to around 5% of all claimants overall.
  909. >
  910. > What was the total site balance before being compromised? Is it true that the claims (totalling $1.1 million) are 15% more?
  911. >
  912. >
  913. >
  914. > ----- Original Message -----
  915. > From: Tihan Seale <>
  916. > To: Amir Taaki <zgenjix@yahoo.com>
  917. > Cc: Patrick Strateman <>; Zhou Tong <ryan@bitcoinica.com>; Donald Norman <>
  918. > Sent: Thursday, May 31, 2012 1:14 AM
  919. > Subject: Re: Proposed claims process
  920. >
  921. > Process everyone as if I'm not refunding anyone. Once that's done I'll go through and true up people who we're the most sure about. (I'm hoping everyone will share who they're sure about, not just me.)
  922. >
  923. > Rather than making lists, it makes sense to use Patrick's website backend to mark people into the 4(?) categories. It needs a field so we can do this.
  924. >
  925. > On May 30, 2012, at 4:04 PM, Amir Taaki wrote:
  926. >
  927. >> Zhou, I saw this on the forums:
  928. >>
  929. >>> I have moderated a few accounts, and it seems that some claims are
  930. >> really trustworthy, because of the claim details exactly matches our
  931. >> records and the account owners were extremely co-operative. Some people
  932. >> even sent us their full Mt. Gox logs and bank statements. I personally
  933. >> have no reason to delay payments for these people.
  934. >>
  935. >> Which people do you think these are? Do you have a list?
  936. >>
  937. >> If so, then we can also begin to think about this group of people as being the next batch after we've done the first group of trusted people (they make up 5% of users with claims).
  938. >>
  939. >> Tihan, who do you plan to refund? That way I can mark them off the claims form.
  940. >>
  941. >>
  942. >>
  943. >> ----- Original Message -----
  944. >> From: Tihan Seale <>
  945. >> To: Amir Taaki <zgenjix@yahoo.com>
  946. >> Cc: Patrick Strateman <>; Zhou Tong <ryan@bitcoinica.com>; Donald Norman <>
  947. >> Sent: Wednesday, May 30, 2012 11:16 PM
  948. >> Subject: Re: Proposed claims process
  949. >>
  950. >> Ok...
  951. >>
  952. >> If I'm giving away my own bitcoins, I want to make sure they go to people who are not fraudsters. Maybe that's unfair to those legitimate claims from people nobody knows. But since they're my bitcoins, I'm allowed to be "unfair" in who I give them to.
  953. >>
  954. >> Bitcoinia LP doesn't have the same luxury. To minimize liability, you should be as fair as possible with the legally available funds of the company. That probably means "pro-rata for all non-fraudulent claims".
  955. >>
  956. >> So I think the best solution is for me to do my thing outside the official process. By giving away 10k btc to people we know to be honest with perfect data, I'm making more customers happy. That's a good thing. But announcing that I'm doing that will make a lot of unlucky customers (who don't happen to know us) unhappy. That's a bad thing.
  957. >>
  958. >> So be fully transparent about the official process. But don't go out your way to make people mad about some unofficial donations that might make them upset.
  959. >>
  960. >> Make sense?
  961. >>
  962. >> On May 30, 2012, at 1:56 PM, Amir Taaki wrote:
  963. >>
  964. >>>> Also, while a certain amount of discussion is good, it'd be smart to
  965. >>> designate someone to have the final say so that decisive action can be
  966. >>> taken to move forward. Since he has the most first-hand knowledge of the data, I'd nominate Patrick.
  967. >>>
  968. >>> Me and Patrick agreed that I can be designated to be responsible for the payout process. I'm willing to do that to make sure this gets completed without everyone worrying excessively.
  969. >>>
  970. >>> I will though do my best to give full control to those who know best and have the greatest capacity to make this happen.
  971. >>>
  972. >>>
  973. >>>> Lastly, you should decide what details are appropriate to announce
  974. >>> publicly. The most politically correct statement might be "All
  975. >>> non-fraudulent claims will receive a pro-rata portion of the available
  976. >>> funds." If that's the case, it might make sense to have me true up the
  977. >>> fully trusted category using my own funds outside of the official
  978. >>> process.
  979. >>>
  980. >>> Once we agree, and the claims are locked then we will be totally transparent about everything. Being open and honest is the only way to do this responsibly. That way people can engage in the process and offer feedback to ensure a payout structure as fair as possible.
  981. >>>
  982. >>>
  983. >>>
  984. >>> ----- Original Message -----
  985. >>> From: Tihan Seale <>
  986. >>> To: Amir Taaki <zgenjix@yahoo.com>
  987. >>> Cc: Patrick Strateman <>; Zhou Tong <ryan@bitcoinica.com>; Donald Norman <>
  988. >>> Sent: Wednesday, May 30, 2012 6:07 PM
  989. >>> Subject: Re: Proposed claims process
  990. >>>
  991. >>> Also, while a certain amount of discussion is good, it'd be smart to designate someone to have the final say so that decisive action can be taken to move forward. Since he has the most first-hand knowledge of the data, I'd nominate Patrick.
  992. >>>
  993. >>> Lastly, you should decide what details are appropriate to announce publicly. The most politically correct statement might be "All non-fraudulent claims will receive a pro-rata portion of the available funds." If that's the case, it might make sense to have me true up the fully trusted category using my own funds outside of the official process.
  994. >>>
  995. >>> On May 30, 2012, at 8:40 AM, Tihan Seale wrote:
  996. >>>
  997. >>>> To me, it sounds like a mostly complete plan with 3+1=4? categories. To make sure it is in fact complete and everybody understands it, maybe someone could complete the following "MadLib".
  998. >>>>
  999. >>>> Claims will be split up into _____ (4?) categories. The categories are ____, _____, _____, _____. The objective test for each category  is _____, _____, _____, _____.  The % payout calculation for each category will be _____, _____, _____, _____. The payment schedule for each category will be _____, _____, _____, _____.
  1000. >>>>
  1001. >>>> I suspect he objective tests would include components of how much personal trust we have for the user, how much evidence we have to verify the amount,  the size of the claim, and the time of receipt (relative to the "no db" announcement).
  1002. >>>>
  1003. >>>> To help everybody contribute to sorting the claims into categories, I suggest adding a field that has the (4?) categories to the admin backend. This field is probably different than the one there now that deals strictly with accuracy.
  1004. >>>>
  1005. >>>> My only request is there be a category of personally trusted claims that get 100% of their funds back (eventually). If you determine that this is not appropriate then I would like to keep my personal bitcoins so that I can use them to "make whole" the people who I personally trust. I'm offering to extend that to people you guys also trust 100%, to the extent that is possible.
  1006. >>>>
  1007. >>>>
  1008. >>>> On May 30, 2012, at 3:34 AM, Amir Taaki wrote:
  1009. >>>>
  1010. >>>>> Putting people into 3 groups of personally-trusted, somewhat-trusted and neither. Those falling under somewhat-trusted get the benefit of the doubt but can still be rejected.
  1011. >>>>>
  1012. >>>>> Pro-rata is applied to somewhat-trusted and neither. Obvious fraudalent claims are rejected from the neither group.
  1013. >>>>>
  1014. >>>>> Personally-trusted are paid out immediately, followed by somewhat-trusted and then everyone else.
  1015. >>>>>
  1016. >>>>> The exact payout percentages may not be 100%. Although first I just want to see if you agree with what I've written above. Patrick favours paying 90% first to the personally-trusted people to give head-room (maybe he can comment further).
  1017. >>>>>
  1018. >>>>> Also I favour doing the personally-trusted people first but not all at once. We can take our time and make sure that we don't make big mistakes.
  1019. >>>>>
  1020. >>>>>
  1021. >>>>>
  1022. >>>>> ----- Original Message -----
  1023. >>>>> From: Tihan Seale <>
  1024. >>>>> To: Amir Taaki <zgenjix@yahoo.com>
  1025. >>>>> Cc: Patrick Strateman <>; Zhou Tong <ryan@bitcoinica.com>; Donald Norman <>
  1026. >>>>> Sent: Wednesday, May 30, 2012 2:13 AM
  1027. >>>>> Subject: Re: Proposed claims process
  1028. >>>>>
  1029. >>>>> My version of "Hybrid" contemplated putting people into 3 groups -- personally-trusted, fraudulent, or neither -- and paying them 100%,  0%, or pro-rata, respectively.
  1030. >>>>>
  1031. >>>>> Is that what you also mean by hybrid?
  1032. >>>>>
  1033. >>>>>
  1034. >>>>> On May 29, 2012, at 4:52 PM, Amir Taaki wrote:
  1035. >>>>>
  1036. >>>>>> OK, so me and Patrick think a hybrid method is a good one.
  1037. >>>>>>
  1038. >>>>>> That means that we pay people we trust immediately, followed by people we have a high certainty and then the stragglers.
  1039. >>>>>>
  1040. >>>>>> Tihan, just waiting for your confirmation. How does that sound? If you agree, then we can actually begin working on the implementation payout specifics.
  1041. >>>>>>
  1042. >>>>>>
  1043. >>>>>>
  1044. >>>>>> ----- Original Message -----
  1045. >>>>>> From: Tihan Seale <>
  1046. >>>>>> To: Amir Taaki <zgenjix@yahoo.com>
  1047. >>>>>> Cc: Patrick Strateman <>; Zhou Tong <ryan@bitcoinica.com>; Donald Norman <>
  1048. >>>>>> Sent: Monday, May 28, 2012 3:38 AM
  1049. >>>>>> Subject: Re: Proposed claims process
  1050. >>>>>>
  1051. >>>>>> The "would I cover the difference" test isn't meant to be applied in practice. (I'm not asking anyone to actually write a check.) It's just a mental guidepost to help us all apply the same standard.
  1052. >>>>>>
  1053. >>>>>> Trust is a very subjective thing that doesn't lend itself to blind taste test approach IMHO. (eg. There's people I've known a long time that I don't trust at all.)
  1054. >>>>>>
  1055. >>>>>> Sent from iPhone
  1056. >>>>>>
  1057. >>>>>> On May 27, 2012, at 4:53 PM, Amir Taaki <zgenjix@yahoo.com> wrote:
  1058. >>>>>>
  1059. >>>>>>>> For category 1) One of us, receiving this email, trusts the holder or
  1060. >>>>>>> the evidence enough that we would personally be willing to cover the
  1061. >>>>>>> difference if it turned out we're wrong.
  1062. >>>>>>>
  1063. >>>>>>> I have no savings of my own. Does that mean my recommendations are invalid?
  1064. >>>>>>>
  1065. >>>>>>> It's very hard to quantify the level of trust for what is qualitative data here. I propose separating our relationships to people in categories that we can objectively cross-rate for each other. This adds a finer granularity to cat 1)
  1066. >>>>>>>
  1067. >>>>>>> 1. Have you met person in real life?
  1068. >>>>>>> 2. If yes, number of meetings:
  1069. >>>>>>> 3. Duration of interaction online with said person (hours, approx.):
  1070. >>>>>>> 4. Duration of presence within the community (months, approx.):
  1071. >>>>>>>
  1072. >>>>>>> And so on. Then another person does a blind rating based off this information (names and other identifying info stripped out).
  1073. >>>>>>>
  1074. >>>>>>> Afterwards, that person can do a second pass with rating those names and then correlate both those scores. That will better help identify why this person is trustworthy.
  1075. >>>>>>>
  1076. >>>>>>>
  1077. >>>>>>>
  1078. >>>>>>> ----- Original Message -----
  1079. >>>>>>> From: Tihan Seale <>
  1080. >>>>>>> To: Amir Taaki <zgenjix@yahoo.com>
  1081. >>>>>>> Cc: Patrick Strateman <>; Zhou Tong <ryan@bitcoinica.com>; Donald Norman <>
  1082. >>>>>>> Sent: Sunday, May 27, 2012 9:28 PM
  1083. >>>>>>> Subject: Re: Proposed claims process
  1084. >>>>>>>
  1085. >>>>>>> If Hybrid is the way to go, then it would be nice if there were some objective criteria for defining claims as either:
  1086. >>>>>>>
  1087. >>>>>>> 1) trusted enough to receive 100%,
  1088. >>>>>>> 2) only enough to get their pro-rata or
  1089. >>>>>>> 3) distrusted enough to receive 0.
  1090. >>>>>>>
  1091. >>>>>>> What are these criteria?
  1092. >>>>>>>
  1093. >>>>>>> I propose :
  1094. >>>>>>>
  1095. >>>>>>> For category 1) One of us, receiving this email, trusts the holder or the evidence enough that we would personally be willing to cover the difference if it turned out we're wrong.
  1096. >>>>>>>
  1097. >>>>>>> For category 2) We don't have any reason to especially trust or distrust the holder/info.
  1098. >>>>>>>
  1099. >>>>>>> For category 3) We're so sure it's fraudulent that we're ready to be sued if we're wrong.
  1100. >>>>>>>
  1101. >>>>>>>
  1102. >>>>>>>
  1103. >>>>>>> On May 27, 2012, at 9:51 AM, Amir Taaki wrote:
  1104. >>>>>>>
  1105. >>>>>>>> Hybrid does sound good. The only addition I have to that is maybe doing something like paying back a full 40% of claims and then spreading the remaining 10% among the last 60% (with a promise of the next (1 - 1/6) * 100% being paid out later).
  1106. >>>>>>>>
  1107. >>>>>>>> Maybe this is slightly more complicated, but it will put people more at ease if they see regular small payments made out rather than prolonged inactivity. This is something I noticed with TradeHill who are gradually fully refunding people. Those at the end of the queue became quite vocal and impatient at the prospect of no payout occurring.
  1108. >>>>>>>>
  1109. >>>>>>>>
  1110. >>>>>>>> ________________________________
  1111. >>>>>>>> From: Tihan Seale <>
  1112. >>>>>>>> To: Patrick Strateman <>
  1113. >>>>>>>> Cc: Zhou Tong <ryan@bitcoinica.com>; Donald Norman <>; zgenjix@yahoo.com
  1114. >>>>>>>> Sent: Sunday, May 27, 2012 5:34 PM
  1115. >>>>>>>> Subject: Re: Proposed claims process
  1116. >>>>>>>>
  1117. >>>>>>>>
  1118. >>>>>>>> First of all, thank you for bringing the focus of the discussion back to where it's needed.
  1119. >>>>>>>>
  1120. >>>>>>>> My thoughts on the claims process...
  1121. >>>>>>>> As written, it sounds like those who submitted false claims prior to "immediately" will get at least 50%. Fraudster's who want in on the action and submit false claims afterward will get... also at least 50(?)%?
  1122. >>>>>>>>
  1123. >>>>>>>> There are fundamentally two different approaches to paying people back. At the extremes they look like:
  1124. >>>>>>>>
  1125. >>>>>>>> "Fully Trust based" -- we know you and trust you completely so you get everything back. Whatever is left over is divvied up among the people we don't trust to the degree we think we might.
  1126. >>>>>>>>
  1127. >>>>>>>> "Pure Pro Rata" -- we take all available funds and divvy it up evenly among all claims past and future until it's gone.
  1128. >>>>>>>>
  1129. >>>>>>>>
  1130. >>>>>>>> I think both extremes are bad. We need some sort of criteria so we're not paying fraudsters at the expense of honest depositors unchecked. And we need to balance that against the guy we've never heard of who just came back from vacation.
  1131. >>>>>>>>
  1132. >>>>>>>> Zhou proposed one set of criteria which leans heavily toward "Fully Trust Based". Patrick's proposal, as written, sounds much like "Pure Pro Rata".
  1133. >>>>>>>>
  1134. >>>>>>>> I would like to propose:
  1135. >>>>>>>>
  1136. >>>>>>>> "Hybrid" -- for those we absolutely know and trust, they get everything back. For those we're pretty positive are fraudsters, they get nothing. Everybody else get's pro-rata of what's left.
  1137. >>>>>>>>
  1138. >>>>>>>> I believe this could be implemented after paying out an immediate 50% of all claims (the one's received prior to genjix announcing the missing database). Announcing and paying people something soon would calm a lot of people down.
  1139. >>>>>>>>
  1140. >>>>>>>> Thoughts on Hybrid?
  1141. >>>>>>>>
  1142. >>>>>>>>
  1143. >>>>>>>>
  1144. >>>>>>>> On May 26, 2012, at 11:41 PM, Patrick Strateman wrote:
  1145. >>>>>>>>
  1146. >>>>>>>> Claims Process
  1147. >>>>>>>>> As many of you now know there is not a recent backup available.
  1148. >>>>>>>>>
  1149. >>>>>>>>>
  1150. >>>>>>>>> Our primary concern in the processing of claims is to be as fair to everybody effected as possible.
  1151. >>>>>>>>>
  1152. >>>>>>>>>
  1153. >>>>>>>>> This includes people who have not yet filed a claim as well as people who have not yet even heard there is a problem.
  1154. >>>>>>>>>
  1155. >>>>>>>>>
  1156. >>>>>>>>> The claims we have received are for more than there are assets available.
  1157. >>>>>>>>>
  1158. >>>>>>>>>
  1159. >>>>>>>>> Claims will be reviewed and compared to the information available.
  1160. >>>>>>>>>
  1161. >>>>>>>>>
  1162. >>>>>>>>> Half of accepted claims will be paid immediately.
  1163. >>>>>>>>>
  1164. >>>>>>>>>
  1165. >>>>>>>>> In one month all claims will be reviewed again and paid according to available funds.
  1166. >>>>>>
  1167. >>>>
  1168.  
  1169. Quote
  1170. Donald Monday, June 4, 2012 4:19 PM:
  1171. Hey,
  1172.  
  1173. I don't wanna email from the bitcoinica consult email bc for all I know tihan is spying on us there. He's still trying to pass it off and prey on you because he sees you're easy to prey on. I can't beleive you continued doing things without asking me. We had agreed on not doing but you continued to.
  1174.  
  1175. We should not be taking the offline wallet but giving him the database.
  1176.  
  1177. Quote
  1178.  
  1179. FROM:
  1180.  
  1181.         Tihan Seale  
  1182.  
  1183. TO:
  1184.  
  1185.         Patrick Strateman  
  1186.         Amir Taaki
  1187.         Donald Norman  
  1188.  
  1189. Message flagged
  1190. Wednesday, June 6, 2012 10:30 PM
  1191. Thank you.
  1192.  
  1193. The Companies office requests can still be handled in parallel and should be. This will protect you against personal liability for what has already occurred.  
  1194.  
  1195. Chris will be sending in the valid docs he has so that he can resign as director. Remaining directors can be added as the necessary docs become available until everybody is safe and sound.
  1196.  
  1197. Can I inform Chris that everyone will be doing this?
  1198.  
  1199.  
  1200. On Jun 6, 2012, at 1:18 PM, Patrick Strateman wrote:
  1201.  
  1202. > fair enough ill start payments tomorrow
  1203. > On Jun 6, 2012 12:52 PM, "Tihan Seale" <> wrote:
  1204. >
  1205. >     Your legal authorization to act is entirely valid based on the contracts. Furthermore you've already taken actions that would be inappropriate if you weren't authorized -- collecting customer data, taking exclusive control of the domain etc.
  1206. >
  1207. >     But let's put those issues aside for a moment.
  1208. >
  1209. >     Who will be upset if you act to process customer claims? The customers? Nope they want their money. Me? Nope, I want you to give the customers their money. The investors? Nope... you get the idea.
  1210. >
  1211. >     Now... Who might be upset if you refuse to process customer claims? Pretty much all of the above.
  1212. >
  1213. >     Does that help?
  1214. >
  1215. >
  1216. >     On Jun 6, 2012, at 12:39 PM, Patrick Strateman wrote:
  1217. >
  1218. >>     So the problem as I see it is this.  Despite everybodies best intentions bitcoinica consultancy ltd doesn't exist.
  1219. >>
  1220. >>     This leaves core credit ltd as the general partner and leaves me donald and amir as neither directors of the gp, employees of the gp, or consultants to the gp.
  1221. >>
  1222. >>     So as it stands we really do not have authority to act (even if it's what makes the most sense).
  1223. >>
  1224. >>     Being employees is out of the question and i have no idea about consultants and it seems like completing the paperwork for bitcoinica consultancy ltd would be just as difficult as changing the directors of core credit ltd.
  1225. >>
  1226. >>     For me to get a certified copy of my passport i either have to wait 2 weeks for the state government to get back to me or go out of state (i double checked it's illegal for a notary to certify a copy in california).
  1227. >>
  1228. >>     I dont know about donald and I read that amir has all his stuff ready and acceptable.
  1229. >>
  1230. >>     On 06/06/12 09:44, Tihan Seale wrote:
  1231. >>>     Can I make a politically incorrect suggestion?
  1232. >>>
  1233. >>>     You guys need to pick -one- person to make the decisions and that person needs to act without waiting for everyone else's permission. Others should be delegated tasks which help expedite the process.
  1234. >>>
  1235. >>>     You can't run a company by unanimous consent when you're on opposite continents and have a 1-hour daily window when everyone is awake.
  1236. >>>
  1237. >>>     Amir?
  1238. >>>
  1239. >>>     On Jun 6, 2012, at 9:37 AM, Donald Norman wrote:
  1240. >>>
  1241. >>>>     Patrick, I think is still asleep. I thought he already spoke about what we need. I'll put his attention to this when he wakes up. I haven't seen him online in 8+ hours so should be up soon
  1242. >>>>
  1243. >>>>     On Wed, Jun 6, 2012 at 6:08 PM, Tihan Seale <tihan@splashlab.com> wrote:
  1244. >>>>
  1245. >>>>         +1
  1246. >>>>
  1247. >>>>         I'll repeat my question. What exactly do you think you need to proceed?
  1248. >>>>
  1249. >>>>         It's not clear to me at all what the hold up is.
  1250. >>>>
  1251. >>>>         On Jun 6, 2012, at 9:00 AM, Amir Taaki wrote:
  1252. >>>>
  1253. >>>>         > Why can't we all say we all agree and just make the first payments already? Then we can sort out whatever else afterwards. I hate waiting on things for so long.
  1254. >>>>         > ________________________________
  1255. >>>>         > From: Tihan Seale <>
  1256. >>>>         > To: Amir Taaki <zgenjix@yahoo.com>
  1257. >>>>         > Cc: patrick; Donald Norman <>
  1258. >>>>         > Sent: Wednesday, June 6, 2012 5:29 PM
  1259. >>>>         > Subject: Re:
  1260. >>>>         >
  1261. >>>>         >
  1262. >>>>         > I forgot that "Incatatus" is Donald and not Amir.
  1263. >>>>         >
  1264. >>>>         > Let's get everybody on the same page.  What exactly do you think you need to proceed?
  1265. >>>>         >
  1266. >>>>         >
  1267. >>>>         >
  1268. >>>>         > On Jun 6, 2012, at 8:21 AM, Tihan Seale wrote:
  1269. >>>>         >
  1270. >>>>         > What???
  1271. >>>>         >>
  1272. >>>>         >>
  1273. >>>>         >>
  1274. >>>>         >> In case you truly believe what you told X, be very clear that I consider you to have full legal authority (and obligation) to process claims. In fact you are only ones legally allowed to do this.
  1275. >>>>         >>
  1276. >>>>         >>
  1277. >>>>         >> What exactly are you waiting on?
  1278. >>>>         >>
  1279. >>>>         >>
  1280. >>>>         >> This needs to get cleared up now.
  1281. >>>>         >
  1282. >>>>
  1283. >>>>
  1284. >>>
  1285. >>
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