back to article Bitcoinica sued for $460,000 by 'out-of-pocket' punters

The operators of a website that earlier this year reported that a hacker had stolen units of virtual currency worth hundreds of thousands of pounds are being sued by four users that claim to be owed more than $460,000. According to documents submitted to a US court, four users of the Bitcoinica website have sued those involved …

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Anonymous Coward

Caveat emptor

Who in their right mind would buy monopoly money that actually only existed in a virtual world.

caveat emptor you fools.

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FAIL

Re: Caveat emptor

If only they had put their wealth in a currency backed by the gold standard!

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Re: Caveat emptor

The argument in favour of bitcoins appears to run as follows:

"Fiat currency is a massive ponzi scheme backed by inadequate collateral and weak ineffective regulation. The answer to this problem is to put your money in a massive ponzi scheme backed by absolutely zero collateral and no regulation whatsoever."

I know the bitcoin astroturfers will be furiously hitting the red arrow a few pixels away from this comment, but who in their right mind would trust even a single Zimbabwean Dollar to an outfit that has a domain registered with a proxy owner, no address on their website and is not registered with a Financial Services Authority or similar anywhere in the world?

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Anonymous Coward

BITCOINICA

Run by three teenagers from a bedroom on a 5 year old laptop with a 6 year old copy of Norton installed on it hat had not been updated for 5 years.

Money placed into the scheme used to buy days out at Disney World, ice creams and loads of comics.

Punters sue Bitcoinica and find that the coffers are empty and the 'directors' are three 14 year olds being given their tea by their mom.

Might as well be, they'll not get their money back anyway.

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Boffin

Re: Caveat emptor

Bitcoins : for when you absolutely, positively have to piss money away into the aether. In many ways its the ideal analogy for unbacked currency; you could use it as a model to explain to kids why governments have deficits and banks lend more than their assets and the whole stock market doesn't just disintegrate when someone says facebook is worth a billionty dollars.

but there the analogy ends. real currency exists in the real world. its backed by the markets; not just the existence of currency exchanges and governments, but that starbucks will take your dollars, euros, and yen without so much as a blink. Anyone who says they have assets of half a million dollars in bitcoins knows that what they really have is a promise of half a million if they dont destabilise the market : by doing something silly like attempting to get half a million dollars out of it. Its tulip bulbs all over again. A million tulip bulbs! Im rich enough to buy the earth... unless I flood the market with a million bulbs. huh. confusing. illiquidity in the market, including the lack of large transfers is the only thing propping it up, along with the confidence trick of lawsuits like this claiming that some dodgy brokerage or bank owes them big money. It doesnt. It owes them bitcoins.

I dont get why these people dont just invest in the stock market. Its not difficult to figure out where trends are going. Read the FT. Read New Scientist. invest all your money in tantalum for 5 years. ta da. Sure, you're being a shitbag futures investor inherently driving up the cost of a commodity on everyone elses dime, but at least it makes sense.

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Anonymous Coward

Re: Caveat emptor

"who in their right mind would trust even a single Zimbabwean Dollar..."

The kind of knobs who try to buy drugs on the internet.

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Re: Caveat emptor

"If only they had put their wealth in a currency backed by the gold standard!"

At least that would protect people's investment to some extent. Even a bold faced scam like liberty dollars used gold and silver to produce its coins so investors were taken for a ride but their exposure was limited.

Compare and contrast to bitcoin where the price goes up and then plunges like a roller coaster as the boosters exit on favourable terms leaving others holding the bag. It's just one big scam.

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Anonymous Coward

Re: Caveat emptor

Funny, the £10 note in pocket, doesn't actually exist.

All it says it that it promises to give the bearer the sum of £10,that all. A promise.

Still if you choose to use wild west currency, run buy a bunch of people with little, to no regulation, who just use it for a means of gambling then use Bitcoin, otherwise use proper banks.....ahh ok, right, yes you got me there.

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Printing money

> being sued by four users that claim to be owed more than $460,000.

Do you thing they'd accept BTCs instead of dollars for the settlement payout?

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Trollface

Re: Printing money

These gullible twonks would probably accept these magic beans I've found in my desk.

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Anonymous Coward

Re: Printing money

"Do you thing they'd accept BTCs instead of dollars for the settlement payout?"

Like the child on "Jim'll fix it" years ago who wanted to see what happened if they took a pound note to the Governor of the Bank of England and asked him to pay out the sum of one pound as per promise on the bank note. They got a short talk on the history of bank notes, how once it was linked to gold but wasn't any more and were handed back a crisp new one pound note in exchange

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Anonymous Coward

Re: Printing money

I don't suppose the four users are Barclays, Lloyds, RBS and HSBC?

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Re: Printing money

Probably, why do you ask?

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This post has been deleted by its author

Good grief

"Bitcoinica has remained closed to trading whilst "the transitional process" for upgrading the exchange "to a professional level of security" is completed."

Head spinning. What did they have before if not "a professional level of security"? And how on earth did they think they'd operate without it?

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I read an article about Bitcoins and the fact that one guy had invested all his life savings in Bitcoins.

My immediate thought was 'what an idiot'.

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When I first moved stateside I was amazed by the number of people / friends / coworkers / relatives attempting to sell me and each other what amounted to MLM or Ponzi schemes. They were utterly, startlingly fricking obvious. People were paying thousands of dollars to 'get in on the ground floor'. At first I thought it was a lack of respect, they just didn't care about other people but as I talked to them I realized they genuinely believed they and their friends would end up richer than god.

It is easy to just ridicule and attack these folks, I gently remind some of them of their attempts to get me to invest 10k in a web conferencing software scheme which was basically netmeeting with a skin. However, America got wealthy by taking big risks and having lots of oppertunity to win. It's in their blood and everyone wants a shot. It's not so much a lack of intelligence as the combined historical evidence and a lack of specialized knowledge (most easy win money oppertunities have gone long ago) outweighing caution.

Personally I wouldn't put more then a couple of dollars into something like bitcoins, and even then I'd need a hell of a good reason. Many of us see warning signs, some folks see oppertunity. Maybe at some point they will luck out and make a fortune but these days wipeouts are far more likely.

Some folks hunt out 'the next big thing', some will be ostrich meat farms and some will be future intels or googles. Whilst I can't blame folks for taking risks as thats where the big rewards are, I do wish they would slow down just a little and do due diligence as big failures are there as well and they outnumber rewards massively.

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Just because the US has a entrepreneurial streak does not excuse would-be-entrepreneurs who check their brains in at the door.

Any business which pretends to sell goods but where most of the income is derived from recruiting friends & family as a "downline", or selling training / motivational materials, or where the goods are exorbitantly expensive or of dubious value is almost certainly a scam. It's not hard to find hundreds of websites run by people suckered into these schemes selling vitamins, herbal drinks, diet pills, cleaning products, makeup and other junk.

Americans should know this better than anyone because most of the MLM companies operate from there, skirting the law as closely as they can. They might be "legal" but just barely and it's not hard to find numerous pyramid schemes, ponzis, matrix schemes and MLMs which aren't.

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I don't excuse them for a second, and those starting such schemes usually are crooks. Most of these wonderful investment oppertunities are absolutely scams. Hence I haven't ever invested in any of them. When I have made investment it has been in companies like nvidia, amd. skb etc, companies where I know the market reasonably well. I've made some nice change from that, not exactly enough to retire but I didn't get greedy. If there isn't an oppertunity I don't try and create one. Others are less cautious.

The reason most MLM companies operate there is because Americans seem not to know better. I was just attempting to suggest, politely, a reason for their optimism.

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I don't get it

Shouldn't they be suing for damages valued in bitcoins? Surely its not because they have zero faith in the currency and were only involved in this glorified ponzi with the goal of exiting with dollars.

And why on earth would they even allow substantial amounts of bitcoins to even rest with a website when there have been a string of similar attacks. These bitcoin exchanges are generally mickey mouse operations, with no government guarantees and often skirting the laws themselves. If they have to be used at all it should be in a transient way.

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Lol :) Msut try and save a link to these comments so In 7 years I can link it with this article:

http://www.thedailybeast.com/newsweek/1995/02/26/the-internet-bah.html

Your supposed to be security pros yet you dont know a secure system looks like and how much that is worth? El-reg has really gone down hill.

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WTF?

ROFL

Have you read that article recently? All of the things it predicts will never happen have happened, the search failings it notes are long fixed and best of all it now ends with an invite to 'Get Newsweek on your iPad'.

1995 was a long time ago in Internet years.

Back to the topic though, Bitcoins, lol, fools and their money etc.

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Bronze badge

Well they havent lost anything really,they started out with a virtual currency now thay have virtually nothing to show for it.Id say thats a good 50% and worth at least a ruble of anyones currency.

Funny really as several people on a forum I use have recently been trying to say how safe and stable the BitCoin market is.......There but for the lack of funds go I

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Facepalm

When you read about Bitcoin swindles anyone else think of the scene in the Simpons where Snake rushes into the internet cafe? He shoves a floppy in the PC Homer is on doing his online banking, Snake exclaims "Download to Pappa!" and runs out with all Homer's money!

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You know the old saying

A fool and his money are some party!

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Facepalm

Whew!

I was just about to exchange all my Quatloos for Bitcoins, good thing I saw this!

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Itchy And Scratchy Money is the same

Just like real money, but more fun...

And completely worthless on the open market.

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