All the more reason to sue.

Right now they are broke because the coins and cash have been moved internally and announced as theft/hacks.  The first thing a lawyer will do is get a police investigation going, which will lead to criminal charges and the recovery of said coins/cash.

Don't believe for a second this wasn't an inside job.  The lack of police involvement pretty well proves it.

Really?  Then have the police tell me they don't understand it, not you. Using this an excuse for lack of police involvement is nonsense.  The police have not become involved because they could get IP logs from ISPs and trace them right back to the inside job.

Didn't they say that they still have 70%? "Only" 30% stolen?
Once you drag them to court and they have to file bankruptcy I am sure we will get nothing, or in any case way less than 70%.
So how is that better?

I lost nearly $150,000 one day. Pretty much everything. Nothing to do with Bitcoin. The guy went to jail but I was never completely sure if we had the whole truth. I took it on the chin.

Intersango has been a useful service and Amir has done a lot for me and us.

I do think action should go ahead as there is a case for it and it should change attitudes. But I also acknowledge it will be a shame to see the back of Intersango as they've:
- taken risks on my behalf by running the exchange in the grey area of is-it-forex (initially for no fee),
- developing the exchange software,
- working on the Bitcoin code and also
- campaigning in person at events like Occupy

I'm not defending them. I'm just saying it's a shame. These will be the next in a line of public figures with Bitcoin where the community has turned against. A sample size of 2 is a bit early for a worrying trend but divided we are and so easily.

It took a lot more work than this to turn me against the guy who was slated as spending my life savings. For a long time I felt there must have been mitigating circumstances because they were shutdown by an agency with active interests in doing so. I could see a conspiracy theory. To this day I'm not completely sure but I've decided not to break the guys legs even though he's been convicted and done his jail time. The hard thing is it's hard for me to know.  

What is suing going to achieve other than finally show people a precedent that this is a serious matter and things are real.

That was me saying it in a light fashion to save egos. Perhaps I should be blunt. I could say "Screw you. Get off these guys. Let me carry on using my favorite exchange. Let me continue to receive their contributions to the code base and exchange software. Let me enjoy their work at Occupy. Forgive them and shut the crap up just like I did with my life savings."

I feel very qualified to say so because I have gone through the experience and it has changed my entire life. If I hadn't lost that cash I wouldn't be in this damn job, I wouldn't be in the country and I'd be with my girlfriend! But I know burning down the guys house isn't going to change anything.

Now, if suing does change things and get people to take security more seriously then do it, you are doing it from a good place.
But if you look in your heart and you're doing it for vengeance then I suggest step back because that in my experience usually backfires. If necessarily, find a way to do it right.

I've gone out on a limb to say this for you, bear that in mind.

edit:

There might not be any chillingeffect though. Thoughts?

They probably aren't gonna be using client funds for legal defense against said clients, that would land them in an even bigger pile of shit and open the door for a criminal investigation.
 

Thanks for your report. I can feel your pain as I am in the same place that you were.

Mainly, I want my money. I mean once I'll have my money I wont have any grief toward anyone.

The dollars and Bitcoins owed by Bitcoinica to their depositors were not destroyed nor squandered. They still exist, merely their possessors are illegitimate. This means that it is possible to repossess them. Until they are returned, the rights of the depositors are being violated, even though it is unclear who is to what extent responsible for it. Even if I personally did not care whether my money is returned, I still want to live in a world where property rights are respected. This requires enforcement.

There exists a perception of uncertainty about the ability of the legal system to enforce property rights with respect to Bitcoin, and this discourages people from using Bitcoin, thinking that fiat currencies like dollars or the euro are "safer". While I don't think that's true, based on my research it appears to be a very common perception. A legal precedent can be beneficial for the future of Bitcoin. If we don't do it now with Bitcoinica, eventually someone else will do it in some other case in the future, when someone else is a victim. But making a precedent now can make it easier for this future victim, or even prevent them from becoming victims in the first place.

I personally as an anarchocapitalist think that the prison system is retarded. The victims are required to pay, via taxes, for the food and lodgings of the people that harmed them, while the perpetrators cannot work to repay the debt. However, whether people go to prison or not is to a large extent determined by the state, not by the victims. The victims and witnesses are often required to participate in criminal proceedings whether they want or not.

However, putting people into prison is an entirely different issue than enforcement of property rights. I want the latter but not the former. Not only for me, not only for Bitcoin users, but for everyone.

This is a great post.

Right now I'm sitting on the sidelines - I have nothing at stake in Bitcoinica, but do use Intersango on a regular basis. Right now, what Bitcoin needs to grow and succeed is a) people willing to put effort and wisdom into making Bitcoin usable and trusted, and b) people willing to take that trust and build on it. Yes, there's "real money" at stake, but at the same time that "real money" is based on a platform of openness and accountability.

IMHO, underscoring Bitcoin with lawsuits *will* increase accountability (why wasn't Bitcoinica open sourced? why is info on most sites' security practices and legal statuses still so hard to find?), but it's going to require some *very* dedicated and passionate people to step up to that. The question is where are they going to come from?

My own opinion is that 'shit happens'. I wish BC hadn't bothered taking on such a risk (as, I guess, do they), but that's the shit Bitcoin is in.

What does it mean for the future of Bitcoin? I have no idea - but I'm certainly more wary about telling other people how great it is. Relying on  a small number of decent services is a dangerous position to be in.

The lawyer I contacted works for an internationally established company with offices all around the world and experience with dealing with financial banking lawsuits.

That's all fine. Those people can still use other ways of attempting to enforce their claims if they believe it is worth it. But eventually there will be a sufficient demand for more "official" enforcement methods.

alpaca socks would be nice, although dollars would be preferred.