Recent OKC Temper Tantrum Makes Researcher $20k Richer

The last thing you want to do when it’s really nice outside is sit and read through/analyze documents. Even worse, is when you finish, and realize you just wasted hours of your life that you will never get back. If you haven’t guessed, yes… this is related to OK Coin.

Today, they took their turn in evidence presentation to the Bitcoin community and general public. In this Reddit post, the CEO (Star) gave his arguments, and side of the story regarding the document forgery. Pastebin here in case that is deleted. As expected, none of the other pressing issues the community has been hounding OKC about were even remotely addressed. Shitco.in has our own questions for OKC, they were outlined in this post.

As part of their evidence, OKC posted the following video:

Almost as if their goal was for this to be the focus of the post, the link and “subtitles” (Guys, you REALLY have to start learning proper English. Maybe, “walk through” would be more fitting.) take up a full 1/3 of the Reddit post. Most ADD Redditors probably stopped there. To anyone who doesn’t know Chinese, the video is pretty much worthless because you have to take their word for what is going on. They move so fucking fast through everything, and it looks like they used a potato to record it. Yes, we paused the video a million times to see what as going on, but if you are presenting “evidence”, it should be much more user friendly. The conclusion that they want us to draw, is that a former employee (CZ) is the culprit.

After this, we have a sliver of the report which was written by Ben McGinnes. Again here, we have to analyze the specific format that OKC chose to insert this into the Reddit post, because to us it is just hilarious. Someone went out of their way to write a 20 page report not making you look like total assholes, and you bury the link directly to the PDF in a 3 character hyperlink? Then there is a link to the site where the report is posted, but users have to click another link just to view it? Click here to view the report. Yes OKC, we gave that PDF more exposure than you did (by 6 characters).

The report that Ben presents is extremely thorough, very well documented and very professional. Overall, it looks like a very solid and well researched piece of work (great job Ben). We took the time to look through the sources, read through everything and fully digest the information presented. The entire report is interesting, but the most relevant part to our readers would be the conclusion:

Screen Shot 2015-05-28 at 11.46.03 PMScreen Shot 2015-05-28 at 11.46.42 PM

In summary, we have OKC admitting that there was a file modification, but because it wasn’t Star – its OK! Roger’s cryptographic dis-proof of fraud bounty hasn’t been collected, and OKC tries to sweep this under the rug by paying out their bounty and attempting to make a public event out of this “conclusion”. The key word from the last sentence, attempting. Honestly guys, we have had more posts on the front page of Reddit (for longer) than the “leading global bitcoin exchange” regarding this topic.

Even if the v8 of the document were “real”, OKC would still owe Roger money for the months they managed the domain. If OKC thinks that this makes them look any less sketchy, they must have some fine narcotics in China because this is even more incredible than before this recent temper tantrum. CZ was the CTO of OKC, a C level exec of what should be considered a financial institution. While we are aware that fraud in existing financial institutions runs rampant, shouldn’t there be some sort of cross check system within any organization for legally binding contracts? How does it change the situation that there was a fraudulent document introduced, that was signed off on by a then acting officer of the company? Oops, sorry. We mean “officer of the brand”. To us (and probably the legal system), this still constitutes fraud.

We still would appreciate answers to the following 3 questions:

1. Can you show us your cold storage wallet and proof of BTC(XBT) reserves?

This Reddit post outlines your policies, as if it is meant to ensure users their funds exist. Even more hilarious, are the posts in that thread of people bashing OKC months ago.

2. Do you have an English speaking lawyer that is interfacing with US authorities, to ensure that OKC is in compliance with US regulations?

3. Can you please outline your corporate structure for the community.

OKC Races the NSA To Beat Cryptography

In a dramatic turn of events over the weekend, the OKC/Ver situation that had “gone nuclear” on Friday, appears to be more of a long lasting Fukushima type incident than an atoll test. Read our overview of part 1 and part 2 if you aren’t all caught up.

We thought the story couldn’t get any more ridiculous, but thanks to the public actions of “the leading global bitcoin exchange”, we are in full blown unicorn territory. In what appears to be a move of desperation, the OKC CEO (Star) took to Reddit in an attempt to clear the air. Pastebin is here, in case that post is removed. Ironically, but not surprisingly, this posting only inflamed the situation further.

In what appears to be the only attempt at negotiation OKC is capable of, they are now offering $20,000 USD to anyone who can prove they are right, and Roger is wrong.

OKCoin will reward $20,000 USD to anyone with authentication skills confirming that the digital and hardcopy of v8 are genuine and signed from December of 2014 by our former employee.

Ok, so at first glance that might not seem too insane… but if you take about .5 seconds to think about the situation, is it ludicrous. In summary, OKC is taking on the NSA in their attempt to break cryptography. If you were one of the individuals who failed the Cicada 3301 challenge, here is your next opportunity.

For those of you that are just joining us, the last few days have been a smorgasbord of deliciousness in the drama that makes up bitcoin.

OKCoin, we at shitcoin, would like to ask you the following:

1. Can you show us your cold storage wallet and proof of BTC(XBT) reserves?

This should be trivial, at best. Stop hunts aside, the community wants answers.

2. Do you have an English speaking lawyer that is interfacing with US authorities, to ensure that OKC is in compliance with US regulations?

3. Can you please outline your corporate structure for the community. Mark Karpeles (of all people – and we thank you Mark, in a non satirical way) posted the attached research paper.

We could go on, and on… and on. Let’s just leave it here for now though.

Although short, this post took a considerable amount of time to complete because we kept deleting quality shit in order to keep the butt hurt level down. It probably would have been much more humorous had we left some of the original content, but we don’t want to rock to boat too hard. We are hardcore bitcoin believers, that’s why this shit is so hilarious. Yajun Li, we want to ask you: Have you reviewed the investment contracts that Tim Draper sent over via Googe Translate? How does a term sheet look after you run it through Google Translate? Does Lawsky use Google Translate as well to communicate with OKC? How do you say business suicide in mandarin?

 

 

Bitcoin Jesus vs The China King of Bitcoin – Round 2, Fight

Less than 24 hours after the latest OKC drama came to light, things have escalated significantly. A cache of e-mails between Roger Ver, OKC and other involved parties has been released by Reddit user la0ban – link to the post herelink to the imgur of the emails here.

As if things couldn’t get any more ridiculous, these e-mails show that the clock is stuck at amateur hour over at OKC, and has been for quite a while. There really isn’t any nice way to put it at this point, and it wouldn’t surprise us (or many other Bitcoiners if Reddit is a gauge) if OKC was also engaged in other, seriously dubious practices.

Again, we would like to reiterate the point – OKCoin, the self proclaimed “leading Bitcoin exchange”, appears to have (at the very least) created a fraudulent document in order to back out of a deal that was going to lose them money. The question we ask is, why would you trust them with your money?

Screen Shot 2015-05-23 at 1.40.13 PM

We were really looking forward to more drama unfolding, but had no idea it would materialize so quickly. OKC tried to mitigate the situation with a blog post clearly designed to push their narrative, but like most of their bullshit, their desperation is nothing short of completely transparent.

Moving on to today’s fun – (Roger/his team is in blue, OKC’s side is in red).

Apparently, knowing the content of the site they are supposed to be managing is too much to ask.

 

Screen Shot 2015-05-23 at 1.25.01 PM Screen Shot 2015-05-23 at 1.25.08 PM

This is just insane… these people run the largest futures market for Bitcoin and they don’t know what is on a page that says this at the bottom:

Screen Shot 2015-05-23 at 1.55.22 PMFor any doubters, archive.org doesn’t lie.

We can skip over the countless e-mails where Roger asks for money, they give him some run around and obviously no payment is delivered. We get that people have mixed feelings about Roger, but it shouldn’t be hard to look at this from an objective point of view… especially with all of these e-mails out in the open. Roger conducts himself in an extremely professional manner, is well spoken/written, educated on the subject areas in which he discusses and is willing to expend the proper resources to have the issue resolved properly. OKC, on the other hand, continuously contradict themselves, have many employees and a CEO who apparently don’t know proper English, have a lawyer who uses Google Translate and seemingly can’t pony up a small amount of cash for a contract they signed/agreed upon, for an issue that is “a small thing in our [OKC’s] company”.

It also appears as if OKC offers Roger to engage in a payment scheme which may be less than kosher.

Screen Shot 2015-05-23 at 1.57.44 PMScreen Shot 2015-05-23 at 1.57.58 PM

Screen Shot 2015-05-23 at 2.10.00 PM Screen Shot 2015-05-23 at 2.10.10 PMAgain, we would like to highlight the point that OKC (even though they have investments from US based firms) does NOT have counsel which know English. WHAT THE FUCK. Putting aside the fact that OKC appears to have created a fraudulent document, how are they going to interface with the US authorities to ensure that they are in compliance with US regulations? If you don’t see the writing on the wall now, we are sorry for your future loss.

In case our readers think we are being hyperbolic, please see the next item.  Screen Shot 2015-05-23 at 2.12.46 PMScreen Shot 2015-05-23 at 2.12.53 PMThere is an e-mail from OKCoin’s “lawyer”, which is in one of the Chinese dialects, and obviously wasn’t too impressive. Roger’s lawyer (in both Chinese (presumably Mandarin) and English) shortly responded, with the attached:

Screen Shot 2015-05-23 at 2.16.43 PM Screen Shot 2015-05-23 at 2.17.05 PM

Edit: Here is the e-mail from OKC’s lawyer.

Screen Shot 2015-05-23 at 5.35.03 PMA reader knowledgeable in Chinese reached out to us after this report, and submitted the following:

  • 15/5, 15:11: These are 简体, or simplified Chinese. It’s odd that the lawyer didn’t sign their name in Chinese characters, only using YaJun
  • 17/5, 08:48: Daniel replies in 繁体, or classical Chinese as used in HK where he seems to be based. The simplified Chinese for the characters he uses for YaJun Li are 李亚军, and when he later suggests it’s a crime to practice law without a licence, it may indicate the lawyer is suspected to be fictional
  • 17/5/2015: This is from the supposed lawyer. The text is, “We don’t acknowledge your position, you can adopt whichever legal methods you think effective.”

 

There is some additional back and fourth which contains some more fireworks, but we can leave those for you to read – here’s the link again. Essentially, it is just more banter between all of the above parties, OKC acts extremely childish, Star makes some more shit up and Roger drops the hammer regarding cryptographic proof of fraud. It honestly is almost not worth reporting on some of the shit that OKC says because we don’t want to make the Bitcoin community look bad.

At this point, it appears as if the credibility of OKC as a company, and of their CEO personally has been completely liquidated (kind of like their customer’s trading positions). Be vigilant, do your research and decide which companies you feel have the best reputation when you engage in trading. If you haven’t been stop hunted, and actually make some profit, please consider the possible longer term repercussions towards the community for supporting a business like OKC. Some profit today is not worth it in the longer term, if OKC turns into Gox 2.0. We are all building this community together, and as a community we should self-regulate to limit the number of bad actors.

OKC Drama Goes Nuclear

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Some people are still pissed off at Roger for his Mt. Gox audit, but given the actions of government employees leading up to the questionable seizure of Mt. Gox bank accounts, we don’t think its really fair to place blame on anyone until all of the details are revealed. So if we can all agree to forget about that Gox thing for now, let’s just focus on the issue at hand. OKCoin fucking someone else over. This time though, it isn’t through stop hunts.

Remember back in February, when the OKCoin CTO left? The entire thing reeked of shadiness, but once again, let’s just give them the benefit of the doubt for now and say that it was a peaceful departure. Now let’s move many stop hunts and margin calls forward, it looks like OKC are liars, manipulators and probably under some sort of financial stress (aka running a fractional reserve exchange).

Roger hosted this DropBox link, where all of the source files can be found. For the non-believers after his last claim, this one contains cryptographic proof of scam.

Moving on to the most relevant and shocking parts of today’s revelations:

From, OKCoin Fraud and Forgery

Screen Shot 2015-05-22 at 11.13.10 PM Screen Shot 2015-05-22 at 11.12.48 PM Screen Shot 2015-05-22 at 11.13.16 PMSketchy as fuck. We will get into the finer details that Roger reveals, but already we can see evidence of OKC being liars and manipulators. Personally, I don’t really think anyone would want to put their hard earned bitcoin on an exchange that manipulates legally binding contracts, but that’s just me.

OKC has preferential rights to advertise for itself on bitcoin.com, but that probably won’t help increase revenue unless that advertising is purely to bring in new game (oops I mean customers) for them to hunt.

Edit: Just found this on Reddit.

I’m Damian, I was Product Manager (UX) at OKCoin at the time the company took over custody of bitcoin.com. I can confirm the OKCoin statement is delibrately misleading.
The intention of the CEO, Star Xu, was to use bitcoin.com to advertise OKCoin. I know this because he rejected my first wireframe and asked me to add 2 links to OKCoin, one on the homepage just below the navbar and another just a few hundred pixels down. I still have the wireframes. Xu’s micromanagement of this project was among the reasons I left weeks later.
There was no plan for quality content at any point. No plan to add value to the bitcoin ecosystem. There was only a plan to advertise OKCoin.

Pastebin of the text.

The most relevant points from Roger’s timeline: Screen Shot 2015-05-22 at 11.22.12 PM

 

Link to the above transaction on the blockchain.

 

 

Screen Shot 2015-05-22 at 11.22.25 PM Just over a month in, we have OKC supposedly taking money from other companies for advertisements and never displaying them. As if the wicks that perfectly completed H&S weren’t enough, you traders have to be dumb as shit to keep any coin with these people.

Moving on:

Screen Shot 2015-05-22 at 11.26.54 PMNow OKC is about 3.5 months behind in payment, or $35,000 USD. Shouldn’t be much of an issue considering they GAVE AWAY $1.6 million worth of BTC just months earlier!

Then it starts to get really good, and Goxxey.

Screen Shot 2015-05-22 at 11.30.44 PM Screen Shot 2015-05-22 at 11.30.55 PMSound familiar? The only thing we didn’t see here was OKC telling Roger he would get the money in two weeks. We don’t want to make any accusations, but it is starting to sound a little bit like OKC might be having some financial difficulties. They are trying to wiggle their way out of this using any slimy trick they can. This next part is just classic though, a fucking lawyer that conducts business using Google Translate? That’s right, the worlds biggest Bitcoin exchange (Bitcoin is this thing that’s supposed to revolutionize finance if you forgot) has a lawyer that uses Google Translate. Enough said. No, seriously though… there is a tip address at the bottom of this page, and if you trade at OKC you might as well just send your coin to our tip address before it disappears.

 

Screen Shot 2015-05-22 at 11.32.09 PM Screen Shot 2015-05-22 at 11.32.17 PMAnd to read that last document referenced from J. Maurice, click here.

Screen Shot 2015-05-22 at 11.38.18 PMThe tin foil hat wearers aren’t starting to sound so conspiracy theoryish about that resignation now, are they?

Screen Shot 2015-05-22 at 11.40.20 PM Screen Shot 2015-05-22 at 11.40.25 PMAs if the on exchange shenanigans weren’t enough, here we have some pretty damning evidence that OKC is, in fact, as shady as we have all thought.

Thank you Roger for providing us with this insight into the operations of one of the worlds leading bitcoin exchanges. One that has the “highest volume”, and moves the price considerably. Maybe traders will start to re-consider their trading decisions, and use more transparent exchanges which actually act in the best interest of their customers… like BitFinex did today, when they promptly and professional took care of a small exchange security breach, and covered customer losses out of their own pocket.

Traders Appear Butthurt, As Humans Realize They Can’t Out-Trade Computers

dr-zoidbergs-butthurt-cream

A running joke amongst Bitcoin traders is that “we just draw lines and steal each others money all day”. Sadly, this isn’t far from the truth, but there is one important piece that most people miss out on. “We” aren’t just stealing each others money, but the market makers are constantly taking money from traders and exchanges are pulling in transaction fees like a going out of business sale.

Sure, some say that if you stare at the charts long enough you will see pretty much anything, but we think that there has been a little bit more going on behind the scenes.

For a brief introduction, we recommend reading this very well put together blog post by BTCVIX.

We recently discussed the migration of bitcoin traders to alternate markets. Because of the higher fees on BitFinex relative to the Chinese exchanges, the liquidity on BFX during these slow, ranging days has dried up worse than California’s water resources. It’s almost as if traders have given up, and don’t care about participating in a marketplace that is being raped by the market makers.

This looks evident if we analyze yesterday morning’s sell off (pay attention to volume).

 

bfx  huobiokcThe lack of volume on BFX during the sell off leads us to believe that there were few active participants at that time, including stop and limit orders on the exchange. This is very strange, considering the usual cross exchange volume correlation.

If you trade on BFX, and stare at their charts all day every day, you will recognize this shape in the visual representation of their order book (showing bid/ask depth). It won’t fucking go away, except for when there are sizable market pumps or dumps. Even when the market moves a small amount, liquidity near bid/ask becomes non-existent these days.

bfx pinchers

While it is possible that these are many different people’s bots adjusting to market fluctuations, it seems more likely that this is one market maker. By controlling most of the order book near the bid/ask, it would be incredibly easy for a market maker to deduce which orders belonged to other traders, simply by process of elimination. This would certainly give them an edge over others.

We aren’t saying that this is definitely the case, but coupled with the article from BTCVIX it seems like a reasonable explanation that would explain recent market behavior. We trade on BFX, love them, and think that they have one of the most sophisticated total trading packages (swaps, etc) that is offered to bitcoiners. In no way is this meant to say anything negative about BFX, just offer some insight into the activities of what appear to be a large market maker on the exchange.

Obviously the intention of any market maker is to make money (and markets, we guess). The irony in all of this is that their aggressive market making activities could be discouraging traders, which decreases their profits, and the profits exchanges reap from trading fees. The beauty of this all (if correct, of course), is that we are seeing a free market in work.

Happy trading everyone.

Swedish ETN Launch = GBTC Dewm

The Swedish Bitcoin ETN launched today on the Nasdaq OMX Nordic market. This ETN tracks the price of Bitcoin via 3 exchange quotes, and each unit/share is equal to .005 BTC. Shares are quoted in SEK though (Swedish Krona), even though the prices are derived in other currencies from the Bitcoin exchanges.

The Bitcoin Tracker One Prospectus can be found here.

Screen Shot 2015-05-18 at 1.50.51 PMView the Nasdaq OMX page for Bitcoin Tracker One here.

Two interesting things to note:

1) Bitcoin Tracker One was the 8th most traded ETN on the exchange today.

Screen Shot 2015-05-18 at 2.07.09 PM2) It is stated in the Prospectus that Bitcoin Tracker One will be applying to be listed on the Norwegian and Finnish markets. This would be a great step in the right direction, and would presumably give one of the worlds largest sovereign wealth funds easy access to Bitcoin.

 

Back on this side of the Atlantic, on the US Nasdaq OTCQX, GBTC has been significantly closing the spread between it’s trading price and the spot market.

Screen Shot 2015-05-18 at 2.10.12 PMWe look forward to seeing the continued trading of these two instruments, it’s good to see Bitcoin finally being accepted into the mainstream.

Bitcoin Is Open Source, It Doesn’t Matter Who Satoshi Is

Today, The New York Times took their turn at attempting to identify who Satoshi might be. Contrary to the Newsweek fiasco, this piece was well researched and written, including many important pieces of Bitcoin’s past (with links/citations for a change!).

The article suggests that Nick Szabo may have some connection to Bitcoin’s creation, but they are unable to make any concrete conclusions. Our stance is that it doesn’t really matter who Satoshi is. For all we care, it could just be a new program The Machines inserted into The Matrix, and there is no Satoshi. While the exposure from these “found Satoshi” stories is welcomed, we feel that education trumps fairy tale chasing.

The NYT had to fuck something up with their article, and we found that when we watched the video embedded into the article (after reading it). If you found Satoshi, the first thing he would probably tell you is that MINING IS NOT SOLVING MATH PROBLEMS! Also, isn’t the whole part about the miners/network verifying transactions to prevent a double spend pretty important? What about that Blockchain thingie that the MSM has in their sights? The guy in the video seems really enthusiastic about everything he is discussing, but really doesn’t seem to understand what he is saying.

Anyway, enough with the hate… he does bring up an important point that we can use to loop this thing full circle – “What is money?”. And with that, we bring you a blog post from Mr. Szabo himself, entitled – Shelling Out — The Origins Of Money. Hope you enjoy the weekend reading :)