Most Mt Gox Bitcoins Were Gone by May 2013, Report Claims

[tokeweed]

Mt Gox's missing bitcoins were stolen from the exchange over a period of time beginning in 2011, according to a new report released today by a group investigating its collapse.

They were gone long before the company's collapse in February 2014, the report said. Gox had therefore been operating on a fractional reserve basis for most of that time, either knowingly or unknowingly.

The stolen bitcoins had been withdrawn and sold off on various exchanges including Mt Gox itself, and given the timing probably at prices far below the 2013-14 highs.

Tokyo-based bitcoin security firm WizSec, which produced today's update and a previous one in February, has been conducting an unofficial investigation into Mt Gox's collapse based on data pieced together from various leaks, hacks and other sources.

http://www.coindesk.com/most-mt-gox-bitcoins-were-gone-by-may-2013-report-claims/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+CoinDesk+%28CoinDesk+-+The+Voice+of+Digital+Currency%29

http://blog.wizsec.jp/2015/04/the-missing-mtgox-bitcoins.html

[Bizmark13]

Mt Gox's missing bitcoins were stolen from the exchange over a period of time beginning in 2011, according to a new report released today by a group investigating its collapse.

They were gone long before the company's collapse in February 2014, the report said. Gox had therefore been operating on a fractional reserve basis for most of that time, either knowingly or unknowingly.

The stolen bitcoins had been withdrawn and sold off on various exchanges including Mt Gox itself, and given the timing probably at prices far below the 2013-14 highs.

Tokyo-based bitcoin security firm WizSec, which produced today's update and a previous one in February, has been conducting an unofficial investigation into Mt Gox's collapse based on data pieced together from various leaks, hacks and other sources.

http://www.coindesk.com/most-mt-gox-bitcoins-were-gone-by-may-2013-report-claims/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+CoinDesk+%28CoinDesk+-+The+Voice+of+Digital+Currency%29

http://blog.wizsec.jp/2015/04/the-missing-mtgox-bitcoins.html

Wasn't there one theory that said Mt. Gox began operating on a fractional reserve because of the $5 million fine that they were forced to pay by the government? I think the theory stated that the fine was paid by converting BTC into fiat and when BTC prices skyrocketed, it became increasingly difficult for Mt. Gox to pay it off. Does that theory still have merit today or has it been discredited?

Also, as the article points out, it was proven on June 2011 that Mt. Gox had control of 424,242 bitcoins which was around the same amount that it was supposed to have back then. This is corroborated by the chart in that article. What isn't explained is the massive drop in BTC reserves immediately after that. If you look at the chart, the line for "actual BTC" follows the line for "expected BTC" almost perfectly except for the drop in 2011 which happened just after the 424,242 BTC transfer and a minor slipping in the first half of 2012.

That puts to rest the "slow drain" theory that the exchange constantly lost hundreds of bitcoins per day over the span of many years. If Karpeles and Mt. Gox were unaware of the event in 2011 which caused the expected BTC reserves to diverge so rapidly, then it's very much possible that the discrepancy would have gone unnoticed.

[Kprawn]

They were running a fractional reserve and when they were cornered, they blamed it on Mark's Willy. 

You can see why the exchanges today are so over regulated... this is all related to what happened there at MtGox.... was it not for that event, we would have seen prices exceeding $2000 per Bitcoin.

It seems greed has no boundries. 

[lucullus]

They were running a fractional reserve and when they were cornered, they blamed it on Mark's Willy. 

You can see why the exchanges today are so over regulated... this is all related to what happened there at MtGox.... was it not for that event, we would have seen prices exceeding $2000 per Bitcoin.

It seems greed has no boundries. 

Interesting

[WhatTheGox]

Mt Gox's missing bitcoins were stolen from the exchange over a period of time beginning in 2011, according to a new report released today by a group investigating its collapse.

They were gone long before the company's collapse in February 2014, the report said. Gox had therefore been operating on a fractional reserve basis for most of that time, either knowingly or unknowingly.

The stolen bitcoins had been withdrawn and sold off on various exchanges including Mt Gox itself, and given the timing probably at prices far below the 2013-14 highs.

Tokyo-based bitcoin security firm WizSec, which produced today's update and a previous one in February, has been conducting an unofficial investigation into Mt Gox's collapse based on data pieced together from various leaks, hacks and other sources.

http://www.coindesk.com/most-mt-gox-bitcoins-were-gone-by-may-2013-report-claims/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+CoinDesk+%28CoinDesk+-+The+Voice+of+Digital+Currency%29

http://blog.wizsec.jp/2015/04/the-missing-mtgox-bitcoins.html

Wheres magicaltux's comments on this? no way he didnt know coins were gone way before 2014.

[ensurance982]

It really boils down to incredible stupidity, negligence, or such a tremendous amount of fraud and criminal intentions, this isn't funny anymore. I do buy the Willy report more every day, actually...

[Amph]

it could be that willy bot was created to cover the dump of those stolen coins, that were dumped at small amount to avoid arousing suspicion, there is a big scam around that exchange

[SpanishSoldier]

Was not Mt. Gox under control of Jed Mccaleb in 2011 ?

[Snail2]

It's difficult to believe that nobody at Gox noticed such huge amount of missing coins. Why those guys never made any accounting on their holdings? For any exchange that should be one of the most trivial things.

[Hazir]

It's difficult to believe that nobody at Gox noticed such huge amount of missing coins. Why those guys never made any accounting on their holdings? For any exchange that should be one of the most trivial things.

It was because they were not ready for MtGox being so popular, so these people from normal accountants overnight become keepers of the multi million dollar money fortune. They have no experience with bitcoins  trading on such scale.

[Snail2]

It was because they were not ready for MtGox being so popular, so these people from normal accountants overnight become keepers of the multi million dollar money fortune. They have no experience with bitcoins  trading on such scale.

Gox was the first and most popular for years, that should be enough time to get used to their popularity.

"They have no experience with bitcoins  trading on such scale."
Just like nobody else in the crypto scene, but many other exchanges were able to cope with the scale of trade without stealing 640 000 bitcoins .

[InceptionCoin]

Was not Mt. Gox under control of Jed Mccaleb in 2011 ?

According with http://en.wikipedia.org/wiki/Mt._Gox:

... McCaleb announced on 6 March 2011 that he had sold MtGox to Mark Karpelès ...

[sana54210]

Mt Gox's missing bitcoins were stolen from the exchange over a period of time beginning in 2011, according to a new report released today by a group investigating its collapse.

They were gone long before the company's collapse in February 2014, the report said. Gox had therefore been operating on a fractional reserve basis for most of that time, either knowingly or unknowingly.

The stolen bitcoins had been withdrawn and sold off on various exchanges including Mt Gox itself, and given the timing probably at prices far below the 2013-14 highs.

Tokyo-based bitcoin security firm WizSec, which produced today's update and a previous one in February, has been conducting an unofficial investigation into Mt Gox's collapse based on data pieced together from various leaks, hacks and other sources.

http://www.coindesk.com/most-mt-gox-bitcoins-were-gone-by-may-2013-report-claims/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+CoinDesk+%28CoinDesk+-+The+Voice+of+Digital+Currency%29

http://blog.wizsec.jp/2015/04/the-missing-mtgox-bitcoins.html

Many news have come out about Mt gox but the real truth will not come out in any  time in the near future. It was a mystery and will be a mystery for a very long time to come, thats what I feel about whats  happening right now with the whole case of Mt gox.

[PolarPoint]

Mark should have noticed coins are missing when he produced his first balance sheet and annual reports. It is impossible not to notice so much money vanished, unless he is doing the stealing.

[JayCoDon]

Maybe Mark just didn't want to notice that they were all missing. He could make as much money as possible for as long as possible before anyone caught on.

Some of the early "leaders" in bitcoin have hurt it some. I was at an event yesterday and a Wall Street guy said, "people are afraid...We've got a lot of work to clean up where these early guys screwed up."

[crazyearner]

More news on mtgox good now I got some reading to do and see if more vapour or something worth reading and seeing what claims been made now.  iver way hes made is billions and ran off and loling to the bank with everyone's coins.

[Cryddit]

Some of the early "leaders" in bitcoin have hurt it some. I was at an event yesterday and a Wall Street guy said, "people are afraid...We've got a lot of work to clean up where these early guys screwed up."

Exactly.  While I think that the acceptance of Bitcoin has reached a tipping point where legit institutions will eventually deal in it, right now there is huge reluctance because of all the scammy associations that rise out of silk road (just plain illegal), Gox (incredibly stupid or incredibly crooked, doesn't matter, either way is bad), Butterfly, and dozens of imploded exchanges.  

Facing facts, if you were going to investigate the prospects for opening a Bitcoin business right now from a businessman's perspective, you'd be noticing that Bitcoin exchanges have a tendency to go broke in a spectacular way losing a lot of money they'd been trusted with.  And given that apparent risk, it just doesn't seem like a good idea to get into that business.

Now, if the apparent risk is really illusory, and the string of failures has been caused by incompetence or crooked behavior, then the real risk isn't nearly that bad.  Which, you know, is what we all hope.  And that's why the whole scene needs to be "rehabilitated" with honest and competent businessmen accumulating a much better track record than these early unregulated and largely incompetent-at-business people have done, before the wall street guys can sell investors on it.

[ensurance982]

It's difficult to believe that nobody at Gox noticed such huge amount of missing coins. Why those guys never made any accounting on their holdings? For any exchange that should be one of the most trivial things.

It was because they were not ready for MtGox being so popular, so these people from normal accountants overnight become keepers of the multi million dollar money fortune. They have no experience with bitcoins  trading on such scale.

It is also imaginable that once you realize that such a big loss has occurred (somehow) you get cold sweat and have to decide on your course of action. I bet in this case many people's instinct would be to somehow try and cover up the whole thing ans manage to get those coins back somehow.

[BitUsher]

Mtgox is an important lesson to remind us all of Satoshi's original intent and purpose with a decentralized p2p currency.

Whether it was gross incompetence and/or fraud , doesn't matter as the lesson is their are large security risks in trusting a centralized third party with your wealth.

[JayCoDon]

Some of the early "leaders" in bitcoin have hurt it some. I was at an event yesterday and a Wall Street guy said, "people are afraid...We've got a lot of work to clean up where these early guys screwed up."

Exactly.  While I think that the acceptance of Bitcoin has reached a tipping point where legit institutions will eventually deal in it, right now there is huge reluctance because of all the scammy associations that rise out of silk road (just plain illegal), Gox (incredibly stupid or incredibly crooked, doesn't matter, either way is bad), Butterfly, and dozens of imploded exchanges.  

Facing facts, if you were going to investigate the prospects for opening a Bitcoin business right now from a businessman's perspective, you'd be noticing that Bitcoin exchanges have a tendency to go broke in a spectacular way losing a lot of money they'd been trusted with.  And given that apparent risk, it just doesn't seem like a good idea to get into that business.

Now, if the apparent risk is really illusory, and the string of failures has been caused by incompetence or crooked behavior, then the real risk isn't nearly that bad.  Which, you know, is what we all hope.  And that's why the whole scene needs to be "rehabilitated" with honest and competent businessmen accumulating a much better track record than these early unregulated and largely incompetent-at-business people have done, before the wall street guys can sell investors on it.

And I definitely think we are getting there. The businesses that are coming out now have a lot of VC funding, are able to hire top notch engineers that can ACTUALLY keep things secure, and are saying the right things. I wasn't part of bitcoin when Mt.Gox occurred, but I can't imagine trusting one guy with all my bitcoin. One guy who was in control of everything. But I guess hindsight really is 20/20.