Monday, March 3, 2014

Bitcoin news March 3 , 2014 ------ bitcoin recovers in price from recent sell off....... UK issues official guidance , VAT on bitcoin trading to be eliminated ( full tax treatment discussed at length ) , which is good news ..... MT Gox lawsuit targets financial assets of Mark Karpeles ( CEO of MT GOX ) ......BTC-e rumblings...... Lakota nation adopts MazaCoin crypto-currency as legal tender

March 5, 2014 2:00 am JST

Japan to regulate Bitcoin trades, impose taxes

TOKYO -- The Japanese government will set rules for trading bitcoins, defining the virtual tender not as a currency but as a commodity akin to gold.
     Gains from trading bitcoins on online exchanges, and purchases made with them will be subject to Japanese tax. Banks will be prohibited from handling them, and securities firms will be barred from brokering Bitcoin trades.
     Since its origin in 2009, Bitcoin has occupied a legal gray zone. But the cryptocurrency has arguably become too big for regulators to ignore. The value of bitcoins in circulation worldwide at one point reached 1 trillion yen ($9.75 billion).
     Japan will become the first major economy to attempt to regulate the virtual currency and may prompt others to move in the same direction. Last week, Mt. Gox, a Tokyo-based Bitcoin exchange, filed for bankruptcy, drawing attention to the issue of protecting users.
     An opposition lawmaker has asked the government's position on Bitcoin's legal status. In the days ahead, the cabinet will issue a response that will become the basis for guidelines that would also apply to any similar virtual currencies that may come later.
     Significantly, the guidelines will call for taxing Bitcoin transactions. Purchases made in bitcoins will be subject to Japan's consumption tax, which is set to rise to 8% on April 1. Trading gains will be taxed, and companies will need to pay tax on revenue earned from Bitcoin transactions. But enforcement could prove difficult, as tax authorities will have to track down users.
     Given Bitcoin's potential use in money laundering and other crimes, regulating it poses an international challenge. Thus far, major economies' approach has been inconsistent. China has banned financial institutions from processing Bitcoin payments. Russia says using bitcoins as a currency is illegal. Meanwhile, a federal court in the U.S. state of Texas has ruled that Bitcoin is a currency. Any attempt to introduce common rules would likely take time, experts say.

New hack attacks......... both Flexcoin and Poloniex hit hard

Flexcoin and Poloniex; Security Holes Exploited in Another Hack Attack

Posted 6 hours ago 

Flexcoin ‘the Bitcoin Bank’ Exchange shuts down after they lost 896 bitcoins from their hot wallet by hackers on Tuesday. After suffering such a huge loss, Flexcoin announced that they will be shutting their doors. All users who held accounts there are urged to contact them to extract bitcoins from their cold storage free of charge.

Users who put their coins into cold storage will be contacted by Flexcoin and asked to verify their identity. Once identified, cold storage coins will be transferred out free of charge. Cold storage coins were held offline and not within reach of the attacker. All other users will be directed to Flexcoin’s “Terms of service” located at “” a document which was agreed on, upon signing up with Flexcoin.

The coin-thief or thieves were traced to two wallets:
and Flexcoin will continue to work with law enforcement to see what can be done. All bitcoins stolen were only off of their hot wallet and not of their cold storage. Unlike Mt. Gox, they hold reserves that can still be claimed by users.
For all Flexcoin customers, keep checking the Flexcoin Twitter for more updates.
Additionally, another exchange was attacked; Poloniex lost 12.3% of their holdings in another hacker was able to exploit a hole in their withdrawal process. Their system was able to recognize the threat and has since frozen all accounts until they can be certain about moving forward. Due to the inability to fulfill all possible withdrawals, they have cut 12.3% of all Bitcoin accounts until the shortcomings of their balances can be met by exchange fees and donations. Furthermore, they will refine their processing daemons to fix the exploited hole in the system.
It is unlikely to have a deep effect on the market as the recent Mt. Gox episode was largely shrugged off by the Bitcoin community and is seen as a sign to push for higher security and sophistication. 
After Mt. Gox fell, the price of Bitcoin recovered over $250: from a low of $425 last Tuesday to a high of $700 last night.

Additional MT GOX foibles.....

Mt. Gox Call Center Leaves English Users In The 


Posted 13 hours ago 

Call Center
The Bitcoin Exchange Mt. Gox is based in Tokyo, Japan, so it came to no surprise that most of their call operators speak mainly Japanese. However, when English customers have to wait more than 20 minutes to voice their concerns just to get call operators that does not speak English, the customers got right to be frustrated.
Mt. Gox’s call center is open today from 10 am to 5 p.m UTC +9, which is reasonable but inconvenient to European customers where the timing would be from 7 pm to 8 am GMT. The press release from Mt. Gox says:
A call center has been established to respond to all inquiries. The call center is planned to start on March 3, 2014. All inquiries to MtGox Co., Ltd. should be made to the following telephone number:
Telephone number   +81 3-4588-3921 (in Japanese)
Telephone number   +81 3-4588-3922 (in English)
Working hours   Monday to Friday 10am to 5pm (Japan time)
On February 28, Mt. Gox filed for bankruptcy protection for their $27 million debt, which includes 750,000 customer Bitcoins and the company’s own 100,000 Bitcoins, which represents over $500 million worth of Bitcoins to be lost. Although with a fewer supply of Bitcoins and an ever increasing demand, would certainly result in a higher value as with the recent price jumps, what is left is a large handful of angry people fuming over their lost Bitcoins and Gox Bucks.
Bitcoiners are not going to sit idly and watch the proceedings go by without action. Gregory Greene, hailing from Illinois, U.S.A, has started planning the works of a class-action lawsuit against Mt. Gox in the federal court. However, whether or not U.S class-action lawsuit laws would still have the same effect on Mt. Gox remains to be seen. As well, the lawsuit would only recover money lost from U.S customers, not including any Bitcoins or any other customers outside of the United States. Recovering fiat from Mt. Gox would certainly be easier for a class-action lawsuit rather than Bitcoin because of lawmaker’s allergic reactions as well as it being too anonymous to keep track of easily.
Along with a class-action lawsuit being made, an avid Mt. Goxer flew over to Tokyo to Mt. Gox’s headquarters to protest, all to be defeated by being ultimately ignored by Mark Karpeles. Less than 1 percent of the customers are Japanese, leaving English customers wondering why Mt. Gox did not have as much English speaking support staff as Japanese. However, it is still remarkable for Mt. Gox to keep their call center open at all for users, considering they have already shut down the Bitcoin exchange. With Bitcoin’s strong upwards movement after the exchange that once controlled 70% of Bitcoin’s total exchange volume shut down, Bitcoiners can be safely assured that Bitcoin will overcome this hurdle.


Tuesday, March 04, 2014 1:03 PM

Bitcoin Incentive for Fraud; Two More Exchanges Hacked: "Flexcoin" Robbed of All Online Coins; "Poloniex" Missing 12.3% of Assets

Two more bitcoin exchanges were robbed in the past few days. "Flexcoin" lost all online coins and shut its doors.   

Flexcoin admitted it did not have resources to cover 896 stolen bitcoins, worth £365,000 (about $608,200). Bitcoins in Flexcoin's "cold storage" (offline), for which depositors have to pay a fee, were not affected.

"Poloniex", the other hacked bitcoin site, admitted that it is missing 12.3% of its assets because of a flaw in its transaction system. Its owner apologized and will keep its exchange running.

The Guardian reports Bitcoin Bank Flexcoin Closes After Hack Attack
 Flexcoin has been forced to close after hackers stole 896 bitcoins, worth £365,000, in an attack on Sunday. The company shut its website and posted a statement on Tuesday morning detailing the loss.

“On March 2nd 2014 Flexcoin was attacked and robbed of all coins in the hot wallet,” the statement read. “As Flexcoin does not have the resources, assets, or otherwise to come back from this loss, we are closing our doors immediately.”

Not all of the company’s assets were stolen. In line with best practices for running a bitcoin financial service, Flexcoin held some bitcoins in “cold storage”, keeping them on devices not connected to the internet. Those bitcoins are safe, but only users who explicitly requested their bitcoins be held in cold storage (and paid a 0.5% fee) benefit.

“Users who put their coins into cold storage will be contacted by Flexcoin and asked to verify their identity,” the statement continues. “Once identified, cold storage coins will be transferred out free of charge. Cold storage coins were held offline and not within reach of the attacker. Flexcoin will attempt to work with law enforcement to trace the source of the hack.”

Just six days ago, the company was boasting that it was unscathed by the closure of MtGox, once the world’s largest bitcoin exchange:

The same day the company came clean about its losses, a second bitcoin firm, Poloniex, also admitted that 12.3% of its reserves had been stolen by hackers. Poloniex is a bitcoin exchange, and the company has committed to operating at a fractional reserve until it can replenish the losses itself.
"Poloniex" Robbed of 12.3% of Assets, Owner Apologizes

The problem at Poloniex stems from a flaw in Poloniex's system that processed bitcoin transactions simultaneously rather than sequentially, ultimately allowing negative balances.

On the Bitcoin Forum, Poloniex owner Busoni explained how it happened and apologized to the bitcoin holders.
 What Did Poloniex Do Wrong?

The major problem here is that the auditing and security features were not explicitly looking for negative balances. Another design flaw is that withdrawals should be queued at every step of the way. This could not have happened if withdrawals requests were processed sequentially instead of simultaneously.

What Did Poloniex Do Right?

The existing security features noticed unusual withdrawal activity and froze BTC. That is how the activity was discovered.

What Happens Now?

I take full responsibility for this and am committed to repaying the debt of BTC. The exchange funds are 12.3% short. Because there is not enough BTC to cover everyone's balances, all balances will temporarily be deducted by 12.3%. Please understand that this is an absolute necessity--if I did not make this adjustment, people would most likely withdraw all their BTC as soon as possible in order to make sure they weren't left in that remaining 12.3%. Aside from the obvious drawback of most of the BTC being taken out of the exchange, this would not be fair--some people would get all of their money right away, and a few would get none right away.

The amount deducted from everyone's balances will be recorded, and funds raised from exchange fees, as well as donations from my own pocket (which is not very deep, I'm afraid), will be distributed regularly to all users who have had BTC deducted. Exchange fees will be raised to expedite the recovery of the debt. 1.5% has been suggested by many people, but I will take input on this.

If I had the money to cover the entire debt right now, I would cover it in a heartbeat. I simply don't, and I can't just pull it out of thin air.

Right now, all markets and withdrawals are still frozen, and they will remain that way until the negative balance watcher is written and in place and balance deductions are calculated. Please do not bother placing withdrawals right now, as they will not be processed and will probably all be cancelled before functionality resumes. ETA on availability of withdrawals is approximately 12 hours. I am afraid it is 3 AM where I am right now, and I think it is wise for me to get some rest before proceeding.

In conclusion...

I sincerely apologize for this, and I am very grateful to the many people who have already expressed their support and belief in my character. I take full responsibility; I will be donating some of my own money, and I will not be taking profit before the debt is paid.

I welcome your opinions on how to proceed, but please be constructive. I do not have the money to wave away the debt, so we'll need to work together.
Bitcoin Log

Given that a log makes a record of every transaction, and given this hack recently occurred, it should be possible to track the missing bitcoins.

Bitcoins.Com explains "All newly mined Bitcoins, along with every transaction, are publicly recorded and verified through the network. This record is known as the Blockchain and is one of the features that helps keep the system secure from fraud and abuse. Bitcoins cannot be duplicated or forged."

Tracking the stolen bitcoins is easy enough, recovering the stolen money is another matter. The thieves likely traded the bitcoins for cash and now a third party is holding the coins.

Sense some lawsuits regarding ownership of the stolen bitcoins?

Incentive for Fraud

Note the huge incentive for insider fraud at these sites. The owner or owners of these bitcoin exchanges can easily arrange for bitcoins to be stolen.

I do not propose that happened in either case above, I just mention the possibility.

Inside Japan’s Bitcoin Heist

Some do accuse Mt.Gox of fraud but the Daily Beast dismisses that idea. Please consider Inside Japan’s Bitcoin Heist
 The Daily Beast was able to speak with a former employee of Mt. Gox, on the condition of anonymity, due to a nondisclosure agreement with the company. According to the former employee’s testimony and other expert analysis, it seems very likely that the collapse of Mt. Gox was not a criminal fraud but the result of poor management, faulty accounting, and system bugs that went unfixed many months after being recognized by the CEO himself. The final nail in the coffin was the unauthorized release of an internal document that was supposed to serve as the groundwork for saving the company. It is unclear who leaked the document—which was an unfinished draft of a plan of action.

“Essentially,” said the former employee, “Mt. Gox was a dysfunctional organization. Nobody was doing accounting reconciliation and there was an exploitable fault in the transaction system that allowed people to get paid twice—or in other words, withdraw more or less the same amount of Bitcoins two times.”

And it does seem true that Bitcoins are very hard to forge or duplicate. Unfortunately, if you know what you’re doing, they may be easy to steal. Or if you’re not careful, they may be very easy to lose.

Karpeles informed the former employee that an estimated 820,000 Bitcoins were unaccounted for—at the time, the equivalent of close to $500 million. The former employee was told the Bitcoins had possibly been siphoned off over several months by users exploiting flaws in the system. In particular, there seemed to be a system glitch that made it possible to get a payment reissued even after it had been already received. He says that because the firm hadn’t hired an accounting firm to keep the books or an auditor, the theft was undetected.

Teikoku Data Bank, Japan’s largest and most respected credit-rating agency, in July of last year reviewed the company and gave it a D4, the worst possible rating a company can receive on their scale. One of the reasons for the low rating was the lack of qualified accounting staff at the company.

Are you holding bitcoins? If so, what kind of auditing is in place at the exchange you hold them? Are they in cold storage? Should they be?

Accounting procedures at Mt.Gox were so bad it did not matter whether or not you had the transactions in cold storage.

Bitcoin Price and Fraud Go Hand in Hand

One final question: Is the runup in price directly related to fraud and theft?

Yes, two ways.

1. Increasing value of bitcoins made them an ideal target
2. Fraudsters who stole bitcoins had an incentive to artificially drive price higher knowing they could take out more than they put in, at more than one bitcoin exchange, and in more than one way.

How high would the price of bitcoin had gotten in the absence of those incentives?

Mike "Mish" Shedlock

Bitcoin Prices Rise 15% to Reach Post Mt. Gox Crisis High

 (@pete_rizzo_) | Published on March 3, 2014 at 21:22 GMT | AnalysisBitstampBTC-e,CompaniesExchangesNewsPrices

The price of bitcoin is up more than 15% today on the CoinDesk Bitcoin Price Index (BPI), having reached a high of $677.58 before settling to $659.50 at press time.
The $659 figure was roughly $90 more than the opening price of $560, and marked the highest CoinDex BPI prices observed since mid-February, when troubled bitcoin exchange Mt. Gox was removed from the average amid escalating concern about its financial state.
Press time lows on both BTC-e and Bitstamp were the highest observed since 23rd February, when Mt. Gox CEO Mark Karpeles abruptly resigned from his board of director position at the Bitcoin Foundation
Indeed, the rise in the price of bitcoin was significant at points today, with most price gains happening within a roughly three-hour flurry of buying activity peaking at 16:00 pm GMT.

Exchange prices rise

At press time, prices on major Slovenia-based bitcoin exchange Bitstamp had risen from an opening price of $565 to a low of $658. Volume reached its height on the exchange at around 18:00 pm (GMT).
Screen Shot 2014-03-03 at 3.48.59 PM
Likewise, prices on BTC-e increased from an open of $554 to a low of $639 at press time. Here, too, volume peaked at around 17:45 pm before cooling.
Screen Shot 2014-03-03 at 3.50.52 PM

Suspected causes

Speculation was rampant as to the exact cause of the increases, with message boards suggesting that a single buyer had moved the market. Others attributed the rise to the general feeling of optimism from investors following the demise of troubled Japan-based bitcoin exchange Mt. Gox and the UK’s decision to ease bitcoin taxes.
Further, the price jump happened in spite of negative news stories such as the ongoing unrest in Ukraine and renowned investor Warren Buffet’s high-profile rebuff of bitcoin.
The most plausible theory presented may be that no one news story was the impetus for the increase, but that rather prices recovered due to more complex market factors.
For example, some reddit users suggested bitcoin prices now revolve more correctly around hype cycles, and that the increased publicity has brought an influx of new buyers looking to take advantage of a weakened market.
Screen Shot 2014-03-03 at 3.53.39 PM
While prices are recovering, however, it remains to be seen if the market can reach the lofty goals some members expressed would occur at the onset of 2014.

Mt. Gox Lawsuit Targets Mark Karpeles’ Personal Wealth

 (@kadhimshubber) | Published on March 3, 2014 at 12:35 GMT | CrimeLawMt. Gox,News

A class action against Mt. Gox is being organised by a London law firm that says it will go after CEO Mark Karpeles personally to recover its clients’ lost bitcoins.
Selachii LLP says it is representing over 200 claimants from China, the US, Canada and 12 European countries, and that it will launch proceedings against Karpeles “wherever in the world he is”.
They also are in discussions with lawyers in Japan to mount a case against Mt. Gox, which has filed for bankruptcy in Japan after admitting it had lost around 750,000 its customers’ bitcoins. One of the claimants in the lawsuit has lost over 4,000 coins, which equates to $2.3m at today’s exchange rate.
The lawsuit may also make a claim against Tibanne, Mt. Gox’s parent company, which was founded by Mark Karpeles.
Separate legal action was also launched against Mt. Gox and Karpeles in Denver, Colorado, on Thursday by Mt. Gox customer Gregory Greene.

Fraud accusation possible

With Selachii taking action on multiple fronts, Mark Karpeles could find himself defending Mt. Gox’s actions on at least two continents.
Richard Howlett of Selachii says that the facts around the closure of what was once bitcoin’s largest exchange “don’t add up” and that the court action would force Mt. Gox and Mark Karpeles to prove that the huge bitcoin hack actually occurred:
“I don’t know if it’s true that they were hacked, no one knows if it’s true. but that’s something that will come out in court. I will be surprised if it’s as simple as they were just hacked.”
Howlett also raised questions about the loss of fiat funds in addition to Mt. Gox’s bitcoin, which can’t be explained by the hacking of data in the same way as a loss of bitcoin.
Mt. Gox’s public statements reassuring their customers that all was well could come back to haunt the company.
If the company and Karpeles were aware of Mt. Gox’s dire financial situation – which, considering the scale of the issue, is a plausible assumption – Howlett says they could be accused of behaving fraudulently by inducing customers to continue to invest their money in the exchange:
“They had to be honest [with their customers]. They should have stopped everything, because it appears that they were in serious financial difficulty.”
This element of potential liability could explain why Mt. Gox deleted all of its tweets in the days leading up to its eventual demise.
Furthermore, how bitcoins were allegedly stolen from cold storage will be a key technical point, with Howlett suggesting that one explanation could be they were never in cold storage and that Mt. Gox was acting negligently.

Frozen assets

Once a leading member of the bitcoin community, Mark Karpeles bowed deeply last week at the press conference in Japan announcing Mt. Gox’s bankruptcy filing.
The lawsuit could yet see him on his knees if his personal wealth is plundered to pay back Mt. Gox customers. Howlett says that every part of Karpeles’ wealth will be targeted:
“His bank accounts will be scrutinised, his finances will be scrutinised, any offshore accounts, all those sorts of things – if there’s money there, those assets could be pulled into the pot to distribute to the people in the class action.”
Hunting down a person’s assets could prove difficult, however, if they are largely held in bitcoin wallets. Proving ownership of bitcoin assets is not straightforward, even if it is possible to find them in the first place. Bitcoin’s held in cold storage could be hidden in any number of offshore locations.
It is is likely that assets owned by Karpeles, Tibanne and Mt. Gox will be frozen to prevent them being liquidated or hidden once the lawsuit is underway.

Mt. Gox win?

If the lawsuit succeeds, there will be a crucial legal battle about whether any payout should be in bitcoin or in fiat currency.
The value of bitcoin may have risen enough by the culmination of the case to make a fiat currency payout small compared to the total value of any remaining bitcoin in Mt. Gox’s control. Many of Selachii’s clients in the lawsuit are not necessarily looking for their bitcoin back, just their money, says Howlett:
“Many people have got their fingers burnt. The vast number of people we’ve spoken to would rather have the financial value back instead of bitcoin, they’ve been scared off now.”
If the lawsuit is settled in fiat currency and not in bitcoin, then “Mt. Gox could end up winning”, says Howlett, even if the allegations against them turn out to be true.

UK Eliminates Tax on Bitcoin Trading, Publishes Official Guidance

 (@pete_rizzo_) | Published on March 2, 2014 at 21:21 GMT | EuropeRegulation

UPDATE (3rd February, 17:19 GMT): HMRC has now published an official brief, outlining its position on the tax treatment of income derived from bitcoin-related activities.
The UK’s tax agency has reversed an earlier ruling that classified virtual currencies as gift vouchers, exempting digital currency trading from a 20% value added tax (VAT).
HM Revenue and Customs (HMRC), the UK’s customs and tax department, has classified virtual currencies as assets or private money, not as vouchers that required a tax on the value of the coins.
Tom Robinson, co-founder of London-based digital currency storage specialistElliptic and a director of the soon-to-launch industry group U.K. Digital Currency Association, lauded the decision by the tax agency, telling CoinDesk:
“I think this is the most progressive treatment of cryptocurrencies in the world. This is the most forward thinking and comprehensive advice in regards to taxation.”
HMRC had previously indicated it would consider rethinking its treatment of digital currency in December.
Reports say other taxes would still apply to businesses that buy, sell or exchange bitcoin. However, notably, bitcoin businesses will not be charged a tax on margins.
The news follows reports that the UK’s Payments Council, the organisation that sets strategy for payments, is assessing digital currencies, and amid increasing innovation from the local community that has seen the opening of bitcoin ATM alternatives and release of physical bitcoin price tags.

HMRC outlines new position in brief

In its formal Revenue & Customs Brief, published on Monday, the HMRC pointed out that for VAT purposes bitcoin and other digital currencies will be treated as follows.
  1. Income received from bitcoin mining activities will generally be outside the scope of VAT. This is due to the fact that mining does not constitute an economic activity for VAT purposes, as there is an insufficient link between any services provided and any consideration received.
  2. Income received by miners for other activities, such as for the provision of services in connection with the verification of specific transactions for which specific charges are made, will be exempt from VAT under Article 135(1)(d) of the EU VAT Directive as falling within the definition of ‘transactions, including negotiation, concerning deposit and current accounts, payments, transfers, debts, cheques and other negotiable instruments.’
  3. When bitcoin is exchanged for Sterling or for foreign currencies, such as Euros or Dollars, no VAT will be due on the value of the bitcoins themselves.
  4. Charges (in whatever form) made over and above the value of the Bitcoin for arranging or carrying out any transactions in Bitcoin will be exempt from VAT under Article 135(1)(d) as outlined at 2 above.
With VAT out of the way, the HMRC turned to Corporation Tax, Income Tax and Capital gains Tax. It is important to note that there is no clear rule that applies to all activities and organisations. The brief explains:
“Each case will be considered on the basis of its own individual facts and circumstances. The relevant legislation and case law will be applied to determine the correct tax treatment. Therefore, depending on the facts, a transaction may be so highly speculative that it is not taxable or any losses relievable.”
Businesses which accept payment in bitcoins will see no change in the way revenue is recognised and how taxable profits are calculated:
  • Corporation Tax: The profits or losses on exchange movements between currencies are taxable. For the tax treatment of virtual currencies, the general rules on foreign exchange and loan relationships apply. We have not at this stage identified any need to consider bespoke rules.
  • For companies, exchange movements are determined between the company’s functional currency (usually the currency in which the accounts are prepared) and the other currency in question. If there is an exchange rate between Bitcoin and the functional currency then this analysis applies. Therefore no special tax rules for Bitcoin transactions are required. The profits and losses of a company entering into transactions involving Bitcoin would be reflected in accounts and taxable under normal Corporation Tax rules.
  • Income Tax: The profits and losses of a non-incorporated business on Bitcoin transactions must be reflected in their accounts and will be taxable on normal income tax rules.
  • Chargeable gains – Corporation Tax and Capital Gains Tax: If a profit or loss on a currency contract is not within trading profits or otherwise within the loan relationship rules, it would normally be taxable as a chargeable gain or allowable as a loss for Corporation Tax or Capital Gains Tax purposes. Gains and losses incurred on Bitcoin or other cryptocurrencies are chargeable or allowable for Capital Gains Tax if they accrue to an individual or, for Corporation Tax on chargeable gains if they accrue to a company.

An open dialogue

Elliptic and other UK-based bitcoin businesses had earlier contacted the HMRC in an attempt to inspire UK lawmakers to rethink their classification of bitcoin, suggesting that the VAT would discourage UK consumers from investing in the ecosystem and make it harder for domestic companies to compete globally.
The result, however, was that HMRC opened up discussions with the community.
Robinson indicates that in early meetings, UK lawmakers asked questions about various digital currency activities, such as mining, though the larger focus was the overall taxation of the new currencies.


The news spread quickly across the bitcoin community, with many lauding it as a validation of bitcoin at a time when the industry is in need of good news.
Further, though undeniably positive, others in the community suggested that still more work needs to be done to ensure the growth of digital currencies in the UK.
Screen Shot 2014-03-02 at 3.45.29 PM
The news is notable as most recent regulatory statements in the wake of operational issues at the now-bankrupt Japan-based exchange Mt. Gox had been trending negative. Vietnam became the latest to speak out against bitcoin this week, citing Mt. Gox specifically, though over the last month, a slew of countries – from Hungary to Cyprus to Kazakhstan – have all issued warnings.

Data for top three sites ( and MT GOX , may it rest in peace ) , note the differential for BTC-e ! 

Mt. GoxmtgoxUSD1356 days, 23 hrs ago336.26-201.26 -59.85%981,690.49330,102,123.39 USD91.5— (24h)960— (24h)135136.390060.000.00 USD
USDBitStampbitstampUSD6856 min ago614.4170.59 11.49%904,765.51555,897,042.35 USD400562.02 (24h)825.21710 (24h)667.01669633.2551.75 8.17%66,463.4742,088,228.42 USD
USDBitfinexbitfinexUSD687.69 min ago612.3475.26 12.29%665,186.42407,321,139.23 USD100563 (24h)829719.25 (24h)667.1667.78634.4353.17 8.38%51,740.1232,825,525.99 USD
USDbtc·ebtceUSD653.6510 min ago604.8248.83 8.07%585,545.02354,150,099.36 USD102550.489 (24h)816687 (24h)641.427645617.1736.48 5.91%42,429.3126,186,273.60 USD

fwiw comments from bitcoin reddit regarding BTC-e  .....

submitted  ago by furchtbares is now a close second on Bitcoincharts after Bitstamp in trade volume. They are now BY FAR the biggest systemic risk to Bitcoin.
From day one they have been the exchange of choice for the sellers of Silk Road and every other black market site. This is because they offer(ed) every withdrawal option possible up to any amount with ZERO identification needed. They had Liberty Reserve, PerfectMoney, Ucash and many other ID-free options.
BitInstant may have been used by buyers indirectly through BTCKing on SR, but BTC-e has been there for the sellers. So if Charlie Schrem was worth picking up at the airport by the US, you can imagine that the owners of BTC-e are MUCH higher on the wanted list.
They can be arrested anytime and face decades in prison for laundering many millions in drug money. Guess what happens to the hundreds of thousands of coins under their control?
For Bitcoin's sake, people need to be turned away from them. Another top exchange going down would be a disaster and a huge set-back for Bitcoin.
Those wanting to buy or sell should use a 2nd generation exchange that doesn't have dirty hands. Those wanting to take a bet on the rate should use derivatives anyway, same exposure with a smaller deposit.
ps. This is not about creating FUD or hurting their business. This is about getting the facts more into the open. BTC-e is a well run site compared to Mt.Gox, but the inherent risk is JUST AS BIG AND GROWING!
EDIT ;I meant BitInstant, not BitStamp.
It doesn't matter how well run the site is, or how much you trust them. They clearly have been breaking all laws on AML and KYC for ages, and they have done MASSIVE drug related trade. No future audit can wipe out their past. As far as I see it they could go the way of Liberty Reserve any moment. LR's Costa Rican owner was arrested in Spain and pleaded guilty to laundering $6 billion All funds on LR were lost.


submitted  ago by MauledByPorcupines
The backstory is here if you don't already know: part 1 part 2 part 3 part 4
TL;DR - traders had positions opened, MT4 and BFX both got hit with huge sells at the same time which caused the price to crash to $100, both exchanges crash and don't execute traders' stops or let them shut their positions for almost an hour, and trading doesn't resume until the price has moved $200. BFX takes responsibility and compensates traders; BTC-E disappears.
We sent the support desk a ton of requests telling them to fix everything. I finally got a message from them on the subject:
Usually in the case of any technical issue, which is caused by our party – we are taking full losses of our clients on our account. But in the issue, which happened on 10th of February we suffered additional losses (losses of company which nobody will ever compensate) when we were closing positions of our clients after the initialization of stop-out procedures on their accounts. In such environment we can’t simply afford to take further losses and we have to decline your compensation request and take any reputational risk which could be caused by your side. Also we would like to mention, that your case is not the only one, there are several other clients with even larger accounts who faced the same issue. You, as a trader, must understand all risks which are involved in trading activity, especially trading so brand-new financial instrument, which is not somehow regulated. Please take our apologies, but due to the reasons outlined above and in our previous emails, we can’t help you with any compensation on this issue.
At this point I'm way past the point where I expect to ever see this money back and have moved on (as best I can), but I'm posting this here for the following reasons:
  1. If you also got screwed at BTC-E during this incident, I'd love to hear if they sent anything similar to you, or if you got compensated.
  2. You should be aware that, for better or for worse, this is how BTC-E wants you to approach trading on their platform. If you open a position, there's always some chance that the same incident will happen and you won't be able to close it. If this happens, they do not want to hear it, so if you want to trade on BTC-E, you must accept this risk.
  3. Especially in the wake of what just happened at Gox, I don't like the notion that this incident caused them to lose so much money that they simply "cannot afford" to credit traders accounts as they have in the past, and as BFX did in the same situation. That is not a good response.
Not to take attention away from Gox, but the point of all of this: Gox wasn't the only shady exchange out there and it isn't going to be the last. Be careful, research your exchange of choice before you put money there, and avoid shady stuff like this. A simple search on this forum and will also reveal that a number of users have had problems depositing money over there too - deposits that simply never get there.
If you REALLY insist on trading on BTC-E, make sure you don't put more money over there than you're willing to lose 100% of. Be careful!

    Not Bitcoin per se but significan cyber currency news ! 

    Lakota nation adopts MazaCoin crypto-currency as legal tender

    Published time: March 03, 2014 20:53
    Screenshot from
    Screenshot from
    A Bitcoin spinoff known as Mazacoin has been adopted by a confederation of seven Native American tribes as their national currency. The Oglala Lakota Nation has expressed hope that it will draw the tribes out of poverty.
    “I think crypto-currencies could be the new buffalo,” head of the Lakota Nation, Payu Harris, told Forbes.“Once, it was everything for our survival. We used it for food, for clothes, for everything. It was our economy. I think MazaCoin could serve the same purpose.”

    Members of the tribe included Sitting Bull and Crazy Horse – famous for their role in the Battle of Little Bighorn, during which they were key in securing a victory over General George Armstrong Custer.

    “We have to be forward-thinking,” Harris clarified.

    The coin styles itself on its website as creating an “economic foundation upon which the Traditional Lakota Nation can build lasting wealth and prosperity for their people.”

    “MazaCoin will take its place in the world of Crypto-Currency as a solid Alt Coin backed by the unique legacy of an ancient culture and nation,” it adds.

    Mazzacoin is a branch or “fork” of a Bitcoin derivative called ‘ZetaCoin’. However, it remains one of an ever-growing market of alt-coins fighting to establish themselves.

    “Just like debit cards, it will take a while for people to get it,” Harris astated. “But once people understood the new cards, they began to accept them. The same will happen with MazaCoin.”

    He added that an educational campaign has already been launched demonstrate to the Lakota how to mine the currency.

    In preparation, the nation has mined some 25 million MazaCois to be utilized as a national reserve of sorts. A further 25 million are on standby for a Tribal Trust – a collective which will issue grants to tribe members or support local businesses. A handful have already agreed to start using the coin.

    The FBI has already allegedly contacted Harris to discuss the proposals to immerse themselves in the crypto-currency, apparently having reminded him that cryto-currencies are not considered legal tender in the US, currently. Harris has dismissed the warnings.


    Flexcoin is shutting down.

    On March 2nd 2014 Flexcoin was attacked and robbed of all coins in the hot wallet. The attacker made off with 896 BTC, dividing them into these two addresses:
    As Flexcoin does not have the resources, assets, or otherwise to come back from this loss, we are closing our doors immediately.
    Users who put their coins into cold storage will be contacted by Flexcoin and asked to verify their identity. Once identified, cold storage coins will be transferred out free of charge. Cold storage coins were held offline and not within reach of the attacker. All other users will be directed to Flexcoin's "Terms of service" located at "" a document which was agreed on, upon signing up with Flexcoin.
    Flexcoin will attempt to work with law enforcement to trace the source of the hack.
    Updates will be posted on twitter as soon as they become available.