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May 30th, 2015
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  1. I tried hard to stay out of the public dispute between OKCoin and Roger Ver, hoping they would resolve themselves, over a contract relatively small in size.
  3. I know anything I add publicly simply throws more gas on the fire, which is not helpful for resolving the dispute. I have also always refrained from saying anything bad about my previous employer. But the situation has left me no choice but to make a public statement.
  5. Gentleman’s Agreement
  7. I made the mistake of using a simple gentleman’s agreement as the contract. Roger and I are friends. We have enough respect and trust for each other that we both thought a simple gentleman’s agreement would suffice. I did not expect OKCoin will delay or default on payments of $10k in size. For this I apologize. I also did not expect OKCoin would not pay my salary for the time I spent there.
  9. The Deal
  11. I personally still think it is a good deal as the site attracts 2500 unique new visitors each day, mostly from users googling “bitcoin”. The $10k per month is far cheaper than running a Google Adword Campaigne to the same effect.
  13. When I resigned in Feb, I asked strongly to Star Xu for me to take over the contract as is, as a contract I would execute on my own, separate from OKCoin. Star refused. Another OKCoin partner was present at this discussion and can confirm this.
  15. OKCoin internally planned to charge $12,000/month for two top ad spots, $8000/month for 6 middle position spots, and a number of $4000/month ad spots below the first scroll. These numbers were given by Star Xu himself, in a chat group. A few ex-employees can confirm this. Also, to my disagreement, a number of potential sponsors were turned away because they wish to pay via a PPC model, instead of the monthly model.
  17. I signed version 7 of the contract with Roger. It was sent via email with my PGP signature. I do not recall a version 8.
  19. With either version of the contract, OKCoin is seriously violating its obligations.
  21. Ben McGinnes
  23. Ben’s analysis seems illogical at best. He concluded that “document F [version 8] was either created with an entirely different software package or modified after the fact.” Doesn’t this only further prove it is unlikely a document created by me?
  25. Ben also concluded because he could not change the date of a PDF without leaving a trail, so, it’s impossible. As Vitalik Buterin and J. Maurice both quickly point out.
  29. One simply has to change the system date on a machine to create a PDF document with the said date.
  31. The fact that OKCoin paid $20,000 USD for this “analysis” demonstrates the level of quality in their “proof” or “evidence”. It may also show a sign of desperation and/or stupidity. I am not sure which.
  33. QQ Chat Logs
  35. It is unclear to me how this video was generated or notarized, or if it is notarized at all. A few possibilities come to mind. 1. It’s a fake / edited video. 2. The notarization process was flawed, or a “bounty” was applied. Star Xu publicly stated OKCoin “spent” more than 100,000 RMB on this notarization process. 3. I once gave my QQ password to an employee at OKCoin, He Keren何可人 (Sorry to drag you into this). She wanted to use my QQ account to access the list of people in a QQ chat group. The group’s name is “peace restaurant” by literal translation (和平饭店). The group was said to have big traders, and I happened to be the only one at OKCoin allowed into that group. Now, I have spoken with Keren and she reassured me she only used my account that once. I trust her, and think she would not intentionally give away my password. However, it is possible that my QQ password may have leaked through this incident unintentionally. 4. My QQ account was hacked in another way. I don’t use QQ often. 5. Another reason that I don't know yet.
  37. Having a piece of evidence notarized does not automatically win a case. The true validity and influence of the evidence will be determined in a court hearing.
  39. Signatures
  41. I now know that OKCoin have used my physical signature to conduct multiple bank transfers from bank accounts, after I left the company, and without my knowledge. Verifying this is a simple matter of confirming with the bank. And a lawyer is in process of doing just that.
  43. If they can fake my signature with the bank, then how hard would it be to fake my physical signature onto a document?
  45. I have been using PGP to cryptographically sign my emails since 1998. As a “leading” bitcoin company, OKCoin should know cryptographic evidence is impossible to fake. So far, they have not been able to produce any cryptographic evidence.
  47. The Lawyer?
  49. Verifying a lawyer is far simpler than going through the trouble of notarizing QQ chat logs. Why was OKCoin so reluctant to provide contact details for Li Yajun, or let Daniel talk to him in Chinese, even now, whiling publicly claiming to have paid over 100,000 RMB to notarize QQ chat logs?
  51. If OKCoin lied about their lawyer, would they hesitate to forge a document? We will let a court decide that.
  53. Motives
  55. Why on earth would I forge the contract? What benefit is there for me? As Star Xu has openly disclosed my salary, I was making more than $20,000 USD per month in salary (plus double digit equity options). What incentives do I have, to forge a contract valued at $10k per month?
  57. OKCoin, however, have repeatedly shown they want to cancel or modify the contract throughout the email transcript, going as far as claiming OKCoin does not exist.
  59. This post explains the inconsistencies from OKCoin quite well.[2]
  61. Full Transparency
  63. I have suggested multiple times to settle this matter as professionals privately or in court. But OKCoin insisted on displaying this whole dispute publicly. So let’s go full transparency then.
  65. As much as it hurts my reputation to disclose these, I feel the community has a need to know. Again my apologies, to any former colleagues who are now dragged into this.
  67. Bots
  69. I can confirm OKCoin runs bots on their exchanges, under instructions from Star Xu. These bots are managed by Chen (business and operations), Yu (programming), Wang (database admin, “funding”). Many employees and ex-employees of OKCoin are aware of these bots. I will not name them all here.
  71. Fake Volumes
  73. I can confirm some of the above bots are designed to pump up volumes. During certain periods, these bots have also been used in a manner to create orders that will only trade against themselves, not with user orders. This mode of operations was strongly resisted by even Chen and Liu (programming, matching engine), but Star Xu insisted on executing it.
  75. Fake Proof-of-Reserve
  77. I can confirm OKCoin removed a number of accounts (used by OKCoin bots) to pass the Proof-of-Reserve audit in Aug 2014. In essence, these bots trade on fractional (or fictional) reserves. Stephan Thomas was lied to during the audit. This is an unfortunate limitation of the proof-of-reserves method.
  79. As a side note, Stephan Thomas specifically did not want any compensation for his audit efforts. Before the audit, OKCoin offered to make a donation in his name to a charity of his choice. He named a charity. After the audit was carried out, OKCoin never made that donation. Zane is aware of this. In fact, Zane followed up with Star several times after the fact, Star refused.
  81. Cold Wallet Security
  83. Up until the time of my resignation, Star alone holds the private key to the OKCoin code wallet. The backup of the private keys were held by Star’s wife and mother, both of whom are non-technical. Such was the state of OKCoin’s cold wallet security. I have insisted many times to switch to a multi-sig solution. Star said yes, but always delayed the task.
  85. OKCoin have published a post for cold wallet security after I left, still not using multi-sig. I cannot comment on how much was actually implemented or not.
  87. Employees are Encouraged to Trade
  89. Star Xu openly encourage employees to trade on its own exchange. The goal is to “learn the product”. This is a known fact in OKCoin, and there are easily more than a dozen employees who can confirm this.
  91. Opaque Financials
  93. As the 2nd largest individual shareholder in the company at the time, I was never allowed to see a bank statement, even though my name is associated with several bank accounts of the company. In Jan, I asked strongly to see the bank statement where the VC investment money transfer was received, I was denied. I left shortly afterwards.
  95. As many were curious before, this is the meaning of “different directions”. I could go on for a while. But will stop here. I feel sad we had to come to this.
  97. Let me state clearly, most of the employees at OKCoin are very very good people. They are simply following orders. Many of them have fought back on many occasions, to no avail. Many of them have left the company.
  99. Lastly, I want to add that one bad apple does not spoil the bunch. OKCoin is not representative of other Chinese or bitcoin companies. It is unfortunate that OKCoin’s unprofessional conduct is damaging reputation of other Chinese companies. Please do not generalize. This is a not a “culture difference”. I have had the pleasure to work with a large number of great bitcoin (and other) companies in China.
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