I think the truth will be a combination of factors including mismanagement, theft (malleability), price manipulation and government intervention.
I know many people here scream Occam's razor. But from my experience with Bitcoinica the rabbit hole
goes deeper than you think and things only collapse when the situation has become an unrecoverable entangled mess. Government seizure would explain the majority of the 'temporarily unavailable' coins best imho.
We know the US and Japan governments work very closely when it comes to regulation. Also there are vested interests in MtGox failing:
1) Creating the need for government regulation - more power to DFS in NY. more power to lobby institutions like the BF.
2) Depressing the price so large (Wallstreet) investors can get in at ground 0.
3) Opening up new space for competing U.S. regulated exchanges to fill the void.
4) Creating FUD around Bitcoin to turn the public opinion against a technology that poses a threat to the existing power base.
The SR investigation is ongoing and already led to the seizure of customer BTC accounts in the past. It also led to the arrest of Charlie from BitInstant. And subpoena's to virtually every US business that so much a touches BTC (including Gox). Surely the FEDs had their eyes on Gox for a long time but has largely remained out of reach by virtue of them being based in Tokyo.
However, in May 2013 they were able to seize 3 US based accounts (1 Dwolla, 2 Wells Fargo) from Gox:
In May 2013, through an interagency taskforce led by ICE in Baltimore, Maryland, three U.S. bank accounts associated with what was then the world’s largest bitcoin exchanger, Japan-based Mt.Gox, which was moving approximately $60 million per month into a number of Internet-based hidden black markets operating on the Tor network, including
Silk Road, were seized for violations of 18 U.S.C. § 1960, operating a money service business in the United States without a license.
The bulk of the funds were associated with the illicit purchase of drugs, firearms, and child pornography. As a result of the forfeiture action, Mt.Gox, which allows users to trade bitcoins for U.S. dollars and several other currencies, has implemented varying degrees of user verification for its customers. These and many other
ongoing criminal investigations have provided ICE with a better understanding of the risks and challenges posed by virtual currencies.
https://www.dhs.gov/news/2013/11/18/ice-statement-record-senate-committee-homeland-security-and-governmental-affairsI would not be surprised if the FEDs have turned MtGox into a giant honeypot since then so they could actively monitor money flows. (And putting Mark under a gag order possibly issued by FISA in collaboration with the Japanese government). There is a precedent for this in SR where the FEDs also monitored transactions for some time before swooping in and seizing all funds:
During the course of the investigation, ICE special agents identified bitcoins used by buyers and sellers to complete their transactions on the Silk Road site. The bitcoins, worth an estimated $3.6 million, were located in Silk Road's operating account and ultimately seized by the FBI.
Mark also mentioned he stores the cold storage funds as paper wallets in multiple physical locations. I would not be surprised if one of those location would have been in the US. (e.g. a Wells Fargo safety deposit box associated with their seized bank accounts). Mark also mentioned he uses RAID technology to store the private keys, so perhaps he was using split keys. That would mean that Mark has only the first half of his keys, and the FEDs have the 2nd. I.e. neither party can move the coins at the moment. This situation might have existed since May but only escalated recently due to the malleability bug that drained the hot wallet forcing Gox to fall back on cold storage that is frozen.
I could be wrong (and most likely am).
Show Posts
