Difference between revisions of "Bitcoinica"

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An exchange that allows speculation on the Bitcoin to USD (BTC/USD) exchange rate using leverage.
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Was an online service that enabled leveraged speculation in its contract-for-difference (CFD) market against the Bitcoin to USD (BTC/USD) exchange rate.
  
The service was launched on September 8, 2011<ref>[https://bitcointalk.org/index.php?topic=42267.0 Bitcoinica - Advanced Bitcoin Trading Platform]</ref>.  At the time leverage offered was 5:1 though on November 19, 2011 the service dropped the default margin requirement level to 2.5:1<ref>[http://bitcointalk.org/index.php?topic=52092.0 Bitcoinica changes default leverage to 2.5:1 for everyone]</ref>.  The level may raised to 5:1 by placing a request with the company via email.
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==History==
  
The service charges no trading fees but instead earns from the trading spread -- similar to how forex trading functions.
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The service was launched on September 8, 2011<ref>[https://bitcointalk.org/index.php?topic=42267.0 Bitcoinica - Advanced Bitcoin Trading Platform]</ref>.  On March 1st, 2012 the site suffered a significant financial loss when a web hosting had an internal security breach that gave the attacker access to a wallet in which Bitcoinica stored funds.  More than 43K bitcoins were stolen by the attacker.  The operator provided a statement that reserves were sufficient to cover the loss<ref>[http://bitcointalk.org/index.php?topic=66979.0 Bitcoinica lost 43,554 BTC from Linode compromise, suspicious TXIDs publicized]</ref>.  
 
 
Caution is recommended for those not familiar with leverage and/or forex trading.
 
  
Funds may be added in the form of either MTGUSD or Bitcoins.  Leverage from funds added using bitcoins can purchase an even larger Bitcoin (long) position<ref>[http://www.bitcoinmoney.com/post/11583434953 Bitcoinica - Leveraging Your Bitcoins To Buy ... More Bitcoins]</ref>.  Similarly, funds added using USDs can be used to sell (short) bitcoins without already having bitcoins.
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Announced on April 20, 2012 was that Bitcoinica had "reorganized" and was now operated as Bitcoinica LP and had become a registered Financial Services Provider<ref>[http://bitcointalk.org/index.php?topic=77523.msg861805#msg861805 Bitcoinica is now a registered Financial Services Provider!]</ref>.
  
The site for the service has a copyright mention referencing an xWaylab, Inc (a Delaware corporation) however the site does not yet provide a terms of service and it is not known from which jurisdiction the service operates.  The service does not appear to address regulatory requirements referenced in an alert from the U.S. capital regulator FINRA<ref>[http://www.finra.org/Investors/ProtectYourself/InvestorAlerts/MarginAndBorrowing/P005973 Investing with Borrowed Funds: No "Margin" for Error]</ref>.
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On May 11, 2012 Bitcoinica suffered for the second time a security incident in which a large amount of coins were stolen from its hot wallet<ref>[http://bitcointalk.org/index.php?topic=81045.0 Bitcoinica site is taken offline for security investigation]</ref>.  
  
==External Links==
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On August 1, 2012 the Wendon Group investment fund as creditor to Bitcoinica LP announced that it will appoint a receiver under New Zealand law<ref>[http://bitcointalk.org/index.php?topic=97272.0 Bitcoinica Consultancy abandons customers. Bitcoinica to enter Liquidation]</ref>.
 
 
* [http://www.bitcoinica.com Bitcoinica] web site
 
  
 
==References==
 
==References==
 
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[[Category:Defunct products or services]]
[[Category:Exchanges]]
 
[[Category:Investing]]
 

Latest revision as of 22:59, 6 May 2014

Was an online service that enabled leveraged speculation in its contract-for-difference (CFD) market against the Bitcoin to USD (BTC/USD) exchange rate.

History

The service was launched on September 8, 2011[1]. On March 1st, 2012 the site suffered a significant financial loss when a web hosting had an internal security breach that gave the attacker access to a wallet in which Bitcoinica stored funds. More than 43K bitcoins were stolen by the attacker. The operator provided a statement that reserves were sufficient to cover the loss[2].

Announced on April 20, 2012 was that Bitcoinica had "reorganized" and was now operated as Bitcoinica LP and had become a registered Financial Services Provider[3].

On May 11, 2012 Bitcoinica suffered for the second time a security incident in which a large amount of coins were stolen from its hot wallet[4].

On August 1, 2012 the Wendon Group investment fund as creditor to Bitcoinica LP announced that it will appoint a receiver under New Zealand law[5].

References