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Hacked BitCoin Exchange Sued By Customers
judgecorp writes "Bitcoinica, an exchange for the BitCoin virtual currency, is being sued by former customers, after it was hacked. Thieves stole around $180,000 worth of BitCoins in two attacks. The site is now closed, and customers are suing to get their money back."
But Bitcoins are secure and stuff! Not like that stoopid fiat currency.
why would anyone willing to put their life saving in something that is not even FDIC insured?
I wish them the best of luck, they will need it!
That is a problem a virtual currency not official backed by any government, bank, or mega-corp, and is not legally tied to any hard valued currency, fungible commodity, or hard product.
Maybe Bitcoinica will offer a store credit good for their own non-transferable virtual currency?
So how are these bit-coin exchanges different from those virtual second-life "banks"?
Did people truly expect a different result?
What is the definition of insanity?
Oh well, next ponzi scheme pleaz.
(subject says it all)
+/- $180,000.
Other estimates calculate the loss at "ham sandwich and a glass of milk".
Wearing pants should always be optional.
By every other tech site on the web days ago.
For me, it is far better to grasp the Universe as it really is than to persist in delusion
I still don't understand the worth of Bitcoins and probably never will.
The only catch is that the settlement will be paid out in Trepidicoins.
10 PRINT CHR$(205.5+RND(1)); : GOTO 10
I guess if you're going to claim damages for a virtual goods, the inflation phase of a bubble is as good a time as any.
Wouldn't do to wait too long either, or you'll get your damages in shoe strings and bubble gum.
I note too the hilarious claim in TFA that "BitCoins have generally hovered at a price of around $14 to $17".
Bitcoins have generally hovered around zilch, except for a brief investment bubble around last July, after which they have hovered around $5 until a recent and presumably temporary uptake.
I am thinking of purchasing some bitcoins to travel the turnpike called: Silk Road. I think I can keep that many bitcoins safe in my own AES encrypted storage.
Bullshit. $180,000? Dream on.
Here's the thing: Bitcoins are nothing and nothing is worth exactly that.
Bitcoin is a pyramid scheme, plane and simple.
If you want news from today, you have to come back tomorrow.
And I thought you people figured something out after the last related article. All the idiots are back ready to talk about things they don't understand.
The Bitcoin infrastructure might be secured, it's just that the weakest link is in the server
When the server is hacked, and all the info (Bitcoin is made up of encrypted information, please correct me if I am wrong) contained within it is stolen, it's as good as the Bitcoins were stolen and can be used elsewhere
Therefore, the one crucial thing for the Bitcoin infrastructure designers to do is to find ways to shore up the security of the Bitcoin servers, and make it as difficult as possible (it's impossible to make _any_ server 100% guarantee secured, I know) to be hacked
Muchas Gracias, Señor Edward Snowden !
Bullshit. $180,000? Dream on.
Here's the thing: Bitcoins are nothing and nothing is worth exactly that.
Bitcoin is a pyramid scheme, plane and simple.
Ok, you made your point. But these former customers have a right to line up and demand a solid answer to their complaints.
My userid is prime!
I never thought this would happen.
Who wants to bet that the SEC will stomp in and claim that bitcoins are an illegal security?
Back when this happened there was a sizable number of people claiming that this was merely a small fraction of Bitcoinica's volume and how it's not a big deal at all, etc. Care to explain why they are now closed and being sued?
Analogies don't equal equalities, they are merely somewhat analogous.
Perfectly reasonable. After all, you can get USD12 for a bitcoin at a number of places today. Although not all funds lost were in bitcoins, however, some were in fiat balances in their accounts; and forcing any loosing defendants to buy bitcoins to pay plaintiffs who might prefer USD anyway seems silly to me.
Prediction for end of Universe #42: Fencepost error in Quantum_bogosort.cpp
Gold stored in a bank is the only money you can count on.
So, what, our entire economic system is a mistake? Because there's not enough gold to keep the world economy going.
BTW, it's simply not true that gold never loses value except through increased supplies. Look at the price of gold in the markets — it goes up and down all the time. Fluctuations with respect to fiat currency may not impress you, but these shifts represent real changes in gold's ability to be exchanged for stuff you really need.
Yeah, gold backed currency is more resistant to inflation than fiat currency. But when the economy expands and the money supply doesn't you end up with deflation. Where inflation erodes your savings, deflation erodes your ability to sell stuff, because everybody's waiting for it to get even cheaper. If I have to chose between the two, I'll choose inflation.
Note that on this so-called "exchange" you could never actually convert Bitcoins to any other currency. Sure you could "sell" your coins, but you had to buy new Bitcoins to ever get your money out. Mainly Bitconica was used by people trying to short Bitcoins or dollars. This kind of arrangement is known as a bucket shop and has been illegal for a very long time for very good reasons. Namely the people running the site can always manipulate the exchange rates to clean you out, and therefor pocket all your money.
Of course, the 17 year old kid running the whole thing always said that trades went out to real exchanges, but the volume on other exchanges never was anything near what was required for that to be plausible. Meanwhile the whole time people were "zoutong'd" whenever the alleged exchange rate went against their bets.
The whole thing is shady as fuck, although to the credit of Bitcoin people, a lot were asking questions about the thing right from day one, see here and here. (the latter is one of Bitcoins main developers)
I can't believe that much money was stolen. It further sets back BitCoin from ever becoming mainstream.
and nobody cared because all they could do was use the BTC's to buy drugs off Silkroads or donate to the FSF..
Exchanges are a weak point, I'll grant you. They are all new companies who have not built up much trust. But they are a necessary evil at present. At some time the bitcoin economy will grow to the point that anyone with bitcoins can use them to purchase products, and anyone who needs them can get paid for services with them, and the exchanges importance will shrink. And with bitcoin's deflationary tendency, those who have them will have an incentive to keep them in bitcoin, and not sell to a fiat.
Bitcoin itself: Its future is fixed by the whim of the internet, and its wish for a open e-cash. Even if bitcoin itself has a limited life, I don't see cryto-currencies ever disappearing, and I do see any replacement growing out of the bitcoin ecosystem, not from outside it.
Prediction for end of Universe #42: Fencepost error in Quantum_bogosort.cpp
And if the SEC did, I don't see the Internet taking much notice of them!
Prediction for end of Universe #42: Fencepost error in Quantum_bogosort.cpp
Ever heard of the term "bucket shop"? That's exactly how Bitconica functioned. Sure you could sell, or sell on margin, your Bitcoins for imaginary US dollars, but you couldn't never withdraw or deposit anything but Bitcoins. What went on was people would use the margin given to them by Bitconica to speculate on the price of Bitcoin, then they'd conveniently lose their whole positions whenever the market went against them, which is quite easy to do if you happen to have everyones Bitcoins to manipulate the market with. This happened so often that a new term was invented for it: zhou tonged, named in honor of the 17 year old kid running the site. (seriously, 17!) Hell, even in the Bitcoin community lots of people were calling them out on this right from the start, for instance here is a post by one of the main devs, obviously concerned about all the other scams that of course have cropped up using bitcoin. Speaking of, wait'll you see the press when the pyramid scheme known as "Bitcoin Savings and Trust" fails, as it of course will given it pays out %3400 a year.
Personally I'd suggest you use your Bitcoins for something reputable, like buying pot, getting cash out of Argentina or donating to wikileaks. All this investment non-sense, as opposed to just using the currency for moving value around digitally, is getting out of hand.
While I agree with you that the victims on this case should share a portion of the blame, we need to understand that not all the bitcoin users are super tech-savvy
Sure, compare with the Joe Sixpacks on the back alleys the average bitcoin users do comprehend more tech terms, but that does not make them super-tech-savvy - I bet that there _are_ users who do not know which database engine a particular site they visit is using
Muchas Gracias, Señor Edward Snowden !
If I had been one of the victims, I would have sued the site directly in Singapore court. A small tax haven and tax shelter like Singapore is much more likely to want to encourage this type of industry and therefore encourage straight dealings in those types of transactions.
Dear Sir,
I do not know where you get the notion that Singapore being a tax heaven
Before anybody else gets hurt, I need to say that Singapore is NO tax heaven.
Never was, never is, and the way it looks, not likely to be in the future, either
Muchas Gracias, Señor Edward Snowden !
and you are assuming other people care enough about the bitcoin ponzi scheme to have urgent news on the topic
intellectual property law is philosophically incoherent. it is your moral duty to ignore it or sabotage it
their gold lust started a snowballing chain of inquiring efforts that eventually led through the centuries to the accumulation of enough knowledge to do this:
http://en.wikipedia.org/wiki/Synthesis_of_precious_metals#Gold
of course, it's not financially worth the effort. but we have realized the dreams of the alchemists
intellectual property law is philosophically incoherent. it is your moral duty to ignore it or sabotage it
I'm having a really tough time following this logic?
You say a gold-backed currency would be a bad thing because the standard deflates (because the demand for money far outpaces the supply).
Ok, except when you look at the whole point of having some sort of standardized currency in the first place, isn't it really nothing more than a symbol of one's labor?
It seems to me the assigned value for a certain amount of it is rather irrelevant, as long as it's agreed upon by all parties. If the demand outstrips the supply so badly, then perhaps people will simply deal in smaller quantities? Who says a coin has to be pure gold, for example? What if it's made of other materials of very little value, with a small (but verifiable) amount of gold included with it? Surely, there's enough gold to go around if we reach the stage where people aren't typically storing whole bars of the stuff, but rather, measurable amount of gold dust (or as I said previously, that same small amount mixed in with another material to make a convenient to handle coin)?
Not only that, but silver has long acted as gold's lesser valued twin. So when dealing in smaller amounts of money, I don't see why silver couldn't work in tandem with gold as a currency?
By contrast, the current system of printing up paper money means we put all the control over its worth in the hands of Federal Reserve bankers and the Federal govt. It's obvious to me why the people in power advocate such a system. They get to pull the strings whenever they like, printing more or less currency to purposely create more demand or flood the supply. But IMO, something as basic as a universally recognized symbol of the work we do shouldn't have ANYONE manipulating it subjectively at that low a level. If the Fed wants to raise or lower interest rates on loans, fine. That's one thing. But I like knowing that only a free marketplace of buyers, sellers, and investors determined the worth of a given piece of currency.
IMO, currency has its value because people put trust in it. There's a collective agreement going on that it's assigned a value that's universally recognized.
There lies the problem with paper currency.... You can't just come up with billions or trillions of dollars worth of gold out of thin air. The world's supply is essentially fixed. When your symbol of wealth is simply paper printed by some central authority or body, you have to entrust its "caretaking" to that central authority.
Especially in more recent times, it's clear that authority is abusing its power, making huge loans to other nations when they likely don't even posses the amount of money required to extend the loan in the first place.... printing up more paper whenever they feel it would "help the economy" to do so (vs. letting things play out naturally), etc. People still have SOME trust in the currency right now, but much of that trust is probably only out of ignorance of the extent to which it's manipulated, and what that could mean for everyone. All in all, the trust is eroding.....
Actually, the money spent on the lawsuit would be better spent on that investment scheme from those guys from Nigeria. The same goes for any money spent on getting Bitcoins.
It has been a long time since this happened. If the company had insurance the companies are dragging their feet paying the claim and should be criminally prosecuted for fraud.
If there was no insurance, the prospect of getting blood out of a turnip is slim unless personal assets can be identified buy civil cases are notoriously expensive, long and unsatisfactory to all but the lawyers themselves. The system is broken.
JJ
Just about every "Bitcoin exchange" has had some huge problem. Either they take the money and run, or they get broken into and lose the money.
Tradehill sounded like the most legitimate of the exchanges. Then, in February 2012, Tradehill shut down with no notice, after a big chargeback from Dwolla. They did refund the money, though.
Bitcoinica collapsed and lost customer funds. There was the Bruce Wagner fiasco. Below that level, there were about a dozen other "exchanges" and "online wallets" that lost customer funds.
Mt. Gox is almost the only exchange that hasn't yet lost customer funds or collapsed. Even there, one wonders. They're vague about who's really behind the organization. Mt. Gox started as "Magic, the Gathering Online Exchange."
Comment removed based on user account deletion
Most of the people here are confusing security of the bitcoin protocol with security of some server which provides bitcoin services. Bitcoin hasn't been hacked. Bitcoinica was. That's a big difference. If you store the wallet offline or encrypted on a virus free computer, there is no way you can get hacked. Where are all the people on slashdot that used to provide excelent feedback? I guess I have to move on as well.
That's silly.
There is enough of gold, it's not a question of absolute quantity, it's the question of valuation in your preferred currency.
Gold used to be at 19 USD per ounce 100 years back, before the Fed was created. US gov't set the rate at 35 for a long time, after it stole the gold from the people. In 1971 the link was broken and price in USD went up to over 800 per ounce until 1981, when Paul Volcker smashed inflation with 21.5% interest rates.
For the last decade gold has been in the 'bull market' in US dollars (and in other currencies) specifically because of inflation.
1615USD per ounce today is the valuation. At 100,000 per ounce the same amount of gold gets many more US dollars.
You can't handle the truth.
I guess this proves bitcoin's libertarian credentials, you've got about as much chance of getting stolen bitcoins back as you do getting stolen gold that you hid under your bed back...
In 1991 the Philosopher's Stone became the target of the Dark Wizard Lord Voldemort in his quest for immortality. Voldemort used a human host, Quirinus Quirrell, to seek it out at Hogwarts School of Witchcraft and Wizardry, where it was being held. The stone was originally stored at Gringotts Wizarding Bank in Vault 713. However, possibly suspecting a threat, Albus Dumbledore had Rubeus Hagrid retreive the stone the very morning of an attempted robbery.
http://harrypotter.wikia.com/wiki/Philosopher's_Stone
intellectual property law is philosophically incoherent. it is your moral duty to ignore it or sabotage it
Learn history, gold and silver used to be the money of USA when USA was the productive country. Same with the Roman Republic, of-course when they started inflating the value of their coins (clipping and diluting with non-precious metals), they too began the destruction of their economy.
you did not provide an example of a country that is currently using gold or silver as the basis for their currency. comparing the modern us to the us of 100 years ago, or the romans of many more centuries ago, makes no sense. is there, or is there not, a country currently using gold, silver, or any other precious material as the basis of their currency value? it would appear the answer to that is no.
which, of course, makes your argument pointless.
The owner and site creator, Zhou Tong, robbed the site.
All the evidence points to the string of robberies being an inside job and this guy was caught handling the last 40k USD that was robbed from the site.
why did you start a new account? you can post just as often as anyone else here, and you still have tons of like-minded adherents here to your same religion. this is obviously your account, and you do yourself no favors to open another account just to parrot the same mantras.
First they go:
"Fuck the, Government, we're gonna use this virtual Monopoly money so you can't control us!"
They they go:
"Please help us, Government, they took our virtual Monopoly money that you're not supposed to control and we demand to get paid in actual money!"
Makes sense.
And if they win, will get paid in bitcoins...
I follow that logic, except if you don't have any standard universally accepted currency EXCEPT specific precious metals (like gold), hoarding would prove difficult for most people. (If you have to decide between trying to stock up on gold or pay your rent, or buy groceries? It seems to me most people will give in and spend some of their saved up gold. The fact it would increase in value by hanging onto it isn't really any different than other forms of investment, IMO. If I bought Apple stock at pretty much any point in time in the last 10 years or so and just "hoarded" it, I'd have generated a lot of wealth too. But I don't own any stock because although I had pretty high confidence doing so would be profitable, I couldn't spare the money to purchase it after paying for all the necessities.)
The "elite" in positions to hoard significant quantities (perhaps oil barons, for example?) would still be taking chances, IMO. If they succeeded in making gold rare enough to run its price way up, people would lean more heavily on alternative precious metals like silver, platinum, or whatever else was in circulation. That could, in turn, make its price fall back down again -- correct?